US Internal Revenue Service: i1040--1995

8/14/2019 US Internal Revenue Service: i1040--1995

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Now you can haveyour refunddirectly depositedinto your bankaccount. See theline 63instructions onpage 32.

Get the CreditYou Deserve!

Cat. No. 11325E

Instructions

19951040Department of the TreasuryInternal Revenue Service

Want an EasierWay To File?

See page 6.

See page 5 to findout if you qualifyfor the earnedincome credit.

Did You Have anyHousehold Help(babysitter,housekeeper,etc.)?

You now payhouseholdemployment taxes

with your return.See page 5.

Check YourSocial SecurityNumbers (SSNs)!

Incorrect ormissing SSNsmay delay yourrefund. To get anSSN, seepage 11.

Will You OweMoney With YourReturn?

Please use Form1040-V, PaymentVoucher. Seepage 33.

Note: This booklet does not contain any tax forms.

Expecting aRefund?


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Dividend income. Attach Schedule B if over $400

Department of the TreasuryInternal Revenue Service

1040 U.S. Individual Income Tax ReturnOMB No. 1545-0074For the year Jan. 1Dec. 31, 1995, or other tax year beginning , 1995, ending , 19

Last nameYour first name and initial Your social security number

(Seeinstructionson page 11.)

LABEL

HE

RE

Last name Spousessocial securitynumberIf a joint return, spouses first name and initial

Use the IRSlabel.Otherwise,please printor type.

Home address (number and st reet ). If you have a P.O. box, see page 11. Ap t. no. For Privacy Act and

Paperwork ReductionAct Notice, see page 7.City, town or post office, state, and ZIP code. If you have a foreign address, see page 11.

PresidentialElection Campaign

Note: Checking Yeswill not change yourtax or reduce yourrefund.

NoYes

Do you want $3 to go to this fund?

(See page 11.) If a joint return, does your spouse want $3 to go to this fund?

1 SingleFiling Status 2 Married filing joint return (even if only one had income)

3

Check onlyone box.

4

Qualifying widow(er) with dependent child (year spouse died 19 ). (See page 12.)5

6a Yourself. If your parent (or someone else) can claim you as a dependent on his or her tax

return, do not check box 6a. But be sure to check the box on line 33b on page 2

No. of boxeschecked on 6aand 6b

ExemptionsSpouseb(See page 12.)

No. of your

children on 6cwho:

(4 ) No. of monthslived in your

home in 1995

Dependents:c (2 ) Dependents socialsecurity number. If bornin 1995, see page 13.

(3 ) Dependentsrelationship to

yo u(1 ) First name Last name

lived with you

didnt live withyou due todivorce orseparation (seepage 14)

If more than sixdependents,see page 13.

Dependents on 6cnot entered above

Add numbersentered onlines above

If your child didnt live with you but is claimed as your dependent under a pre-1985 agreement, check hered

Total number of exemptions claimede

7Wages, salaries, tips, etc. Attach Form(s) W-27

8a8a Taxable interest income (see page 15). Attach Schedule B if over $400Income8bb Tax-exempt interest (see page 15). DONT include on line 8aAttach

Copy B of yourForms W-2,W-2G, and1099-R here.

99 1010 Taxable refunds, credits, or offsets of state and local income taxes (see page 15)

1111 Alimony received

1212 Business income or (loss). Attach Schedule C or C-EZ

Enclose, but donot attach, yourpayment andpaymentvoucher. Seepage 33.

1313 Capital gain or (loss). If required, attach Schedule D (see page 16)

1414 Other gains or (losses). Attach Form 4797

15a 15bTotal IRA distributions b Taxable amount (see page 16)15a

16b16aTotal pensions and annuities b Taxable amount (see page 16)16a1717 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E

1818 Farm income or (loss). Attach Schedule F

1919 Unemployment compensation (see page 17)

20b20a b Taxable amount (see page 18)20a Social security benefits

212122 Add the amounts in the far right column for lines 7 through 21. This is your total income 22

23aYour IRA deduction (see page 19)23a23bSpouses IRA deduction (see page 19)bAdjustments

to Income2525 One-half of self-employment tax

26Self-employed health insurance deduction (see page 21)26

2727 Keogh & self-employed SEP plans. If SEP, check

2828 Penalty on early withdrawal of savings

2929 Alimony paid. Recipients SSN

30Add lines 23a through 29. These are your total adjustments 30

Subtract line 30 from line 22. This is your adjusted gross income . If less than $26,673 and a child livedwith you (less than $9,230 if a child didnt live with you), see Earned Income Credit on page 27

31AdjustedGross Income 31

If you did notget a W-2, seepage 14.

Form

Married filing separate return. Enter spouses social security no. above and full name here.

Label

(See page 11.)

Form 1040 (1995)

IRS Use OnlyDo not write or staple in this space.

Head of household (with qualifying person). (See page 12.) If the qualifying person is a child but not your dependent,

enter this childs name here.

Other income. List type and amountsee page 18

Moving expenses. Attach Form 3903 or 3903-F24 24

(99)

Your Tax Return Quick ReferenceGot a question about what to put on a line? Turn to the page shown in the circle.

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B-1

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If you are married filing separately and your spouse itemizes deductions oryou are a dual-status alien, see page 23 and check here

Add lines 55 through 60. These are your total payments

Page 2Form 1040 (1995)

Amount from line 31 (adjusted gross income)32 32

Check if:33aTaxCompu-tation

33aAdd the number of boxes checked above and enter the total here

33bIf your parent (or someone else) can claim you as a dependent, check here b

If you wantthe IRS tofigure yourtax, seepage 35.

c33c

Single$3,900 Married filing jointly or Qualifying widow(er)$6,550

34 Enter

thelargerofyour:

34

35Subtract line 34 from line 3235

36If line 32 is $86,025 or less, multiply $2,500 by the total number of exemptions claimed on

line 6e. If line 32 is over $86,025, see the worksheet on page 23 for the amount to enter

36

37Taxable income. Subtract line 36 from line 35. If line 36 is more than line 35, enter -0-37

38 Tax. Check if from

38

39Additional taxes. Check if from39Add lines 38 and 39 40 40

4141 Credit for child and dependent care expenses. Attach Form 2441

4242 Credit for the elderly or the disabled. Attach Schedule RCredits

4343 Foreign tax credit. Attach Form 1116(See page24.)

44 Other credits (see page 25). Check if from

44

4545

46

Add lines 41 through 44

46

47

Subtract line 45 from line 40. If line 45 is more than line 40, enter -0-

47

48

Self-employment tax. Attach Schedule SE

48OtherTaxes

49

Alternative minimum tax. Attach Form 6251

49

50

Recapture taxes. Check if from

50

51

Social security and Medicare tax on tip income not reported to employer. Attach Form 4137

51

52

Tax on qualified retirement plans, including IRAs. If required, attach Form 5329

52

54

Advance earned income credit payments from Form W-2

54 Add lines 46 through 53. This is your total tax

5555

Federal income tax withheld. If any is from Form(s) 1099, check56 56

57

1995 estimated tax payments and amount applied from 1994 return

57

Payments

5858

59

Amount paid with Form 4868 (extension request)

59

AttachForms W-2,W-2G, and1099-R onthe front.

60

Excess social security and RRTA tax withheld (see page 32)

60

61

Other payments. Check if from

61

6262

64 64

If line 61 is more than line 54, subtract line 54 from line 61. This is the amount you OVERPAID

6565

Amount of line 62 you want REFUNDED TO YOU

66

Refund orAmountYou Owe

66

Amount of line 62 you want APPLIED TO YOUR 1996 ESTIMATED TAX

If line 54 is more than line 61, subtract line 61 from line 54. This is the AMOUNT YOU OWE.

For details on how to pay and use Form 1040-V, Payment Voucher, see page 33

Estimated tax penalty (see page 33). Also include on line 65

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge andbelief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.Sign

Here DateYour signatureKeep a copyof this returnfor yourrecords.

DateSpouses signature. If a joint return, BOTH must sign.

Preparers social security no.DatePreparerssignature

Check ifself-employed

PaidPreparersUse Only

Firms name (or yoursif self-employed) andaddress

EIN

ZIP code

Your occupation

Spouses occupation

Standard deduction shown below for your filing status. But if you checked

any box on line 33a or b, go to page 23 to find your standard deduction.If you checked box 33c, your standard deduction is zero.

Itemized deductions from Schedule A, line 28, OR

Head of household$5,750 Married filing separately$3,275

(See page23.)

6363

You were 65 or older, Blind; Spouse was 65 or older, Blind.

a Tax Table, b Tax Rate Schedules, c Capital Gain Tax Work-

d Form 8615 (see page 24). Amount from Form(s) 8814 esheet, or

a Form 4970 b Form 4972

a Form 3800

b Form 8396 c Form 8801 d Form (specify)

a Form 4255 b Form 8611 c Form 8828

a Form 2439 b Form 4136

and type

(See page25.)

Earned income credit. Attach Schedule EIC if you have a qualifying

child. Nontaxable earned income: amount

53 Household employment taxes. Attach Schedule H 53

Your Tax Return Quick ReferenceGot a question about what to put on a line? Turn to the page shown in the circle.

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A-1

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NATIONALPERFORMANCE

REVIEW

IRS CustomerService Standards

For 1996, we have set the following CustomerService Standards.

Simpler Forms. We made some changes to thetax forms and instructions this year to makethem easier to use, but we want your ideas forimprovements. Please call or write to us. (Seepage 7.)

Easier Filing. To make it easier for you to meetyour tax obligations, we have expanded youropportunities for simplified return filing andpayment of your taxes through our electronicfiling, joint Federal-state filing, TeleFile, and elec-tronic payment programs.

Access to Information. You will have conve-nient access to tax law and account information.Our pre-recorded tax information will continueto be available 24 hours a day, 7 days a week,and access to refund status information will beavailable 16 hours a day. Live telephone assis-tance will be available 10 hours each businessday. (See pages 36 and 38.)

Accuracy. Our goal is to answer your questionsand process your tax returns accurately. Toreach that goal, we will continue to makeimprovements yearly.

One-Stop Service. Our goal is to resolve youraccount inquiries with one contact. To reach thatgoal, we will make improvements yearly.

Canceling Penalties. If you provide sufficientand accurate information to our tax assisters butare given and reasonably rely on an incorrectanswer, we will cancel related penalties.

Resolving Problems. If you have a problem thathas not been resolved through normalprocesses, you may contact our Problem Reso-lution Office. A caseworker will contact youwithin 1 week and will work with you to resolvethe issue. (See page 6.)

Prompt Refunds. If you file a complete andaccurate tax return and you are due a refund,your refund will be issued within 40 days if you

The people of the TreasuryDepartment are dedicatedto doing what governmentshould do: M eet the higheststandards in serving ourfellow Americans. Robert Rubin,Secretary of the Treasury

Dear Taxpayer:

Margar et Milner Richar dson

file a paper return. If you file electronically, it willbe issued within 21 days. (Your refund may bedelayed if your return is selected for furtherreview.)

Last year we at the IRS made a commitment to serve you better in severalareas. Im pleased to report that weve made significant progress.

We said wed ma ke it easier t o file a t ax retu rn. La st year more tha n 11 milliontaxpayers filed electronically, nearly 3 million taxpayers used a short machine-scoredanswer sheet and 700,000 filed by telephone. This year telephone filing will beavailable to about 20 million 1040EZ filers t hroughout t he U nited St ates.

We made a commitment to issue refunds within 21 days to taxpayers who filedelectronically and within 40 days to those who filed on paper. We came close toachieving this goal, but did have to slow the process sometimes. This extra effort keptus from paying out $400 million in improper refunds, but it also forced us to miss ourdeadline at times. I apologize to those taxpayers who were inconvenienced.

Providing information about our tax laws or your account status when you wantit is an other of our priorities. Last year we responded to 118 million taxpayers, a nincrease of nearly 60% from the year before. Automated information was alwaysavailable. Information on refunds was available 16 hours each day, and IRS personnelcould be reached by phone for 10 hours each business day.

Weve made r eal progress, an d we rema in comm itted t o doing even bett er. Weappreciate your suggestions about how we can do that.


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Section 1.

Before You FillIn Form 1040

If you were in the Persion Gulf area combat zone, get Pub. 945, Tax Informationfor Those Affected by Operation Desert Storm.

Whats New for1995?Social Security Numbers(SSNs) for DependentsYou must enter the SSN of each dependent,except for a child born in November or De-cember of 1995. If you dont enter a correctSSN, your refund will be delayed. If your de-pendent does not have an SSN, see the in-structions for line 6c, column (2), on page13.

Earned Income CreditIf you do not have any qualifying children,

you earned less than $9,230, and you or yourspouse were at least age 25, you may beable to take this credit. See the instructionsfor line 57 on page 27.

If you have one qualifying child and youearned less than $24,396, you may be ableto take a larger credit. If you have two ormore qualifying children, you must haveearned less than $26,673 to take the credit.See the instructions for line 57 on page 27.

If you have a qualifying child, you mustattach Schedule EIC to your return. You alsomust enter the social security number (SSN)of each qualifying child, except for a childborn in November or December of 1995. Ifyou dont attach Schedule EIC or dont entera correct SSN, your refund will be delayed.

If you were in the military on extendedactive duty outside the United States, youmay be able to claim the EIC. See the in-structions for line 57 on page 27. If you werea nonresident alien for any part of 1995, youcannot claim the EIC unless you are marriedto a U.S. citizen or resident and elect to betaxed as a resident for all of 1995. For detailson the election, get Pub. 519, U.S. Tax Guidefor Aliens.

Direct Deposit of RefundIf you have a refund on line 63 of your 1995Form 1040, you can have it directly depos-ited into your bank account instead of re-ceiving a check. Use new Form 8888, Direct

Deposit of Refund, to do so. See the instruc-tions for line 63 on page 32 for details.

Household EmploymentTaxesEmployment taxes on wages paid to house-hold employees are now reported on Form1040, line 53, using new Schedule H (Form1040). If you paid someone to work in oraround your home, you may owe employ-ment taxes. See the instructions for line 53on page 26.

If you paid these taxes in 1994, you shouldreceive a separate package in January con-

taining Schedule H, Form W-2, and otheritems. If you dont receive the package, youcan get it by calling 1-800-TAX-FORM(1-800-829-3676).

Form 1040-V, PaymentVoucherA payment voucher is a statement you sendwith your payment when you have a balancedue on your tax return. It is like the part ofother billsutilities, credit cards, etc.yousend with your payment.

If you have a balance due on line 65 ofyour 1995 Form 1040, please use Form1040-V when making your payment (seepage 33). By doing so, you will help save taxdollars because we will be able to processyour payment more accurately and efficient-ly. We strongly encourage you to use Form1040-V, but do not require it.

Self-Employed HealthInsurance DeductionThis deduction, which expired December 31,1993, has been retroactively extended andmade permanent. If you were entitled toclaim this deduction in 1994 but did not doso, file Form 1040X, Amended U.S. Individ-ual Income Tax Return, to amend your 1994return. Do not use the worksheet in thisbooklet to figure your deduction for 1994.Instead, use the worksheet in the 1994 In-structions for Form 1040 or get Pub. 535,Business Expenses.

Also, the maximum amount of this deduc-tion has increased for 1995. See the instruc-tions for line 26 on page 21.

Payment of DeferredAdditional 1993 TaxesIf you filed Form 8841, Deferral of Additional1993 Taxes, with your 1993 return, your lastinstallment is due on April 15, 1996. See theinstructions for line 63 on page 32.

Tax Law ChangesFor more details, get Pub. 553, Highlights of1995 Tax Changes.

Earned IncomeCredit (EIC) Wit hYour PayIf you expect to be able to claim the EIC in1996 and a child lives with you, you may beable to get part of the credit in your paycheckinstead of waiting until you file your 1996return. For details, call Tele-Tax (see page36) and listen to topic 604 or get Form W-5,Earned Income Credit Advance PaymentCertificate, from your employer.

What Free Tax HelpIs Available?Tax Forms and PublicationsYou can answer most of your tax questionsby reading the tax form instructions or oneof our many free tax publications. There aremany ways to get the items you need, in-cluding using your computer to get themfrom our bulletin board or via the Internet.See page 34.

Refund InformationOur Tele-Tax service can tell you the statusof your refund. See page 36.

Recorded Tax InformationTele-Tax also has recorded tax informationcovering many topics. See page 36 for thenumber to call.

Telephone HelpIRS representatives are available to help youwith your tax questions. If, after reading thetax form instructions and publications, youare not sure how to fill in your return, or havea question about a notice you received fromus, please call us. See page 38 for thenumber.

Send the IRS Written

QuestionsYou may send your written tax questions toyour IRS District Director. You should get ananswer in about 30 days. If you dont havethe address, call us. See page 38 for thenumber.

Walk-In HelpAssisters are available in most IRS officesthroughout the country to help you prepareyour return. An assister will explain a Form1040EZ, 1040A, or 1040 with Schedules Aand B to you and other taxpayers in a groupsetting. You can also file your return elec-tronically by computer free of charge atmany IRS offices. To find the IRS office near-est you, look in the phone book underUnited States Government, Internal Reve-nue Service or call us. See page 38 for thenumber.

Volunteer Income TaxAssistance (VITA) and TaxCounseling for the Elderly(TCE)These programs help older, disabled, low-income, and non-English-speaking peoplefill in their returns. For details, call us. Seepage 38 for the number. If you received a


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Federal income tax package in the mail, takeit with you when you go for help. Also bringa copy of your 1994 tax return if you have it.

VideotapeVideotaped instructions for completing yourreturn are available in English and Spanishat many libraries.

Large-Print Forms andInstructionsPub. 1614 has large-print copies of Form

1040, Schedules A, B, D, E, EIC, and R,Forms 1040-V and 8888, and their instruc-tions. You can use the large-print forms andschedules as worksheets to figure your tax,but you cant file on them. To get Pub. 1614,call 1-800-TAX-FORM (1-800-829-3676).

Help for People WithDisabilitiesTelephone help for people with impairedhearing is available using TDD equipment.See page 38 for the number to call. Braillematerials are available at regional librariesthat have special services for people withdisabilities.

Unresolved Tax ProblemsThe Problem Resolution Program is forpeople who have been unable to resolvetheir problems with the IRS. If you have a taxproblem you cannot clear up through normalchannels, write to your local IRS District Di-rector or call your local IRS office and askfor Problem Resolution assistance. Peoplewith impaired hearing who have access toTDD equipment may call 1-800-829-4059 toask for help from Problem Resolution. Thisoffice cannot change the tax law or technicaldecisions. But it can help you clear up prob-

lems that resulted from previous contacts.For more details, call Tele-Tax (see page 36)and listen to topic 104 or get Pub. 1546. In1995, 88.2% of the people who asked forhelp were contacted within 1 week.

Common M istak esTo AvoidErrors may delay your refund or result in no-tices being sent to you.

1. If the amount on Form 1040, line 31, isunder $26,673 and a child lived with you(under $9,230 if a child didnt live with you),read the instructions for line 57 that begin

on page 27 to see if you can take the earnedincome credit.

2. Check your math, especially when fig-uring your taxable social security benefits,deduction for exemptions, taxable income,total income, total tax, Federal income taxwithheld, and your refund or amount youowe.

3. If you are taking the standard deductionand you checked any box on line 33a or 33b,be sure to see page 23 to find the correctamount to enter on line 34.

4. If you (or your spouse if you check thebox on line 6b) were age 65 or older or blind,be sure to check the appropriate boxes online 33a.

5. Make sure your name, address, andsocial security number (SSN) are correct onthe peel-off label. If not, enter the correctinformation.

6. If you are married filing jointly and didnt

get a peel-off label, or you are married filingseparately, enter your spouses SSN in thespace provided on page 1 of Form 1040.Also, enter your SSN in the space providednext to your name.

7. Check the box on line 33b if you (or yourspouse if filing a joint return) can be claimedas a dependent on someones 1995 return,such as your parents return. Check the boxeven if that person chose not to claim you(or your spouse).

8. Attach your W-2 form(s) and other re-quired forms and schedules. Dont forget toput all forms and schedules in the properorder. See Assemble Your Return on page33.

9. Remember to sign and date Form 1040and enter your occupation.

10. Be sure to include your SSN on yourpayment.

* Some refunds may be delayed as a result of compliance reviews to ensure that the returns are accurate.

AlternativeWays of Filing

IRS offers several filing alternatives to make filing your tax return easier. They are designed to be moreconvenient and accurate and will result in faster processing of your tax return. One of the choices listedbelow may be for you.

Electronic FilingLast year, millions of taxpayers sent their tax returns to IRS electronically. Electronic filing is availablewhether you prepare your own return or use a tax preparer.

If you file a complete and accurate return electronically, your refund will be issued within 21 days.* You canalso get the convenience and safety of direct deposit. With electronic filing, you get the relief of knowing thatIRS has received your return because we notify your electronic return transmitter that your return has beenreceived and accepted. And, if you owe tax, you can file early and pay by April 15, 1996.

In many states, you may be able to file your state tax return electronically with your Federal tax return. Checkwith your tax return preparer or transmitter. Many companies also offer electronic filing as a benefit for theiremployees. Check with your employer.

To file electronically, you must go through an IRS-approved tax preparer or other company.

TeleFileMany single taxpayers who filed Form 1040EZ in 1995 will receive a special TeleFile tax package that allowsthem to file their taxes by phone. TeleFile is easy, fast, free, and available 24 hours a day, with nothing to mail

in. The IRS automatically sends a special TeleFile package to those who are eligible to use it. TeleFile is agreat way for students to file their tax return!

Other AlternativesYou can also file your return electronically with a computer, tax software, and a modem. There are some on-lineservices that can accept your tax return electronically. Check with your on-line service to see if you can fileelectronically with them.

For more details on your choices, call Tele-Tax (see page 36) and listen to topic 252.


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Privacy Act and Paperwork Reduction Act Notice

The Privacy Act of 1974 and Paperwork Re-duction Act of 1980 say that when we askyou for information we must first tell you ourlegal right to ask for the information, why weare asking for it, and how it will be used. Wemust also tell you what could happen if wedo not receive it and whether your responseis voluntary, required to obtain a benefit, ormandatory under the law.

This notice applies to all papers you filewith us, including this tax return. It also ap-plies to any questions we need to ask youso we can complete, correct, or process yourreturn; figure your tax; and collect tax, inter-est, or penalties.

Our legal right to ask for information isInternal Revenue Code sect ions 6001, 6011,and 6012(a) and their regulations. They saythat you must file a return or statement withus for any tax you are liable for. Your re-sponse is mandatory under these sections.Code section 6109 and its regulations saythat you must show your social securitynumber on what you file. This is so we knowwho you are, and can process your returnand other papers. You must fill in all parts ofthe tax form that apply to you. But you donot have to check the boxes for the Presi-dential Election Campaign Fund.

We ask for tax return information to carryout the tax laws of the United States. Weneed it to figure and collect the right amountof tax.

We may give the information to the De-partment of Justice and to other Federalagencies, as provided by law. We may alsogive it to cities, states, the District of Colum-bia, and U.S. commonwealths or posses-

sions to carry out their tax laws. And we maygive it to foreign governments because of taxtreaties they have with the United States.

If you do not file a return, do not providethe information we ask for, or provide fraud-ulent information, you may be charged pen-alties and be subject to criminal prosecution.We may also have to disallow the exemp-tions, exclusions, credits, deductions, or ad-justments shown on the tax return. Thiscould make the tax higher or delay anyrefund. Interest may also be charged.

Please keep this notice with your records.It may help you if we ask you for other infor-mation. If you have questions about the rulesfor filing and giving information, please call

or visit any Internal Revenue Service office.

The Time It Takes To PrepareYour Return

We try to create forms and instructions thatcan be easily understood. Often this is diffi-cult to do because our tax laws are verycomplex. For some people with incomemostly from wages, filling in the forms iseasy. For others who have businesses, pen-

sions, stocks, rental income, or other invest-ments, it is more difficult.

We Welcome Comments on Forms

If you have comments concerning the accu-racy of the time estimates shown below orsuggestions for making these forms simpler,we would be happy to hear from you. Youcan write to the Tax Forms Committee,Western Area Distribution Center, RanchoCordova, CA 95743-0001. Or, you can callthe IRS with your suggestions at 1-800-829-9043 and leave a recorded message 24hours a day, 7 days a week.

DO NOT send your return to this address.Instead, see Where Do I File? on the backcover.

Copying,assembling,and sending

the formto the IRS

Learningabout

the law orthe form

Preparingthe formRecordkeepingForm

53 min.4 hr., 43 min.2 hr., 54 min.3 hr., 8 min.Form 1040

27 min.1 hr., 10 min.26 min.2 hr., 32 min.Sch. A20 min.17 min.8 min.33 min.Sch. B

35 min.2 hr., 5 min.1 hr., 10 min.6 hr., 26 min.Sch. C

41 min.1 hr., 1 min.1 hr., 8 min.51 min.Sch. D

35 min.1 hr., 16 min.1 hr., 7 min.2 hr., 52 min.Sch. E

Sch. F:

20 min.1 hr., 14 min.35 min.4 hr., 2 min.Cash Method

20 min.1 hr., 19 min.25 min.4 hr., 22 min.Accrual Method

35 min.22 min.15 min.20 min.Sch. R

Sch. SE:

14 min.11 min.13 min.20 min.Short

20 min.34 min.22 min.26 min.Long

The time needed to complete and file Form 1040 and its schedules will vary depending on individual circumstances. The estimatedaverage times are:

Estimated Preparation Time

5 min.4 min.2 min.Sch. EIC

Sch. C-EZ 46 min. 4 min. 18 min. 20 min.

Sch. H 46 min. 43 min. 1 hr., 3 min. 35 min.

- - - - -

Totals

11 hr., 38 min.

4 hr., 35 min.1 hr., 18 min.

10 hr., 16 min.

3 hr., 41 min.

5 hr., 50 min.

6 hr., 11 min.

6 hr., 26 min.

1 hr., 32 min.

58 min.

1 hr., 42 min.

1 hr., 28 min.

3 hr., 7 min.

11 min.


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Section 2.

FilingRequirements

The rules below apply to all U.S. citizens and resident aliens.

Do I Have To File?Use Chart A, B, or C to see if you must filea return. U.S. citizens who lived in or hadincome from a U.S. possession should getPub. 570, Tax Guide for Individuals WithIncome From U.S. Possessions. Residentsof Puerto Rico can call Tele-Tax (see page36) and listen to topic 901 to see if they mustfile.

Even if you do not o therwise haveto file a return, you should file oneto get a refund of any Federalincome tax withheld. You should

also file if you can take the earned incomecredit.

TIP

Exception for Children UnderAge 14

If your child is required to file a return andall four of the following apply, you may electto report your childs income on your return.But you must use Form 8814, Parents Elec-tion To Report Childs Interest and Divi-dends, to do so. If you make this election,your child does not have to file a return.

1. Your child was under age 14 on January1, 1996.

2. Your child had income only from interestand dividends (including Alaska PermanentFund dividends).

3. Your childs gross income was less than$5,000.

4. Your child had no Federal income taxwithheld and did not make estimated taxpayments for 1995.

If you and the childs other parent are notfiling a joint return, special rules apply todetermine which parent may make the elec-tion. See Form 8814 for details.

Nonresident Aliens and Dual-Status Aliens

The rules above also apply to nonresidentaliens and dual-status aliens who were mar-ried to U.S. citizens or residents at the endof 1995 and who have elected to be taxedas resident aliens.

Exception. Different rules apply to other

nonresident aliens and dual-status aliens.They may have to file Form 1040NR, U.S.Nonresident Alien Income Tax Return, orForm 1040NR-EZ, U.S. Income Tax Returnfor Certain Nonresident Aliens With No De-pendents. Specific rules apply to determineif you are a resident or nonresident alien. GetPub. 519, U.S. Tax Guide for Aliens, for de-tails, including the rules for students andscholars.

Chart AFor Most People

To use this chart, first find your marital status at the end of 1995. Then, read across tofind your filing status and age at the end of 1995. You must file a return if your grossincome** was at least the amount shown in the last column.

Gross income**Age*Filing statusMarital status

$6,400under 65Single

7,35065 or olderSingle (including divorcedand legally separated) $8,250under 65Head of

household (seepage 12) 9,20065 or older

Married with a child andliving apart from yourspouse during the last 6months of 1995

$8,250under 65Head ofhousehold (seepage 12) 9,20065 or older

$11,550under 65(both spouses)

12,30065 or older(one spouse)

Married, jointreturn

Married and living with yourspouse at end of 1995 (oron the date your spousedied)

13,05065 or older(both spouses)

$2,500any ageMarried, separatereturn

Married, not living with yourspouse at end of 1995 (oron the date your spousedied)

Married, joint orseparate return

$2,500any age

$6,400under 65Single

7,35065 or older

$8,250under 65Widowed before 1995 andnot remarried in 1995

Head ofhousehold 9,20065 or older

Qualifyingwidow(er) withdependent child(see page 12)

$9,050under 65

9,80065 or older

* If you turned age 65 on January 1, 1996, you are considered to be age 65 at theend of 1995.

** Gross incomemeans all income you received in the form of money, goods,property, and services that is not exempt from tax, including any gain on the sale ofyour home (even if you may exclude or postpone part or all of the gain). Do notinclude social security benefits unless you are married filing a separate return andyou lived with your spouse at any time during 1995.


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Chart BFor Children and Other Dependents (See the instructions for line 6c onpage 12 to find out if someone can claim you as a dependent.)

In this chart, unearned income includes taxable interest and dividends. Earnedincome includes wages, tips, and taxable scholarship and fellowship grants.

If your parent (or someone else) can claim you as a dependent, use this chart to see ifyou must file a return.

Married dependents. Were you either age 65 or older or blind?

Single dependents. Were you either age 65 or older or blind?

Your gross income was at least $5 and your spouse files a separate returnand itemizes deductions.

Your earned income was over $4,025 ($4,775 if 65 or older and blind),

Your unearned income was over $1,400 ($2,150 if 65 or older and blind),

Your earned income was over $4,850 ($5,800 if 65 or older and blind).

Your unearned income was over $1,600 ($2,550 if 65 or older and blind).

Your gross income was at least $5 and your spouse files a separate returnand itemizes deductions.

Chart COther Situations When You Must File

If any of the four conditions below applied to you for 1995, you must file a return.

2. You received any advance earned income credit (EIC) payments from youremployer. These payments should be shown in box 9 of your W-2 form.

1. You owe any special taxes, such as:

Social security and Medicare tax on tips you did not report to your employer,

3. You had net earnings from self-employment of at least $400.

Uncollected social security and Medicare or RRTA tax on tips you reported toyour employer or on group-term life insurance,

4. You had wages of $108.28 or more from a church or qualified church-controlledorganization that is exempt from employer social security and Medicare taxes.

Alternative minimum tax,

Tax on a qualified retirement plan, including an individual retirement arrangement(IRA), or

Recapture taxes. (See the instructions for line 49 on page 25.)

Caution: If your gross income was $2,500 or more, you usually cannot be claimed as adependent unless you were under age 19 ora student under age 24. For details, seeTest 4Incomeon page 13.

No. You must file a return if

Your unearnedincome was: AND

The total of that income plusyour earned income was:

$1 or more

$0

over $650

over $3,900

Yes. You must file a return if any of the following apply.

Your gross income was more than

The larger of: PLUS This amount:

$650 or your earnedincome (up to $3,900)

$950 ($1,900 if 65or older and blind)

No. You must file a return if either of the following apply.

Your unearnedincome was: AND

The total of that income plusyour earned income was:

$1 or more

$0

over $650

over $3,275

Yes. You must file a return if any of the following apply.

Your gross income was more than

The larger of: PLUS This amount:

$650 or your earnedincome (up to $3,275)

$750 ($1,500 if 65or older and blind)

When Should I File?Not later than April 15, 1996. If you file late,you may have to pay penalties and interest.See page 35.

If you are a U.S. citizen or resident, youmay qualify for an automatic extension oftime to file if, on the due date of your return,you meet one of the following conditions:

You live outside the United States andPuerto Rico, AND your main place of busi-ness or post of duty is outside the UnitedStates and Puerto Rico. You are in military or naval service on

duty outside the United States and PuertoRico.

This extension gives you an extra 2months to file and pay the tax, but interestwill be charged from the original due date ofthe return on any unpaid tax. You mustattach a statement to your return showingthat you meet the requirements.

What If I Cant File on Time?If you know that you cant file your return bythe due date, you should file Form 4868,Application for Automatic Extension of TimeTo File U.S. Individual Income Tax Return,

by April 15, 1996.Caution: Form 4868 does not extend thetime to pay your income tax. See Form 4868.

Where Do I File?If an envelope addressed to the Internal Rev-enue Service came with your booklet, pleaseuse it. If you dont have one, or if you movedduring the year, see the back cover of thisbooklet.


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Where To ReportCertain Items From1995 Forms W-2,1098, and 1099

Form Item and Box in Which It Should Appear Where To Report if Filing Form 1040

W-2 Wages, salaries, tips, etc. (box 1) Form 1040, line 7Allocated tips (box 8) See Tip Income on page 14Advance EIC payments (box 9) Form 1040, line 52Dependent care benefits (box 10) Form 2441, line 11

W-2G Gambling winnings (box 1) Form 1040, line 21 (Schedule C or C-EZ for professional gamblers)

1098 Mortgage interest (box 1)Points (box 2)

Schedule A, line 10*

Refund of overpaid interest (box 3) See the instructions for Form 1040, l ine 21, that begin on page 18*

1099-A Acquisition or abandonment of securedproperty

See Pub. 544

1099-B Stocks, bonds, etc. (box 2) Schedule DBartering (box 3) See Pub. 525Futures contracts (box 9) Form 6781

1099-DIV Ordinary dividends (box 1b) Form 1040, line 9Capital gain distributions (box 1c) See the instructions for Form 1040, line 13, on page 16Nontaxab le d ist ribut ions (box 1d) See the inst ructions for Form 1040, line 9, on page 15Investment expenses (box 1e) Form 1040, line 9, and Schedule A, line 22Foreign tax paid (box 3) Schedule A, line 8 (or Form 1116)

1099-G Unemployment compensat ion (box 1) Form 1040, line 19. But if you repaid any unemploymentcompensation in 1995, see the instructions for line 19 on page 17

State or local income tax refund (box 2) See the instructions for Form 1040, line 10, on page 15*Taxable grants (box 6) Form 1040, line 21*Agriculture payments (box 7) See the Schedule F instructions or Pub. 225

1099-INT Interest income (box 1) Form 1040, line 8aEarly withdrawal penalty (box 2) Form 1040, line 28

Foreign tax paid (box 5) Schedule A, line 8 (or Form 1116)

1099-MISC Rents (box 1) See the instructions for Schedule ERoyalties (box 2) Schedule E, line 4 (timber, coal, iron ore royalties, see Pub. 544)Other income (box 3) Form 1040, line 21*

Other (boxes 5, 6, 8, 9, and 10) See the instructions on Form 1099-MISC

1099-OID Original issue discount (box 1) See the instructions on Form 1099-OIDOther periodic interest (box 2)Early withdrawal penalty (box 3) Form 1040, line 28

1099-PATR Patronage dividends and other distributionsfrom a cooperative(boxes 1, 2, 3, and 5)

Schedule C, Schedule C-EZ, Schedule F, or Form 4835, but first seethe instructions on Form 1099-PATR

1099-R Distributions from IRAs See the instructions for Form 1040, lines 15a and 15b, on page 16Distributions from pensions, annuities, etc. See the instructions for Form 1040, lines 16a and 16b, on page 16Capital gain (box 3) See the instructions on Form 1099-R

1099-S

Buyers part of real estate tax (box 5)

Form 2119 (or Form 4797 or Schedule D if the property was not yourhome)

Interest on U.S. savings bonds and Treasury

obligations (box 3)

Gross proceeds from real estate transactions(box 2)

See the instructions for Form 1040, line 8a, on page 15

See the instructions for Schedule A, line 6, on page A-2*

* If the item relates to an activity for which you are required to file Schedule C, C-EZ, E, or F, or Form 4835, report the taxable or deductible amount allocable tothe activity on that schedule or form instead.

Nonemployee compensation (box 7) Schedule C, C-EZ, or F (Form 1040, l ine 7, if you were notself-employed)

Credits (boxes 7 and 8) Form 3468 or Form 5884

1099-C Canceled debt (box 2) Form 1040, line 21, but first see the instructions on Form 1099-C*

Report any Federal income tax withheld from these forms on Form 1040, line 55. If you itemize your deductions, reportany state or local income tax withheld from these forms on Schedule A, line 5.


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Section 3.

LineInstructionsFor Form 1040

Name, Address, andSocial SecurityNumber (SSN)Why Use the Label?

The peel-off label in this instruction bookletis designed to speed processing. It preventscommon errors that can delay refunds orresult in unnecessary notices. (In 1995, ouraccuracy rate in processing refunds was99.5%.) Do not attach the label until youhave finished your return. Cross out anyerrors and print the correct information. Addany missing items such as your apartmentnumber.

Caution: If the label is for a joint return andthe SSNs are not listed in the same order asthe first names, show the SSNs in the c orrectorder.

Address Change

If the address on your peel-off label is notyour current address, cross out your old ad-dress and print your new address. If you planto move after filing your return, see page 34.

Name Change

If you changed your name because of mar-riage, divorce, etc., be sure to report this to

your local Social Security Administrationoffice before filing your return. This preventsdelays in processing your return and issuingrefunds. It also safeguards your future socialsecurity benefits. If you received a peel-offlabel, cross out your former name and printyour new name.

What If I Do Not Have a Label?

If you didnt receive a label, print or type theinformation in the spaces provided. But ifyou are married filing a separate return, enteryour husbands or wifes name on line 3.

Social Security Number (SSN)

If you do not have a label, enter your SSN inthe area marked Your social securitynumber. If you are married, enter your hus-bands or wifes SSN in the area markedSpouses social security number. Also,check that your SSN is correct on yourForms W-2 and 1099. See page 34 for moredetails.

An incorrect or missing SSN will delay yourrefund. To apply for an SSN, get Form SS-5from your local Social Security Administra-tion (SSA) office or call the SSA at1-800-772-1213. Fill it in and return it to theSSA. It usually takes about 2 weeks to getan SSN.

Nonresident Alien SpouseIf your spouse is a nonresident alien and youfile a joint return, your spouse must usuallyget an SSN. But if your spouse cannot getan SSN because he or she had no incomefrom U.S. sources, enter NRA in the spacefor your spouses SSN. If you file a separatereturn and your spouse has no SSN and noincome, enter NRA.

P.O. Box

If your post office does not deliver mail toyour home and you have a P.O. box, showyour box number instead of your home ad-dress.

Foreign AddressIf your address is outside the United Statesor its possessions or territories, fill in the linefor City, town or post office, state, and ZIPcode in the following order: city, provinceor state, postal code, and the name of thecountry. Do not abbreviate the countryname.

Deceased Taxpayer

See page 35.

Presidential ElectionCampaign FundThis fund helps pay for Presidential electioncampaigns. The fund reduces candidatesdependence on large contributions from in-dividuals and groups and places candidateson an equal financial footing in the generalelection. If you want $3 to go to this fund,check the Yes box. If you are filing a jointreturn, your spouse may also have $3 go tothe fund. If you check Yes, your tax orrefund will not change.

Filing Stat usCheck only the filing status listed below thatapplies to you. The ones that will usually giveyou the lowest tax are listed last.

Married filing separately Single

Head of household

Married filing jointly or Qualifying wid-ow(er) with dependent child

TIPIf more than one filing statusapplies to you, choose the onethat will give you the lowest tax.

Line 1

SingleYou may check the box on line 1 if any ofthe following was true on December 31,1995:

You were never married, or

You were legally separated, accordingto your state law, under a decree of divorceor separate maintenance, or

You were widowed before January 1,1995, and did not remarry in 1995.

Line 2

Married Filing JointlyYou may check the box on line 2 if any ofthe following is true:

You were married as of December 31,1995, even if you did not live with yourspouse at the end of 1995, or

Your spouse died in 1995 and you didnot remarry in 1995, or

Your spouse died in 1996 before filinga 1995 return. For details on filing the jointreturn, see Death of Taxpayer on page 35.

A husband and wife may file a joint returneven if only one had income or if they didnot live together all year. However, both mustsign the return and both are responsible. Thismeans that if one spouse does not pay thetax due, the other may have to. If you file ajoint return for 1995, you may not, after thedue date for filing that return, amend it to fileas married filing separately.

Nonresident Aliens and Dual-StatusAliens. You may be able to file a joint return.Get Pub. 519, U.S. Tax Guide for Aliens, fordetails.

Line 3

Married Filing SeparatelyIf you file a separate return, you will usuallypay more tax. But you may want to figure

your tax both ways (married filing jointly andmarried filing separately) to see which filingstatus is to your benefit. Generally, youreport only your own income, exemptions,deductions, and credits. Different rules applyto people who live in community propertystates. See page 14.

TIPYou may be able to file as headof household if you had a childliving with you and you lived apartfrom your spouse during the last

6 months of 1995. See Married PersonsWho Live Aparton the next page.


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Line 4

Head of HouseholdThis filing status is for unmarried individualswho provide a home for certain other per-sons. (Some married persons who liveapart may also qualify. See below.) You maycheck the box on line 4 only if you wereunmarried or legally separated as of Decem-ber 31, 1995. But either 1 or 2 below mustapply to you.

1. You paid over half the cost of keepingup a home that was the main home for all of1995 of your parent whom you can claim asa dependent. Your parent did not have to livewith you in your home; or

2. You paid over half the cost of keepingup a home in which you lived and in whichone of the following also lived for more thanhalf of the year (if half or less, see the Ex-ception later).

Your unmarried child, adopted child,grandchild, great-grandchild, etc., or step-child. This child does not have to be yourdependent. But in this case, enter the childsname in the space provided on line 4. If youdont enter the name, it will take us longerto process your return.

Your married child, adopted child,grandchild, great-grandchild, etc., or step-child. This child must be your dependent.But if your married childs other parentclaims him or her as a dependent under therules for Children of Divorced or SeparatedParents on the next page, this child doesnot have to be your dependent. Enter thechilds name on line 4. If you dont enter thename, it will take us longer to process yourreturn.

Your foster child, who must be yourdependent.

Any other relative you can claim as adependent. For the definition of a relative,see Test 1 on this page. But for this purpose,the Exception at the end of that test doesntapply.

Note: Youcannot file as head of householdif your child, parent, or relative describedabove is your dependent under the rules onthe next page forPerson Supported by Twoor More Taxpayers.

Married Persons Who Live Apart

Even if you were not divorced or legally sep-arated in 1995, you may be able to file ashead of household. You may check the boxon line 4 if all five of the following apply.

1. You must have lived apart from yourspouse for the last 6 months of 1995.

2. You file a separate return from yourspouse.

3. You paid over half the cost of keepingup your home for 1995.

4. Your home was the main home of yourchild, adopted child, stepchild, or foster childfor more than half of 1995 (if half or less, seethe Exception later).

5. You claim this child as your dependentor the childs other parent claims him or herunder the rules for Children of Divorced orSeparated Parents on the next page. If thischild is not your dependent, be sure to enterthe childs name on line 4. If you dont enter

the name, it will take us longer to processyour return.

TIPIf all five apply, you may also beable to take the credit for childand dependent care expensesand the earned income credit. In

addition, you can take the standarddeduction even if your spouse itemizesdeductions. For more details, see theinstructions for these topics.

Keeping Up a Home

To find out what is included in the cost of

keeping up a home, get Pub. 501, Exemp-tions, Standard Deduction, and Filing Infor-mation.

If you used payments you received underthe Aid to Families With Dependent Chil-dren (AFDC) program or other public as-sistance programs to pay part of the cost ofkeeping up your home, you cannot countthem as money you paid. But you must in-clude them in the total cost of keeping upyour home to figure if you paid over half ofthe cost.

Dependents

To find out if someone is your dependent,see the instructions for line 6c.

ExceptionYou can count temporary absences such asfor school, vacation, or medical care as timelived in the home. If the person for whom youkept up a home was born or died in 1995,you may still file as head of household aslong as the home was that persons mainhome for the part of the year he or she wasalive.

Line 5

Qualifying Widow(er) WithDependent ChildYou may check the box on line 5 and use

joint return tax rates for 1995 if all five of thefollowing apply.

1. Your spouse died in 1993 or 1994 andyou did not remarry in 1995.

2. You have a child, stepchild, adoptedchild, or foster child whom you can claim asa dependent.

3. This child lived in your home for all of1995. Temporary absences, such as forschool, vacation, or medical care, count astime lived in the home.

4. You paid over half the cost of keepingup your home.

5. You could have filed a joint return withyour spouse the year he or she died, even ifyou didnt actually do so.

If your spouse died in 1995, you may notfile as qualifying widow(er) with dependentchild. Instead, see the instructions for line 2.

ExemptionsFor each exemption you can take, you gen-erally can deduct $2,500 on line 36.

Line 6a

YourselfCheck the box on line 6a unless your parent(or someone else) can claim you as a depen-dent on his or her tax return. For example, ifyour parents (or someone else) could claimyou as a dependent on their return but theychose not to claim you, do not check thebox on line 6a.

Line 6bSpouseIf you file a joint return and your spousecannot be claimed as a dependent on an-other persons return, check the box on line6b. If you file a separate return, you can takean exemption for your spouse only if yourspouse is not filing a return, had no income,and cannot be claimed as a dependent onanother persons return.

If you were divorced or legally separatedat the end of 1995, you cannot take an ex-emption for your former spouse. If your di-vorce was not final (an interlocutory decree),you are considered married for the wholeyear.

Death of Your Spouse

If your spouse died in 1995 and you did notremarry by the end of 1995, check the boxon line 6b if you could have taken an exemp-tion for your spouse on the date of death.For other filing instructions, see Death ofTaxpayer on page 35.

Nonresident Alien Spouse

If your filing status is married filing separate-ly, you can take an exemption for your non-resident alien spouse only if your spouse hadno income from U.S. sources and is not thedependent of another person. If you can takean exemption for your spouse, check the box

on line 6b and enter NRA to the right ofthe word Spouse.

Line 6c

DependentsYou can take an exemption for each of yourdependents who was alive during some partof 1995. This includes a baby born in 1995or a person who died in 1995. Get Pub. 501,Exemptions, Standard Deduction, and FilingInformation, for more details. Any personwho meets all five of the following testsqualifies as your dependent.

Test 1Relationship

The person must be your relative. But seeException at the end of Test 1. The followingare considered your relatives:

Your child, stepchild, adopted child; achild who lived in your home as a familymember if placed with you by an authorizedplacement agency for legal adoption; or afoster child (any child who lived in your homeas a family member for the whole year).

Your grandchild, great-grandchild, etc.

Your son-in-law, daughter-in-law.

Your parent, stepparent, parent-in-law.


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Your grandparent, great-grandparent,etc.

Your brother, sister, half brother, halfsister, stepbrother, stepsister, brother-in-law, sister-in-law.

If related by blood, your aunt, uncle,nephew, niece.

Any relationships established by marriageare not treated as ended by divorce or death.

Exception. A person who lived in your homeas a family member for the entire year canalso be considered a dependent. But the re-lationship must not violate local law.

Test 2Married Person

If the person is married and files a jointreturn, you cannot take an exemption for theperson.

TIPIf the person and the personsspouse file a joint return only toget a refund of all tax withheld,you may be able to claim him or

her if the other four tests are met. See Pub.501 for details.

Test 3Citizen or Resident

The person must be one of the following:

A U.S. citizen or resident alien, or

A resident of Canada or Mexico, or

Your adopted child who is not a U.S.citizen but who lived with you all year in aforeign country.

Test 4Income

Generally, the persons gross income mustbe less than $2,500. Gross income does notinclude nontaxable income, such as welfarebenefits or nontaxable social security bene-fits.

Income earned by a permanently and to-tally disabled person for services performedat a sheltered workshop school is generallynot included for purposes of the income test.See Pub. 501 for details.

Exception for Your Child. Your child canhave gross income of $2,500 or more if:

1. Your child was under age 19 at the endof 1995, or

2. Your child was under age 24 at the endof 1995 and was a student.

Your child was a student if he or she

Was enrolled as a full-time student at aschool during any 5 months of 1995, or

Took a full-time, on-farm training courseduring any 5 months of 1995. The coursehad to be given by a school or a state,county, or local government agency.

A school includes technical, trade, andmechanical schools. It does not include on-the-job training courses or correspondence

schools.Test 5Support

The general rule is that you had to provideover half the persons total support in 1995.If you file a joint return, support can comefrom either spouse. If you remarried, the sup-port provided by your new spouse is treatedas support coming from you. For exceptionsto the support test, see Children of Di-vorced or Separated Parents and PersonSupported by Two or More Taxpayers onthis page.

Support includes food, a place to live,clothing, medical and dental care, and edu-cation. It also includes items such as a carand furniture, but only if they are for thepersons own use or benefit. In figuring totalsupport:

Use the actual cost of these items, butfigure the cost of a place to live at its fairrental value.

Include money the person used for hisor her own support, even if this money wasnot taxable. Examples are gifts, savings,social security and welfare benefits, and

other public assistance payments. This sup-port is treated as not coming from you.

Total support does not include items suchas income tax, social security and Medicaretax, life insurance premiums, scholarshipgrants, or funeral expenses.

If you care for a foster child, see Pub. 501for special rules that apply.

Children of Divorced or SeparatedParents

Special rules apply to determine if the sup-port test is met for children of divorced orseparated parents. The rules also apply tochildren of parents who lived apart from eachother during the last 6 months of the year,

even if they do not have a separation agree-ment. For these rules, a custodial parent isthe parent who had custody of the child formost of the year. A noncustodial parent isthe parent who had custody for the shorterperiod of time or who did not have custodyat all. See Pub. 501 for the definition of cus-tody.

The general rule is that the custodialparent is treated as having provided over halfof the childs total support if both parentstogether paid over half of the childs support.This means that the custodial parent canclaim the child as a dependent if the otherdependency tests are also met.

But if you are the noncustodial parent, youare treated as having provided over half of

the childs support and can claim the childas a dependent if both parents together paidover half of the childs support, the otherdependency tests are met, and either 1 or2 below applies:

1. The custodial parent agrees not to c laimthe childs exemption for 1995 by signingForm 8332 or a similar statement. But you(as the noncustodial parent) must attach thissigned Form 8332 or similar statement toyour return. Instead of attaching Form 8332,you can attach a copy of certain pages ofyour divorce decree or separation agreementif it went into effect after 1984 (see ChildrenWho Didnt Live With You Due to Divorceor Separation on the next page), or

2. Your divorce decree or written separa-tion agreement went into effect before 1985and it states that you (the noncustodialparent) can claim the child as a dependent.But you must have given at least $600 forthe childs support in 1995. Also, you mustcheck the pre-1985 agreement box on line6d. This rule does not apply if your decreeor agreement was changed after 1984 to saythat you cannot claim the child as your de-pendent.

Person Supported by Two or MoreTaxpayers

Even if you did not pay over half of anotherpersons support, you might still be able toclaim him or her as a dependent if all five ofthe following apply.

1. You and one or more other eligible per-son(s) together paid over half of anotherpersons support.

2. You paid over 10% of that personssupport.

3. No one alone paid over half of that

persons support.4. Tests 1 through 4 are met.

5. Each eligible person who paid over 10%of support completes Form 2120, MultipleSupport Declaration, and you attach theseforms to your return. The form states thatonly you will claim the person as a depen-dent for 1995.

An eligible person is someone who couldhave claimed another person as a dependentexcept that he or she did not pay over halfof that persons support.

Columns (1) Through (4)After you have figured out who you can claimas a dependent, fill in the columns on line

6c. If you have more than six dependents,attach a statement to your return. Give thesame information as in columns (1) through(4) for each dependent.

Column (1)

Enter the name of each dependent.

Column (2)

Each dependent must have a social securitynumber (SSN) unless the dependent wasborn in November or December of 1995. Youmust enter the SSN in column (2). If you donot enter it or if the SSN is wrong, it will takeus longer to issue any refund shown on yourreturn. You may also have to pay a $50 pen-alty. If your dependent was born in Novem-

ber or December of 1995 and does not havean SSN, enter 11/95 or 12/95 in column(2).

Your dependent can get an SSN by filingForm SS-5 with your local Social SecurityAdministration office. It usually takes about2 weeks to get an SSN. If your dependentwont have an SSN by April 15, 1996, seeWhat If I Cant File on Time? on page 9. Ifyour dependent lives in Canada or Mexico,see Pub. 501 for details on how to get anSSN.

Column (3)

Enter your dependents relationship to you.For example, if the dependent is your child,

enter son or daughter.Column (4)

Enter the number of months your dependentlived with you in 1995. Count temporary ab-sences such as for school or vacation astime lived in your home. If your dependentwas born or died in 1995, enter 12 in thiscolumn. If your dependent lived in Canadaor Mexico during 1995, dont enter anumber. Instead, enter CN or MX, which-ever applies.


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Children Who Didnt Live With YouDue to Divorce or Separation

If you are claiming a child who didnt live withyou under the rules on page 13 for Childrenof Divorced or Separated Parents, enterthe total number of such children on the lineto the right of line 6c labeled No. of yourchildren on 6c who: didnt live with you dueto divorce or separation. If you put a numberon this line, you must do one of the followingeach year you claim this child as a depen-dent.

Check the box on line 6d if your di-vorce decree or written separation agree-ment went into effect before 1985 and itstates that you can claim the child as yourdependent.

Attach Form 8332 or similar statementto your return. If your divorce decree or sep-aration agreement went into effect after 1984and it states you can claim the child as yourdependent without regard to any condition,such as payment of support, you may attacha copy of the following pages from thedecree or agreement instead.

1. Cover page (put the other parents SSNon that page),

2. The page that states you can claim thechild as your dependent, and

3. Signature page with the other parentssignature and date of agreement.

Note: You must attach the required informa-tion even if you filed it in an earlier year.

Other Dependent Children

Enter the total number of children who didnot live with you for reasons other than di-vorce or separation on the line labeled De-pendents on 6c not entered above. Includedependent children who lived in Canada orMexico during 1995.

Income

U.S. Citizens Living Abroad andForeign-Source Income

You must report unearned income, such asinterest, dividends, and pensions, fromsources outside the United States unlessexempt by law or a tax treaty. You must alsoreport earned income, such as wages andtips, from sources outside the United States.But you may also be able to exclude part orall of your earned income. For details, getPub. 54, Tax Guide for U.S. Citizens andResident Aliens Abroad, and Form 2555,Foreign Earned Income, or Form 2555-EZ,Foreign Earned Income Exclusion.

Community Property States

Community property states are Arizona,California, Idaho, Louisiana, Nevada, NewMexico, Texas, Washington, and Wisconsin.

If you and your spouse lived in a commu-nity property state, you must follow state lawto determine what is community income andwhat is separate income. However, differentrules could apply if:

You and your spouse lived apart all year,

You do not file a joint return, and

None of the community income youearned was transferred to your spouse.

For details, get Pub. 555, Federal Tax In-formation on Community Property.

Rounding Off to Whole Dollars

You may round off cents to the nearestwhole dollar on your forms and schedules.This will make it easier to complete yourreturn. To do so, drop amounts under 50cents and increase amounts from 50 to 99cents to the next dollar. For example,$129.39 becomes $129 and $235.50 be-comes $236. If you do round off, do so forall amounts. But if you have to add two ormore amounts to figure the amount to enteron a line, include cents when adding andonly round off the total.

Example. You received two W-2 forms, oneshowing wages of $5,000.55 and one show-ing wages of $18,500.73. On Form 1040, line7, you would enter $23,501 ($5,000.55 +$18,500.73 = $23,501.28).

Line 7

Wages, Salaries, Tips, etc.Enter the total of your wages, salaries, tips,etc. This should be shown in box 1 of yourW-2 form. For a joint return, be sure to in-clude your spouses income. Also include inthis total:

Corrective distributions of excess salarydeferrals.

Corrective distributions of excess con-tributions and excess aggregate contribu-tions to a retirement plan.

Disability pensions if you have notreached the minimum retirement age set byyour employer.

Note: Disability pensions received after youreach your employers minimum retirementage and other pensions shown on Form1099-R (other than payments from an IRA)are reported on lines 16a and 16b of Form1040. Payments from an IRA are reported onlines 15a and 15b.

Missing or Incorrect Form W-2

If you dont get a Form W-2 by January 31,

1996, ask your employer for it. If you dontget it by February 15, call us. See page 38for the number. You will be asked for youremployers name, address, telephonenumber, and, if known, identificationnumber. You will also be asked for your ad-dress, social security number (SSN), daytimetelephone number, dates of employment,and your best estimate of your total wagesand Federal income tax withheld. If you loseyour Form W-2 or it is incorrect, ask youremployer for a new one.

Even if you dont get a Form W-2 fromyour employer, you must still report yourearnings. For example, if you were paid lessthan $1,000 as a household employee in1995, your employer is not required to giveyou a W-2 form, but you must still includethe wages on line 7.

Employer-Provided Vehicle

If you used an employer-provided vehicle forboth personal and business use and 100%of its annual lease value was included aswages on your W-2 form, you may be ableto deduct the business use of the vehicle onSchedule A. But you must use Form 2106,Employee Business Expenses, to do so. Thetotal annual lease value of the vehicle shouldbe shown in box 12 of your W-2 form or on

a separate statement. For more details, getPub. 917, Business Use of a Car.

Tip Income

Be sure to report all tip income you received,even if it is not included in box 1 of your W-2form(s). You must report as income theamount of allocated tips shown on your W-2form(s) unless you can prove that you re-ceived less. Allocated tips should be shownin box 8 of your W-2 form(s). They are notincluded in box 1 of your W-2 form(s). Fordetails on allocated tips, get Pub. 531, Re-

porting Tip Income.Use Form 4137, Social Security and Med-icare Tax on Unreported Tip Income, tofigure any social security and Medicare taxon unreported or allocated tips. See the in-structions for line 50.

Statutory Employees

If you were a statutory employee, the Stat-utory employee box in box 15 of your W-2form should be checked. Statutory employ-ees include full-time life insurance sales-people, certain agent or commission driversand traveling salespeople, and certainhomeworkers.

If you are deducting business expenses asa statutory employee, report the amount

shown in box 1 of your W-2 form and yourexpenses on Schedule C or C-EZ. If you arenot deducting business expenses, reportyour income on line 7.

Excess Salary Deferrals

You may have chosen to have your employercontribute part of your pay to certain retire-ment plans (such as a 401(k) plan or theFederal Thrift Savings Plan) instead of havingit paid to you. If so, the Deferred compen-sation box in box 15 of your W-2 formshould be checked. The amount deferredshould be shown in box 13. The total amountthat may be deferred for 1995 under all plansis generally limited to $9,240 for eachperson. But a different limit may apply ifamounts were deferred under a tax-sheltered annuity plan or an eligible plan ofa state or local government or tax-exemptorganization. For details, get Pub. 575, Pen-sion and Annuity Income (Including Simpli-fied General Rule). Any amount deferred inexcess of these limits must be reported onForm 1040, line 7.

Caution: You may not deduct the amountdeferred. It is not included as income in box1 of your W-2 form.

Dependent Care Benefits (DCB)

If you received benefits for 1995 under youremployers dependent care plan, you maybe able to exclude part or all of them from

your income. You must use Form 2441,Child and Dependent Care Expenses, to doso. The benefits should be shown in box 10of your W-2 form(s). First, fill in Parts I andIII of Form 2441. Include any taxable benefitsfrom line 20 of that form on Form 1040, line7. On the dotted line next to line 7, enterDCB.

Scholarship and Fellowship Grants

If you received a scholarship or fellowship,part or all of it may be taxable even if youdidnt receive a W-2 form. If you were adegree candidate, the amounts you used for


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expenses other than tuition and course-related expenses are taxable. For example,amounts used for room, board, and travelare taxable. If you were not a degree candi-date, the full amount of the scholarship orfellowship is taxable.

Include the taxable amount not reportedon a W-2 form on line 7. Then, enter SCHand the taxable amount not reported on aW-2 form on the dotted line next to line 7.

Line 8a

Taxable Interest IncomeEach payer should send you a Form1099-INT or a Form 1099-OID. A copy isalso sent to the IRS.

TIPBe sure each payer of interestincome has your correct socialsecurity number. Otherwise, thepayer may withhold 31% of the

interest. You may also be subject topenalties.

Report all of your taxable interest incomeon line 8a even if it is $400 or less. If the totalis over $400 or any of the other conditionslisted at the beginning of the Schedule Binstructions (see page B-1) apply to you, fillin Schedule B first.

Report any interest you received or thatwas credited to your account so you couldwithdraw it, even if it wasnt entered in yourpassbook. Interest credited in 1995 on de-posits that you could not withdraw becauseof the bankruptcy or insolvency of the finan-cial institution may not have to be includedin your 1995 income. For details, get Pub.550, Investment Income and Expenses.

U.S. Savings Bonds

For series E or EE bonds, you can eitherreport the total interest when you cash thebonds (or when they reach final maturity andno longer earn interest) or each year reportthe yearly increase in value. See Pub. 550

for more details.

TIPIf you get a 1995 Form 1099-INTfor U.S. savings bond interest thatincludes amounts you reportedbefore 1995, see Pub. 550.

Line 8b

Tax-Exempt InterestIf you received any tax-exempt interestincome, such as from municipal bonds,report it on line 8b. Include any exempt-interest dividends from a mutual fund orother regulated investment company. Donot include interest earned on your IRA.

Line 9

Dividend IncomeThe payer should send you a Form1099-DIV. A copy is also sent to the IRS.

If your total gross dividends are over $400,first fill in Schedule B (see page B-1). Also,fill in Schedule B if you received, as a nom-inee, dividends that actually belong to some-one else. If you dont have to fill in ScheduleB, include on line 9 only ordinary dividendsand any investment expenses. If you re-

ceived capital gain distributions, see the in-structions for line 13.

TIPBe sure each payer of dividendshas your correct social securitynumber. Otherwise, the payermay withhold 31% of t he dividend

income. You may also be subject topenalties.

Nontaxable Distributions

Some distributions are nontaxable becausethey are a return of your cost. They will notbe taxed until you recover your cost. You

must reduce your cost (or other basis) bythese distributions. After you get back all ofyour cost (or other basis), you must reportthese distributions as capital gains. For de-tails, get Pub. 550, Investment Income andExpenses.

Dividends on Insurance Policies

These are a partial return of the premiumsyou paid. Do not report them as dividends.Include them in income only if they exceedthe total of all net premiums you paid for thecontract.

Line 10

Taxable Refunds, Credits, orOffsets of State and LocalIncome TaxesIf you received a refund, credit, or offset ofstate or local income taxes in 1995 that youpaid and deducted before 1995, part or allof this amount may be taxable. You mayreceive Form 1099-G, or similar statement,showing the refund.

If you chose to apply part or all of therefund to your 1995 estimated state or localincome tax, the amount applied is treated asreceived in 1995.

If, in the year you paid the tax, you (a) didnot itemize deductions on Schedule A (Form1040), or (b) filed Form 1040A or Form1040EZ, none of your refund is taxable.

If the refund was for a tax you paid in 1994and you itemized deductions for 1994, usethe worksheet on this page to see if any ofyour refund is taxable.

Exceptions

See Recoveries in Pub. 525, Taxable andNontaxable Income, instead of using theworksheet below if any of the following ap-

plies: You received a refund in 1995 that is for

a tax year other than 1994.

You received a refund other than anincome tax refund, such as a real propertytax refund, in 1995 of an amount deductedor credit claimed in an earlier year.

Your 1994 taxable income was less thanzero.

You made your last payment of 1994estimated state or local income tax in 1995.

You owed alternative minimum tax in1994.

You could not deduct the full amount ofcredits you were entitled to in 1994 becausethe total credits exceeded the tax shown on

your 1994 Form 1040, line 40. You could be claimed as a dependent

by someone else in 1994.

Also, see Tax Benefit Rule in Pub. 525instead of using the worksheet below if allthree of the following apply.

1. You had to use the Itemized DeductionsWorksheet in the 1994 Schedule A instruc-tions because your 1994 adjusted grossincome was over $111,800 (over $55,900 ifmarried filing separately).

2. You couldnt deduct all of the amounton line 1 of the 1994 worksheet.

Note: If the filing status on your 1994 Form 1040 was marriedfiling separately and your spouse itemized deductions in 1994,skip lines 3, 4, and 5 and enter the amount from line 2 online 6.

Enter on line 3 the amount shown below for the filing statusclaimed on your 1994 Form 1040:

Single, enter $3,800

Married filing jointly orQualifying widow(er), enter $6,350

Married filing separately, enter $3,175

Head of household, enter $5,600

State and Local Income Tax Refund WorksheetLine 10(keep for your records)

Enter the income tax refund from Form(s) 1099-G (or similarstatement)

Enter your total allowable itemized deductions from your 1994Schedule A, line 29

If you didnt complete line 33a on your 1994 Form 1040, enter-0-. Otherwise, multiply the number on your 1994 Form 1040,line 33a, by $750 ($950 if your 1994 filing status was single orhead of household) and enter the result

Add lines 3 and 4

Subtract line 5 from line 2. If zero or less, enter -0-

Taxable part of your refund. Enter the smaller of line 1 or line6 here and on Form 1040, line 10

1.

2.

3.

4.

5.

6.

7.

1.

2.

3.

4.

5.

6.

7.


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3. The amount on line 8 of the 1994 work-sheet would be more than the amount online 4 of that worksheet if the amount on line4 were reduced by 80% of the refund youreceived in 1995.

Line 11

Alimony ReceivedEnter amounts received as alimony or sep-arate maintenance. You must let the personwho made the payments know your socialsecurity number. If you dont, you may haveto pay a $50 penalty. For details, get Pub.504, Divorced or Separated Individuals.

If you received payments under a divorceor separation instrument executed after1984, see the instructions for line 29 on page21 for the rules that apply in determiningwhether these payments qualify as alimony.

Line 12

Business Income or (Loss)If you operated a business or practiced yourprofession as a sole proprietor, report yourincome and expenses on Schedule C orSchedule C-EZ.

Line 13

Capital Gain or (Loss)Caution: At the time these instructions wereprinted, Congress was considering legisla-tion that would change the tax treatment ofcapital gains, including capital gain distribu-tions. Information on these changes will beavailable electronically through our bulletinboard or via the Internet (see page 34). Or,you can getPub. 553, Highlights of 1995 TaxChanges.

Enter the gain or (loss) from Schedule D.But if you received capital gain distribu-tions (reported to you on Form 1099-DIV or

a substitute statement) and do not needSchedule D for other capital transactions,enter those distributions on line 13. WriteCGD on the dotted line next to line 13.

TIPYour tax may be less if you canuse the Capital Gain TaxWorksheet on page 24. You canuse it if your taxable income

(Form 1040, line 37) is more than$94,250($56,550 if single; $80,750 if head ofhousehold; or $47,125 if married filingseparately).

Line 14

Other Gains or (Losses)If you sold or exchanged assets used in atrade or business, see the instructions forForm 4797.

Lines 15a and 15b

IRA DistributionsUse lines 15a and 15b to report payments(distributions) you received from your indi-vidual retirement arrangement (IRA). Theseinclude regular distributions, early distribu-tions, rollovers, and any other money orproperty you received from your IRA account

or annuity. You should get a Form 1099-Rshowing the amount of your distribution.

If you made any nondeductible contribu-tions to your IRA for 1995 or an earlier yearor you rolled your IRA distribution over intoanother IRA, see below. Do not use lines 15aand 15b to report a rollover from a qualifiedemployers plan to an IRA. Instead, see theinstructions for lines 16a and 16b.

IRA distributions that you must include inincome are taxed at the same rate as otherincome. You may not use the special aver-aging rule for lump-sum distributions from

qualified employer plans.If your IRA distribution is fully taxable,

enter it on line 15b; do not make an entryon line 15a. If only part is taxable, enter thetotal distribution on line 15a and the taxablepart on line 15b.

Caution: You may have to pay an additionaltax if (1) you received an early distributionfrom your IRA and the total distribution wasnot rolled over, (2)you received a distributionin excess of $150,000, or (3)you were bornbefore July 1, 1924, and received less thanthe minimum required distribution. See theinstructions for line 51 for details.

Nondeductible Contributions

If you made nondeductible contributions forany year, only part of your IRA distributionmay be taxable. Get Form 8606 to figure thetaxable part of your IRA distribution. If youmade any nondeductible contributions for1995, you may need to make a special com-putation. Get Pub. 590, Individual Retire-ment Arrangements (IRAs), for details. Enterthe total distribution on line 15a and the tax-able part on line 15b.

IRA Rollovers

A rollover is a tax-free distribution of cash orother assets from one retirement plan that iscontributed to another plan. Use lines 15aand 15b to report a rollover from one IRA toanother IRA. Enter the total distribution on

line 15a. If the total on line 15a was rolledover, enter zero on line 15b. If the total wasnot rolled over, enter the part not rolled overon line 15b. But if you ever made nonde-ductible contributions to any of your IRAs,use Form 8606 to figure the taxable part toenter on line 15b. For more details, see Pub.590.

Lines 16a and 16b

Pensions and AnnuitiesUse lines 16a and 16b to report pension andannuity payments you received, includingpayments (distributions) from retirementplans, life insurance annuity contracts,

profit-sharing plans, and employee-savingsplans. See the next page for details on roll-overs and lump-sum distributions.

Also, use these lines to report disabilitypensions received after you reach the mini-mum retirement age set by your employer.Disability pensions received before youreach your employers minimum retirementage are reported on line 7.

TIPYou should receive a Form1099-Rshowing the amount youreceived. Attach Form 1099-R toForm 1040 if any Federal income

tax was withheld.

Do not use lines 16a and 16b to reportcorrective distributions of excess salary de-ferrals, excess contributions, or excess ag-gregate contributions from retirement plans.Instead, see the instructions for line 7. Also,do not use lines 16a and 16b to report anysocial security or railroad retirement benefitsshown on Forms SSA-1099 and RRB-1099.Instead, see the instructions for lines 20aand 20b.

Caution: Certain transactions, such as loansagainst your interest in a qualified plan, maybe treated as taxable distributions and may

also be subject to additional taxes. For de-tails, get Pub. 575, Pension and AnnuityIncome (Including Simplified General Rule).

Fully Taxable Pensions andAnnuities

If your pension or annuity is fully taxable,enter it on line 16b; do not make an entryon line 16a. Your payments are fully taxableif either of the following applies:

1. You did not contribute to the cost ofyour pension or annuity, or

2. You got your entire cost back tax freebefore 1995.

Fully taxable pensions and annuities alsoinclude military retirement pay shown on

Form 1099-R. For details on military disabil-ity pensions, get Pub. 525, Taxable and Non-taxable Income. If you received a FormRRB-1099-R, get Pub. 575 to see how toreport your benefits.

Partially Taxable Pensions andAnnuities

If your pension or annuity is partially taxableand your Form 1099-R does not show thetaxable part, you must use the General Ruleto figure the taxable part. The General Ruleis explained in Pub. 939, Pension GeneralRule (Nonsimplified Method). But if your an-nuity starting date (defined below) was afterJuly 1, 1986, you may be able to use theSimplified General Rule, explained later.

You can ask the IRS to figure the taxablepart for you for a $50 fee. Submit your re-quest before the due date of your return,including extensions. For details, see Pub.939.

If your Form 1099-R shows a taxableamount, you may report that amount on line16b. But you may be able to report a lowertaxable amount by using the General Ruleor, if you qualify, the Simplified General Rule.

Once you have figured the taxable part ofyour pension or annuity, enter that amounton line 16b and the total on line 16a.

Annuity Starting Date

Your annuity starting date is the later of the

first day of the first period for which youreceived a payment, or the date the plansobligations became fixed.

Simplified General Rule

This method will usually give you the sameamount or more of the pension or annuitytax free each year as the General Rule or asfigured by the IRS. You can use this simplermethod if all four of the following apply.

1. Your annuity starting date was afterJuly 1, 1986.

2. The payments are for (a) your life or (b)your life and that of your beneficiary.


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3. The payments are from a qualified em-ployee plan, a qualified employee annuity, ora tax-sheltered annuity.

4. At the time the pension or annuity pay-ments began, either you were under age 75or the number of years of guaranteed pay-ments was fewer than 5.

If all four apply, use the worksheet on thispage to figure the taxable part of your pen-sion or annuity. If you are a beneficiary en-titled to a death benefit exclusion, add theexclusion to the amount you enter on line 2of the worksheet. Do this even if you re-

ceived a Form 1099-R showing a taxableamount. The payer of the annuity cannot addthe death benefit exclusion to your costwhen figuring the taxable amount. Attach asigned statement to your return stating thatyou are entitled to a death benefit exclusion.For more details on the Simplified GeneralRule, see Pub. 575 or Pub. 721, Tax Guideto U.S. Civil Service Retirement Benefits.

Caution: If you received U.S. Civil Serviceretirement benefits and you cho se the lump-sum credit op tion, use the worksheet in Pub.721. Do notuse the one on this page.

Age at Annuity Starting Date

If you are the retiree, use your age on theannuity starting date. If you are the survivor

US Internal Revenue Service: i1040--1995

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