us internal revenue service: i1040--1996

8/14/2019 US Internal Revenue Service: i1040--1996

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Cat. No. 11325E

Instructions19961040

Department of the TreasuryInternal Revenue Service

Note: This booklet does not contain tax forms.

Quick andEasy Accessto Tax Helpand Forms:

COMPUTER

Check YourSocial SecurityNumbers (SSNs)!

Incorrect or missingSSNs may increase yourtax or reduce yourrefund. See page 6.

Do You OweMoney WithYour Return?

Please use Form 1040-V.See the instructions forline 62 on page 30.

Receivinga Refund?

Have it sent directly toyour bank account. Seethe instructions forlines 60b60d on page 30.

FAX

See Page 5!

Telnetiris.irs.ustreas.gov

World Wide Webhttp://www.irs.ustreas.gov

IRIS at FedWorld

703-321-8020

From your fax machinestelephone dial703-487-4160

File TransferProtocolftp.irs.ustreas.gov


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If more than sixdependents,see theinstructionsfor line 6c.

Tax Return Page ReferenceQuestions about what to put on a line? Help is on the page number in the circle.

Department of the TreasuryInternal Revenue Service

1040 U.S. Individual Income Tax ReturnOMB No. 1545-0074For the year Jan. 1Dec. 31, 1996, or other tax year beginning , 1996, ending , 19

Last nameYour first name and initial Your social security number

(Seepage 11.)

LABEL

H

ERE

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 help finding line

instructions, see pages2 and 3 in the booklet.City, town or post office, state, and ZIP code. If you have a foreign address, see page 11.

PresidentialElection Campaign(See page 11.)

Note: CheckingYes wil l not change your tax orreduce your refund.

NoYes

Do you want $3 to go to this fund?

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 instruct ions.)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 6aExemptionsSpouseb

(4) No. of monthslived in your

home in 1996

Dependents:c (2 ) Dependents socialsecurity number. If bornin Dec. 1996, see inst.

(3 ) Dependentsrelationship to

you(1 ) First name Last name

d Total number of exemptions claimed

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

8a8a Taxable interest. Attach Schedule B if over $400Income8bb Tax-exempt interest. DO NOT include on line 8aAttach

Copy B of your

Forms W-2,W-2G, and1099-R here.

99 Dividend income. Attach Schedule B if over $400

1010 Taxable refunds, credits, or offsets of state and local income taxes (see instructions)1111 Alimony received

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

Enclose, but donot attach, anypayment. Also,please encloseForm 1040-V(see theinstructionsfor line 62).

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

1414 Other gains or (losses). Attach Form 4797

15a 15bTotal IRA distributions b Taxable amount (see inst.)15a

16b16aTotal pensions and annuities b Taxable amount (see inst.)16a

1717 Rental real estate, royalties, partnerships, S c orporations, trusts, etc. Attach Schedule E1818 Farm income or (loss). Attach Schedule F

1919 Unemployment compensation

20b20a b Taxable amount (see inst.)20a Social security benefits

21

21

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

23aYour IRA deduction (see instructions)23a

23bSpouses IRA deduction (see instructions)b

2525 One-half of self-employment tax. Attach Schedule SE

26Self-employed health insurance deduction (see inst.)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 2930

Subtract line 30 from line 22. This is your adjusted gross income 31

AdjustedGrossIncome

31

If you did notget a W-2,see theinstructionsfor line 7.

Form

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

Cat. No. 11320B

Label

Form 1040 (1996)

IRS Use OnlyDo not write or staple in this space.

Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your

dependent, enter this childs name here.

Other income. List type and amountsee instructions

Moving expenses. Attach Form 3903 or 3903-F24 24

(99)96

For Privacy Act and Paperwork Reduction Act Notice, see page 7.

If line 31 is under$28,495 (under$9,500 if a childdid not live withyou), see theinstructions forline 54.

No. of boxeschecked onlines 6a and 6b

No. of yourchildren on line6c who:

Dependents on 6cnot entered above

Add numbersentered onlines above

lived with you

did not live withyou due to divorceor separation(see instructions)

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B-1

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1313 13

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Amount of line 59 you want REFUNDED TO YOU

Add lines 52 through 57. These are your total payments

Page 2Form 1040 (1996)

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

If you wantthe IRS tofigure yourtax, see theinstructionsfor line 37.

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

b33b

Single$4,000 Married filing jointly or Qualifying widow(er)$6,700

34 Enterthelargerofyour:

34

35Subtract line 34 from line 3235

36If line 32 is $88,475 or less, multiply $2,550 by the total number of exemptions claimed on

line 6d. If line 32 is over $88,475, see the worksheet in the inst. 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

38

3939 Credit for child and dependent care expenses. Attach Form 2441

4040 Credit for the elderly or the disabled. Attach Schedule RCredits

4141 Foreign tax credit. Attach Form 1116

42 Other. Check if from42

4343

44

Add lines 39 through 42

44

45

Subtract line 43 from line 38. If line 43 is more than line 38, enter -0-

45

46

Self-employment tax. Attach Schedule SE

46OtherTaxes

47

Alternative minimum tax. Attach Form 6251

47

4848

49

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

49

50

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

50

Advance earned income credit payments from Form(s) W-2

52

Add lines 44 through 50. This is your total tax

53

52Federal income tax withheld from Forms W-2 and 1099

54

53

54

1996 estimated tax payments and amount applied from 1995 return

55

Payments

55

56 56

Amount paid with Form 4868 (request for extension)

57

AttachForms W-2,W-2G, and1099-R onthe front. 57

Excess social security and RRTA tax withheld (see inst.)

58

59

Other payments. Check if from

59

60a60a

62

61

If line 58 is more than line 51, subt ract line 51 from line 58. This is the amount you OVERPAID

63

62

Refund

63

Amount of line 59 you want APPLIED TO YOUR 1997 ESTIMATED TAX

Estimated tax penalty. Also include on line 62

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.

Standard deduction shown below for your filing status. But see the

instructions if you checked any box on line 33a or b or someonecan claim you as a dependent.

Itemized deductions from Schedule A, line 28, OR

Head of household$5,900 Married filing separately$3,350

61

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

a Form 3800 b Form 8396

c Form 8801 d Form (specify)

a Form 2439 b Form 4136

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

child. Nontaxable earned income: amount

and type

51

Household employment taxes. Attach Schedule H

51

58

AmountYou Owe

SignHere 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

Tax. See instructions. Check if total includes any tax from

If line 51 is more than line 58, subtract line 58 from line 51. This is the AMOUNT YOU OWE.

For details on how to pay and use Form 1040-V, see instructions

b

Have it sentdirectly toyour bankaccount! Seeinst. and fill in60b, c, and d.

Routing number

Account number

c Checking SavingsType:

a Form(s) 8814Form 4972

b

d

Tax Return Page ReferenceQuestions about what to put on a line? Help is on the page number in the circle.

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A-1

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IRS Cust omer Service St andards19 96 Progress Report

Dear Taxpayer:

Margaret Milner Richardson

Easier Filing. To make iteasier for you to meet your

tax obligations, we haveexpanded opportunitiesfor simplified return filingand payment of taxesthrough our electronicfiling, joint Federal-state

filing, TeleFile, and electronic paymentprograms. In 1996, IRS received 14.9 millionelectronically filed individual returns andschedules compared to 11.8 million in 1995.This included 2.8 million returns throughTeleFile, the first totally paperless way foryou to file a Federal income tax return. Weexpanded the number of states participatingin the Federal-state electronic filing programfrom 29 to 31. IRS also received over $374billion in electronic payments.

Access to Information. You will haveconvenient access to tax law and accountinformation. Tax information will be availableby fax and through the Internet. Ourpre-recorded tax information will be available24 hours a day, 7 days a week, and accessto refund status information will be available16 hours each business day. Telephoneassistance provided by our representativeswill be available 10 hours each business day.During 1996, we assisted over 104 milliontaxpayers by providing pre-recorded taxinformation, refund status information, and

Accuracy. Our goal is to answer yourquestions and process your tax returnsaccurately. In 1996, we achieved anaccuracy rate of 93% in answering tax lawand account questions. Our accuracy ratefor processing tax refunds was 99.6%.

Prompt Refunds. If you file a complete and

accurate tax return and you are due a refund,your refund will be issued within 21 days, ifyou file electronically and if you file a paperreturn, within 40 days. (Your refund may bedelayed if your return is selected for furtherreview.) In 1996, refunds were issued on timefor all complete and accurate returns.Refunds based on electronically filed returnswere issued, on average, within 16 days andfor paper returns, the average was 38 days.

Canceling Penalties. If you provide suffi-cient and accurate information to our taxassisters but are given and reasonably relyon an incorrect answer, we will cancelrelated penalties.

Resolving Problems. If you have a problemthat has not been resolved through normalprocesses, you may contact our ProblemResolution Office. A caseworker will contactyou within 1 week and will work with you toresolve the issue. During 1996, over 355,000cases were referred and taxpayers werecontacted within 1 week of referral 89.5% ofthe time.

Simpler Forms. We will make tax forms andinstructions simpler and easier for you touse. We made some changes this year butwe want your ideas for improvements.Please e-mail, call, or write to us (see page7). For 1996, you will be able to requestdirect deposit of your refund on your taxreturn rather than on a separate form. Moresole proprietors will be eligible to file theSchedule C-EZ. In addition, several itemswhich appeared on the 1995 Forms 1040and 1040A have been eliminated.

A Message From theCommissioner

Initial Contact Resolution. Our goal is tosatisfactorily resolve all your issues the firsttime you contact the IRS. In 1996, we met

telephone assistance from our representa-tives. In addition, taxpayers had 24 hour

access to over 600 forms and publicationsand over 148 tax topics on the Internet.Taxpayers downloaded almost 3 million ofthese products using the Internet and over300,000 using the IRS electronic bulletinboard. Over 100,000 information orders havebeen filled by fax. There were over 80 millionaccesses on the IRS Home Page on theInternet.

that goal 80% of the time. We will continueour efforts to address all of your issues and

improve the level of our service in 1997.

NATIONALPE

RFORMANCE

REVIEW

Each year the IRS tries to make iteasier for you at tax time. This year youwill find many new ways to help youprepare your return. At the beginning ofthis booklet, a sample Form 1040 showsyou where to find the help you need, lineby line. Many of you have let us knowhow helpful this format was last year, and

we have incorporated many of yoursuggestions to make it even better.

Many of you may have heard about themany tax law changes that took placeover the last year. Most of these changeswill not affect your 1996 tax return. Theinstructions included in this bookletincorporate any changes that are effectivefor 1996. See Whats New on page 6 formore details.

This year it is more important than everthat you put the correct Social SecurityNumber on your return for yourself, yourspouse, and your children. This year, if

you have a missing or incorrect SocialSecurity Number on your return, yourrefund may be decreased or the amountof tax you owe may be increased at thetime we process your return. Check page11 of this booklet for information on howto get a Social Security Number.

You should find the answers to most ofyour questions in this booklet. You canget forms and other information quicklyand easily through our Internet HomePage (http://www.irs.ustreas.gov). Or youcan use your fax machine to get over 100forms and answers to many of your taxlaw questions. You can also call our

Tele-Tax automated phone service andget answers to frequently asked taxquestions. Check page 5 for details on allof these services.

This year you can choose to have yourrefund directly deposited into your bankaccount by filling out the information onlines 60b through 60d of your Form 1040.You do not have to fill out any otherpaperwork to take advantage of this safe,quick and easy way to get your refund.

I hope you will take advantage of theservices we offer to make filing your 1996tax return easier. We welcome your

suggestions on how we can improve ourservices to you. You can e-mail usthrough our Internet Home Page(http://www.irs.ustreas.gov).


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Quick and Easy Access to Tax Help and Forms:

PERSONAL COMPUTER

Why not use a personal computerand modem to get the forms andinformation you need?

Here is a sample of what you will findwhen you visit the IRSs Internet Web Siteat http:/ /www.irs.ustreas.gov

Forms and Instructions

Publications

Educational Materials

IRS Press Releases and Fact Sheets

Tele-Tax Topics on About 150 Tax Topics

Answers to Frequently Asked Questions

You can also reach us using:

Telnet at iris.irs.ustreas.gov

FAX

Just call703-487-4160from thetelephone connected to your faxmachine to get the following:

Forms and InstructionsWe can fax you over 100 of the most requested formsand instructions. (See page 36 for a list of the items. )

Tele-Tax Topics

We can also fax you Tele-Tax topics covering about150 tax topics. (See pages 34 and 35 for a list of thetopics.)

PHONE

You can also get information andforms by phone.

Forms and Publications

You can order forms, instructions, and publications byphone. Just call 1-800-TAX-FORM (1-800-829-3676)between 7:30 a.m. and 5:30 p.m. on weekdays. Thebest time to call is before 9 a.m. or after 2 p.m.

Thursdays and Fridays are the best days to contact us.(The hours are Pacific time in Alaska and Hawaii,Eastern time in Puerto Rico.) You should receive yourorder or notification of its status within 7 to 15workdays.

Tele-Tax Topics

You can listen to pre-recorded messages coveringabout 150 tax topics. (See pages 34 and 35 for thenumber to call and a list of the topics. )

Direct Dial (by modem)You can also dialdirect to the Internal Revenue InformationServices (IRIS) by calling 703-321-8020 usingyour modem. IRIS is an on-line informationservice on FedWorld. FedWorlds help desk(703-487-4608) offers technical assistance onaccessing IRIS (not tax help) during normal

business hours.

File Transfer Protocol at ftp.irs.ustreas.gov

MAILYou can o rder for ms, instructions,and publications by completing theorder blank on page 39.

WALK-INYou can pick up certain forms,instructions, and publications atmany post offices, libraries, and IRSoffices. See page 40 for a partiallisting of products. You can alsophotocopy, or print out from aCD-ROM or the Internet, many otherproducts at participating libraries.

For small businesses, return preparers, or others whomay frequently need tax forms or publications, aCD-ROM containing over 2,000 products can bepurchased for $25 from the Government Printing Office(GPO), Superintendent of Documents (Supt. Docs.).Current tax year materials, and tax forms from 1991and publications from 1994, are included on the disc.

CD-ROM

You can also get help in other waysSee page 33for information.

To order the CD-ROM, contact Supt.Docs. at 202-512-1800 (selectOption #1), or by computer throughGPOs Internet Web Site(http://www.access.gpo.gov/su_docs).


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Section 1.

Before You FillIn Form 1040

If you were a participant in Operation Joint Endeavor or you were in the PersianGulf area combat zone, seePub. 3, Armed Forces Tax Guide.

Whats New for1996?Tax Law ChangesThe 1996 tax forms and instructions reflectchanges resulting from the legislation enact-ed in 1996. However, you will find that yourtax forms this year are very similar to thoseyou filed in the past. This is because mostof the new tax changes do not take effectuntil after 1996. For more details on 1996and 1997 tax changes, see Pub. 553, High-lights of 1996 Tax Changes.

Social Security Numbers(SSNs)You must include on your return the SSN ofeach person, other than a child born in De-cember 1996, you claim as a

Dependent on Form 1040 (for example,your child).

Qualifying person for the credit on Form2441, Child and Dependent Care Expenses.

Qualifying child on Schedule EIC,Earned Income Credit.

Please be sure to include the correct SSNfor that person. If you do not, at the time weprocess your return, we may disallow thatperson as a dependent and reduce or disal-low any other tax benefits (such as the cred-its listed above) based on that person.

Also, please be sure to include the correctSSN for you and your spouse. If you do not,at the time we process your return, we maydisallow the exemption(s) and any earnedincome credit you claim.

To find out how to get an SSN, see page11.

IRS Individual TaxpayerIdentification Numbers(ITINs) for AliensThe IRS will issue you an ITIN if you are anonresident or resident alien and you do nothave and are not eligible to get a social se-curity number (SSN). To apply for an ITIN,file Form W-7 with the IRS. See page 5 to

find out how to get the form. It usually takesabout 30 days to get an ITIN. Enter yourITIN wherever your SSN is requested onyour tax return. If you are required toinclude another persons SSN on your returnand that person does not have and cannotget an SSN, enter that persons ITIN. Anincorrect or missing taxpayer identifica-tion number may increase your tax orreduce your refund.

Note: An ITIN is for tax use only. It does notentitle you to social security benefits orchange your employment or immigrationstatus under U.S. law.

Direct Deposit of RefundThis year you do not have to file an extra

form to have your refund sent directly to yourbank account. See the instructions for lines60b60d on page 30.

Standard Mileage RatesThe rate for business use has increased to31 cents a mile. For medical and movingexpenses, the rate has increased to 10 centsa mile.

Private Delivery ServicesIn addition to the United States Postal Ser-vice, private delivery services (to be desig-nated by the IRS) can be used to meet thetimely mailing as timely filing and paying rule(for example, to send your tax return to the

IRS). When these instructions were printed,no private delivery services had been desig-nated. When they are, the IRS will makeevery effort to publicize the information.

Gifts From Foreign PersonsIf you received over $10,000 of gifts (or be-quests) after August 20, 1996, from foreignpersons, you may have to provide informa-tion about the gifts. Foreign persons includenonresident aliens and foreign partnerships,corporations, estates, trusts, etc. For details,see Pub. 553.

Earned Income

Credit (EIC)You may be able to take this credit if youearned less than $28,495 (less than $9,500if you do not have any qualifying children).See the instructions for line 54 that begin onpage 25.

EIC With Your Pay. If you expect to be ableto claim the EIC for 1997 and a child liveswith you, you may be able to get part of thecredit in your paycheck instead of waitinguntil you file your 1997 return. For details,use Tele-Tax topic 604 (see page 34) or getForm W-5, Earned Income Credit AdvancePayment Certificate, from your employer.

Alternative Ways ofFilingThe IRS offers several alternatives to makefiling tax returns easier. They are more con-venient and accurate and result in faster pro-cessing of your tax return. For details, seepage 33.

How To AvoidCommon M istak esMistakes may delay your refund or result innotices being sent to you.

1. 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.

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

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

information.4. If you are taking the standard deductionand you checked any box on line 33a or you(or your spouse if filing joint ly) can be claimedas a dependent on someones return, besure to see page 21 to find the correctamount to enter on line 34.

5. 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.

6. If you are married filing jointly and didnot get a peel-off label, or you are marriedfiling separately, enter your spouses SSN inthe space provided on page 1 of Form 1040.Also, enter your SSN in the space providednext to your name.

7. Attach your W-2 form(s) and other re-quired forms and schedules. Do not forgetto put all forms and schedules in the properorder. See Assemble Your Return on page31.

8. Be sure to include your SSN on yourpayment.


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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 sections 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.

You are not required to provide the infor-mation requested on a form that is subjectto the Paperwork Reduction Act unless theform displays a valid OMB control number.Books or records relating to a form or its

instructions must be retained as long as theircontents may become material in the admin-istration of any Internal Revenue law. Gen-erally, tax returns and return information areconfidential, as required by Code section6103.

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

of 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. This

could 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 callor 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 e-mail us your suggestions and com-ments through the IRS Internet Home Page(http://www.irs.ustreas.gov) or write to theTax Forms Committee, Western Area Distri-bution Center, Rancho Cordova, CA95743-0001. You can also leave a recordedmessage 24 hours a day, 7 days a week, at1-800-829-9043.

DO NOT send your return to this address.

Instead, see Where Do I File? on the backcover.

Copying,assembling,

and sendingthe form

to the IRS

Learning

aboutthe law orthe form

Preparingthe formRecordkeepingForm

40 min.4 hr., 33 min.2 hr., 32 min.3 hr., 8 min.Form 1040

27 min.1 hr., 10 min.26 min.2 hr., 32 min.Sch. A

20 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 Method20 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

20 min.4 min.2 min.Sch. EIC

Sch. C-EZ 46 min. 4 min. 32 min. 20 min.

Sch. H 46 min. 29 min. 48 min. 35 min.

- - - - -

Totals

10 hr., 53 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., 42 min.

2 hr., 38 min.

26 min.


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Section 2.

FilingRequirements

Note: These rules apply to all U.S. citizens, regardless of where they live, andresident 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 seePub. 570, Tax Guide for Individuals WithIncome From U.S. Possessions. Residentsof Puerto Rico can use Tele-Tax topic 901(see page 34) to see if they must file.

TIPEven if you do not otherwise haveto file a return, you should f ile oneto get a refund of any Federalincome tax withheld. You should

also file if you are eligible for the earnedincome credit.

Exception for Children UnderAge 14

If you are planning to file a return for yourchild who was under age 14 on January 1,1997, and certain other conditions apply,you may elect to report your childs incomeon your return. But you must use Form 8814,Parents Election To Report Childs Interestand Dividends, to do so. If you make thiselection, your child does not have to file areturn. For details, use Tele-Tax topic 553(see page 34) or see Form 8814.

Nonresident Aliens and Dual-Status Aliens

These rules also apply to nonresident aliensand dual-status aliens who were married toU.S. citizens or residents at the end of 1996

and who have elected to be taxed as resi-dent aliens. Other nonresident aliens anddual-status aliens have different filing re-quirements. They may have to file Form1040NR, U.S. Nonresident Alien Income TaxReturn, or Form 1040NR-EZ, U.S. IncomeTax Return for Certain Nonresident AliensWith No Dependents. Specific rules apply todetermine if you are a resident or nonresi-dent alien. See Pub. 519, U.S. Tax Guide forAliens, for details, including the rules for stu-dents and scholars who are aliens.

When Should I File?Not later than April 15, 1997. If you file after

this date, you may have to pay penalties andinterest. See page 33.

What if I Cannot File onTime?If you know that you cannot file your returnby the due date, you should file Form 4868,Application for Automatic Extension of TimeTo File U.S. Individual Income Tax Return,by April 15, 1997.

Caution: Form 4868 does not extend thetime to pay your income tax. See Form 4868.

But if you are a U.S. citizen or resident,you may qualify for an automatic extension

of time to file without filing Form 4868, if, onthe due date of your return, you meet one ofthe 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 onduty 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.

Where Do I File?See the back cover of this booklet.

**

Chart AFor Most People

To use this chart, first find your filing status. Then, read across to find your age at the

end of 1996. You must file a return if your gross income** was at least the amountshown in the last column.

Gross income**Age*Filing status

$6,550under 65Single

7,55065 or older

$8,450under 65Head of household(see page 11)

9,45065 or older

$11,800under 65 (both spouses)

12,60065 or older (one spouse)Married, filing jointly***

13,40065 or older (both spouses)

$2,550any ageMarried, filing separately

Qualifying widow(er) withdependent child(see page 12)

$9,250under 65

10,05065 or older

*

*** If you did not live with your spouse at the end of 1996 (or on the date your spouse

died) and your gross income was at least $2,550, you must file a return regardlessof your age.

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 anytime in 1996.

If you turned age 65 on January 1, 1997, you are considered to be age 65 at theend of 1996.


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Chart BFor Children and Other Dependents (See the instructions for line 6c thatbegin on page 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 $4,150 ($4,950 if 65 or older and blind).

Your unearned income was over $1,450 ($2,250 if 65 or older and blind).

Your earned income was over $5,000 ($6,000 if 65 or older and blind).

Your unearned income was over $1,650 ($2,650 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 1996, 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 51 on page 24.)

Caution: If your gross income was $2,550 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 12.

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 $4,000

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 $4,000)

$1,000 ($2,000 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 $3,350

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 $3,350)

$800 ($1,600 if 65or older and blind)


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Where To ReportCertain Items From1996 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 49Dependent 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, line 21, on page 17*

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 15Nontaxab le d ist ribut ions (box 1d) See the inst ructions for Form 1040, line 9, on page 14Investment 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 1996, see the instructions for line 19 on page 16

State or local income tax refund (box 2) See the instructions for Form 1040, line 10, on page 14*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 15Distributions from pensions, annuities, etc. See the instructions for Form 1040, lines 16a and 16b, on page 15Capital 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 14

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 amounts shown on these forms as Federal income tax withheld on Form 1040, line 52. If you itemize yourdeductions, report any amounts shown on these forms asstate or local income tax withheld on Schedule A, line 5.


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Section 3.

LineInstructionsFor Form 1040

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

Using the peel-off label in this booklet willspeed the processing of your return. It alsoprevents common errors that can delay re-funds or result in unnecessary notices.Attach the label after you have finished yourreturn. Cross out any errors and print thecorrect information. Add any missing itemssuch as your apartment number.

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

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 32.

Name Change

If you changed your name, be sure to reportthe change to your local Social Security Ad-ministration office before filing your return.This prevents delays in processing your

return and issuing refunds. It also safeguardsyour future social security benefits. If youreceived a peel-off label, cross out yourformer name and print your new name.

What If I Do Not Have a Label?

Print or type the information, including yourSSN(s), in the spaces provided. If you aremarried filing a separate return, enter yourhusbands or wifes name on line 3 insteadof below your name.

Social Security Number (SSN)

An incorrect or missing SSN may increaseyour tax or reduce your refund. To apply foran SSN, get Form SS-5 from your localSocial Security Administ ration (SSA) office orcall the SSA at 1-800-772-1213. Fill in FormSS-5 and return it to the SSA. It usually takesabout 2 weeks to get an SSN. Check thatyour SSN is correct on your Forms W-2 and1099. See page 32 for more details.

Nonresident Alien Spouse

If your spouse is a nonresident alien and youfile a joint or separate return, your spousemust have either an SSN or an IndividualTaxpayer Identification Number (ITIN). If yourspouse is not eligible to obtain an SSN, heor she can file Form W-7 with the IRS toapply for an ITIN. See page 6.

P.O. BoxEnter your box number only if your postoffice does not deliver mail to your home.

Foreign Address

Enter the information in the following order:city, province or state, postal code, and thename of the country. Please do not abbre-viate the country name.

Death of a Taxpayer

See page 32.

Presidential Election

Campaign 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 that applies to

you. The ones that will usually give you thelowest tax are listed last.

Married filing separately

Single

Head of household

Married filing jointly or Qualifyingwidow(er) with dependent child

TIPMore than one filing status mayapply to you. Choose the one thatwill give you the lowest tax.

Line 1

Single

You may check the box on line 1 if any ofthe following was true on December 31,1996:

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 1,1996, and did not remarry in 1996.

Line 2

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

You were married as of December 31,1996, even if you did not live with yourspouse at the end of 1996, or

Your spouse died in 1996 and you didnot remarry in 1996, or

Your spouse died in 1997 before filinga 1996 return. For details on filing the jointreturn, see Death of a Taxpayer on page32.

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 1996, 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.See Pub. 519, U.S. Tax Guide for Aliens, fordetails.

Line 3

Married Filing SeparatelyIf you are married and file a separate return,you will usually pay more tax. You may wantto figure your tax both ways (married filingjointly and married filing separately) to seewhich filing status is best for you. Generally,you report only your own income, exemp-tions, deductions, and credits. Different rulesapply to people who live in community prop-erty states. See page 13.

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 1996. See Married PersonsWho Live Aparton the next page.

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 page 12.) Youmay check the box on line 4 only if you wereunmarried or legally separated as of Decem-ber 31, 1996, and either 1 below or 2 onpage 12 apply to you.

1. You paid over half the cost of keepingup a home that was the main home for all of


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1996 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 at the end of the line 4 instructions).

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 you

do not 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 do not enterthe name, it will take us longer to processyour return.

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 doesnot apply.

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 1996, 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 1996.

2. You file a separate return from yourspouse.

3. You paid over half the cost of keepingup your home for 1996.

4. Your home was the main home of yourchild, adopted child, stepchild, or foster childfor more than half of 1996 (if half or less, seethe Exception at the end of the line 4 in-structions).

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 do not enterthe name, it will take us longer to process

your return.

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

You can also take the standard deductioneven if your spouse itemizes deductions. Formore details, see the instructions for thesetopics.

Keeping Up a Home

To find out what is included in the cost ofkeeping up a home, see 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. However, you mustinclude 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.

Exception

You 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 1996,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) With

Dependent ChildYou may check the box on line 5 and usejoint return tax rates for 1996 if all five of thefollowing apply.

1. Your spouse died in 1994 or 1995 andyou did not remarry in 1996.

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 of1996. 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 did not actually do so.

If your spouse died in 1996, 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 $2,550 on line 36.

Line 6b

Spouse

Check the box on line 6b if you file either (1)a joint return, or (2) a separate return andyour spouse had no income and is not filinga return. However, do not check the box ifyour spouse can be claimed as a dependenton another persons return.

Line 6c

DependentsYou can take an exemption for each of yourdependents who was alive during some partof 1996. This includes a baby born in 1996or a person who died in 1996. See Pub. 501,

Exemptions, Standard Deduction, and FilingInformation, for more details. Any personwho meets all five of the following testsqualifies as your dependent.

If you have more than six dependents,attach a statement to your return with therequired information.

Test 1Relationship

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

Your child, stepchild, adopted child; a

child 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.

Your grandparent, great-grandparent,etc.

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

Your aunt, uncle, nephew, niece, if theyare related by blood.

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. However,the relationship 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 $2,550. 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 $2,550 or more if:

1. Your child was under age 19 at the endof 1996, or

2. Your child was under age 24 at the endof 1996 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 1996, or


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Took a full-time, on-farm training courseduring any 5 months of 1996. 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 correspondenceschools.

Test 5Support

The general rule is that you had to provideover half the persons total support in 1996.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, but

figure 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, andother 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 duringthe last 6 months of the year, even if they donot have a separation agreement. For theserules, a custodial parent is the parent whohad custody of the child for most of the year.A noncustodial parent is the parent whohad custody for the shorter period of time orwho did not have custody at all. See Pub.501 for the definition of custody.

The general rule is that the custodial

parent 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 ofthe childs support and can claim the childas a dependent if both parents together paidover half of the childs support, the other

dependency tests are met, and either 1 or2 below applies:

1. The custodial parent agrees not to claimthe childs exemption for 1996 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 Did Not Live With You Due to Divorceor Separation on this 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 1996. This rule doesnot apply if your decree or agreement waschanged after 1984 to say that you cannotclaim the child as your dependent.

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) (see below) together paid over half ofanother persons support.

2. You paid over 10% of that personssupport.

3. No one alone paid over half of thatpersons support.

4. Tests 1 through 4 on page 12 are met.

5. Each other eligible person who paidover 10% of support completes Form 2120,Multiple Support Declaration, and you attach

these forms to your return. The form statesthat only you will claim the person as a de-pendent for 1996.

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.

Line 6c, Column (2)

You must enter each dependents social se-curity number (SSN) unless he or she wasborn in December 1996 or was born and diedin 1996. If you do not enter the correct SSN,at the time we process your return, we maydisallow the exemption claimed for the de-pendent. If your dependent was born in De-cember 1996 and does not have an SSN,

enter 12/96 in column (2). If your depen-dent was born and died in 1996 and did nothave an SSN, enter Died 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 dependentwill not have an SSN by April 15, 1997, seeWhat if I Cannot File on Time? on page 8.

Line 6c, Column (4)

Enter the number of months your dependentlived with you in 1996. Count temporary ab-sences such as for school or vacation as

time lived in your home. If your dependentwas born or died in 1996, enter 12 in thiscolumn. If your dependent lived in Canadaor Mexico during 1996, do not enter anumber. Instead, enter CN or MX, which-ever applies.

Children Who Did Not Live With

You Due to Divorce or SeparationIf you are claiming a child who did not livewith you under the rules on this page forChildren of Divorced or Separated Par-ents, attach Form 8332 or similar statementto your return. But see Exception below. Ifyour divorce decree or separation agreementwent into effect after 1984 and it states youcan claim the child as your dependent with-out regard to any condition, such as pay-ment of support, you may attach a copy ofthe following pages from the decree oragreement 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.

Exception. You do not have to attach Form8332 or similar statement if your divorcedecree or written separation agreement wentinto effect before 1985 and it states that youcan claim the child as your dependent.

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 1996.

IncomeForeign-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.

If you worked abroad, you may be able toexclude part or all of your earned income.For details, see Pub. 54, Tax Guide for U.S.Citizens and Resident Aliens Abroad, and

Form 2555, Foreign Earned Income, or Form2555-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 communityproperty state, you must usually follow statelaw to determine what is community incomeand what is separate income. For details, seePub. 555, Community Property.

Need More Information or Forms? You can use a personal computer,fax, or phone to get what you need. See page 5.


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Rounding Off to Whole Dollars

To round off cents to the nearest whole dollaron your forms and schedules, drop amountsunder 50 cents and increase amounts from50 to 99 cents to the next dollar. If you doround off, do so for all amounts. But if youhave to add two or more amounts to figurethe amount to enter on a line, include centswhen adding and only round off the total.

Line 7

Wages, Salaries, Tips, etc.Enter the total of your wages, salaries, tips,etc. If a joint return, also include yourspouses income. For most people, theamount to enter on this line should be shownin box 1 of their Forms W-2. But the follow-ing types of income must also be includedin the total on line 7.

Tip income you did not report to youremployer. Also include allocated tips shownon your W-2 form(s) unless you can provethat you received less. Allocated tips shouldbe shown in box 8 of your W-2 form(s). Theyare not included in box 1. See Pub. 531,Reporting Tip Income, for more details.

Caution: You may owe social security andMedicare tax on unreported or allocated tips.See the instructions for line 47.

Dependent care benefits, whichshould be shown in box 10 of your W-2form(s). But first complete Form 2441, Childand Dependent Care Expenses, to see if youmay exclude part or all of the benefits.

Scholarship and fellowship grantsnot reported on a W-2 form. Also, enterSCH and the amount on the dotted linenext to line 7. Exception. If you were adegree candidate, include on line 7 only theamounts you used for expenses other thantuition and course-related expenses. For ex-ample, amounts used for room, board, andtravel must be reported on line 7.

Excess salary deferrals. The amount

deferred should be shown in box 13 of yourW-2 form and the Deferred compensationbox in box 15 should be checked. If the totalamount you (or your spouse if filing jointly)deferred for 1996 under all plans was morethan $9,500, include the excess on line 7.But a different limit may apply if amountswere deferred under a tax-sheltered annuityplan or an eligible plan of a state or localgovernment or tax-exempt organization. SeePub. 575, Pension and Annuity Income, fordetails.

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

Disability pensions shown on Form1099-R if you have not reached the minimumretirement age set by your employer. Disabil-ity pensions received after you reach thatage and other pensions shown on Form1099-R (other than payments from an IRA)are reported on lines 16a and 16b.

Corrective distributions shown onForm 1099-R of (1) excess salary deferralsand (2) excess contributions to a retirementplan. But do not include distributions froman IRA on line 7. Instead, report them on lines15a and 15b.

Were You a Statutory Employee?If you were, the statutory employee box inbox 15 of your W-2 form should be checked.Statutory employees include full-time life in-surance salespeople, certain agent or com-mission drivers and traveling salespeople,and certain homeworkers. If you have relatedbusiness expenses to deduct, report theamount shown in box 1 of your W-2 form onSchedule C or C-EZ along with your ex-penses.

Missing or Incorrect Form W-2?

If you do not get a W-2 form from your em-ployer by January 31, 1997, use Tele-Taxtopic 154 (see page 34) to find out what todo. Even if you do not get a W-2, you muststill report your earnings. If you lose yourForm W-2 or it is incorrect, ask your employ-er for a new one.

Line 8aTaxable Interest IncomeEach payer should send you a Form1099-INT or Form 1099-OID. Report all ofyour taxable interest income on line 8a evenif it is $400 or less. If the total is over $400or any of the other conditions listed at the

beginning of the Schedule B instructions(see page B-1) apply to you, fill in ScheduleB first.

Interest credited in 1996 on deposits thatyou could not withdraw because of the bank-ruptcy or insolvency of the financial institu-tion may not have to be included in your1996 income. For details, see Pub. 550, In-vestment Income and Expenses.

TIPIf you get a 1996 Form 1099-INTfor U.S. savings bond interest thatincludes amounts you reportedbefore 1996, 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 9Dividend IncomeEach payer should send you a Form1099-DIV. If your total gross dividends areover $400, first fill in Schedule B (see pageB-1). Also, fill in Schedule B if you received,as a nominee, dividends that actually belong

to someone else. If you do not have to fill inSchedule B, include on line 9 only ordinarydividends and any investment expenses. Ifyou received capital gain distributions, seethe instructions for line 13.

Nontaxable DistributionsSome distributions are nontaxable becausethey are a return of your cost. They will notbe taxed until you recover your cost. Youmust 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, see Pub. 550, Investment Income andExpenses.

TIPDividends on insurance policiesare a partial return of the premi-ums you paid. Do notreport themas dividends. Include them in

income only if they exceed the to tal of all netpremiums you paid for the contract.

Line 10Taxable Refunds, Credits, orOffsets of State and LocalIncome Taxes

TIPNone of your refund is taxable if,in the year you paid the tax, youdid not itemize deductions.

If you received a refund, credit, or offset ofstate or local income taxes in 1996, you mayreceive a Form 1099-G. If you chose toapply part or all of the refund to your 1996estimated state or local income tax, theamount applied is treated as received in1996. If the refund was for a tax you paid in1995 and you itemized deductions for 1995,use the worksheet on the next page to seeif any of your refund is taxable.

ExceptionsSee Recoveries in Pub. 525, Taxable andNontaxable Income, instead of using theworksheet if any of the following apply:

You received a refund in 1996 that is fora tax year other than 1995.

You received a refund other than anincome tax refund, such as a real propertytax refund, in 1996 of an amount deductedor credit claimed in an earlier year.

Your 1995 taxable income was less thanzero.

You made your last payment of 1995estimated state or local income tax in 1996.

You owed alternative minimum tax in1995.

You could not deduct the full amount ofcredits you were entitled to in 1995 becausethe total credits exceeded the tax shown onyour 1995 Form 1040, line 40 (or Form1040-T, line 26).

You could be claimed as a dependentby someone else in 1995.

Also, see Tax Benefit Rule in Pub. 525instead of using the worksheet if all three ofthe following apply.

1. You had to use the Itemized DeductionsWorksheet in the 1995 instruction bookletbecause your 1995 adjusted gross incomewas over $114,700 (over $57,350 if marriedfiling separately).

2. You could not deduct all of the amounton line 1 of the 1995 Itemized DeductionsWorksheet.

3. The amount on line 8 of that 1995 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 1996.

Line 11Alimony ReceivedEnter amounts received as alimony or sep-arate maintenance. You must let the person


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who made the payments know your socialsecurity number. If you do not, you may haveto pay a $50 penalty. For more details, useTele-Tax topic 406 (see page 34) or see Pub.504, Divorced or Separated Individuals.

Line 12Business 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)Enter the gain or (loss) from Schedule D. Butif you received capital gain distributions(reported to you on Form 1099-DIV or a sub-stitute statement) and do not need Schedule

D for other capital transactions, enter thosedistributions on line 13. Write CGD on thedotted line next to line 13.

TIPYour tax may be less if you canuse theCapital Gain Tax Work-sheeton page 23. You can use itif your taxable income (Form

1040, line 37) ismore than$96,900 ($58,150if single; $83,050 if head of household; or$48,450 if married filing separately).

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 DistributionsYou should receive a Form 1099-R showingthe amount of the distribution from your in-dividual retirement arrangement (IRA). Leaveline 15a blank and enter the total distributionon line 15b.

Exception. Do not enter your total IRA dis-tribution on line 15b if either 1 or 2 belowapplies.

1. You made nondeductible contributionsto any of your IRAs for 1996 or an earlier

year. Instead, use Form 8606 to figure theamount to enter on line 15b; enter the totaldistribution on line 15a. If you made nonde-ductible contributions for 1996, also seePub. 590, Individual Retirement Arrange-ments (IRAs).

2. You rolled your IRA distribution over intoanother IRA. Enter the total distribution online 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 1 above also applies, useForm 8606 to figure the taxable part.

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 $155,000, or (3)you were bornbefore July 1, 1925, and received less thanthe minimum required distribution. See theinstructions for line 48 for details.

Lines 16a and 16b

Pensions and AnnuitiesYou should receive a Form 1099-R showingthe amount of your pension and annuity pay-ments. See the next page for details on roll-overs and lump-sum distributions. Do notinclude the following payments on lines 16aand 16b. Instead, report them on line 7.

Disability pensions received before youreach the minimum retirement age set byyour employer.

Corrective distributions of excess salarydeferrals or excess contributions to retire-ment plans.

TIPAttach Form 1099-R to Form1040 if any Federal income taxwas withheld.

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 1996.

Fully taxable pensions and annuities alsoinclude military retirement pay shown onForm 1099-R. For details on military disabil-ity pensions, see Pub. 525, Taxable andNontaxable Income. If you received a FormRRB-1099-R, see Pub. 575, Pension andAnnuity Income, to find out how to reportyour 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. However, if your annuity starting date

(defined on page 16) was after July 1, 1986,and before November 19, 1996, you may beable to use the Simplified General Rule ex-plained on page 16. If your annuity startingdate was after November 18, 1996, do notuse these instructions to figure the taxablepart of your pension or annuity. Instead, seePub. 575 or Pub. 721, Tax Guide to U.S. CivilService Retirement Benefits.

You can ask the IRS to figure the taxablepart for you for a $50 fee. For details, seePub. 939.

(Continues on next page.)


Enter on line 3 the amount shown below for the filing statusclaimed on your 1995 return:

Note: If the filing status on your 1995 return was married filingseparately and your spouse itemized deductions in 1995, skiplines 3, 4, and 5 and enter the amount from line 2 on line 6.

Single, enter $3,900

Married filing jointly orQualifying widow(er), enter $6,550

Married filing separately, enter $3,275

Head of household, enter $5,750

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 1995Form 1040, Schedule A, line 28 (or Form 1040-T, Section B,line t)

Did you fill in line 33a on your 1995 Form1040 (or line 19 on Form 1040-T)?

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 orline 6 here and on Form 1040, line 10

1.

2.

3.

4.

5.

6.

7.

1.

2.

3.

4.

5.

6.

7.

No. Enter -0-.

Yes. Multiply $750 ($950 if your 1995 filingstatus was single or head ofhousehold) by the number on line 33aof your 1995 Form 1040 (or by thenumber of circles filled in on line 19 ofForm 1040-T)


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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 DateYour annuity starting date is the later of thefirst day of the first period for which youreceived a payment, or the date the plans

obligations became fixed.Simplified General RuleThis 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 (definedabove) was after July 1, 1986, and beforeNovember 19, 1996.

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

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. For more details on the Sim-plified General Rule, see Pub. 575 or Pub.721.

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 worksheet on this p age.

Age at Annuity Starting DateIf you are the retiree, use your age on theannuity starting date. If you are the survivor

of a retiree, use the retirees age on his orher annuity starting date. If you are the ben-eficiary of an employee who died, see Pub.575. If there is more than one beneficiary,see Pub. 575 or Pub. 721 to figure eachbeneficiarys taxable amount.

Changing MethodsIf your annuity starting date was after July1, 1986, you may be able to change from theGeneral Rule to the Simplified General Rule(or the other way around). For details, seePub. 575 or Pub. 721.

Death Benefit ExclusionIf you are the beneficiary of a deceased em-ployee or former employee, amounts paid to

you by, or on behalf of, an employer becauseof the death of the employee may qualify fora death benefit exclusion of up to $5,000. Ifyou are entitled to this exclusion, add it tothe amount you enter on line 2 of the work-sheet on this page. Do this even if the Form1099-R shows a taxable amount. The payerof the annuity cannot add the death benefitexclusion to your cost when figuring the tax-able amount.

Special rules apply if you are the survivorunder a joint and survivors annuity. For de-tails, see Pub. 575.

Caution: The death benefit exclusion wasrepealed for individuals who died afterAugust 20, 1996.

RolloversA rollover is a tax-free distribution of cash orother assets from one retirement plan that iscontributed to another plan. Use lines 16aand 16b to report a rollover, including adirect rollover, from one qualified employersplan to another or to an IRA.

Enter on line 16a the total distributionbefore income tax or other deductions were

withheld. This amount should be shown inbox 1 of Form 1099-R. From the total on line16a, subtract any contributions (usuallyshown in box 5) that were taxable to youwhen made. From that result, subtract theamount that was rolled over either directly orwithin 60 days of receiving the distribution.Enter the remaining amount, even if zero, online 16b.

Special rules apply to partial rollovers ofproperty. For more details on rollovers, in-cluding distributions under qualified domes-tic relations orders, see Pub. 575.

Lump-Sum DistributionsIf you received a lump-sum distribution froma profit- sharing or retirement plan, your Form

1099-R should have the Total distribution

box in box 2b checked. You may owe anadditional tax if you (1) received an earlydistribution from a qualified retirement planand the total amount was not rolled over, or(2) received a distribution in excess of$155,000 from a qualified retirement plan.For details, see the instructions for line 48.

Enter the total distribution on line 16a andthe taxable part on line 16b.

TIPYou may be able to pay less taxon the distribution if you were atleast age 5912 on the date of thedistribution, you meet certain

other conditions, and you choose to useForm 4972, Tax on Lump-Sum Distributions,to figure the tax on any part of the distribu-tion. You may also be able to use Form 4972if you are the beneficiary of a d eceased em-ployee who was either age 5912 or older onthe date of death or was born before 1936.For details, see Form 4972.

Line 19UnemploymentCompensationYou should receive a Form 1099-G showingthe total unemployment compensation paidto you in 1996.

Simplified General Rule WorksheetLines 16a and 16b(keep for your records)

Enter the total pension or annuity payments received thisyear. Also, enter this amount on Form 1040, line 16a

1.

Enter your cost in the plan at theannuity starting date plus any deathbenefit exclusion (see this page)

2.

Age at annuity starting date(see this page):

3.Enter:

30055 and under2605660

2406165

1706670 12071 and older

Divide line 2 by the number on line 34.

Multiply line 4 by the number of monthsfor which this years payments weremade. If your annuity starting date wasbefore 1987, skip lines 6 and 7 andenter this amount on line 8. Otherwise,go to line 6

5.

Enter the amount, if any, recovered taxfree in years after 1986

6.

Subtract line 6 from line 27.

Enter the smaller of line 5 or line 78.

Taxable amount. Subtract line 8 from line 1. Enter theresult, but not less than zero. Also, enter this amount onForm 1040, line 16b. If your Form 1099-R shows a largeramount, use the amount on this line instead of the amountfrom Form 1099-R

9.

Note: If you had more than one partially taxable pension or annuity, figure thetaxable part of each separately. Enter the total of the taxable parts on Form1040, line 16b. Enter the total pension or annuity payments received in 1996on Form 1040, line 16a.

1.

2.

3.

4.

5.

6.

7.

8.

9.

Note: Do not use this worksheet if your annuity starting date (see this page) wasafterNovember 18, 1996. Instead, seePub. 575(Pub. 721 for U.S. C ivil Serviceretirement).


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If you received an overpayment of unem-ployment compensation in 1996 and yourepaid any of it in 1996, subtract the amountyou repaid from the total amount you re-ceived. Enter the result on line 19. Also, enterRepaid and the amount you repaid on thedotted line next to line 19. If, in 1996, yourepaid unemployment compensation that

you included in gross income in an earlieryear, you may deduct the amount repaid onSchedule A, line 22. But if the amount repaidwas more than $3,000, see Repayments inPub. 525, Taxable and Nontaxable Income,for details on how to report the repayment.

TIPIf you expect to receive unem-ployment compensation in 1997,you may ask the state unemploy-ment office to withhold Federal

income tax from those payments.

Lines 20a and 20b

Social Security BenefitsYou should receive a Form SSA-1099 show-

ing in box 3 the total social security benefitspaid to you. Box 4 will show the amount ofany benefits you repaid in 1996. If you re-ceived railroad retirement benefits treated associal security, you should receive a FormRRB-1099.

To find out if any of your benefits are tax-able, first complete Form 1040, lines 21 and23a through 30 if they apply to you. Then,complete the worksheet on this page. How-ever, do not use the worksheet if any of thefollowing apply.

You made IRA contributions for 1996and you were covered by a retirement planat work or through self-employment. In-stead, use the worksheets in Pub. 590 to seeif any of your social security benefits are tax-able and to figure your IRA deduction.

You repaid any benefits in 1996 andyour total repayments (box 4) were morethan your total benefits for 1996 (box 3).None of your benefits are taxable for 1996.In addition, you may be able to take an item-ized deduction for part of the excess repay-ments if they were for benefits you includedin gross income in an earlier year. For moredetails, see Pub. 915.

You file Form 2555 or 2555-EZ, relatingto foreign earned income, Form 4563, Ex-clusion of Income for Bona Fide Residentsof American Samoa, Form 8815, Exclusionof Interest From Series EE U.S. SavingsBonds Issued After 1989, or you exclude

income from sources within Puerto Rico. In-stead, use the worksheet in Pub. 915.

TIPIf you expect to receive taxablesocial security benefits in1997, you may ask the payer towithhold Federal income tax from

your payments.

Line 21

Other IncomeUse this line to report any other income notreported on your return or other schedules.

See examples on page 18. List the type andamount of income. If necessary, show therequired information on an attached state-ment. For more details, see MiscellaneousTaxable Income in Pub. 525, Taxable andNontaxable Income.

Do not report any nontaxable income online 21, including the following:

Child support.

Money or property that was inherited,willed to you, or received as a gift.

Life insurance proceeds received be-cause of a persons death.

Do not report on this line any income fromself-employment or fees received as anotary public. Instead, you must use Sched-ule C, C-EZ, or F, even if you do not haveany business expenses.

(Continues on next page.)


Social Security Benefits WorksheetLines 20a and 20b(keep for your records)

If you are married filing separately and you lived apart from your spouse forall of 1996, enter D to the left of line 20a.

1. Enter the total amount from box 5 of

all your Forms SSA-1099 andRRB-1099

Note: If line 1 is zero or less, stop; none of your socialsecurity benefits are taxable. Otherwise, go to line 2.

2. Enter one-half of line 1

Add the amounts on Form 1040, lines 7, 8a, 9 through14, 15b, 16b, 17 through 19, and 21. Do not includeamounts from box 5 of Forms SSA-1099 or RRB-1099

3.

Add lines 2, 3, and 4

4.

5.

Enter the amount from Form 1040, line 30

Subtract line 6 from line 5

6.

Enter $25,000 ($32,000 if married filing jointly; $0 if

married filing separately and you lived with your spouseat any time in 1996)

7.

Subtract line 8 from line 7. If zero or less, enter -0-

8.

No. Stop; none of your social security benefits aretaxable. Do not enter any amounts on lines 20a or20b of Form 1040. But if you are married filingseparately and you lived apart from your spousefor all of 1996, enter -0- on line 20b. Be sure toenter D to the left of line 20a.

Yes. Go to line 10.

Enter one-half of line 12

9.

10.

If part of y