INSTRUCTIONS TAKE THE FREE WAY NOTE: THIS BOOKLET DOES NOT CONTAIN TAX FORMS. Including Instructions for Schedules A, B, C, D, E, F, J, and SE

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1 1040 INSTRUCTIONS NOTE: THIS BOOKLET DOES NOT CONTAIN TAX FORMS Including Instructions for Schedules A, B, C, D, E, F, J, and SE 2007 Explore all electronic filing and payment options, including Free File. TAKE THE FREE WAY If you made $54,000 or less in 2007, you re one of the 95+ million taxpayers who are eligible to e-file for free! See page 4 or go to: MAILING YOUR RETURN You may be mailing your return to a different address this year. See the back cover. MORTGAGE INSURANCE PREMIUMS You may be able to deduct qualified mortgage insurance premiums. See the Instructions for Schedules A&B. Department of the Treasury Internal Revenue Service IRSwww.irs.gov Cat. No E

2 Table of Contents Department of the Treasury Internal Revenue Service Contents Page Contents Page IRS Customer Service Standards Earned Income Credit (EIC) Table Help With Unresolved Tax Issues (Taxpayer Advocate Service)... 3 Refund IRS e-file... 4 Amount You Owe What s New... 5 Third Party Designee Filing Requirements... 6 Sign Your Return Do You Have To File?... 6 Assemble Your Return When and Where Should You File? Tax Table Where To Report Certain Items 2007 Tax Computation Worksheet From 2007 Forms W-2, 1098, and General Information Tax Return Page Reference Refund Information Line Instructions for Form What Is TeleTax? Name and Address Calling the IRS Social Security Number (SSN) Quick and Easy Access to Tax Help and Tax Products Presidential Election Campaign Fund. 12 Disclosure, Privacy Act, and Paperwork Filing Status Reduction Act Notice Exemptions Order Blank for Forms and Publications Income Major Categories of Federal Income Adjusted Gross Income and Outlays For Fiscal Year Tax and Credits Tax Rate Schedules Other Taxes Index Payments

3 The IRS Mission Provide America s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. IRS Customer Service Standards At the IRS, our goal is to continually improve the quality of our services. To achieve that goal, we have developed customer service standards in the following areas. Easier filing and payment options. Access to information. Accuracy. Prompt refunds. Canceling penalties. Resolving problems. Simpler forms. If you would like information about the IRS standards and a report of our accomplishments, see Pub Help With Unresolved Tax Issues Taxpayer Advocate Service The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. You may be eligible for assistance if: You are experiencing economic harm or significant cost (including fees for professional representation), You have experienced a delay of more than 30 days to resolve your tax issue, or You have not received a response or resolution to the problem by the date promised by the IRS. The service is free, confidential, tailored to meet your needs, and available for businesses as well as individuals. There is at least one local taxpayer advocate in each state, the District of Columbia, and Puerto Rico. Because advocates are part of the IRS, they know the tax system and how to navigate it. If you qualify for assistance, you will receive personalized service from a knowledgeable advocate who will: Listen to your problem, Help you understand what needs to be done to resolve it, and Stay with you every step of the way until your problem is resolved. You can contact the Taxpayer Advocate Service by: Calling the TAS toll-free case intake line at or TTY/TDD , Calling or writing your local taxpayer advocate, whose address and phone number are listed in the government listings in your local telephone directory and in Pub. 1546, Taxpayer Advocate Service Your Voice at the IRS, Filing Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), with the Taxpayer Advocate Service, or Asking an IRS employee to complete Form 911 on your behalf. To get a copy of Form 911 or learn more about the Taxpayer Advocate Service, go to Low Income Taxpayer Clinics (LITCs) LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies with the IRS for free or for a nominal charge. The clinics also provide tax education and outreach for taxpayers with limited English proficiency or who speak English as a second language. Pub. 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. It is available at or your local IRS office. -3-

4 Make $54,000 or less? e-file For Free! If your 2007 adjusted gross income was $54,000 or less, you re one of the 95+ million taxpayers who are eligible for Free File. Free File, a service offered by the IRS in partnership with the Free File Alliance, a group of tax preparation software companies, is: Use IRS e-file there are three ways: Use a computer. You can easily prepare and e-file your own tax return. To do so, you ll need: A computer with Internet access, and IRS-approved tax preparation software which is available via the Internet for online use, for download from the Internet, and in retail stores for offline use. Visit for details. Fast, easy, and safe to use; Available in English and Spanish; Accessible online 24 hours a day, 7 days a week (You will need Internet access to Free File. Also, Free File can only be accessed by going through the website even if you used Free File in previous years.); and Absolutely FREE. No hidden fees If you don t qualify for Free File, then you may want to check out the Partners Page on for low-cost e-file options. Use a volunteer. The VITA Program offers free tax help for low to moderate income taxpayers. The Tax Counseling for the Elderly (TCE) Program provides free tax help to people age 60 and older. Use a tax professional. Many taxpayers rely on tax professionals to handle their returns and most tax professionals can e-file your return. You just have to be sure to ask. Also, tax professionals can charge a fee for IRS e-file. Fees can vary depending on the professional and specific services rendered, so be sure to discuss this upfront. e-file! It s Never Been Easier. It s easy to see why more than 60% of taxpayers e-file their tax returns: it s faster, easier, and more convenient than paper filing. E-filing also reduces the chance of making mistakes. Plus, if your 2007 adjusted gross income was $54,000 or less, you can e-file for FREE by using Free File at Totally Safe and Secure More than half a billion federal tax returns have been e-filed! The IRS uses the most secure technology available to safeguard your personal information. So you can rest assured that when you e-file, your information will be safe. Visit: for the latest information. e-file and Get the Benefits A faster refund than by paper filing in as little as 10 days with Direct Deposit. An ed proof of receipt within 48 hours after the IRS receives your return, which you can t get with paper filing. Reduced chance of making mistakes since IRS e-file software checks your return. In fact, e-filed returns have a 1% or less error rate, compared to 20% with paper returns. (Please note that e-filing your tax return does not impact or change the chance of an audit.) Save time by preparing and e-filing federal and state returns together. You can electronically sign your return with a secure, self-selected PIN number. If you owe, you can authorize an electronic funds withdrawal or pay by credit card. You can also file a return early and pay the amount you owe later. Help the environment, use less paper, and save taxpayer money it costs less to process an e-filed return than a paper return. You can accomplish many things electronically within The Electronic IRS is a gateway to the many IRS electronic options and it s available 24 hours a day, 7 days a week. Should you choose to file a paper return, you ll find information, resources, and all of the forms ready to download. -4-

5 What s New Mailing your return. You may be mailing Earned income credit (EIC). You may be What s New for 2007 your return to a different address this year able to take the EIC if: Tax benefits extended. The following tax because the IRS has changed the filing lo- A child lived with you and you earned benefits were extended through cation for several areas. If you received an less than $38,646 ($41,646 if married filing envelope with your tax package, please use Deduction for educator expenses in jointly), or it. Otherwise, see Where Do You File? on figuring adjusted gross income. the back cover. A child did not live with you and you Tuition and fees deduction. earned less than $12,880 ($15,880 if mar- District of Columbia first-time Domestic production activities deduction. ried filing jointly). homebuyer credit. The deduction rate for 2007 is increased to 6%. The maximum AGI you can have and Alternative minimum tax (AMT) still get the credit also has increased. You exemption amount decreased. The AMT Unreported social security and Medicare may be able to take the credit if your AGI is exemption amount is decreased to $33,750 tax on wages. If you are an employee and less than the amount in the above list that ($45,000 if married filing jointly or a qualiapplies to you. The maximum investment your employer did not withhold social sefying widow(er); $22,500 if married filing curity and Medicare tax, see Form 8919 to income you can have and still get the credit separately). figure and report this tax. has increased to $2,950. At the time these instructions Refundable credit for prior-year minimum went to print, Congress was ex- tax. If you have an unused minimum tax Personal exemption and itemized! pected to consider legislation CAUTION credit carryforward from 2004, see Form deduction phaseouts reduced. Taxpayers that would increase the 8801 to find if you can take this credit. with adjusted gross income above a certain amounts above. To find out if legislation amount may lose part of their deduction for was enacted, and for more details, see the Health savings account (HSA) funding dis- personal exemptions and itemized deductributions. You may be able to elect to ex- tions. The amount by which these deduc- Instructions for Form clude from income a distribution made tions are reduced in 2008 will be only 1 2 of IRA deduction expanded. You may be from your IRA to your HSA. See the in- the amount of the reduction that otherwise able to take an IRA deduction if you were structions for lines 15a and 15b on page 21. would have applied in covered by a retirement plan and your 2007 modified adjusted gross income (AGI) is Insurance premiums for retired public less than $62,000 ($103,000 if married filcapital gain tax rate is reduced to zero. safety officers. If you are a retired safety Capital gain tax rate reduced. The 5% ing jointly or qualifying widow(er)). officer, you can elect to exclude from in- come distributions made directly from your You may be able to deduct up to an adeligible retirement plans to pay premiums ditional $3,000 if you were a participant in Tax on children s income. Form 8615 will for certain insurance. See the instructions a 401(k) plan and your employer was in be required to figure the tax for the follow- for lines 16a and 16b on page 22. bankruptcy in an earlier year. See the inmore than $1,800. ing children with investment income of structions for line 32 on page 27. Exemption for housing a person displaced Standard mileage rates. The 2007 rate for by Hurricane Katrina expires. The addi- 1. Children under age 18 at the end of business use of your vehicle is 48 1 tional exemption amount for housing a per- 2 cents a mile. The 2007 rate for use of your vehicle son displaced by Hurricane Katrina does 2. The following children if their earned to get medical care or to move is 20 cents a not apply for 2007 or later years. income is not more than half their support. mile. Telephone excise tax credit. This credit a. Children age 18 at the end of Earned income credit (EIC). You may be was available only on your 2006 return. If b. Children over age 18 and under age able to take the EIC if: you filed but did not request it on your at the end of 2008 who are full-time stureturn, file Form 1040X using a simplified dents. A child lived with you and you earned less than $37,783 ($39,783 if married filing procedure explained in its instructions to amend your 2006 return. If you were not The election to report a child s investment jointly), or required to file a 2006 return, see the 2006 income on a parent s return and the special A child did not live with you and you Form 1040EZ-T. rule for when a child must file Form 6251 earned less than $12,590 ($14,590 if mar- will also apply to the children listed above. ried filing jointly). What s New for 2008 The maximum AGI you can have and Expiring tax benefits. The following benestill get the credit also has increased. You fits are scheduled to expire and will not apmay be able to take the credit if your AGI is IRA deduction expanded. You and your ply for less than the amount in the above list that spouse, if filing jointly, each may be able to deduct up to $5,000 ($6,000 if age 50 or Deduction for educator expenses in applies to you. The maximum investment older at the end of the year). You may be figuring adjusted gross income. income you can have and still get the credit has increased to $2,900. See the instruccovered by a retirement plan and your 2008 The exclusion from income of quali- able to take an IRA deduction if you were Tuition and fees deduction. tions for lines 66a and 66b that begin on page 44. modified AGI is less than $63,000 fied charitable distributions. ($105,000 if married filing jointly or quali- Credit for nonbusiness energy prop- Elective salary deferrals. The maximum fying widow(er)). amount you can defer under all plans is erty. generally limited to $15,500 ($10,500 if You may be able to deduct up to an adhomebuyer credit (for homes purchased af- District of Columbia first-time you only have SIMPLE plans; $18,500 for ditional $3,000 if you were a participant in section 403(b) plans if you qualify for the a 401(k) plan and your employer was in ter 2007). 15-year rule). See the instructions for line 7 bankruptcy in an earlier year. See the in- The election to include nontaxable on page 18. structions for line 32 on page 27. combat pay in earned income for the EIC. -5-

6 Filing Requirements These rules apply to all U.S. citizens, regardless of where they live, and resident aliens. Have you tried IRS e-file? It s the fastest way to get your refund and it s free if you are eligible. Visit for details. What if You Cannot File on ident alien or a dual-status alien and both of Do You Have To File? the following apply. Time? Use Chart A, B, or C to see if you must file You were married to a U.S. citizen or resident alien at the end of You can get an automatic 6-month exten- a return. U.S. citizens who lived in or had sion if, no later than the date your return is income from a U.S. possession should see You elected to be taxed as a resident due, you file Form For details, see Pub Residents of Puerto Rico can use alien. Form TeleTax topic 901 (see page 79) to see if See Pub. 519 for details. they must file. An automatic 6-month exten- Even if you do not otherwise Specific rules apply to deter- sion to file does not extend the mine if you are a resident alien,! TIP have to file a return, you should! CAUTION time to pay your tax. See Form file one to get a refund of any CAUTION nonresident alien, or dual-status federal income tax withheld. alien. Most nonresident aliens You should also file if you are eligible for and dual-status aliens have different filing If you are a U.S. citizen or resident the earned income credit, additional child requirements and may have to file Form alien, you may qualify for an automatic tax credit, health coverage tax credit, or 1040NR or Form 1040NR-EZ. Pub. 519 extension of time to file without filing refundable credit for prior year minimum discusses these requirements and other in- Form You qualify if, on the due date tax. formation to help aliens comply with U.S. of your return, you meet one of the follow- tax law, including tax treaty benefits and ing conditions. Exception for children under age 18. If special rules for students and scholars. you are planning to file a tax return for your You live outside the United States and child who was under age 18 at the end of Puerto Rico and your main place of busi and certain other conditions apply, ness or post of duty is outside the United you can elect to include your child s in- When and Where States and Puerto Rico. come on your return. But you must use You are in military or naval service on Form 8814 to do so. If you make this elec- Should You File? duty outside the United States and Puerto tion, your child does not have to file a re- Rico. turn. For details, use TeleTax topic 553 File Form 1040 by April 15, If you (see page 79) or see Form file after this date, you may have to pay This extension gives you an extra 2 interest and penalties. See page 78. months to file and pay the tax, but interest A child born on January 1, 1990, is con- will be charged from the original due date sidered to be age 18 at the end of Do If you were serving in, or in support of, of the return on any unpaid tax. You must not use Form 8814 for such a child. the U.S. Armed Forces in a designated attach a statement to your return showing combat zone, qualified hazardous duty Resident aliens. These rules also apply if that you meet the requirements. If you are you were a resident alien. Also, you may area, or a contingency operation, see still unable to file your return by the end of qualify for certain tax treaty benefits. See Pub. 3. the 2-month period, you can get an addi- Pub. 519 for details. tional 4 months if, no later than June 16, See the back cover for filing instructions 2008, you file Form This 4-month Nonresident aliens and dual-status aliens. and addresses. For details on using a pri- extension of time to file does not extend the These rules also apply if you were a nonres- vate delivery service, see page 9. time to pay your tax. See Form Chart A For Most People AND at the end of 2007 THEN file a return if your gross IF your filing status is... you were*... income** was at least... Single under 65 $8, or older 10,050 under 65 (both spouses) $17,500 Married filing jointly*** 65 or older (one spouse) 18, or older (both spouses) 19,600 Married filing separately (see page 13) any age $3,400 Head of household (see page 13) under 65 $11, or older 12,550 Qualifying widow(er) with dependent under 65 $14,100 child (see page 14) 65 or older 15,150 * If you were born on January 1, 1943, you are considered to be age 65 at the end of ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). Do not include social security benefits unless you are married filing a separate return and you lived with your spouse at any time in *** If you did not live with your spouse at the end of 2007 (or on the date your spouse died) and your gross income was at least $3,400, you must file a return regardless of your age. -6-

7 Chart B For Children and Other Dependents (See the instructions for line 6c that begin on page 15 to find out if someone can claim you as a dependent.) If your parent (or someone else) can claim you as a dependent, use this chart to see if you must file a return. In this chart, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Earned income includes wages, tips, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income. Single dependents. Were you either age 65 or older or blind? No. You must file a return if any of the following apply. Your unearned income was over $850. Your earned income was over $5,350. Your gross income was more than the larger of $850, or Your earned income (up to $5,050) plus $300. Yes. You must file a return if any of the following apply. Your unearned income was over $2,150 ($3,450 if 65 or older and blind). Your earned income was over $6,650 ($7,950 if 65 or older and blind). Your gross income was more than The larger of: Plus This amount: $850, or $1,300 ($2,600 if 65 or Your earned income (up to $5,050) plus $300 } older and blind) Married dependents. Were you either age 65 or older or blind? No. You must file a return if any of the following apply. Your unearned income was over $850. Your earned income was over $5,350. Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Your gross income was more than the larger of $850, or Your earned income (up to $5,050) plus $300. Yes. You must file a return if any of the following apply. Your unearned income was over $1,900 ($2,950 if 65 or older and blind). Your earned income was over $6,400 ($7,450 if 65 or older and blind). Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Your gross income was more than The larger of: Plus This amount: $850, or $1,050 ($2,100 if 65 or Your earned income (up to $5,050) plus $300 } older and blind) Chart C Other Situations When You Must File You must file a return if any of the four conditions below apply for You owe any special taxes, including any of the following. a. Alternative minimum tax. b. Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are filing a return only because you owe this tax, you can file Form 5329 by itself. c. Household employment taxes. But if you are filing a return only because you owe this tax, you can file Schedule H by itself. d. Social security and Medicare tax on tips you did not report to your employer or on wages you received from an employer who did not withhold these taxes. e. Write-in taxes, including uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on group-term life insurance and additional tax on health savings account distributions. See the instructions for line 63 on page 42. f. Recapture taxes. See the instructions for line 44, that begin on page 33, and line 63, on page 42. g. Additional tax on a health savings account from Form 8889, Part III. 2. You received any advance earned income credit (EIC) payments from your employer. These payments are shown in Form W-2, box You had net earnings from self-employment of at least $ You had wages of $ or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. -7-

8 Where To Report Certain Items From 2007 Forms W-2, 1098, and 1099 IRS e-file takes the guesswork out of preparing your return. You may also be eligible to use Free File to file your federal income tax return. Visit for details. If any federal income tax withheld is shown on these forms, include the tax withheld on Form 1040, line 64. If you itemize your deductions and any state or local income tax withheld is shown on these forms, include the tax withheld on Schedule A, line 5, if you do not elect to deduct state and local general sales taxes. Form Item and Box in Which It Should Appear Where To Report if Filing Form 1040 W-2 Wages, tips, other compensation (box 1) Form 1040, line 7 Allocated tips (box 8) See Wages, Salaries, Tips, etc. on page 18 Advance EIC payment (box 9) Form 1040, line 61 Dependent care benefits (box 10) Form 2441, Part III Adoption benefits (box 12, code T) Form 8839, line 22 Employer contributions to an Archer Form 8853, line 3 MSA (box 12, code R) Employer contributions to a health savings account Form 8889, line 9 (box 12, code W) 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) Form 1040, line 21, but first see the instructions on Form 1098* Mortgage insurance premiums (box 4) See the instructions for Schedule A, line 13* 1098-C Contributions of motor vehicles, boats, and Schedule A, line 17 airplanes 1098-E Student loan interest (box 1) See the instructions for Form 1040, line 33, on page 30* 1098-T Qualified tuition and related expenses See the instructions for Form 1040, line 34, on page 31, or Form 1040, (box 1) line 49, on page 37, but first see the instructions on Form 1098-T* 1099-A Acquisition or abandonment of secured property See Pub B Stocks, bonds, etc. (box 2) See the instructions on Form 1099-B Bartering (box 3) See Pub. 525 Aggregate profit or (loss) (box 11) Form 6781, line C Canceled debt (box 2) Form 1040, line 21, but first see the instructions on Form 1099-C* 1099-DIV Total ordinary dividends (box 1a) Form 1040, line 9a Qualified dividends (box 1b) See the instructions for Form 1040, line 9b, on page 19 Total capital gain distributions (box 2a) Form 1040, line 13, or, if required, Schedule D, line 13 Unrecaptured section 1250 gain (box 2b) See the instructions for Schedule D, line 19, that begin on page D-8 Section 1202 gain (box 2c) See Exclusion of Gain on Qualified Small Business (QSB) Stock in the instructions for Schedule D on page D-4 Collectibles (28%) gain (box 2d) See the instructions for Schedule D, line 18, on page D-8 Nondividend distributions (box 3) See the instructions for Form 1040, line 9a, on page 19 Investment expenses (box 5) Schedule A, line 23 Foreign tax paid (box 6) Form 1040, line 51, or Schedule A, line 8. But first see the instructions for line 51 that begin on page G Unemployment compensation (box 1) Form 1040, line 19. But if you repaid any unemployment compensation in 2007, see the instructions for line 19 on page 24. State or local income tax refunds, credits, or See the instructions for Form 1040, line 10, that begin on page 20. If offsets (box 2) box 8 on Form 1099-G is checked, see the box 8 instructions. ATAA payments (box 5) Form 1040, line 21 Taxable grants (box 6) Form 1040, line 21* Agriculture payments (box 7) See the Instructions for Schedule F or Pub. 225* * 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 to the activity on that schedule or form instead. -8-

9 Form Item and Box in Which It Should Appear Where To Report if Filing Form INT Interest income (box 1) See the instructions for Form 1040, line 8a, on page 19 Early withdrawal penalty (box 2) Form 1040, line 30 Interest on U.S. savings bonds and Treasury See the instructions for Form 1040, line 8a, on page 19 obligations (box 3) Investment expenses (box 5) Schedule A, line 23 Foreign tax paid (box 6) Form 1040, line 51, or Schedule A, line 8. But first see the instructions for line 51 that begin on page 37. Tax-exempt interest (box 8) Form 1040, line 8b Specified private activity bond interest (box 9) Form 6251, line LTC Long-term care and accelerated death benefits See Pub. 525 and the Instructions for Form MISC Rents (box 1) See the Instructions for Schedule E* Royalties (box 2) Schedule E, line 4 (for timber, coal, and iron ore royalties, see Pub. 544)* Other income (box 3) Form 1040, line 21* Nonemployee compensation (box 7) Schedule C, C-EZ, or F. But if you were not self-employed, see the instructions on Form 1099-MISC. Excess golden parachute payments (box 13) See the instructions for Form 1040, line 63, on page 42 Other (boxes 5, 6, 8, 9, 10, and 15b) See the instructions on Form 1099-MISC 1099-OID Original issue discount (box 1) Other periodic interest (box 2) } See the instructions on Form 1099-OID Early withdrawal penalty (box 3) Form 1040, line 30 Original issue discount on U.S. Treasury See the instructions on Form 1099-OID obligations (box 6) Investment expenses (box 7) Schedule A, line PATR Patronage dividends and other distributions from a Schedule C, C-EZ, or F or Form 4835, but first see the instructions on cooperative (boxes 1, 2, 3, and 5) Form 1099-PATR Domestic production activities deduction (box 6) Form 8903, line 21 Credits (boxes 7, 8, and 10) Form 3468, 3800, 5884, 6478, 8835, 8844, 8845, 8861, 8864, 8896, or 8909 Patron s AMT adjustment (box 9) Form 6251, line 26 Deduction for small refiner capital costs or Schedule C, C-EZ, or F qualified refinery property (box 10) 1099-Q Qualified education program payments See the instructions for Form 1040, line 21, on page R Distributions from IRAs** See the instructions for Form 1040, lines 15a and 15b, that begin on page 21 Distributions from pensions, annuities, etc. See the instructions for Form 1040, lines 16a and 16b, that begin on page 22 Capital gain (box 3) See the instructions on Form 1099-R 1099-S Gross proceeds from real estate transactions (box Form 4797, Form 6252, or Schedule D. But if the property was your 2) home, see the Instructions for Schedule D to find out if you must report the sale or exchange. Report an exchange of like-kind property on Form 8824 even if no gross proceeds are reported on Form 1099-S. Buyer s part of real estate tax (box 5) See the instructions for Schedule A, line 6, on page A-5* 1099-SA Distributions from health savings accounts (HSAs) Form 8889, line 14a Distributions from MSAs*** Form 8853 * 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 to the activity on that schedule or form instead. ** This includes distributions from Roth, SEP, and SIMPLE IRAs. *** This includes distributions from Archer and Medicare Advantage MSAs. Private Delivery Services Federal Express (FedEx): FedEx Pri- The private delivery service can tell you ority Overnight, FedEx Standard Over- how to get written proof of the mailing You can use certain private delivery serv- night, FedEx 2Day, FedEx International date. ices designated by the IRS to meet the Priority, and FedEx International First. timely mailing as timely filing/paying Private delivery services cannot rule for tax returns and payments. These United Parcel Service (UPS): UPS deliver items to P.O. boxes. Next Day Air, UPS Next Day Air Saver,! private delivery services include only the CAUTION You must use the U.S. Postal following. UPS 2nd Day Air, UPS 2nd Day Air A.M., Service to mail any item to an UPS Worldwide Express Plus, and UPS DHL Express (DHL): DHL Same Day IRS P.O. box address. Worldwide Express. Service, DHL Next Day 10:30 am, DHL Next Day 12:00 pm, DHL Next Day 3:00 pm, and DHL 2nd Day Service. -9-

10 Form Tax Return Page Reference Questions about what to put on a line? Help is on the page number in the circle. Department of the Treasury Internal Revenue Service 1040 U.S. Individual Income Tax Return 2007 (99) Label 12 (See instructions on page 12.) Use the IRS label. Otherwise, please print or type. L A B E L H E R E Presidential Election Campaign Filing Status Check only one box. Exemptions If more than four dependents, see page 15. Income Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. If you did not get a W-2, see page 19. Enclose, but do not attach, any payment. Also, please use Form 1040-V. Adjusted Gross Income For the year Jan. 1 Dec. 31, 2007, or other tax year beginning, 2007, ending, 20 Your first name and initial If a joint return, spouse s first name and initial FOR REFERENCE ONLY DO NOT FILE Check 12 here if you, or your spouse if filing jointly, want $3 to go to this fund (see page 12) 15 Last name Last name Home address (number and street). If you have a P.O. box, see page 12. City, town or post office, state, and ZIP code. If you have a foreign address, see page Wages, salaries, tips, etc. Attach Form(s) W a Taxable interest. Attach Schedule B if required 8a b Tax-exempt interest. Do not include on line 8a 8b 19 9a Ordinary dividends. Attach Schedule B if required B-1 9a b Qualified dividends (see page 19) 9b Taxable refunds, credits, or offsets of state and local income taxes (see page 20) Alimony received Business income or (loss). Attach Schedule C or C-EZ Capital gain or (loss). Attach Schedule D if required. If not required, check here Other gains or (losses). Attach Form a IRA distributions 15a 21 b Taxable amount (see page 21) 15b 16a Pensions and annuities 16a 22 b Taxable amount (see page 22) 16b 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E Farm income or (loss). Attach Schedule F Unemployment compensation 19 20a Social security benefits 20a 24 b Taxable amount (see page 24) 20b 21 Other income. List type and amount (see page 24) Add the amounts in the far right column for lines 7 through 21. This is your total income Educator expenses (see page 26) Apt. no OMB No Your social security number Spouse s social security number 1 Single 12 4 Head of household (with qualifying person). (See page 13.) If 2 Married filing jointly (even if only one had income) 14 the qualifying person is a child but not your dependent, enter 13 3 Married filing separately. Enter spouse s SSN above this child s name here. and full name here. 5 Qualifying widow(er) with dependent child (see page 14) Boxes checked 6a Yourself. If someone can claim you as a dependent, do not check box 6a on 6a and 6b 14 b Spouse No. of children c Dependents: (4) if qualifying (2) Dependent s (3) Dependent s on 6c who: child for child tax social security number relationship to (1) First name Last name you credit (see page 15) d Total number of exemptions claimed 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ Health savings account deduction. Attach Form Moving expenses. Attach Form One-half of self-employment tax. Attach Schedule SE Self-employed SEP, SIMPLE, and qualified plans Self-employed health insurance deduction (see page 26) Penalty on early withdrawal of savings 30 31a Alimony paid b Recipient s SSN 31a 32 IRA deduction (see page 27) Student loan interest deduction (see page 30) Tuition and fees deduction. Attach Form Domestic production activities deduction. Attach Form Add lines 23 through 31a and 32 through Subtract line 36 from line 22. This is your adjusted gross income For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 83. IRS Use Only Do not write or staple in this space. Cat. No B You must enter your SSN(s) above. lived with you did not live with you due to divorce or separation (see page 16) Dependents on 6c not entered above Add numbers on lines above 12 Checking a box below will not change your tax or refund. You Spouse Form 1040 (2007) -10-

11 Tax Return Page Reference Questions about what to put on a line? Help is on the page number in the circle. Form 1040 (2007) Tax and Credits Standard Deduction for People who checked any box on line 39a or 39b or who can be claimed as a dependent, see page 31. All others: Single or Married filing separately, $5,350 Married filing jointly or Qualifying widow(er), $10,700 Head of household, $7,850 Other Taxes Payments If you have a qualifying child, attach Schedule EIC. Refund Direct deposit? See page 59 and fill in 74b, 74c, and 74d, or Form Amount You Owe Third Party Designee Sign Here Joint return? See page 13. Keep a copy for your records. Paid Preparer s Use Only 38 Amount from line 37 (adjusted gross income) 38 39a Check You were born before January 2, 1943, Blind. Total boxes if: Spouse was born before January 2, 1943, Blind. checked 39a b If your spouse itemizes on a separate return or you were a dual-status alien, see A-1page 31 and check here 39b 40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line a b If line 72 is more than line 63, subtract line 63 from line 72. This is the amount you overpaid Amount of line 73 you want refunded to you. If Form 8888 is attached, check here Routing number c Type: Checking Savings d Account number 75 Amount of line 73 you want applied to your 2008 estimated tax Amount you owe. Subtract line 72 from line 63. For details on how to pay, see page Estimated tax penalty (see page 61) Do you want to allow another person to discuss this return with the IRS (see page 61)? Yes. Complete the following. Designee s name 61 Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Spouse s signature. If a joint return, both must sign. Preparer s signature Firm s name (or yours if self-employed), address, and ZIP code Phone no. ( ) Date Date Your occupation Spouse s occupation Date Check if self-employed EIN Phone no a Personal identification number (PIN) Daytime phone number ( ) 62 Preparer s SSN or PTIN ( ) NEW Page 2 No Form 1040 (2007) 42 If line 38 is $117,300 or less, multiply $3,400 by the total number of exemptions claimed on line 6d. If line 38 is over $117,300, see the worksheet on page Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter Tax (see page 33). Check if any tax is from: a Form(s) 8814 b Form 4972 c Form(s) Alternative minimum tax (see page 36). Attach Form 6251 NEW Add lines 44 and Credit for child and dependent care expenses. Attach Form Credit for the elderly or the disabled. Attach Schedule R Education credits. Attach Form Residential energy credits. Attach Form Foreign tax credit. Attach Form 1116 if required Child tax credit (see page 39). Attach Form 8901 if required Retirement savings contributions credit. Attach Form Credits from: a Form 8396 b Form c Form Other credits: a Form 3800 b Form 8801 c Form Add lines 47 through 55. These are your total credits Subtract line 56 from line 46. If line 56 is more than line 46, enter Self-employment tax. Attach Schedule SE Unreported social security and Medicare tax from: a Form 4137 b Form Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required Advance earned income credit payments from Form(s) W-2, box Household employment taxes. Attach Schedule H Add lines 57 through 62. This is your total tax Federal income tax withheld from Forms W-2 and estimated tax payments and amount applied from 2006 return a Earned income credit (EIC) 66a b Nontaxable combat pay election 66b Excess social security and tier 1 RRTA tax withheld (see page 59) Additional child tax credit. Attach Form Amount paid with request for extension to file (see page 59) 70 Payments from: a Form 2439 b Form 4136 c Form Refundable credit for prior year minimum tax from Form 8801, line NEW 72 Add lines 64, 65, 66a, and 67 through 71. These are your total payments

12 Form 1040 Line 1 Line Instructions for Form 1040 IRS e-file takes the guesswork out of preparing your return. You may also be eligible to use Free File to file your federal income tax return. Visit for details. Section references are to the Internal Revenue Code. Name and Address Foreign Address This fund helps pay for Presidential elec- tion campaigns. The fund reduces candi- dates dependence on large contributions from individuals and groups and places candidates on an equal financial footing in the general election. If you want $3 to go to this fund, check the box. If you are filing a joint return, your spouse can also have $3 go to the fund. If you check a box, your tax or refund will not change. Enter the information in the following order: City, province or state, and country. Use the Peel-Off Label Follow the country s practice for entering the postal code. Do not abbreviate the Using your peel-off name and address label country name. on the back of this booklet will speed the processing of your return. It also prevents common errors that can delay refunds or result in unnecessary notices. Put the label Death of a Taxpayer on your return after you have finished it. See page 77. Cross out any incorrect information and print the correct information. Add any missing items, such as your apartment number. Address Change An incorrect or missing SSN can increase your tax or reduce your refund. To apply for an SSN, fill in Form SS-5 and return it, along with the appropriate evidence docu- ments, to the Social Security Administration (SSA). You can get Form SS-5 online at from your local SSA office, or by calling the SSA at It usually takes about 2 weeks to get an SSN once the SSA has all the evidence and information it needs. Check that your SSN on your Forms W-2 and 1099 agrees with your social se- curity card. If not, see page 76 for more details. If the address on your peel-off label is not your current address, cross out your old address and print your new address. If you plan to move after filing your return, use Form 8822 to notify the IRS of your new address. Name Change If you changed your name because of marriage, divorce, etc., be sure to report the change to your local Social Security Administration office before filing your return. This prevents delays in processing your return and issuing refunds. It also safeguards your future social security benefits. See page 76 for more details. If you received a peel-off label, cross out your former name and print your new name. What if You Do Not Have a Social Security Number (SSN) IRS Individual Taxpayer Identification Numbers (ITINs) for Aliens If you are a nonresident or resident alien and you do not have and are not eligible to get an SSN, you must apply for an ITIN. Your spouse is filing a separate return. Presidential Election Campaign Fund Filing Status Check only the filing status that applies to you. The ones that will usually give you the lowest tax are listed last. Married filing separately. Single. Head of household. Married filing jointly or qualifying widow(er) with dependent child. TIP Label? For details on how to do so, see Form W-7 Line 1 Print or type the information in the spaces provided. If you are married filing a separate return, enter your spouse s name on line 3 instead of below your name. If you filed a joint return for TIP 2006 and you are filing a joint return for 2007 with the same spouse, be sure to enter your names and SSNs in the same order as on your 2006 return. More than one filing status can apply to you. Choose the one that will give you the lowest tax. and its instructions. It usually takes about 4-6 weeks to get an ITIN. Single If you already have an ITIN, enter it You can check the box on line 1 if any of wherever your SSN is requested on your the following was true on December 31, tax return Note. An ITIN is for tax use only. It does not entitle you to social security benefits or You were never married. change your employment or immigration You were legally separated, according status under U.S. law. to your state law, under a decree of divorce or separate maintenance. Nonresident Alien Spouse You were widowed before If your spouse is a nonresident alien, he or January 1, 2007, and did not remarry before she must have either an SSN or an ITIN if: the end of But if you have a depen- P.O. Box You file a joint return, dent child, you may be able to use the qual- Enter your box number only if your post You file a separate return and claim an ifying widow(er) filing status. See the office does not deliver mail to your home. exemption for your spouse, or instructions for line 5 on page 14. Need more information or forms? See page

13 Form 1040 Lines 2 Through 4 You may be able to file as head Dependent. To find out if someone is your Line 2 TIP of household if you had a child dependent, see the instructions for line 6c living with you and you lived that begin on page 15. Married Filing Jointly apart from your spouse during Exception to time lived with you. Tempothe last 6 months of See Married You can check the box on line 2 if any of rary absences for special circumstances, the following apply. persons who live apart on this page. such as for school, vacation, medical care, You were married at the end of 2007, military service, and detention in a juvenile even if you did not live with your spouse at facility, count as time lived in the home. If the end of Line 4 the person for whom you kept up a home Your spouse died in 2007 and you did was born or died in 2007, you can still file not remarry in Head of Household as head of household as long as the home You were married at the end of 2007, This filing status is for unmarried individuthe year he or she was alive. Also see Kid- was that person s main home for the part of and your spouse died in 2008 before filing a als who provide a home for certain other 2007 return. persons. (Some married persons who live napped child on page 17, if applicable. For federal tax purposes, a marriage apart are considered unmarried. See Mar- Keeping up a home. To find out what is means only a legal union between a man ried persons who live apart on this page. If included in the cost of keeping up a home, and a woman as husband and wife. A husmay also be considered unmarried. See If you used payments you received you are married to a nonresident alien, you see Pub band and wife filing jointly report their combined income and deduct their com- Nonresident alien spouse on this page.) under Temporary Assistance for Needy bined allowable expenses on one return. You can check the box on line 4 only if you Families (TANF) or other public assistance They can file a joint return even if only one were unmarried or legally separated (ac- programs to pay part of the cost of keeping had income or if they did not live together cording to your state law) under a decree of up your home, you cannot count them as all year. However, both persons must sign divorce or separate maintenance at the end money you paid. However, you must inof 2007 and either Test 1 or Test 2 below clude them in the total cost of keeping up the return. Once you file a joint return, you cannot choose to file separate returns for applies. your home to figure if you paid over half that year after the due date of the return. the cost. Test 1. You paid over half the cost of keep- Joint and several tax liability. If you file a ing up a home that was the main home for Married persons who live apart. Even if joint return, both you and your spouse are all of 2007 of your parent whom you can you were not divorced or legally separated generally responsible for the tax and any claim as a dependent, except under a multiinterest or penalties due on the return. This ple support agreement (see page 17). Your married if all of the following apply. at the end of 2007, you are considered un- means that if one spouse does not pay the parent did not have to live with you. You lived apart from your spouse for tax due, the other may have to. However, the last 6 months of Temporary absee Innocent Spouse Relief on page 76. Test 2. You paid over half the cost of keep- sences for special circumstances, such as Nonresident aliens and dual-status aliens. ing up a home in which you lived and in for business, medical care, school, or mili- Generally, a husband and wife cannot file a which one of the following also lived for tary service, count as time lived in the joint return if either spouse is a nonresident more than half of the year (if half or less, home. alien at any time during the year. However, see Exception to time lived with you on this You file a separate return from your if you were a nonresident alien or a page). spouse. dual-status alien and were married to a U.S. 1. Any person whom you can claim as a You paid over half the cost of keeping citizen or resident alien at the end of 2007, dependent. But do not include: up your home for you may elect to be treated as a resident alien and file a joint return. See Pub. 519 a. Your qualifying child (as defined in Your home was the main home of for details. Step 1 on page 15) whom you claim as your your child, stepchild, or foster child for dependent based on the rule for Children of more than half of 2007 (if half or less, see divorced or separated parents that begins Exception to time lived with you above). on page 16, You can claim this child as your de- Line 3 b. Any person who is your dependent pendent or could claim the child except that only because he or she lived with you for the child s other parent can claim him or Married Filing Separately all of 2007, or her under the rule for Children of divorced If you are married and file a separate return, c. Any person you claimed as a depenyou will usually pay more tax than if you dent under a multiple support agreement. Adopted child. An adopted child is al- or separated parents that begins on page 16. use another filing status for which you See page 17. ways treated as your own child. An adopted qualify. Also, if you file a separate return, 2. Your unmarried qualifying child who child includes a child lawfully placed with you cannot take the student loan interest is not your dependent. you for legal adoption. deduction, the tuition and fees deduction, Foster child. 3. Your married qualifying child who is A foster child is any child the education credits, or the earned income not your dependent only because you can placed with you by an authorized place- credit. You also cannot take the standard be claimed as a dependent on someone ment agency or by judgment, decree, or deduction if your spouse itemizes deducelse s 2007 return. other order of any court of competent juris- tions. diction. Generally, you report only your own 4. Your child who is neither your dependent nor your qualifying child because of Nonresident alien spouse. You are consid- income, exemptions, deductions, and credered unmarried for head of household filing the rule for Children of divorced or sepaits. Different rules apply to people in comstatus if your spouse was a nonresident rated parents that begins on page 16. munity property states. See page 18. alien at any time during the year and you do Be sure to enter your spouse s SSN or If the child is not your dependent, enter not choose to treat him or her as a resident ITIN on Form 1040 unless your spouse the child s name on line 4. If you do not alien. To claim head of household filing does not have and is not required to have an enter the name, it will take us longer to status, you must also meet Test 1 or Test 2 SSN or ITIN. process your return. on this page Need more information or forms? See page 82.