Page 77 - 2020 Publication 17

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
primarily designed to reduce consumption of that person, and only restores you to the posi- a. An agency of a state or one of its polit-
electricity or natural gas, or improve the man- tion you were in before the loss, the payment ical subdivisions, or
agement of energy demand. isn’t includible in your income. b. A qualified foster care placement
Dwelling unit. This includes a house, apart- Fees for services. Include all fees for your agency.
ment, condominium, mobile home, boat, or sim- services in your income. Examples of these Difficulty-of-care payments. These are
ilar property. If a building or structure contains fees are amounts you receive for services you payments that are designated by the payer as
both dwelling and other units, any subsidy must perform as: compensation for providing the additional care
be properly allocated. • A corporate director; that’s required for physically, mentally, or emo-
Estate and trust income. An estate or trust, • An executor, administrator, or personal tionally handicapped qualified foster individuals.
unlike a partnership, may have to pay federal in- representative of an estate; A state must determine that this compensation
come tax. If you’re a beneficiary of an estate or is needed, and the care for which the payments
trust, you may be taxed on your share of its in- • A manager of a trade or business you op- are made must be provided in the foster care
come distributed or required to be distributed to erated before declaring chapter 11 bank- provider's home in which the qualified foster in-
you. However, there is never a double tax. Es- ruptcy; dividual was placed.
tates and trusts file their returns on Form 1041, • A notary public; or Certain Medicaid waiver payments are trea-
U.S. Income Tax Return for Estates and Trusts, • An election precinct official. ted as difficulty-of-care payments when re-
and your share of the income is reported to you ceived by an individual care provider for caring
on Schedule K-1 (Form 1041). Nonemployee compensation. If you aren’t for an eligible individual living in the provider's
home. See Notice 2014-4, available at
Current income required to be distrib- an employee and the fees for your services IRS.gov/irb/2014-4_IRB/ar06.html, and related
from a single payer in the course of the payer's
uted. If you’re the beneficiary of an estate or trade or business total $600 or more for the questions and answers, available at IRS.gov/
trust that must distribute all of its current in- year, the payer should send you a Form Individuals/Certain-Medicaid-Waiver-
come, you must report your share of the distrib- 1099-MISC. You may need to report your fees Payments-May-Be-Excludable-From-Income,
utable net income, whether or not you actually as self-employment income. See Self-Em- for more information.
received it. ployed Persons in chapter 1 for a discussion of You must include in your income diffi-
Current income not required to be dis- when you’re considered self-employed. culty-of-care payments to the extent they’re re-
tributed. If you’re the beneficiary of an estate Corporate director. Corporate director fees ceived for more than:
or trust and the fiduciary has the choice of are self-employment income. Report these pay- • 10 qualified foster individuals under age
whether to distribute all or part of the current in- ments on Schedule C (Form 1040). 19, or
come, you must report: Personal representatives. All personal • Five qualified foster individuals age 19 or
• All income that’s required to be distributed representatives must include in their gross in- older.
to you, whether or not it’s actually distrib- come fees paid to them from an estate. If you
Maintaining space in home. If you’re paid
uted, plus aren’t in the trade or business of being an exec- to maintain space in your home for emergency
• All other amounts actually paid or credited utor (for instance, you’re the executor of a foster care, you must include the payment in
to you, friend's or relative's estate), report these fees your income.
up to the amount of your share of distributable on Schedule 1 (Form 1040), line 8. If you’re in Reporting taxable payments. If you re-
the trade or business of being an executor, re-
net income. port these fees as self-employment income on ceive payments that you must include in your
How to report. Treat each item of income Schedule C (Form 1040). The fee isn’t includi- income and you’re in business as a foster care
the same way that the estate or trust would treat ble in income if it’s waived. provider, report the payments on Schedule C
it. For example, if a trust's dividend income is Manager of trade or business for bank- (Form 1040). See Pub. 587, Business Use of
distributed to you, you report the distribution as ruptcy estate. Include in your income all pay- Your Home, to help you determine the amount
dividend income on your return. The same rule ments received from your bankruptcy estate for you can deduct for the use of your home.
applies to distributions of tax-exempt interest managing or operating a trade or business that Found property. If you find and keep property
and capital gains. you operated before you filed for bankruptcy. that doesn’t belong to you that has been lost or
The fiduciary of the estate or trust must tell Report this income on Schedule 1 (Form 1040), abandoned (treasure trove), it’s taxable to you
you the type of items making up your share of line 8. at its fair market value in the first year it’s your
the estate or trust income and any credits undisputed possession.
you’re allowed on your individual income tax re- Notary public. Report payments for these
turn. services on Schedule C (Form 1040). These Free tour. If you received a free tour from a
payments aren’t subject to self-employment tax. travel agency for organizing a group of tourists,
Losses. Losses of estates and trusts gener- See the separate Instructions for Schedule SE you must include its value in your income. Re-
ally aren’t deductible by the beneficiaries. (Form 1040) for details. port the fair market value of the tour on Sched-
Grantor trust. Income earned by a grantor Election precinct official. You should re- ule 1 (Form 1040), line 8, if you aren’t in the
trade or business of organizing tours. You can’t
trust is taxable to the grantor, not the benefi- ceive a Form W-2 showing payments for serv- deduct your expenses in serving as the volun-
ciary, if the grantor keeps certain control over ices performed as an election official or election tary leader of the group at the group's request. If
the trust. (The grantor is the one who transfer- worker. Report these payments on line 1 of you organize tours as a trade or business, re-
red property to the trust.) This rule applies if the Form 1040 or 1040-SR. port the tour's value on Schedule C (Form
property (or income from the property) put into Foster care providers. Generally, payment 1040).
the trust will or may revert (be returned) to the you receive from a state, political subdivision, or
grantor or the grantor's spouse. a qualified foster care placement agency for Gambling winnings. You must include your
Generally, a trust is a grantor trust if the caring for a qualified foster individual in your gambling winnings in income on Schedule 1
grantor has a reversionary interest valued (at home is excluded from your income. However, (Form 1040), line 8. If you itemize your deduc-
the date of transfer) at more than 5% of the you must include in your income payment to the tions on Schedule A (Form 1040), you can de-
value of the transferred property. extent it’s received for the care of more than five duct gambling losses you had during the year,
Expenses paid by another. If your personal qualified foster individuals age 19 years or but only up to the amount of your winnings. If
you’re in the trade or business of gambling, use
expenses are paid for by another person, such older. Schedule C (Form 1040).
as a corporation, the payment may be taxable A qualified foster individual is a person who:
to you depending upon your relationship with 1. Is living in a foster family home; and Lotteries and raffles. Winnings from lotter-
that person and the nature of the payment. But ies and raffles are gambling winnings. In addi-
if the payment makes up for a loss caused by 2. Was placed there by: tion to cash winnings, you must include in your
Chapter 8 Other Income Page 73