IRS Publication 550

IRS Publication 550

IRS Publication 550 is a document published by the Internal Revenue Service (IRS) that provides information on how investment income and expenses are to be treated when filing taxes. Interest income is covered in detail, including money market funds, certificates of deposit, penalties for early withdrawal, gifts for opening accounts, interest on insurance dividends, prepaid insurance premiums, U.S. obligations, interest on tax refunds, installment sale proceeds, interest on insurance contracts, how to treat usurious interest, interest on frozen deposits, below-market loans, foreign interest, U.S. Savings Bonds, educational savings bonds, bonds sold between interest dates, U.S. Treasury Bills and Notes, State or Local Government Obligations, mortgage revenue bonds, and Original Issue Discount (OID). Treatment of dividends is covered, including ordinary dividends, the most common type of distribution from a corporation or a mutual fund. It includes information on the tax treatment of investment income and expenses for individual shareholders of mutual funds or other regulated investment companies, such as money market funds, according to the IRS. It also explains what investment income is taxable and what investment expenses are deductible. IRS Publication 550 explains what investment expenses are deductible, when gains and losses from the sale of investment property are to be reported and what type of investments are considered taxable. Investors who purchase U.S. property from a foreign individual or firm may be required to withhold income taxes. IRS Publication 550 is a document published by the Internal Revenue Service (IRS) that provides information on how investment income and expenses are to be treated when filing taxes.

DEFINITION of IRS Publication 550

IRS Publication 550 is a document published by the Internal Revenue Service (IRS) that provides information on how investment income and expenses are to be treated when filing taxes. IRS Publication 550 explains what investment expenses are deductible, when gains and losses from the sale of investment property are to be reported and what type of investments are considered taxable.

Understanding IRS Publication 550

Investors who purchase U.S. property from a foreign individual or firm may be required to withhold income taxes. In addition, U.S. citizens must report income earned on foreign investments, even if a Form 1099 was not issued. This is explained in more detail in IRS Publication 515. Special tax rules apply to employees who exercise stock options. More information is provided in IRS Publication 525.

What's In IRS Publication 550

This is one of the agency's most complex topics, covering information on the tax treatment of investment income and expenses. It includes information on the tax treatment of investment income and expenses for individual shareholders of mutual funds or other regulated investment companies, such as money market funds, according to the IRS.

It also explains what investment income is taxable and what investment expenses are deductible. It explains when and how to show these items on your tax return. There's information on how to determine and report gains and losses on the disposition of investment property. Another key section regards property trades and tax shelters.

Interest income is covered in detail, including money market funds, certificates of deposit, penalties for early withdrawal, gifts for opening accounts, interest on insurance dividends, prepaid insurance premiums, U.S. obligations, interest on tax refunds, installment sale proceeds, interest on insurance contracts, how to treat usurious interest, interest on frozen deposits, below-market loans, foreign interest, U.S. Savings Bonds, educational savings bonds, bonds sold between interest dates, U.S. Treasury Bills and Notes, State or Local Government Obligations, mortgage revenue bonds, and Original Issue Discount (OID).

Treatment of dividends is covered, including ordinary dividends, the most common type of distribution from a corporation or a mutual fund. Qualified dividends are covered, which are subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain.  Capital gain distributions, which are paid or credited to your account by mutual funds and real estate investment trusts (REITs), are covered in detail.

Related terms:

Investment Income

Investment income is money derived from interest payments, dividends, or capital gains realized on the sale of stock or other assets. read more

IRS Publication 516

IRS Publication 516 is published by the IRS and details the income tax requirements for U.S. citizens working for the government in a foreign country. read more

IRS Publication 527

IRS Publication 527 is a document providing tax information to those who rent out their residential properties for part or all of the year. read more

IRS Publication 541

Publication 541 is a document published by the Internal Revenue Service (IRS) that provides tax information for partners and partnerships. read more

IRS Publication 550

IRS Publication 550 provides information on how investment income and expenses are to be treated when filing taxes.  read more

IRS Publication 552

A document published by the IRS that provides information for individuals on which documents to keep on file and for how long, for tax filing purposes. read more

IRS Publication 575

IRS Publication 575 is the document that provides the details on how to report income from pensions and annuities on a tax return. read more

Mutual Fund

A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. read more

Taxes

A mandatory contribution levied on corporations or individuals by a level of government to finance government activities and public services  read more

Tax Shelter

A tax shelter is a vehicle used by taxpayers to minimize or decrease their taxable incomes and, therefore, tax liabilities. read more