Washington DC Tax Form D-40 - Individual Income Tax Return Instructions

General Information for D-40

Who must file a DC income tax return?

You must file a 2008 DC individual income tax return if –

  • You were a DC resident in 2008 and were required to file a federal income tax return, or
  • You maintained a place of residence in DC for a total of 183 days or more during 2008 even if your permanent residence was outside DC, or
  • You were a member of the U.S. armed forces and DC was your home of record for all or part of 2008, or
  • You are the spouse/registered domestic partner of an exempt military person or another exempt person, such as a non-resident presidential appointee and your meet any of the above requirements.

Do not file a 2008 DC income tax return if -

  • You were not required to file a 2008 federal income tax return.
  • You were not a resident of DC at any time during 2008.
  • You were an elected member of the U.S. government who is not domiciled in DC.
  • You were an employee on the personal staff of an elected member of the U.S. Congress and you and the elected member are bona fide residents of the same state.
  • You were a member of the U.S. executive Branch appointed by the President, subject to confirmation by the U.S. senate, whose tenure of office is at the pleasure of the President and you were not domiciled in DC during any part of 2008.
  • You were a justice of the U.S. supreme Court and were not domiciled in DC during any part of 2008.

Special filing circumstances

Part-year status- If you were a DC resident (or your permanent home was in DC) for fewer than 183 days, you must file a form D-40 and indicate in the Filing status section that you are a part-year resident. see page 9.

Amended return- File an amended DC return if your DC tax liability for a prior open tax year (usually 3 years) has changed. to file an amended return for the current year, complete another 2008 DC return with the corrected information and fill in the amended return oval on the form. attach a list showing the changes covered by this amended return. File the amended return separately from any other return. By filing an amended return as soon as possible, you will reduce the penalty and interest charges on any balance due.

If you are filing an amended return for a prior year, attach a copy of the return filed for that year, fill in the amended return oval on the form and attach a statement explaining the items amended. You can download forms from www.taxpayerservicecenter.com or call 202-442-6546 to request forms by mail.

If the Internal revenue service adjusts your individual federal tax return, you must file an amended DC return within 90 days of receiving notice of the federal adjustment. attach a copy of the adjusted federal return.

Refund of DC taxes withheld- If you were a DC resident but are not required to file a DC return, you must file a DC return to request a refund of any DC taxes withheld. If you were not a DC resident and are not required to file a DC return, but DC tax was withheld from your wages, file Form D-40B, Nonresident request for refund.

Business income of more than $12,000 (D-40 filers)- If you have gross income from DC sources of more than $12,000 from any business or business activity, including rental of property, you must file Form D-30, Unincorporated Business Franchise tax return, and report that income. the only exception is if you are specifically exempted by law. on Line 10 of the D-40 you may subtract any of your income reported and taxed on DC forms D-20, D-30 or D-41.

Which form should you file?

D-40EZ Income Tax Return for Single and Joint Filers with No Dependents

You may use this simpler form if you meet all of the following:

  • Your filing status is single or filing jointly with a spouse or a *registered domestic partner.;
  • You do not claim dependents;
  • You do not claim an exemption for being age 65 or older or legally blind;
  • You were a DC resident from January 1 through December 31, 2008;
  • Your income is $100,000 or less and consists only of wages, salaries and tips; taxable scholarships or fellowship grants; unemployment compensation; and/or interest and dividends ($1500 maximum);
  • You have no federal adjustments to income;
  • You do not itemize deductions;
  • You do not file DC schedules h, L, I, N, s or U;
  • You do not make estimated income tax payments;
  • You do not claim a deduction for a payment to the DC college savings plan; and
  • You do not claim a long-term care insurance premium deduction. *Domestic partners registered with the Vital records Division of the DC Department of health may file a DC joint return.

D-40 Individual Tax Return

Use this form if you cannot use the D-40eZ.

D-41 Fiduciary Income Tax Return

Use this form if you are the fiduciary of a DC estate or trust and:

  • the gross income for the estate is $1,675 or more for the taxable year; or
  • the gross income for the trust is $100 or more for the taxable year.

When are your Taxes Due?

File your return and pay any taxes due by april 15, 2009. If the due date for filing a return falls on a saturday, sunday or legal holiday, the return is due the next business day.

FR-127 Extension of Time to File Income Tax Return

File the Fr-127 by april 15, 2009 to request a six-month extension of time to file if you cannot file your return by the due date. Do not use the federal extension form to request an extension of time to file a DC return.

Filing a request for an extension of time to file does not extend the due date for paying any tax you may owe. Before filing for an extension, estimate the tax you will owe and pay it with the Fr-127 by april 15, 2009. attach a copy of your Fr-127 to the D-40 when you file it.

Penalty and interest charges are imposed on any tax not paid on time with the extension request.

How to file your return

By mail

  • If mailing a return with a payment, send it to:

    Office of Tax and Revenue
    PO Box 7182 Washington,
    DC 20044-7182

  • If mailing a refund request return or a no money due return, send it to:

    Office of Tax and Revenue
    PO Box 209 Washington,
    DC 20044-0209

Mail Labels

there are two adhesive mail labels on the back flap of your return envelope. If you are sending a payment with your return, use the Po Box 7182 mail label on your return envelope.

If you are filing a no money due or a refund requested return, use the Po Box 209 mail label on your return envelope.

Do not include more than one return per envelope.

By DC e-file

E-File offers most DC individual income taxpayers a full Federal/state electronic Filing program. there are two ways in which taxpayers can file their federal and DC returns together electronically:

  1. through a tax practitioner who is an authorized e-file provider; or
  2. through a commercial online filing service, which allows taxpayers to transmit their DC and Federal returns electronically from their PC for a fee.

Visit our website at www.taxpayerservicecenter.com for more information.

In addition, we offer a free and easy way to file your DC income tax return on the Internet directly with the office of tax and revenue (otr). the electronic taxpayer service Center (etsC) allows you to file your D-40 and D-40eZ, 24 hours a day, 7 days a week. this Internet site provides a full calculation of DC tax and credits. this filing option is available to taxpayers who filed a D-40 or D-40eZ tax return in 2007. You may also use etsC to file and make payments with the D-40es and Fr-127.

To file online, visit our website at www.taxpayerservicecenter.com for more information.

If you use one of our e-file options to file your DC return, you may also choose to have your refund deposited directly into your checking or savings account. see the instructions on either page 8 or 16.

Refund Status Inquiry

to check on your refund refer to www.taxpayerservicecenter.com.

Payment options

Check or money order

Include a check or money order, payable to the DC treasurer, with your completed return. Write your social security number, daytime telephone number, “2008” and the type of form filed “D-40” or “D40EZ” on your payment. Attach your payment to the Form D-40P voucher provided in this booklet.

Make sure your check will clear- You will be charged a $65 fee if your check is returned to us.

Credit card

24-hour service-You may pay the amount you owe on your 2008 tax return using Visa, masterCard, Discover, or american express. You will be charged a fee equal to 2.5% of your tax payment. the fee is paid directly to the official Payments Corporation, the credit card service provider. Payment is effective the day you charge it.

Online- Visit the Website for Credit Card Payment information.

By Phone

  1. Dial 1-800-272-9829 (available 7 days a week, 24 hours a day)
  2. enter code 6000 (District of Columbia's Jurisdiction Code)
  3. Complete the telephone transaction directly with the credit card processing vendor, official Payments Corporation. You will be given a confirmation number; please keep it with your records.

Electronic check

Online- Visit the Website for electronic Check Payment information.

By Phone

  1. Dial 1-800-272-9829 (available 7 days a week, 24 hours a day)
  2. enter code 6000 (District of Columbia's Jurisdiction Code)
  3. Complete the telephone transaction directly with the electronic- check processing vendor, official Payments Corporation. You will be given a confirmation number; please keep it with your records.

How to avoid penalties and interest

File your return on time- otr charges a 5% per-month penalty for failure to file a return or pay any tax due on time. this penalty is calculated on the unpaid tax for each month or part of a month that the return is not filed or the tax is not paid. the maximum penalty is an additional amount equal to 25% of the tax due.

otr charges interest of 10% per year, compounded daily, on any tax not paid on time. Interest is calculated from the due date of the return to the date paid. Interest on any underpayment of tax will accrue even if you requested an extension of time to file your return.

Estimate your taxes accurately and pay as you go—D-40 filers - You need to estimate the amount of taxes you will owe and pay your taxes periodically throughout the year. You may have your employer withhold taxes from your earnings, make estimated tax payments yourself, or both.

If you expect to owe $100 or more in taxes after subtracting your withheld tax and any credits from your estimated tax payments, you must make additional payments on your own. You can request the booklet, D-40es, estimated Payment for Individual Income tax, by calling 202-442-6546. the D-40es booklet contains payment vouchers and explains the estimated tax payment rules and due dates.

You will be charged 10% per year, compounded daily, for a late payment or for an underpayment of taxes. an underpayment occurs if your withheld taxes, credits and estimated tax payments do not equal at least 90% of the amount of tax you owe on your DC return for 2008 or 100% of the amount of tax owed on your 2007 DC return. this penalty will be assessed automatically by otr's integrated tax system. For additional information, see DC Form D-2210, Underpayment of estimated Income tax by Individuals.

Do not understate your taxes- There may be a penalty on an understatement of the tax required to be shown on your return if the understatement exceeds the greater of:

  • 10% of the tax required to be shown on the individual income tax return; or
  • $2,000.

The penalty is 20% of the excess of the amount required to be shown on the return over the tax shown on the return.

Tax preparers must pay a penalty for understating taxes for any of the following:

  • the refund or amount due is based on unrealistic information; or
  • the preparer should have been aware of a relevant law or regulation; or
  • relevant facts about the return are not adequately disclosed. or Penalties range from $250 to $10,000.

Instructions for the D-40

Getting started

To complete this form, you should have the following –

  • a copy of your completed 2008 federal return (Form 1040, 1040a, or 1040eZ) and any additional forms, schedules or worksheets related to the return.
  • a copy of your completed state return if you filed an income tax return with another state.
  • Copies of all your 2008 W-2 and 1099 forms.
  • a calculator.
  • a pen with black ink.

Before completing your D-40 you will need to do a series of calculations contained in these instructions and copy many of the line items and totals onto your D-40. You may also need to attach DC schedules, forms and worksheets to your completed Form D-40.

Schedule S, Supplemental Information and Dependents.

Schedule s provides space for reporting a foreign or an in-careof address, dependent and head of household information and itemized deductions summary amounts. It contains Calculation G for use in determining the number of exemptions that you may claim and Calculation J which is used to determine the DC tax amount for married or registered domestic partners filing separately on the same return. If you itemized on your federal return, you must itemize on your DC return. Fill in the federal itemized deduction information at the bottom of page 2 of schedule s. Unless instructed otherwise, if you complete any part of schedule s, attach that schedule to your return.

Schedule H, Homeowner and Renter Property Tax Credit.

This schedule allows eligible residents to claim a property tax credit against their income tax liability. See schedule h in this booklet.

Schedule U, Additional Miscellaneous Credits and Contributions.

This schedule lists certain additional nonrefundable and refundable credits that you may be able to claim. It also lists several funds to which you may wish to contribute. see schedule U in this booklet.

Schedule I, Additions to and Subtractions from Federal Adjusted Gross Income.

This schedule combines Calculations a and B. see schedule I in this booklet.

Schedule N, DC Non-Custodial Parent EITC Claim.

This schedule is used to determine whether a non-custodial parent making court-ordered child support payments may claim the DC earned Income tax Credit. see schedule N in this booklet.

Part-year residents

You are a part-year DC resident if, during the year, you moved out of DC with the intent to permanently leave or moved into DC with the intent to permanently stay.

NOTE: A temporary absence (even a lengthy one) from your permanent home does not make you a part-year resident. You will be given guidance for completing your D-40 throughout these instructions.

How to file a part-year return

If DC was your home or permanent residence for less than a year, fill in the oval on Line 2 of the D-40 and prepare a worksheet showing the type and amount of income received:

  • During the time you resided in DC;
  • During the time you were a non-resident; and
  • the total income reported on your federal income tax return.

If you received a state income tax refund while a resident of DC, do not include it as DC income.

If you claimed itemized deductions on your federal income tax return, include, for DC tax purposes, only those relating to the time you were a DC resident. If the itemized deductions were subject to a limitation on the federal return, you must complete Calculation D on page 11. Your federal worksheet will assist you in completing schedule I (Calculations a and B) and Calculations C, D, F (if applicable) and h. Keep a copy of your worksheet, a copy of your tax return and all calculations.

Filling out the form

To aid us in processing your return quickly and accurately, please follow these guidelines.

  • Do not print outside the boxes.
  • Use black ink.
  • Print in CAPITAL letters.
  • Leave a space between words and between words and numbers.
  • Write 3s with a rounded top, not a flat top. Write 7s without a middle bar.
  • Fill in ovals completely.
  • Do not enter cents. Round cents to the nearest dollar.

 Note:Your social security number is used for tax administration purposes only.

Amended return- Fill in the amended return oval.

Filing for a deceased taxpayer- Fill in the oval. If a taxpayer died in 2008 or in 2009 before filing a return, a return must be filed for that person. Complete a D-40 and provide the deceased’s information, not your own.

You do not need to adjust the deceased’s income, exemptions or deductions to reflect the date of death. tax preparers, other than the surviving spouse/registered domestic partner, such as executors, attorneys, or other personal representatives, must attach letters of administration. If a refund is due, all tax preparers must attach a completed Form Fr-147, statement of Person Claiming refund Due a Deceased taxpayer, and a copy of the death certificate. Do not use the federal form to request a refund.

Foreign address- Use Schedule S.If your home address is in another country, provide this information on schedule s. Do not abbreviate the country name. Follow the country’s practice for entering the postal code. attach schedule s to your D-40.

 In-care-of address- If you need to provide an in-care-of address use schedule s.

Tax Fraud Hotline- If you suspect someone of tax fraud, please report it to the DC tax Fraud hotline at 1-800-380-3495 or by e-mail to – tax Fraud hotline@dc.gov.

Claiming Dependents and deductions for being blind and/or over 65- Use Schedule S. You may claim an exemption for each of your dependents. If claiming exemptions, use schedule s to list each dependent’s name, social security number and relationship to you. You may also claim a deduction for yourself or your spouse/registered domestic partner for being over 65 or blind. attach schedule s to your D-40.

Third party designee- To authorize someone to discuss your DC tax matters with employees of the office of tax and revenue, enter that person’s name and telephone number at the bottom of page 2 of your return.

Filing status

More than one filing status may apply to you. Use the one that will give you the lowest tax.

Generally, you will use the same filing status on your DC return as that used on your federal return. however, if you used married filing jointly on your federal return, it may be better for you to file your DC return using either married filing separately or filing separately on same return. If both have income, figure the tax both ways.

Registered domestic partners- To be considered as domestic partners the parties must register with the Vital records Division of the DC Department of health. If you have registered your relationship you may file either a joint return or separately on the same return.

Registered domestic partners may wish to prepare a “not to be filed” (mock) joint federal return solely to calculate the benefits of filing jointly or separately on the same DC D-40.

  • If filing jointly is chosen, enter the partners’ total Federal agI on line 3, Form D-40.
  • If filing separately on same return is chosen, follow the instructions under married or registered domestic partners filing separately on same return.

Do not file the “mock” joint Federal Income Tax return with the Internal Revenue Service (nor with the DC return).

Line 1

Single

You were unmarried or legally separated as of December 31, 2008, or were widowed and did not remarry before January 1, 2009.

Filing jointly

You were married or have a registered domestic partner and both spouses/domestic partners were DC residents as of December 31, 2008, or your spouse/domestic partner died in 2008 and you did not remarry/reregister in 2008. If legally separated, do not file jointly.

Filing separately

You are married or you have a registered domestic partner and both spouses/partners had income.

Include your spouse’s/domestic partner’s name and social security number in the Personal information section.

You will each report only your own income, exemptions, deductions and credits. You will each report one half of the income from any securities, bank accounts, real estate, etc., that are registered or titled in both names.

You must file using this status if –

  • You and/or your spouse/registered domestic partner were part-year residents of DC during different periods of 2008.
  • You were a DC resident and your spouse/registered domestic partner was one of the following:
    • a member of the U.S. armed forces and not considered a DC resident;
    • a member of the U.S. Congress or an employee on the personal staff of a member of Congress who is considered a resident of the member’s state of residency;
    • an officer of the U.S. executive Branch whose primary residence was not in DC, who is appointed by the President, confirmed by the U.S. senate and serves at the pleasure of the President; or
    • a justice of the U.S. supreme Court whose primary residence was not in DC.

Dependent claimed by someone else

If you are claimed as a dependent on someone else’s 2008 return you may not claim an exemption for yourself.

Married or registered domestic partners filing separately on same return

If you claim this status, you and your spouse/domestic partner must combine your separate amounts using Calculation J on schedule s so that you will either receive one refund or make one tax payment. You may also claim a credit for child and dependent care expenses, which you are not allowed to claim if you file separate returns. Using this filing status may reduce the amount of tax you pay by allowing each spouse/domestic partner to take advantage of lower tax brackets.

Before filling out Calculation J and Form D-40, you will need to figure the following for you and your spouse/domestic partner:

  • each person’s federal adjusted gross income;
  • each person’s additions to federal income;
  • each person’s subtractions from federal income;
  • each person’s deductions; and
  • each person’s exemptions.

 NOTE: If you and your spouse/domestic partner were part-year residents of DC during different periods of 2008, you cannot file separately on the same return. You must file separate returns.

Head of household

You may claim this status if you were unmarried or legally separated as of December 31, 2008, and paid over half the cost of maintaining a home for a qualifying person, such as a child or parent. Certain individuals who lived apart from their spouse/domestic partner for the last 6 months of 2008 may also be able to use this filing status.

Use the appropriate section of schedule s to enter the name of the qualifying person whether that person is a dependent or non dependent.

Line 2

Part-year resident – If you resided in DC for only part of 2008 allocate to DC, your income and deductions attributable to the time of your DC residency. also prorate your exemptions and credits.

A DC taxpayer domiciled in DC during the tax year, is a full-time DC resident unless he or she changes domicile during the tax year. In such case, he or she will be a part-year resident for the period not domiciled in DC.

A DC taxpayer present in DC for 183 days or more and not domiciled in DC during the tax year, is a part-time resident for the period present in DC.

“Domicile” is that place where a person has his or her permanent home. to change domicile, you have to abandon the previous domicile and establish a new domicile in another state with the intent to remain.

Before completing the D-40, calculate the following:

  • Income received when you were a resident of DC and when you resided outside DC; and
  • Deductible expenses paid when you resided in DC and when you resided outside DC. the same allocation is required for exemptions, credits and other deductions.

 Number of months of DC residency- Divide the number of days you lived in DC by 30 to determine the months of DC residency. any remainder over 15 days counts as a full month.

Example 196 days of residency in DC divided by 30 = 7 months (6 months plus one month due to the 16 day remainder).

Income Information

Enter the amount from your federal return.

  • Copy Lines a through d from the appropriate lines on your federal return. Do not recalculate any amounts or totals.
  • Not all items will apply to you. Fill in only those that do. If the amount is zero, leave the line blank.
  • If you had a loss for Lines b, c, d, 3, 6, 15 or 21 fill in the “Fill in if loss” oval to indicate that the figure entered is a negative one. Do not enter a minus sign in the boxes.
  • Do not enter cents. round cents to the nearest dollar. Drop cents for amounts under 50¢; round up to the next dollar for amounts of 50¢ and over.

Example: $10,500.50 rounds up to $10,501and $10,500.49 rounds down to $10,500

Line a Wages, salaries, and/or tips

Enter the amount from your 1040 or 1040a, Line 7 or 1040eZ, Line 1, plus any unemployment compensation received.

Line b Business income or loss

Enter the amount from 1040, Line 12.

Line c Capital gain or loss

Enter amount from 1040, Line 13. Capital losses are netted against capital gain. the maximum annual capital loss claim is $3000 ($1500 if married or registered domestic partner filing separately).

If you had farm income or loss, add the amount on line 18 of your 1040 to the amount entered on Line c.

If you had gross income, from DC sources, of more than $12,000 from any business or business activity you must file DC Form D-30, Unincorporated Business Franchise tax return.

Line d Rental real estate, royalties, partnerships, S Corporations, trusts, etc.

Enter the amount from 1040, Line 17.

If you had gross income, from DC sources, of more than $12,000 from such a business or business activity file a DC Form D-30, Unincorporated Business Franchise Tax Return. An S corporation must file DC Form D-20, Corporation Franchise Tax Return.

(Note: Calculations A and B are on Schedule I)

Calculation C Standard deduction for part-year DC residents
a. Your standard deduction.
Married or registered domestic partner filing separately enter $2,000. All others enter $4,000.		 a.__________
b. Number of months you lived in DC from D-40, Line 2. b.__________
c. Divide Line a by the number 12. c.__________
d. Part-year DC standard deduction. Multiply Line c by Line b, enter here and on D-40, Line 17. d.__________
Calculation D DC Itemized deductions for part-year DC residents with “a limitation” on federal itemized deductions
a. Total federal itemized deductions from Form 1040 S chedule A , Line 29. a.__________
b. Total federal itemized deductions before the limitation from the worksheet in 1040
Schedule A instructions.		 b.__________
c. Divide Line a by Line b. (Enter the percent.) c.__________
d. Portion of Line b amount that applies to the time you were a DC resident. d.__________
e. Total limited itemized deductions for the time you were a DC resident.
Multiply Line d by Line c.		 e.__________
f. Portion of your state and local income tax or state and local general sales tax deduction
from 1040 S chedule A , Line 5 that applies to the time you were a DC resident.		 f.__________
g. State and local income tax or state and local general sales tax deduction.
Multiply Line f by Line c		 g.__________
h. DC itemized deductions. Subtract Line g from Line e, enter here and on D-40, Line 17. h.__________

Computation of DC Gross and Adjusted Gross Income

Line 3 Federal adjusted gross income

Enter the amount from 1040, Line 37; 1040a, Line 21; or 1040eZ, Line 4 and the amounts from 1040Nr line 35 plus line 86 or 1040Nr-eZ line 10. Include your pension/annuity in your federal adjusted gross income. If you took the 30% or 50% federal bonus depreciation or the additional IrC section 179 expenses on your federal return, enter the total on schedule I, Calculation a, Line 3.

Note: any grants and stipends received by certain DC public or charter school teachers under the housing support for teachers act of 2007 are subject to both federal and DC income tax.

Additions to DC Income

Line 4 Franchise tax

Enter any franchise tax deducted on a federal business tax return.

Line 5 Other additions from DC Schedule I

Enter the amount from Line 8 of Calculation a, schedule I.

Line 6 Add Lines 3, 4 and 5

Add federal adjusted gross income, franchise tax deducted and additions to DC income.

Subtractions from DC Income

Line 7 Income received during period of nonresidence

For each type of income reported on your federal 1040, determine the amount you received when you resided in DC. subtract that amount from your total income and enter the result on Line 7.

Line 8 Taxable refunds, credits or offsets of state and local income tax

Enter the amount from 1040, Line 10.

Line 9 Taxable amount of social security and tier 1 railroad retirement

Enter the amount from 1040, Line 20b or 1040a, Line 14b.

Line 10 Income reported and taxed this year on a DC franchise or fiduciary return (D-20, D-30 or D-41)

If the income reported on your 1040 included income reported and taxed on a DC franchise or DC fiduciary return, enter that amount here. attach a statement with the name of the entity, the federal employer identification number or social security Number and your share of the income reported.

Line 11 DC and federal government pension and annuity limited exclusion.

You must be 62 years of age or older as of December 31, 2008 to claim this exclusion. enter the lesser of $3000 or the taxable income you received from military retired pay, pension income or annuity income from the DC or federal government during the year. attach a copy of your federal Form 1099r. the maximum annual exclusion is $3000 per person. the remaining amount of the pension/ annuity is taxable and must be reported on your return.

Line 12 DC and federal government survivor benefits

If you are an annuitant’s survivor and 62 years of age or older as of December 31, 2008; enter the total survivor benefits (do not include social security survivor benefits).

Line 13 Other subtractions from DC Schedule I

Enter the total from Calculation B, Line 16.

Subtractions from Federal adjusted gross income. Below are explanations of some of the Calculation B items on Schedule I. The line references relate to Calculation B.)

  • Line 6 Long-term care insurance premiums paid in 2008 are entered on Line 6, Calculation B, schedule I. the deduction may not exceed $500 per year, per person, whether filing individually or jointly.
  • Line 7 Enter the amount contributed to a qualified DC “529” College savings Plan. You may deduct up to $4,000 annually for contributions you made to all qualified college savings accounts of which you are the owner. If you are married and file a joint or combined separate return, each spouse/domestic partner may deduct up to $4,000 for contributions made to all accounts for which that spouse/domestic partner is the sole owner. a rollover distribution is not a contribution for purposes of this deduction. Contributions made to one or more accounts in excess of the allowable $4,000 ($8,000 for eligible joint filers) annual deduction may be carried forward as a deduction (subject to the annual limitation) for up to five years. If you were a part-year DC resident during the tax year, you may deduct only the amount contributed when you resided in DC.
  • Line 8 Income not to exceed $10,000 is excludable in computing DC gross income for persons determined by the social security administration to be totally and permanently disabled and who are receiving: supplemental security Income or social security Disability; or railroad retirement disability benefits; or federal or DC government disability benefits; and whose annual household adjusted gross income is less than $100,000.

Adjusted gross income is that of all persons residing in a household, excluding the adjusted gross income of any person who is a tenant under a written lease for fair market value.

  • Lines 9 and 10 An individual who meets the following qualifications:
    1. has been approved by the DC public schools; and
    2. has been a classroom teacher in a DC public school or public charter school for this entire tax year or the entire prior tax year may deduct –
    • the amount the teacher paid during the year for basic and necessary classroom teaching materials and supplies – up to $500 per person whether filing individually or jointly.
    • the tuition and fees paid during the year for postgraduate education, professional development, or state licensing examination and testing for improving teaching credentials or maintaining professional certification – up to $1,500 per person whether filing individually or jointly.
  • Lines 9 and 10 Interaction between DC deductions and similar federal deductions. to prevent a “double deduction” situation – if a DC classroom teacher claims a deduction on his/her federal return for personal expenses incurred in purchasing classroom supplies and/or for tuition and fees expenses, the federal tax deduction claimed reduces the amount that may be claimed for those same expenses on the DC return. For example, a DC classroom teacher who claims $1500 or more for tuition and fees on the federal return (Form 1040, Line 34) may not take any deduction for these same expenses on the DC return.
  • Line 11 “Loan repayment awards” of up to $120,000 paid over 4 years by DC to health care professionals to reduce their medical education debt are not taxed by DC. (this program is administered by the DC Department of health.)
  • Line 12 Any health-care insurance premium paid by an employer for an employee’s domestic partner registered with the Vital records Division of the DC Department of health (see DC Code §32-701 (3) and 702) is deductible unless the employee’s registered domestic partner was considered a dependent under IrC §152 and an exclusion from income was taken on the employee’s federal tax return.

NOTE: In tax years after you claimed the federal bonus depreciation (30% or 50%) on your federal return, the DC basis for the depreciated property will be more than the federal basis. Use Line 5, Calculation B of schedule I to subtract the excess depreciation from the federal agI to show the proper DC allowable depreciation.

Line 14 Total subtractions from DC Income

Add D-40 Lines 7-13.

DC Adjusted Gross Income

Line 15 DC adjusted gross income

Line 6 minus Line 14. reenter this same amount on Line 15, page 2. also reenter your last name and social security number at the top of page 2, D-40.

Calculation E DC Itemized deductions for taxpayers with “no limitation” on federal itemized deductions
a. Total federal itemized deductions from 1040 S chedule A , Line 29.
Part-year residents, enter the portion that applies to the time you were a DC resident.		 a.__________
b. State and local income tax or state and local general sales tax deduction from 1040 S chedule A , Line 5. Part-year residents, enter the portion that applies to the time you were a DC resident. b.__________
c. DC itemized deductions. Subtract Line b from Line a, enter here and on D-40, Line 17. c.__________
Calculation F DC Itemized deductions for full-year DC residents with “a limitation” on federal itemized deductions
a. Total federal itemized deductions from 1040 S chedule A , Line 29. a.__________
b. Total federal itemized deductions before the limitation from the worksheet in 1040
Schedule A instructions.		 b.__________
c. Divide Line a by Line b. (Enter the percent.) c.__________
d.State and local income tax or state and local general sales tax deduction,from 1040 S chedule A , Line 5. d.__________
e. State and local income tax or state and local general sales tax deduction.
Multiply Line dby Line c.		 e.__________
f.DC itemized deductions. Subtract Line e from Line a, enter here and on D-40, Line 17. f.__________
Note: Calculation G–Number of exemptions is on Schedule S – Supplemental Information and Dependents.
Calculation H DC exemption amount for part-year DC residents
a. Number of exemptions from D-40, Line 18. a.__________
b. Exemption amount per month ($1,675 divided by 12). b x $139.58
c. Multiply Line b by Line a. c.__________
d. Number of months you lived in DC from D-40, Line 2. d.__________
e Exemption amount.
Multiply Line c by Line d. Enter here and on D-40, Line 19.		 e.__________
Calculation I DC tax on income over $100,000
a. Taxable income from D-40, Line 21. a.__________
b. Income subtractor. b. – 40,000
c. Subtract Line b from Line a. c.__________
d Tax rate for income over $40,000. d. x .085
e Multiply Line c by Line d. e.__________
f DC tax on income of $40,000. f. + 2,200
g Tax Add Lines e and f.
Round cents to the nearest dollar, enter here and on D-40, Line 22.		 g.__________

DC taxable income

line 16 Deduction type

Indicate which type of deduction (itemized or standard) you are taking by filling in the appropriate oval. You must take the same type of deduction on your DC return as you took on your federal return. If you itemized deductions on your federal return, attach a copy of your DC schedule s with the federal deductions at the bottom of page 2 of schedule s filled in.

line 17 DC deduction amount

Do not copy the amount from your federal return. DC amounts are different from those allowed on your federal return.

Standard deduction- Married or registered domestic partners filing separately enter $2,000. any other filing status enter $4,000.

Part-year DC residents with standard deduction- Adjust your standard deduction to reflect the number of months you were a DC resident. Complete Calculation C on page 11.

Recent federal legislation allows nonitemizers to claim, as part of the standard deduction, the lesser of real estate taxes paid or $500 ($1,000 on a joint return). they may also claim any net disaster loss incurred in federally declared disasters. eligible DC nonitemizers should enter these in whole dollar amounts where indicated on line 17 and include them in the total on line 17.

Itemized deductions- Reduce your federal itemized deductions amount before entering it on your DC return. DC income taxes are not deductible on your DC return.

If your federal itemized deductions were limited and you were a part-year DC resident, complete Calculation D on page 11.

If your federal itemized deductions were not limited, complete Calculation e on page 13. If your deductions were limited and you were a full-year DC resident, complete Calculation F on page 13.

line 18 Number of exemptions

If you are filing single and claiming more than one exemption or married or registered domestic partners filing jointly and claiming more than two exemptions, complete Calculation g on page 2 of schedule s and attach that schedule to your D-40.

Dependent claimed by someone else- Do not claim any exemptions. Leave Lines 18 and 19 blank.

line 19 Exemption amount

Multiply $1,675 by the Line 18 number of exemptions. If you do not claim exemptions, leave Line 19 blank.

Part-year DC residents- Reduce the full exemption amount to reflect the number of months you were a DC resident. Complete Calculation h on page 13.

line 20

Add Lines 17 and 19.

line 21 Taxable income

Subtract Line 20 from Line 15. Enter the result, if it is a minus, fill in the oval.

Calculation K Out-of-state income tax credit
a. Amount of income tax paid to other state(s), enter from the other state(s) return(s). a.__________
b. Income subject to income tax in other states and received while a resident of DC. b.__________
c. DC adjusted gross income from D-40, Line 15. c.__________
d. Divide Line b by Line c. (Enter the percent.) d.__________
e. DC T ax from D-40, Line 22. e.__________
f. Maximum out-of-state credit. Multiply Line e by Line d. f.__________
g. Enter the lesser of Line a or Line f. Also enter on Schedule U, Part 1a Line 3. g.__________
Complete Calculation L to determine which is better for you – the DC Low Income Credit or the DC E arned Income T ax Credit.DO NOT TAKE BOTH.

Calculation L Income credit – comparison of tax benefit
a. DC T ax from D-40, Line 22. a.__________
b. Enter the total non-refundable credits from D-40 Line 26. b.__________
c. Subtract Line b from Line a and enter the result. c.__________
d. Your DC low income credit from the table on page 47. d.__________
e. Enter the lesser of Line c or Line d. e.__________
f. Federal earned income credit from 1040, Line 64a; 1040A, Line 40a; or 1040EZ, Line 8a. f.__________
g. DC E arned Income T ax Credit rate (40%). g X .40
h DC E arned Income T ax Credit multiply Line f by Line g. h.__________

Compare Line e to Line h:
If Line e is greater than or equal to Line h, take the DC Low Income Credit. E nter the amount from Line d on D-40, Line 25.
If Line e is less than Line h, take the DC E arned Income T ax Credit. E nter the amount from Line h on D-40, Line 28.

Note: Part-year residents may not take the full amount of either credit. See page 11 of the instructions to determine the reduced amount.

DC tax, credits and payments

Non-refundable and refundable credits- The credits you claim on Lines 23, 24 and 25 are non-refundable, which means they can reduce the taxes you owe, but they will not result in a tax refund. the credits you claim on Lines 28, 29 and 30 are refundable credits, which means if these credits plus any tax payments are greater than your total tax due, you may receive a refund.

Line 22 Tax

If Line 21 is $100,000 or less, use the tax tables on pages 58-67 to determine your tax. If Line 21 is more than $100,000, Use Calculation I on page 13 to determine your tax.

Married or registered domestic partners filing separately on same return- Complete Calculation J, the tax computation, on schedule s. Before completing this calculation you must determine each person’s separate federal adjusted gross income, additions to income, subtractions from income, deductions and exemptions.

You must combine the separate amounts before making entries on Lines 23-33 of the D-40.

Line 23 Credit for child and dependent care expenses

Do not claim this credit if your filing status is married filing separately. If your status is married or registered domestic partner filing separately on the same return, you may divide the credit between spouses/domestic partners any way you wish.

If you are a full-year DC resident, to figure your DC credit, multiply by .32, the amount from federal Form 2441, Line 9 or from federal Form 1040a, schedule 2, Line 9. enter the result on Line 23 of the D-40. (Do not use DC Form D-2441.)

If you were eligible for the Child and Dependent Care Credit but did not claim it for federal tax purposes, complete the appropriate one of the federal forms mentioned, multiply the result by .32 and claim the DC credit for child and dependent care expenses.

Part-year residents only- Complete DC Form D-2441 and enter the amount from Line 5. attach a copy of your DC Form D-2441.

Line 24 Non-refundable credits from DC Schedule U

This entry is the total of non-refundable amounts from DC schedule U, Part 1a, line 6. It includes the amount DC taxpayers may claim as a credit for income tax paid to other state(s) if the income taxed by that state is derived from that state and is of a kind taxed by DC. the tax paid to a state is the total state tax liability shown on the state tax return. (It is not the state withholding shown on your W-2.)

Complete Calculation K on page 14, to determine your credit. Enter the credit amount on schedule U, Part Ia, Line 3. If you paid tax to more than one state, enter the respective amounts and other state codes in the spaces provided. attach a copy of the state income tax return(s) showing the payment(s) for which you are claiming a credit.

No DC credit is allowed for any other tax imposed by a state, including the following:

  • Corporation franchise tax;
  • License tax;
  • excise tax;
  • Unincorporated business franchise tax; and
  • occupation tax.

Credit for certain DC Government employees who are DC residents and first-time DC homebuyers. This credit was originally limited to DC police officers who are first-time homebuyers in DC. this $2,000 credit has been expanded. It is now available to all DC government employees, employees of a DC public charter school, and any person who has accepted an offer to be a DC police officer, firefighter, emergency medical technician, public school teacher or teacher at a DC public charter school. except for DC police officers this expansion of the tax credit is limited to those employees who purchase their first principal residence DC homes on or after october 1, 2007 and who are enrolled in the employer assisted housing Program offered by the DC Department of housing and Community Development. the credit is available for a 5-year period. enter $2,000 on Line 1, Part 1a of schedule U (included in this booklet).

Line 25 DC Low Income Credit

To qualify for this credit, your federal tax liability before credits and payments (1040, Line 44; 1040a, Line 28; or 1040eZ, Line 11) must be 0. If you claimed the federal earned Income Credit, it may better for you to take the DC earned Income tax Credit instead of the DC Low Income Credit. Do not take both of these DC credits.

Complete Calculation L on page 14, to determine whether the DC Low Income Credit or the DC earned Income tax Credit is better. to determine the low income credit for which you are eligible, see the Low Income Credit table on page 47. If you were a part-year resident of DC whichever credit is taken must be apportioned. see the Line 2 instructions on page 11 for guidance on apportionment.

Dependents claimed by someone else- Use the calculation at the bottom of page 47 to determine the low income credit available.

Line 26 Total non-refundable credits

add Lines 23, 24 and 25.

Line 27 Total tax

subtract Line 26 from Line 22. If Line 22 is less than Line 26, leave Line 27 blank.

Line 28 DC Earned Income Tax Credit

Taxpayers who claimed the federal earned Income Credit (eIC) may also claim a DC earned Income tax Credit of 40% of the federal credit. Taxpayers who claimed the DC Low Income Credit on D-40, Line 25 cannot also claim the DC Earned Income Tax Credit. You may take only one of these DC credits.

Complete Calculation L on page 14 to determine whether the DC Low Income Credit or the DC earned Income tax Credit is better for you.

Your federal EIC– enter the amount from your 1040, Line 64a; 1040a, Line 40a; or 1040eZ, Line 8a and complete Calculation L.

If the IRS is calculating your federal earned Income Credit, wait until they notify you of that amount before you determine your DC earned Income tax Credit. If you were a part-year resident of DC this credit must be apportioned. For guidance on apportionment see the Line 2 instructions on page 11.

Line 28a Qualified EITC children

Enter the number of qualified eItC children for the credit claimed on Line 28 (see page 17 for requirements).

Line 29 Property tax credit

If you filed DC schedule h, homeowner and renter Property tax Credit, enter the amount from the appropriate Line (3 or 9). see the instructions in this booklet for assistance in completing schedule h. attach schedule h to your D-40.

Line 30 Refundable credits from DC Schedule U

Complete schedule U, Part Ib. attach schedule U to your D-40. see schedule N, DC Non-Custodial Parent eItC Claim, to determine if you are eligible to claim this credit. If you complete a schedule N, attach it to your D-40.

Line 31 DC income tax withheld

add the amount of DC income tax withheld as shown on your 2008 federal Forms W-2 and 1099. attach all copies of Forms W-2 and 1099 that show DC tax withheld.

Part-year residents- Do not include income tax withheld for other states in the DC withholding amount.

Line 32 2008 Estimated income tax payments

Enter the total of your 2008 DC estimated income tax payments. If you are filing separately, you and your spouse/registered domestic partner must divide the payments according to which spouse/registered domestic partner paid them. You cannot arbitrarily allocate them between you.

Line 33 Payment made with an extension of time to file

If you filed Form Fr-127, extension of time to File a DC Income tax return, enter the amount you paid with the Fr-127 or with the original return, if filing an amended return.

Line 34 Total payments and refundable credits

Add Lines 28, 29 – 33. If Line 34 is more than Line 27, go to Line 35 in the — Refund section. If Line 34 is equal to or less than Line 27, go toLine 40 in the — Amount owed section.

Refund

Line 35 Amount you overpaid

Subtract Line 27 from Line 34.

Line 36 Amount to be applied to your 2009 estimated tax

Enter the amount of overpayment, if any, you want credited to your 2009 estimated tax. this amount will not be refunded.

Line 37 Contribution amount from Schedule U, Part II

Contribution to the public fund for drug prevention and children at risk- If you itemize your deductions, any amount you contribute to this fund is deductible on your 2009 federal and DC tax returns.

DC Statehood Delegation Fund- You can contribute to a fund dedicated to the continuing effort for DC statehood.

The minimum contribution is $1. the amount contributed will reduce your refund.

Attach the completed schedule U to your return.

Line 38

Add Lines 36 and 37.

Line 39 Refund

Subtract Line 38 from Line 35. Be sure to use the PO Box 209 mail label from the back flap of the return envelope when mailing your return.

Amount owed

Line 40 Tax due

Subtract Line 34 from Line 27.

Line 41 Contribution amount from Schedule U, Part II

See Line 37 instructions.

The minimum contribution is $1. the amount contributed will increase the amount owed.

Line 42 Total due

Add Lines 40 and 41.

You must pay this amount in full with your return. see page 6 for payment options.

If you wish to contribute and you are not due a refund or do not owe additional tax, please enter the total contribution amount on Line 42. make your payment payable to the DC treasurer and include it with your return. enter your specific contributions on schedule U. attach schedule U to your return.

Form D-40P, Payment Voucher

Use this form when sending a check or money order.

Staple any payment to the D-40P voucher. Do not staple the voucher to the D-40. Include the D-40P with your D-40 in the return envelope provided. Use the Po Box 7182 mail label from the back flap of the return envelope.

Direct Deposit of Refund

If you want your refund deposited directly into your bank account, complete the Direct Deposit information section located below Line 39 on page 2 of the D-40. Fill in the bank routing number and account number. You can obtain that information from the lower left portion of your check. Your account number is usually just to the right of the routing number and can be up to 17 digits and can be both numbers and letters. You may want to verify account and routing numbers with your financial institution before entering it in this section. Fill in the oval to show the type of bank account. If you want the refund to go to a savings account, you may need to contact your bank for routing information.

Third Party Designee

If you want to authorize another person to discuss your 2008 DC individual income tax return with the office of tax and revenue (OTR), check the oval in the third Party Designee block on page 2 of the D-40 and enter the designee’s name and phone number. If you want to authorize a paid preparer, enter “Preparer” in the third Party Designee block.

If you are filing a joint return, checking the third Party Designee oval constitutes authorization by both filers. Checking the oval also gives the designee authorization to:

  • give otr any information missing from your return;
  • contact otr for information about processing your return and the status of any refund or payment; and
  • request, receive and/or respond to otr notices related to your return.

The authorization does not:

  • give the designee the right to receive your refund;
  • bind you to any additional tax liability related to your return; or
  • otherwise represent you before OTR.

This authorization automatically ends on april 15, 2009 (without regard to extensions).

Signature

Sign and date your return. If your filing status is married filing jointly or married filing separately on the same return, both spouses/registered domestic partners must sign. If the return was prepared by a paid tax preparer, the tax preparer must also sign the return and provide his or her identification number and telephone number. If the return is not signed, it will be sent back to you.

Send in your original return, keep a copy for your records.

Assembling your D-40 return

  • staple any federal Forms W-2 or 1099, to the front of your Form D-40 where indicated.
  • staple your payment to the D-40P Payment Voucher only.
  • arrange and staple any requested documents relating to your Form D-40 in order, using the “file order” number shown in the lower right corner of the schedule or form.
  • send in your original, signed DC return, not a copy. Please fold your return once and use the return envelope provided in this booklet.
  • there are 2 adhesive mail labels on the back flap of the return envelope. If you are sending a payment with your return use the Po Box 7182 label on the return envelope. If you are filing a no payment due or a refund return use the Po Box 209 label on the return envelope.
  • Do not staple or otherwise damage the Bar Code located in the upper right corner of the form or schedule being attached.
  • staple forms and documents behind the D-40 in the upper left corner in the following order:
    • DC Form D-40 (with Forms W-2 and 1099 stapled to D-40 only)
    • DC schedule s
    • DC schedule h (including the page 3 certification)
    • DC schedule U
    • DC schedule I
    • DC schedule N
    • DC schedule L
    • DC Form Fr-127
    • DC Form Fr-147, with letters of administration and a copy of the death certificate
    • DC Form D-2210
    • DC Form D-2440 (and any certification)
    • DC Form D-2441
    • any state returns filed

Personal records

Maintaining organized and complete records supporting income and deduction items claimed on your return makes it easier to prepare the return, respond to any questions about it and provide additional information if you are ever assessed more tax.

Helpful publications on record keeping available from IRS are:

Publication 463 (PDF) Travel, Entertainment, Gift and Car Expenses;
Publication 552 (PDF) Recordkeeping for Individuals; and
Publication 583 (PDF) Starting a Business and Keeping Records

FR-329, Consumer Use Tax on Purchases and Rentals, should be filed if, during 2008, you paid a total of more than $400 for merchandise, services, or rentals on which you did not pay sales tax. typically, you do not pay sales tax on:

  • merchandise ordered through catalogs;
  • merchandise shipped to DC that you bought or rented outside DC; and
  • merchandise taxed in DC but not in the state where purchased.

Do not file Form Fr-329 for a business. Businesses should file Form Fr-800m (monthly return) or Form Fr-800a (annual return) to report sales tax (in the “use tax” section) on such purchases and rentals.

When is Form FR- 29 due?

You must submit your return by A pril 15, 2009. T here is no extension of time to file this form. Please file this form separately. Do not file it with your return.

This form may be downloaded from our website www.taxpayerservicecenter.com.

Schedule L, Lower Income Long-Term Homeowner Credit

this credit gives a refund to certain taxpayers who have lived in a DC property as their principal residence over a long-term and who have had their real property tax raised by more than 1.05 over that of the previous year. taxpayers who qualify will have a schedule L mailed to them. If you receive a schedule L and wish to apply for this credit, complete the schedule L and file it with your D-40 form. If you are not required to file a D-40, follow the mailing instructions on the schedule L.

Qualifying Child for EITC Purposes

A qualifying eItC child is your:

  • son, daughter, stepchild, legally placed foster child, legally adopted child or a descendant of any of these; or
  • Brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of these;

    and

  • Was under the age of 19 at the end of the year; or
  • Was a full-time student under the age of 24 at the end of the year; or 17
  • Was, regardless of age, permanently and totally disabled at any time during the year;

    and

  • Who lived with you in the U.S. for more than half the year.

If your child was married at the end of the year, the child is not a qualifying child unless you can claim the child’s exemption or you have been given the right to claim the exemption in an agreement signed by the child’s custodial parent releasing the dependency exemption.

Attach a copy of this agreement to your D-40 if you cannot answer “yes” to all the questions in the Schedule N, DC Non Custodial Parent EITC Claim, provided in this booklet.

 

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