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1040x Electronically File

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1040x Electronically File

1040x electronically file 2. 1040x electronically file   Filing Requirements and Required Disclosures Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Annual Information ReturnsSupporting Organization Annual Information Return Unrelated Business Income Tax ReturnEstimated tax. 1040x electronically file Employment Tax ReturnsException. 1040x electronically file FUTA tax exception. 1040x electronically file FICA tax exemption election. 1040x electronically file Revoking the election. 1040x electronically file Definitions. 1040x electronically file Effect on employees. 1040x electronically file Political Organization Income Tax ReturnExempt function. 1040x electronically file Political organization taxable income. 1040x electronically file Separate fund. 1040x electronically file Failure to file. 1040x electronically file Failure to pay on time. 1040x electronically file Reporting Requirements for a Political OrganizationForm 8871 Form 8872 Donee Information ReturnCharitable deduction property. 1040x electronically file Publicly traded securities. 1040x electronically file Exceptions. 1040x electronically file Form 8283. 1040x electronically file Information Provided to DonorsDisclosure of Quid Pro Quo Contributions Acknowledgment of Charitable Contributions of $250 or More Acknowledgment of Vehicle Contribution Qualified Intellectual Property Report of Cash Received Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting FormsAnnual Information Return Public Inspection of Exemption Application Political Organization Reporting Forms Required DisclosuresSolicitation of Nondeductible Contributions Sales of Information or Services Available Free From Government Dues Used for Lobbying or Political Activities Prohibited Tax Shelter Transactions Miscellaneous RulesOrganizational Changes and Exempt Status Introduction Most exempt organizations (including private foundations) must file various returns and reports at some time during (or following the close of) their accounting period. 1040x electronically file Topics - This chapter discusses: Annual information returns Unrelated business income tax return Employment tax returns Political organization income tax return Reporting requirements for a political organization Donee information return Information provided to donors Report of cash received Public inspection of exemption applications, annual returns, and political organizations reporting forms Required disclosures Miscellaneous rules Useful Items - You may want to see: Publication 15 Circular E, Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 598 Tax on Unrelated Business Income of Exempt Organizations Form (and Instructions) 941 Employer's Quarterly Federal Tax Return 990 Return of Organization Exempt From Income Tax 990-EZ Short Form Return of Organization Exempt From Income Tax Schedule A (Form 990 or 990-EZ) Public Charity Status and Public Support Schedule B (Form 990, 990-EZ, or 990-PF) Schedule of Contributors Schedule C (Form 990 or 990-EZ) Political Campaign and Lobbying Activities Schedule D (Form 990) Supplemental Financial Statements Schedule E (Form 990 or 990-EZ) Schools Schedule F (Form 990) Statement of Activities Outside the United States Schedule G (Form 990 or 990-EZ) Supplemental Information Regarding Fundraising or Gaming Activities Schedule H (Form 990) Hospitals Schedule I (Form 990) Grants and Other Assistance to Organizations, Governments, and Individuals in the United States Schedule J (Form 990) Compensation Information Schedule K (Form 990) Supplemental Information on Tax-Exempt Bonds Schedule L (Form 990 or 990-EZ) Transactions With Interested Persons Schedule M (Form 990) Noncash Contributions Schedule N (Form 990 or 990-EZ) Liquidation, Termination, Dissolution, or Significant Disposition of Assets Schedule O (Form 990 or 990-EZ) Supplemental Information to Form 990 Schedule R (Form 990) Related Organizations and Unrelated Partnerships 990-PF Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation 990-BL Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons 990-T Exempt Organization Business Income Tax Return 990-W Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations 1120-POL U. 1040x electronically file S. 1040x electronically file Income Tax Return for Certain Political Organizations 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code 5768 Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation 6069 Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction 7004 Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes 8282 Donee Information Return 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8453-X Political Organization Declaration for Electronic Filing of Notice of Section 527 Status 8822-B Change of Address-Business 8868 Application for Extension of Time to File an Exempt Organization Return 8870 Information Return for Transfers Associated with Certain Personal Benefits Contracts 8871 Political Organization Notice of Section 527 Status 8872 Political Organization Report of Contributions and Expenditures 8886-T Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction 8899 Notice of Income from Donated Intellectual Property 8940 Request for Miscellaneous Determination See chapter 6 for information about getting these publications and forms. 1040x electronically file Annual Information Returns Every organization exempt from federal income tax under section 501(a) must file an Annual Exempt Organization Return except: A church, an interchurch organization of local units of a church, a convention or association of churches, An integrated auxiliary of a church, A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs, A school below college level affiliated with a church or operated by a religious order, Church-affiliated mission societies if more than half of their activities are conducted in, or are directed at persons in, foreign countries, An exclusively religious activity of any religious order, A state institution, the income of which is excluded from gross income under section 115, A corporation described in section 501(c)(1) that is organized under an Act of Congress, an instrumentality of the United States, and is exempt from Federal income taxes, A stock bonus, pension, or profit-sharing trust that qualifies under section 401 (required to file Form 5500, Annual Return/Report of Employee Benefit Plan), A religious or apostolic organization described in section 501(d) (required to file Form 1065, U. 1040x electronically file S. 1040x electronically file Return of Partnership Income), A governmental unit or an affiliate of a governmental unit that meets the requirements of Revenue Procedure 95-48, 1995-2 C. 1040x electronically file B. 1040x electronically file 418, www. 1040x electronically file irs. 1040x electronically file gov/pub/irs-tege/rp1995-48. 1040x electronically file pdf, A private foundation described in section 501(c)(3) and exempt under section 501(a) (required to file Form 990-PF, Return of Private Foundation), A political organization that is a state or local committee of a political party, a political committee of a state or local candidate, a caucus or association of state or local officials, or required to report under the Federal Election Campaign Act of 1971 as a political committee, An exempt organization (other than a private foundation) that normally has annual gross receipts of $50,000 or less, or A foreign organization, or an organization located in a U. 1040x electronically file S. 1040x electronically file possession, that normally has annual gross receipts from sources within the United States of $50,000 or less. 1040x electronically file Supporting Organization Annual Information Return For tax years ending after August 17, 2006, all section 509(a)(3) supporting organizations are required to file Form 990 or 990-EZ with the IRS regardless of the organization's gross receipts, unless it qualifies as one of the following: An integrated auxiliary of a church; The exclusively religious activities of a religious order; or An organization, the gross receipts of which are normally not more than $5,000, that supports a section 509(a)(3) religious order. 1040x electronically file If the organization is described in item (3) above, then it must submit Form 990-N (e-Postcard) unless it voluntarily files Form 990 or 990-EZ. 1040x electronically file On its annual information return, at Part I, Schedule A (Form 990 or 990-EZ) a supporting organization must: List the section 509(a)(3) organizations to which it provides support, Indicate whether it is a Type I, Type II, or Type III supporting organization, and Certify that the organization is not controlled directly or indirectly by disqualified persons (other than by foundation managers and other than one or more publicly supported organizations). 1040x electronically file Annual Electronic Filing Requirement for Small Tax-Exempt Organizations Small tax-exempt organizations with annual gross receipts normally $50,000 or less must submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, with the IRS each year, if they choose not to file a Form 990 or 990-EZ. 1040x electronically file Form 990-N requires the following information: The organization's legal name, and mailing address; Any name under which it operates and does business; Its Internet website address (if any); Its taxpayer identification number; The name and address of a principal officer; Organization's annual tax period; Verification that the organization's annual gross receipts are normally $50,000 or less; and Notification if the organization has terminated. 1040x electronically file Form 990-N is due by the 15th day of the fifth month after the close of the tax year. 1040x electronically file For tax years beginning after December 31, 2006, any organization that fails to meet its annual reporting requirement for 3 consecutive years will automatically lose its tax-exempt status. 1040x electronically file To regain its exempt status an organization will have to reapply for recognition as a tax-exempt organization. 1040x electronically file Exceptions. 1040x electronically file   This filing requirement does not apply to: Churches, their integrated auxiliaries, and conventions or associations of churches; Organizations that are included in a group return; Private foundations required to file Form 990-PF; and Section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. 1040x electronically file Forms 990 and 990-EZ Exempt organizations, other than private foundations, must file their annual information returns on Form 990 or 990-EZ, unless excepted from filing or allowed to submit Form 990-N, described earlier. 1040x electronically file Generally, political organizations with gross receipts of $25,000 ($100,000 for a qualified state or local political organization (QSLPO)) or more for the tax year are required to file Form 990 or 990-EZ unless specifically excepted from filing the annual return. 1040x electronically file The following political organizations are not required to file Form 990 or Form 990-EZ. 1040x electronically file A state or local committee of a political party. 1040x electronically file A political committee of a state or local candidate. 1040x electronically file A caucus or association of state or local officials. 1040x electronically file A political organization that is required to report as a political committee under the Federal Election Campaign Act. 1040x electronically file A 501(c) organization that has expenditures for influencing or attempting to influence the selection, nomination, election, or appointment of any individual for a federal, state, or local public office. 1040x electronically file Form 990-EZ. 1040x electronically file   This is a shortened version of Form 990. 1040x electronically file It is designed for use by small exempt organizations and nonexempt charitable trusts. 1040x electronically file   Beginning in tax year 2010, an organization can file either Form 990 or 990-EZ if it meets the following: Its gross receipts during the year are less than $200,000. 1040x electronically file Its total assets (line 25, column (B) of Form 990-EZ) at the end of the year are less than $500,000. 1040x electronically file If your organization does not meet either of these conditions, you cannot file Form 990-EZ. 1040x electronically file Instead you must file Form 990. 1040x electronically file Group return. 1040x electronically file   A group return on Form 990 may be filed by a central, parent, or like organization for two or more local organizations, none of which is a private foundation. 1040x electronically file This return is in addition to the central organization's separate annual return if it must file a return. 1040x electronically file It cannot be included in the group return. 1040x electronically file See the instructions for Form 990 for the conditions under which this procedure may be used. 1040x electronically file    In any year that an organization is properly included as a subordinate organization on a group return, it should not file its own Form 990. 1040x electronically file Schedule A (Form 990 or 990-EZ). 1040x electronically file   Organizations, other than private foundations, that are described in section 501(c)(3) and that are otherwise required to file Form 990 or 990-EZ must also complete Schedule A of that form. 1040x electronically file Schedule B (Form 990, Form 990-EZ, or 990-PF). 1040x electronically file   Organizations that file Form 990 or 990-EZ use this schedule to provide required information regarding their contributors. 1040x electronically file Schedule O (Form 990). 1040x electronically file   Organizations that file Form 990 must use this schedule to provide required additional information or if additional space is needed. 1040x electronically file   Other schedules may be required to be filed with Form 990 or 990-EZ. 1040x electronically file See the instructions for Form 990 or the instructions for Form 990-EZ for more information. 1040x electronically file Report significant new or changed program services and changes to organizational documents. 1040x electronically file    An organization should report new significant program services or significant changes in how it conducts program services, and significant changes to its organizational documents, on its Form 990 rather than in a letter to EO Determinations. 1040x electronically file EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report new services or significant changes, or changes to organizational documents. 1040x electronically file See Miscellaneous Rules, Organization Changes and Exempt Status, later. 1040x electronically file Form 990-PF All private foundations exempt under section 501(c)(3) must file Form 990-PF. 1040x electronically file These organizations are discussed in chapter 3. 1040x electronically file Electronic Filing You may be required to file Form 990, Form 990-EZ, or Form 990-PF, and related forms, schedules, and attachments electronically. 1040x electronically file If an organization is required to file a return electronically but does not, the organization is considered to have not filed its return. 1040x electronically file See Regulations section 301. 1040x electronically file 6033-4 for more information. 1040x electronically file The IRS may waive the requirement to file electronically in cases of undue hardship. 1040x electronically file For information on filing a waiver, see Notice 2010-13, 2010-4 I. 1040x electronically file R. 1040x electronically file B. 1040x electronically file 327, available at www. 1040x electronically file irs. 1040x electronically file gov/ir/2010-04_IRSB/ar14. 1040x electronically file html. 1040x electronically file Form 990. 1040x electronically file   An organization is required to file Form 990 electronically if it files at least 250 returns during the calendar year and has total assets of $10 million or more at the end of the tax year. 1040x electronically file Form 990-PF. 1040x electronically file   An organization is required to file Form 990-PF electronically if it files at least 250 returns during the calendar year. 1040x electronically file Due Date Forms 990, 990-EZ, or 990-PF must be filed by the 15th day of the fifth month after the end of your organization's accounting period. 1040x electronically file Thus, for a calendar year taxpayer, Forms 990, 990-EZ, or 990-PF is due May 15 of the following year. 1040x electronically file Extension of time to file. 1040x electronically file   Use Form 8868 to request an automatic 3-month extension of time to file Forms 990, 990-EZ, or 990-PF and also to apply for an additional (not automatic) 3-month extension if needed. 1040x electronically file   Do not apply for both the automatic 3-month extension and the additional 3-month extension at the same time. 1040x electronically file For more information, see Form 8868 and its instructions. 1040x electronically file   When filing Form 8868 for an automatic 3-month extension, neither a signature, nor an explanation is required. 1040x electronically file However, when filing Form 8868 for an additional 3-month extension, both a signature and an explanation are required. 1040x electronically file Application for exemption pending. 1040x electronically file   An organization that claims to be exempt under section 501(a) but has not established its exempt status by the due date for filing an information return must complete and file Form 990, 990-EZ, 990–N or 990-PF (if it considers itself a private foundation), unless the organization is exempt from Form 990-series filing requirements. 1040x electronically file If the organization's application is pending with the IRS, it must so indicate on Forms 990, 990-EZ, or 990-PF (whichever applies) by checking the application pending block at the top of page 1 of the return. 1040x electronically file For more information on the filing requirements, see the Instructions for Forms 990, 990-EZ, and 990-PF. 1040x electronically file State reporting requirements. 1040x electronically file   Copies of Forms 990, 990-EZ, or 990-PF may be used to satisfy state reporting requirements. 1040x electronically file See the instructions for those forms. 1040x electronically file Form 8870. 1040x electronically file   Organizations that filed a Form 990, 990-EZ, or 990-PF, and paid premiums or received transfers on certain life insurance, annuity, and endowment contracts (personal benefit contracts), must file Form 8870. 1040x electronically file For more information, see Form 8870 and the instructions for that form. 1040x electronically file Automatic Revocation If the organization fails to file a Form 990, 990-EZ, or 990-PF, or fails to submit a Form 990-N, as required, for 3 consecutive years, it will automatically lose its tax-exempt status by operation of law. 1040x electronically file The list of organizations whose tax-exempt status has been automatically revoked is available on IRS. 1040x electronically file gov. 1040x electronically file This list (Auto-Revocation List) may be viewed and searched on Exempt Organizations Select Check. 1040x electronically file The Auto-Revocation List includes each organization's name, Employer Identification Number (EIN) and last known address. 1040x electronically file It also includes the effective date of the automatic revocation and the date it was posted to the list. 1040x electronically file The IRS updates the list monthly to include additional organizations that lose their tax-exempt status. 1040x electronically file Tax Effect of Loss of Tax-Exempt Status If your organization’s tax-exempt status is automatically revoked, you may be required to file one of the following federal income tax returns and pay any applicable income taxes: Form 1120, U. 1040x electronically file S. 1040x electronically file Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or Form 1041, U. 1040x electronically file S. 1040x electronically file Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year. 1040x electronically file In addition, a section 501(c)(3) organization that loses its tax-exempt status cannot receive tax-deductible contributions and will not be identified in the IRS Business Master File extract as eligible to received tax-deductible contributions, or be included in Exempt Organizations Select Check (Pub 78 database). 1040x electronically file An organization whose exemption was automatically revoked must apply for tax exemption in order to regain its tax exemption (even if it was not originally required to apply). 1040x electronically file In some situations, an organization may be able to obtain exemption retroactive to its date of revocation. 1040x electronically file For more information about automatic revocation, go to IRS. 1040x electronically file gov and select Charities & Non-Profits and then select Revoked? Reinstated? Learn More. 1040x electronically file Penalties Penalties for failure to file. 1040x electronically file   Generally, an exempt organization that fails to file a required return must pay a penalty of $20 a day for each day the failure continues. 1040x electronically file The same penalty will apply if the organization does not give all the information required on the return or does not give the correct information. 1040x electronically file Maximum penalty. 1040x electronically file   The maximum penalty for any one return is the smaller of $10,000 or 5% of the organization's gross receipts for the year. 1040x electronically file Organization with gross receipts over $1 million. 1040x electronically file   For an organization that has gross receipts of over $1 million for the year, the penalty is $100 a day up to a maximum of $50,000. 1040x electronically file Managers. 1040x electronically file   If the organization is subject to this penalty, the IRS may specify a date by which the return or correct information must be supplied by the organization. 1040x electronically file Failure to comply with this demand will result in a penalty imposed upon the manager of the organization, or upon any other person responsible for filing a correct return. 1040x electronically file The penalty is $10 a day for each day that a return is not filed after the period given for filing. 1040x electronically file The maximum penalty imposed on all persons with respect to any one return is $5,000. 1040x electronically file Exception for reasonable cause. 1040x electronically file   No penalty will be imposed if reasonable cause for failure to file timely can be shown. 1040x electronically file Unrelated Business Income Tax Return Even though your organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income. 1040x electronically file Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. 1040x electronically file If your organization has $1,000 or more of unrelated business income, you must file Form 990-T in addition to your required annual information return. 1040x electronically file Estimated tax. 1040x electronically file   Quarterly estimated tax payments are due if your organization expects to owe $500 or more in tax including unrelated business income. 1040x electronically file Use Form 990-W to figure your organization's estimated tax payments. 1040x electronically file Travel tour programs. 1040x electronically file   Travel tour activities that are a trade or business are an unrelated trade or business if the activities are not substantially related to the purpose to which tax exemption was granted to the organization. 1040x electronically file   Whether travel tour activities conducted by an organization are substantially related to the organization's tax exempt purpose is determined by looking at all the relevant facts and circumstances, including, but not limited to, how a travel tour is developed, promoted, and operated. 1040x electronically file Example. 1040x electronically file ABC, a university alumni association, is tax exempt as an educational organization under section 501(c)(3). 1040x electronically file As part of its activities, ABC operates a travel tour program. 1040x electronically file The program is open to all current members of ABC and their guests. 1040x electronically file ABC works with travel agents to schedule approximately ten tours annually to various destinations around the world. 1040x electronically file Members of ABC pay $1,000 to XYZ Travel Agency to participate in a tour. 1040x electronically file XYZ pays ABC a per person fee for each participant. 1040x electronically file Although the literature advertising the tours encourages ABC members to continue their lifelong learning by joining the tours, and a faculty member of ABC's related university frequently joins the tour as a guest of the alumni association, none of the tours include any scheduled instruction or curriculum related to the destinations being visited. 1040x electronically file The travel tours made available to ABC's members do not contribute importantly to the accomplishment of ABC's educational purpose. 1040x electronically file Rather, ABC's program is designed to generate revenues for ABC by regularly offering its members travel services. 1040x electronically file Therefore, ABC's tour program is an unrelated trade or business. 1040x electronically file For additional information on unrelated business income, see Publication 598 and the Instructions for Form 990-T. 1040x electronically file Employment Tax Returns Every employer, including an organization exempt from federal income tax, who pays wages to employees is responsible for withholding, depositing, paying, and reporting federal income tax, social security and Medicare (FICA) taxes, and federal unemployment tax (FUTA), unless that employer is specifically excepted by law from those requirements, or if the taxes clearly do not apply. 1040x electronically file For more information, obtain a copy of Publication 15, which summarizes the responsibilities of an employer, Publication 15-A, Publication 15-B, and Form 941. 1040x electronically file Small Business Health Care Tax Credit. 1040x electronically file   If your small tax-exempt organization provides health care coverage for your workers you may qualify for the small business health care tax credit. 1040x electronically file Go to IRS. 1040x electronically file gov and select Affordable Care Act Tax Provisions for more details. 1040x electronically file See Small Business Health Care Tax Credit at www. 1040x electronically file irs. 1040x electronically file gov/newsroom/article/0,,id=223666,00. 1040x electronically file html. 1040x electronically file Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans. 1040x electronically file   The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). 1040x electronically file The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer's share of social security tax. 1040x electronically file The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013. 1040x electronically file This tax credit was extended through December 31, 2013, under the American Taxpayer Relief Act, passed on January 1, 2013. 1040x electronically file   The credit can be as high as $6,240 for qualified tax-exempt organizations. 1040x electronically file The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. 1040x electronically file The amount of the credit for qualified tax-exempt organizations may not exceed the organization's employer social security tax for the period for which the credit is claimed. 1040x electronically file   All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. 1040x electronically file The process for certifying veterans for this credit is the same for all employers. 1040x electronically file For more information, see Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit and the instructions to Form 8850. 1040x electronically file Notice 2012-13, 2012-9 I. 1040x electronically file R. 1040x electronically file B. 1040x electronically file 421, also provides additional guidance on submission Form 8850. 1040x electronically file   Organizations described in section 501(c) and exempt from taxation under section 501(a) may claim the credit for qualified veterans who begin work on or after Nov. 1040x electronically file 22, 2011, and before January 1, 2013. 1040x electronically file After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, Form 5884-C. 1040x electronically file File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. 1040x electronically file It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately. 1040x electronically file In addition to Form 5884-C and its instructions, tax-exempt employers should see Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit. 1040x electronically file Trust fund recovery penalty. 1040x electronically file   If any person required to collect, truthfully account for, and pay over any of these taxes willfully fails to satisfy any of these requirements or willfully tries in any way to evade or defeat any of them, that person will be subject to a penalty. 1040x electronically file The penalty is equal to the tax evaded, not collected, or not accounted for and paid over. 1040x electronically file The term person includes: An officer or employee of a corporation, or A member or employee of a partnership. 1040x electronically file Exception. 1040x electronically file   The penalty is not imposed on any unpaid volunteer director or member of a board of trustees of an exempt organization if the unpaid volunteer serves solely in an honorary capacity, does not participate in the day-to-day or financial operations of the organization, and does not have actual knowledge of the failure on which the penalty is imposed. 1040x electronically file   This exception does not apply if it results in no one being liable for the penalty. 1040x electronically file FICA and FUTA tax exceptions. 1040x electronically file   Payments for services performed by a minister of a church in the exercise of the ministry, or a member of a religious order performing duties required by the order, are generally not subject to FICA or FUTA taxes. 1040x electronically file FUTA tax exception. 1040x electronically file   Payments for services performed by an employee of a religious, charitable, educational, or other organization described in section 501(c)(3) that are generally subject to FICA taxes if the payments are $100 or more for the year, are not subject to FUTA taxes. 1040x electronically file FICA tax exemption election. 1040x electronically file   Churches and qualified church-controlled organizations can elect exemption from employer FICA taxes by filing Form 8274. 1040x electronically file   To elect the exemption, Form 8274 must be filed before the first date on which a quarterly employment tax return would otherwise be due from the electing organization. 1040x electronically file The organization can make the election only if it is opposed for religious reasons to the payment of FICA taxes. 1040x electronically file   The election applies to payments for services of current and future employees other than services performed in an unrelated trade or business. 1040x electronically file Revoking the election. 1040x electronically file   The election can be revoked by the IRS if the organization fails to file Form W-2, Wage and Tax Statement, for 2 years and fails to furnish certain information upon request by the IRS. 1040x electronically file Such revocation will apply retroactively to the beginning of the 2-year period. 1040x electronically file Definitions. 1040x electronically file   For purposes of this election, the term church means a church, a convention or association of churches, or an elementary or secondary school that is controlled, operated, or principally supported by a church or by a convention or association of churches. 1040x electronically file   The term qualified church-controlled organization means any church-controlled section 501(c)(3) tax-exempt organization, other than an organization that both: Offers goods, services, or facilities for sale, other than on an incidental basis, to the general public at other than a nominal charge that is substantially less than the cost of providing such goods, services, or facilities, and Normally receives more than 25% of its support from the sum of governmental sources and receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities that are not unrelated trades or businesses. 1040x electronically file Effect on employees. 1040x electronically file   If a church or qualified church-controlled organization has made an election, payment for services performed for that church or organization, other than in an unrelated trade or business, will not be subject to FICA taxes. 1040x electronically file However, the employee, unless otherwise exempt, will be subject to self-employment tax on the income. 1040x electronically file The tax applies to income of $108. 1040x electronically file 28 or more for the tax year from that church or organization, and no deductions for trade or business expenses are allowed against this self-employment income. 1040x electronically file   Schedule SE (Form 1040), Self-Employment Tax, should be attached to the employee's income tax return. 1040x electronically file Political Organization Income Tax Return Generally, a political organization is treated as an organization exempt from tax. 1040x electronically file Certain political organizations, however, must file an annual income tax return, Form 1120-POL, U. 1040x electronically file S. 1040x electronically file Income Tax Return for Certain Political Organizations, for any year they have political organization taxable income in excess of the $100 specific deduction allowed under section 527. 1040x electronically file A political organization that has $25,000 ($100,000 for a qualified state or local political organization) or more in gross receipts for the tax year must file Form 990 or Form 990-EZ (and Schedule B of the form), unless excepted. 1040x electronically file See Forms 990 and 990-EZ , earlier. 1040x electronically file Political organization. 1040x electronically file   A political organization is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. 1040x electronically file Exempt function. 1040x electronically file   An exempt function means influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, local public office or office in a political organization, or the election of the Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. 1040x electronically file It also includes certain office expenses of a holder of public office or an office in a political organization. 1040x electronically file Certain political organizations are required to notify the IRS that they are section 527 organizations. 1040x electronically file These organizations must use Form 8871. 1040x electronically file Some of these section 527 organizations must use Form 8872 to file periodic reports with the IRS disclosing their contributions and expenditures. 1040x electronically file For a discussion on these forms, see Reporting Requirements for a Political Organization, later. 1040x electronically file Political organization taxable income. 1040x electronically file   Political organization taxable income is the excess of: Gross income for the tax year (excluding exempt function income) minus Deductions directly connected with the earning of gross income. 1040x electronically file To figure taxable income, allow for a $100 specific deduction, but do not allow for the net operating loss deduction, the dividends-received deduction, and other special deductions for corporations. 1040x electronically file Exempt organization not a political organization. 1040x electronically file   An organization exempt under section 501(c) that spends any amount for an exempt function must file Form 1120-POL for any year which it has political taxable income. 1040x electronically file These organizations must include in gross income the lesser of: The total amount of its exempt function expenditures, or The organization's net investment income. 1040x electronically file Separate fund. 1040x electronically file   A section 501(c) organization can set up a separate segregated fund that will be treated as an independent political organization. 1040x electronically file The earnings and expenditures made by the separate fund will not be attributed to the section 501(c) organization. 1040x electronically file Section 501(c)(3) organizations are precluded from, and may suffer loss of exemption for, engaging in any political campaign on behalf of, or in opposition to, any candidate for public office. 1040x electronically file Due date. 1040x electronically file   Form 1120-POL is due by the 15th day of the 3rd month after the end of the tax year. 1040x electronically file Thus, for a calendar year taxpayer, Form 1120-POL is due on March 15 of the following year. 1040x electronically file If any due date falls on a Saturday, Sunday, or legal holiday, the organization can file the return on the next business day. 1040x electronically file    Form 1120-POL is not required of an exempt organization that makes expenditures for political purposes if its gross income does not exceed its directly connected deductions by more than $100 for the tax year. 1040x electronically file Extension of time to file. 1040x electronically file    Use Form 7004 to request an automatic 6-month extension of time to file Form 1120-POL. 1040x electronically file The extension will be granted if you complete Form 7004 properly, make a proper estimate of the tax (if applicable), file Form 1120-POL by the due date, and pay any tax due. 1040x electronically file Failure to file. 1040x electronically file   A political organization that fails to file Form 1120-POL is subject to a penalty equal to 5% of the tax due for each month (or partial month) the return is late up to a maximum of 25% of the tax due, unless the organization shows the failure was due to reasonable cause. 1040x electronically file For more information about filing Form 1120-POL, refer to the instructions accompanying the form. 1040x electronically file Failure to pay on time. 1040x electronically file   An organization that does not pay the tax when due generally may have to pay a penalty of 1/2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. 1040x electronically file The penalty will not be imposed if the organization can show that the failure to pay on time was due to reasonable cause. 1040x electronically file Reporting Requirements for a Political Organization Certain political organizations are required to notify the IRS that the organization is to be treated as a section 527 political organization. 1040x electronically file The organization is also required to periodically report certain contributions received and expenditures made by the organization. 1040x electronically file To notify the IRS of section 527 treatment, an organization must file Form 8871. 1040x electronically file To report contributions and expenditures, certain tax-exempt political organizations must file Form 8872. 1040x electronically file Form 8871 A political organization must electronically file Form 8871 to notify the IRS that it is to be treated as a section 527 organization. 1040x electronically file However, an organization is not required to file Form 8871 if: It reasonably expects its annual gross receipts to always be less than $25,000. 1040x electronically file It is a political committee required to report under the Federal Election Campaign Act of 1971 (FECA) (2 U. 1040x electronically file S. 1040x electronically file C. 1040x electronically file 431(4)). 1040x electronically file It is a state or local candidate committee. 1040x electronically file It is a state or local committee of a political party. 1040x electronically file It is a section 501(c) organization that has made an “exempt function expenditure. 1040x electronically file ” All other political organizations are required to file Form 8871. 1040x electronically file An organization must provide on Form 8871: Its name and address (including any business address, if different) and its electronic mailing address; Its purpose; The names and addresses of its officers, highly compensated employees, contact person, custodian of records, and members of its board of directors; The name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4)); and Whether it intends to claim an exemption from filing Form 8872, Form 990, or Form 990-EZ. 1040x electronically file Employer identification number. 1040x electronically file   If your organization needs an EIN, you can apply for one: Online—Click on the Employer ID Numbers (EINs) link at www. 1040x electronically file IRS. 1040x electronically file gov/businesses/small. 1040x electronically file By telephone at 1-800-829-4933 from 7:00 a. 1040x electronically file m. 1040x electronically file to 10:00 p. 1040x electronically file m. 1040x electronically file in the organization's local time zone. 1040x electronically file By mailing or faxing Form SS-4. 1040x electronically file   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. 1040x electronically file Due dates. 1040x electronically file   The initial Form 8871 must be filed within 24 hours of the date on which the organization was established. 1040x electronically file If there is a material change, an amended Form 8871 must be filed within 30 days of the material change. 1040x electronically file When the organization terminates its existence, it must file a final Form 8871 within 30 days of termination. 1040x electronically file   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. 1040x electronically file How to file. 1040x electronically file   An organization must file Form 8871 electronically via the IRS Internet website at www. 1040x electronically file IRS. 1040x electronically file gov/polorgs (Keyword: political orgs). 1040x electronically file Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status. 1040x electronically file   After electronically submitting Form 8871, the political organization must print, sign, and mail Form 8453-X to the IRS. 1040x electronically file Upon receipt of the Form 8453-X, the IRS will send the organization a username and password that must be used to file an amended or final Form 8871 or to electronically file Form 8872. 1040x electronically file Penalties Failure to file. 1040x electronically file   An organization that is required to file Form 8871, but fails to do so on a timely basis, will not be treated as a tax-exempt section 527 organization for any period before the date Form 8871 is filed. 1040x electronically file Also, the taxable income of the organization for that period will include its exempt function income (including contributions received, membership dues, and political fundraising receipts) minus any deductions directly connected with the production of that income. 1040x electronically file   Failure to file an amended Form 8871 will cause the organization not to be treated as a tax-exempt section 527 organization. 1040x electronically file If an organization is treated as not being a tax-exempt section 527 organization, the taxable income of the organization will be determined by considering any exempt function income and deductions during the period beginning on the date of the material change and ending on the date that the amended Form 8871 is filed. 1040x electronically file    The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate. 1040x electronically file Fraudulent returns. 1040x electronically file   Any individual or corporation that willfully delivers or discloses to the IRS any list, return, account, statement or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation) or imprisoned for not more than 1 year or both. 1040x electronically file Waiver of penalties. 1040x electronically file   The IRS may waive any additional tax assessed on an organization for failure to file Form 8871 if the failure was due to reasonable cause and not willful neglect. 1040x electronically file Additional information. 1040x electronically file   For more information on Form 8871, see the form and its instructions. 1040x electronically file For a discussion on the public inspection requirements for the form, see Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms , later. 1040x electronically file Form 8872 Every tax-exempt section 527 political organization that accepts a contribution or makes an expenditure, for an exempt function during the calendar year, must file Form 8872 except: A political organization that is not required to file Form 8871 (discussed earlier). 1040x electronically file A political organization that is subject to tax on its income because it did not file or amend Form 8871. 1040x electronically file A qualified state or local political organization (QSLPO), discussed below. 1040x electronically file All other tax-exempt section 527 organizations that accept contributions or make expenditures for an exempt function are required to file Form 8872. 1040x electronically file Qualified state or local political organization. 1040x electronically file   A state or local political organization may be a QSLPO if: All of its political activities relate solely to state or local public office (or office in a state or local political organization). 1040x electronically file It is subject to a state law that requires it to report (and it does report) to a state agency information about contributions and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS. 1040x electronically file The state agency and the organization make the reports publicly available. 1040x electronically file No federal candidate or office holder: Controls or materially participates in the direction of the organization, Solicits contributions for the organization, or Directs the disbursements of the organization. 1040x electronically file Information required on Form 8872. 1040x electronically file   If an organization pays an individual $500 or more for the calendar year, the organization is required to disclose the individual's name, address, occupation, employer, amount of the expense, the date the expense was paid, and the purpose of the expense on Form 8872. 1040x electronically file   If an organization receives contributions of $200 or more from one contributor for the calendar year, the organization must disclose the donor's name, address, occupation, employer, and the date the contributions were made. 1040x electronically file   For additional information that is required, see Form 8872. 1040x electronically file Due dates. 1040x electronically file   The due dates for filing Form 8872 vary depending on whether the form is due for a reporting period that occurs during a calendar year in which a regularly scheduled election is held, or any other calendar year (a nonelection year). 1040x electronically file   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. 1040x electronically file Election year filing. 1040x electronically file    In election years, Form 8872 must be filed on either a quarterly or a monthly basis. 1040x electronically file Both a pre-election report and a post-election report are also required to be filed in an election year. 1040x electronically file An election year is any year in which a regularly scheduled general election for federal office is held (an even-numbered year). 1040x electronically file Nonelection year filing. 1040x electronically file    In nonelection years, the form must be filed on a semiannual or monthly basis. 1040x electronically file A complete listing of these filing periods are in the Form 8872 Instructions. 1040x electronically file A nonelection year is any odd-numbered year. 1040x electronically file How to file. 1040x electronically file   Form 8872 can be filed either electronically or by mail. 1040x electronically file However, organizations that have, or expect to have, contributions or expenditures of $50,000 or more for the year must file electronically. 1040x electronically file    To file by mail, send Form 8872 to the:   Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0027 Electronic filing. 1040x electronically file   File electronically via the IRS internet website at www. 1040x electronically file IRS. 1040x electronically file gov/polorgs. 1040x electronically file You will need a user ID and password to electronically file Form 8872. 1040x electronically file Organizations that have completed the electronic filing of Form 8871 and submitted a completed and signed Form 8453-X will receive a username and password in the mail. 1040x electronically file   Organizations that have completed the electronic filing of Form 8871, but have not received their user ID and password can request one by writing to the following address: Internal Revenue Service Attn: Request for 8872 Password Mail Stop 6273 Ogden, UT 84201 Lost username and password. 1040x electronically file   If you have forgotten or misplaced the username and password issued to your organization after you filed your initial Form 8871, send a letter requesting a new username and password to the address under Electronic filing. 1040x electronically file You can also fax your request to (801) 620-3249. 1040x electronically file It may take 3-6 weeks for your new username and password to arrive, as they will be mailed to the organization. 1040x electronically file Penalty A penalty will be imposed if the organization is required to file Form 8872 and it: Fails to file the form by the due date, or Files the form but fails to report all of the information required or reports incorrect information. 1040x electronically file The penalty is 35% of the total amount of contributions and expenditures to which a failure relates. 1040x electronically file Fraudulent returns. 1040x electronically file   Any individual or corporation that willfully delivers or discloses any list, return, account, statement, or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned for not more than 1 year, or both. 1040x electronically file Waiver of penalties. 1040x electronically file   The IRS may waive any additional tax assessed on an organization for failure to file Form 8872 if the failure was due to reasonable cause and not willful neglect. 1040x electronically file Donee Information Return Dispositions of donated property. 1040x electronically file   If an organization receives charitable deduction property and within three years sells, exchanges, or otherwise disposes of the property, the organization must file Form 8282, Donee Information Return. 1040x electronically file However, an organization is not required to file Form 8282 if: The property is valued at $500 or less, or The property is consumed or distributed for charitable purposes. 1040x electronically file   Form 8282 must be filed with the IRS within 125 days after the disposition. 1040x electronically file Additionally, a copy of Form 8282 must be given to the donor. 1040x electronically file If the organization fails to file the required information return, penalties may apply. 1040x electronically file Charitable deduction property. 1040x electronically file   This is any property (other than money or publicly traded securities) for which the donee organization signed an appraisal summary or Form 8283, Noncash Charitable Contributions. 1040x electronically file Publicly traded securities. 1040x electronically file   These are securities for which market quotations are readily available on an established securities market as of the date of the contribution. 1040x electronically file Appraisal summary. 1040x electronically file   If the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property, see the Exceptions. 1040x electronically file below. 1040x electronically file Exceptions. 1040x electronically file   A written appraisal is not needed if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane), if your deduction for the vehicle is limited to the gross proceeds from its sale, Intellectual property, Certain securities considered to have market quotations readily available (see Regulations section 1. 1040x electronically file 170A-13(c)(7)(xi)(B)), Inventory and other property donated by a corporation that are qualified contributions for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A), or Any donation of stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. 1040x electronically file   The donee organization is not a qualified appraiser for the purpose of valuing the donated property. 1040x electronically file For more information, get Publication 561, Determining the Value of Donated Property. 1040x electronically file Form 8283. 1040x electronically file   For noncash donations over $5,000, the donor must attach Form 8283 to the tax return to support the charitable deduction. 1040x electronically file The donee must sign Part IV of Section B, Form 8283 unless publicly traded securities are donated. 1040x electronically file The person who signs for the donee must be an official authorized to sign the donee's tax or information returns, or a person specifically authorized to sign by that official. 1040x electronically file The signature does not represent concurrence in the appraised value of the contributed property. 1040x electronically file A signed acknowledgment represents receipt of the property described on Form 8283 on the date specified on the form. 1040x electronically file The signature also indicates knowledge of the information reporting requirements on dispositions, as previously discussed. 1040x electronically file A copy of Form 8283 must be given to the donee. 1040x electronically file Information Provided to Donors In some situations, a donor must obtain certain information from a donee organization to obtain a deduction for a charitable contribution. 1040x electronically file In other situations, the donee organization is required to provide information to the donor. 1040x electronically file A charitable organization must give a donor a disclosure statement for a quid pro quo contribution over $75. 1040x electronically file (See Disclosure statement. 1040x electronically file later. 1040x electronically file ) This is a payment a donor makes to a charity partly as a contribution and partly for goods or services. 1040x electronically file See Quid pro quo contribution below for an example. 1040x electronically file Failure to make the required disclosure may result in a penalty to the organization. 1040x electronically file A donor cannot deduct a charitable contribution of $250 or more unless the donor has a written acknowledgment from the charitable organization. 1040x electronically file In certain circumstances, an organization may be able to meet both of these requirements with the same written document. 1040x electronically file Disclosure of Quid Pro Quo Contributions A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution over $75. 1040x electronically file Quid pro quo contribution. 1040x electronically file   A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution. 1040x electronically file Your charitable organization must provide the donor a written statement informing the donor of the fair market value of the items or services it provided in exchange for the contribution. 1040x electronically file Generally, a written statement is required for each payment, whenever the contribution portion is over $75. 1040x electronically file Example. 1040x electronically file If a donor gives your charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. 1040x electronically file In this example, the charitable part of the payment is $60. 1040x electronically file Even though the deductible part of the payment is not more than $75, a written statement must be filed because the total payment is more than $75. 1040x electronically file If your organization fails to disclose quid pro quo contributions, the organization may be subject to a penalty. 1040x electronically file Disclosure statement. 1040x electronically file   The required written disclosure statement must: Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity, and Provide the donor with a good faith estimate of the fair market value of the goods or services that the donor received. 1040x electronically file The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. 1040x electronically file If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution. 1040x electronically file   No disclosure statement is required if any of the following are true. 1040x electronically file The goods or services given to a donor have insubstantial value as described in Revenue Procedure 90-12, 1990-1 C. 1040x electronically file B. 1040x electronically file 471, Revenue Procedure 90-12, and Revenue Procedure 92-49, 1992-1 C. 1040x electronically file B. 1040x electronically file 507 (as adjusted for inflation), Revenue Procedure 92-49. 1040x electronically file There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop). 1040x electronically file There is only an intangible religious benefit provided to the donor. 1040x electronically file The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. 1040x electronically file For example, a donor who, for a payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible religious benefit. 1040x electronically file A donor is not provided intangible religious benefits for payments made for tuition for education leading to a recognized degree, travel services, or consumer goods. 1040x electronically file The donor makes a payment of $75 or less per year and receives only annual membership benefits that consist of: Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services, or Admission to events that are open only to members and the cost per person of which is within the limits for low-cost articles described in Revenue Procedure 90-12 (as adjusted for inflation), Revenue Procedure 90-12. 1040x electronically file Good faith estimate of fair market value (FMV). 1040x electronically file   An organization can use any reasonable method to estimate the FMV of goods or services it provided to a donor, as long as it applies the method in good faith. 1040x electronically file   The organization can estimate the FMV of goods or services that generally are not commercially available by using the FMV of similar or comparable goods or services. 1040x electronically file Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued. 1040x electronically file Example 1. 1040x electronically file A charity provides a 1-hour tennis lesson with a tennis professional for the first $500 payment it receives. 1040x electronically file The tennis professional provides 1-hour lessons on a commercial basis for $100. 1040x electronically file A good faith estimate of the lesson's FMV is $100. 1040x electronically file Example 2. 1040x electronically file For a payment of $50,000, a museum allows a donor to hold a private event in a room of the museum. 1040x electronically file A good faith estimate of the FMV of the right to hold the event in the museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities, and atmosphere comparable to the museum room, even though the hotel ballroom lacks the unique art displayed in the museum room. 1040x electronically file If the hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event in the museum is $2,500. 1040x electronically file Example 3. 1040x electronically file For a payment of $1,000, a charity provides an evening tour of a museum conducted by a well-known artist. 1040x electronically file The artist does not provide tours on a commercial basis. 1040x electronically file Tours of the museum normally are free to the public. 1040x electronically file A good faith estimate of the FMV of the evening museum tour is $0 even though it is conducted by the artist. 1040x electronically file Penalty for failure to disclose. 1040x electronically file   A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. 1040x electronically file The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. 1040x electronically file The charity can avoid the penalty if it can show that the failure was due to reasonable cause. 1040x electronically file Acknowledgment of Charitable Contributions of $250 or More A donor can deduct a charitable contribution of $250 or more only if the donor has a written acknowledgment from the charitable organization. 1040x electronically file The donor must get the acknowledgment by the earlier of: The date the donor files the original return for the year the contribution is made, or The due date, including extensions, for filing the return. 1040x electronically file The donor is responsible for requesting and obtaining the written acknowledgment from the donee. 1040x electronically file A charitable organization that receives a payment made as a contribution is treated as the donee organization for this purpose even if the organization (according to the donor's instructions or otherwise) distributes the amount received to one or more charities. 1040x electronically file Quid pro quo contribution. 1040x electronically file   If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the acknowledgment must include a good faith estimate of the value of the goods or services. 1040x electronically file See Disclosure of Quid Pro Quo Contributions earlier. 1040x electronically file Form of acknowledgment. 1040x electronically file   Although there is no prescribed format for the written acknowledgment, it must provide enough information to substantiate the amount of the contribution. 1040x electronically file For more information, see IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. 1040x electronically file Cash contributions. 1040x electronically file   To deduct a contribution of cash, a check, or other monetary gift (regardless of the amount), a donor must maintain a bank record or a written communication from the donee organization showing the donee's name, date, and amount of the contribution. 1040x electronically file In the case of a lump-sum contribution (rather than a contribution by payroll deduction) made through the Combined Federal Campaign or a similar program such as a United Way Campaign, the written communication must include the name of the donee organization that is the ultimate recipient of the charitable contribution. 1040x electronically file Contributions by payroll deduction. 1040x electronically file   An organization may substantiate an employee's contribution by deduction from its payroll by: A pay stub, Form W-2, or other document showing a contribution to a donee organization, together with A pledge card or other document from the donee organization that shows its name. 1040x electronically file   For contributions of $250 or more, the document must state that the donee organization provides no goods or services for any payroll contributions. 1040x electronically file The amount withheld from each payment of wages to a taxpayer is treated as a separate contribution. 1040x electronically file Acknowledgment of Vehicle Contribution If an exempt organization receives a contribution of a qualified vehicle with a claimed value of more than $500, the donee organization is required to provide a contemporaneous written acknowledgment to the donor. 1040x electronically file The donee organization can use a completed Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the contemporaneous written acknowledgment. 1040x electronically file See section 3. 1040x electronically file 03 of Notice 2005-44 for guidance on the information that must be included in a contemporaneous written acknowledgment and the deadline for furnishing the acknowledgment to the donor. 1040x electronically file Any donee organization that provides a contemporaneous written acknowledgment to a donor is required to report to the IRS the information contained in the acknowledgment. 1040x electronically file The report is due by February 28 (March 31 if filing electronically) of the year following the year in which the donee organization provides the acknowledgment to the donor. 1040x electronically file The organization must file the report on Copy A of Form 1098-C. 1040x electronically file An organization that files Form 1098-C on paper should send it with Form 1096, Annual Summary and Transmittal of U. 1040x electronically file S. 1040x electronically file Information Returns. 1040x electronically file See the Instructions for Form 1096 for the correct filing location. 1040x electronically file An organization that is required to file 250 or more Forms 1098-C during the calendar year must file the forms electronically or magnetically. 1040x electronically file Specifications for filing Form 1098-C electronically or magnetically can be found in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically at www. 1040x electronically file IRS. 1040x electronically file gov/pub/irs-pdf/p1220. 1040x electronically file pdf. 1040x electronically file Acknowledgment For a contribution of a qualified vehicle with a claimed value of $500 or less, do not file Form 1098-C. 1040x electronically file However, you can use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. 1040x electronically file See the Instructions for Form 1098-C. 1040x electronically file Generally, the organization should complete Form 1098-C as the written acknowledgment to the donor and the IRS. 1040x electronically file The contents of the acknowledgment depend upon whether the organization: Sells a qualified vehicle without any significant intervening use or material improvement, Intends to make a significant intervening use of or material improvement to a qualified vehicle prior to sale, or Sells a qualified vehicle to a needy individual at a price significantly below fair market value, or a gratuitous transfer to a needy individual in direct furtherance of a charitable purpose of the organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. 1040x electronically file For more information on the acknowledgment, see Notice 2005-44, 2005-25 I. 1040x electronically file R. 1040x electronically file B. 1040x electronically file 1287, at www. 1040x electronically file irs. 1040x electronically file gov/irb/2005-25_IRB/2005-25_IRB/ar09. 1040x electronically file html. 1040x electronically file Material improvements or significant intervening use. 1040x electronically file   To constitute significant intervening use, the organization must actually use the vehicle to substantially further the organization's regularly conducted activities, and the use must be significant, not incidental. 1040x electronically file Factors in determining whether a use is a significant intervening use depend on the nature, extent, frequency, and duration. 1040x electronically file For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly related to training in vehicle repair. 1040x electronically file Use does not include the use of a vehicle to provide training in business skills, such as marketing or sales. 1040x electronically file Examples of significant use include: Driving a vehicle every day for 1 year to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. 1040x electronically file Driving a vehicle for 10,000 miles over a 1-year period to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. 1040x electronically file   Material improvements include major repairs and additions that improve the condition of the vehicle in a manner that significantly increases the value. 1040x electronically file To be a material improvement, the improvement cannot be funded by an additional payment to the organization from the donor of the vehicle. 1040x electronically file Material improvements do not include cleaning, minor repairs, routine maintenance, painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of theft deterrent devices. 1040x electronically file Penalties. 1040x electronically file   If your charitable organization receives contributions of used motor vehicles, boats, and airplanes valued over $500 it may be subject to a penalty if it knowingly: Fails to furnish an acknowledgement in a timely manner, showing the required information, or Furnishes a false or fraudulent acknowledgement of the contribution. 1040x electronically file    Other penalties may apply. 1040x electronically file See Part O in the 2012 General Instructions for Certain Information Returns. 1040x electronically file   An acknowledgment containing a certification will be presumed to be false or fraudulent if the qualified vehicle is sold to a buyer other than a needy individual without a significant intervening use or material improvement within 6 months of the date of the contribution. 1040x electronically file   If a charity sells a donated vehicle at auction, the IRS will not accept as substantiation an acknowledgment from the charity stating that the vehicle is to be transferred to a needy individual for significantly below fair market value. 1040x electronically file Vehicles sold at auction are not sold at prices significantly below fair market value, and the IRS will not treat vehicles sold at auction as qualifying for this exception. 1040x electronically file   The penalty for a false or fraudulent acknowledgment where the donee certifies that the vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use or the donee certifies that the vehicle is to be transferred to a needy individual for significantly below fair market value in furtherance of the donee's charitable purpose is the larger of $5,000 or the claimed value of the vehicle multiplied by 39. 1040x electronically file 6%. 1040x electronically file   The penalty for an acknowledgment relating to a qualified vehicle being sold in an arm's length transaction to an unrelated party is the larger of the gross proceeds from the sale or the sales price stated in the acknowledgment multiplied by 39. 1040x electronically file 6%. 1040x electronically file Qualified Intellectual Property A taxpayer who contributes qualified intellectual property to a charity may be entitled to a charitable deduction, in addition to any initial deduction allowed in the year of contribution. 1040x electronically file The additional deduction is based on a specified percentage of the qualified donee income with respect to the qualified intellectual property. 1040x electronically file To qualify for the additional charitable deduction, the donor must provide notice to the donee at the time of the contribution that the donor intends to treat the contribution as qualified intellectual property contribution for purposes of sections 170(m) and 6050L. 1040x electronically file Every donee organization described in section 170(c) (except a private foundation as defined in section 509(a) that is not described in section 170(b)(1)(F)) that receives or accrues net income from a charitable gift of qualified intellectual property must file Form 8899. 1040x electronically file Form 8899. 1040x electronically file   Form 8899, Notice of Income From Donated Intellectual Property, is used by a donee to report net income from qualified intellectual property to the donor of the property and to the IRS and is due by the last day of the first full month following the close of the donee’s tax year. 1040x electronically file This form must be filed for each tax year of the donee in which the donated property produces net income, but only if all or part of that tax year occurs during the 10-year period beginning on the date of the contribution and that tax year does not begin after the expiration of the legal life of the donated property. 1040x electronically file Qualified donee income. 1040x electronically file   Qualified donee income is any net income received by or accrued to the donee that is properly allocable to the qualified intellectual property for the tax year of the donee which ends within or with the tax year of the donor. 1040x electronically file Income is not treated as allocated to qualified intellectual property if it is received or accrued after the earlier of the expiration of the legal life of the qualified intellectual property, or the 10-year period beginning with the date of
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IRS Withholding Calculator

If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new  Form W-4, Employee's Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.

Who Can Benefit From The Withholding Calculator?

  • Employees who would like to change their withholding to reduce their tax refund or their balance due;
  • Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
  • Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.

CAUTION:    If you will be subject to alternative minimum tax, self-employment tax, or other taxes; you will probably achieve more accurate withholding by following the instructions in Pub 505: Tax Withholding and Estimated Tax.

Ready to start? Make sure scripting is enabled before using this application. Continue to the Withholding Calculator

Tips For Using This Program

  • Have your most recent pay stubs handy.
  • Have your most recent income tax return handy.
  • Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.

To Change Your Withholding:

  1. Use your results from this calculator to help you complete a new Form W-4, Employee's Withholding Allowance Certificate.
  2. Submit the completed Form to your employer.
Page Last Reviewed or Updated: 02-Jan-2014

IRS Withholding Calculator

 

The 1040x Electronically File

1040x electronically file Publication 559 - Main Content Table of Contents Personal RepresentativeDuties Fees Received by Personal Representatives Final Income Tax Return for Decedent—Form 1040Name, Address, and Signature When and Where To File Filing Requirements Income To Include Exemptions and Deductions Credits, Other Taxes, and Payments Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Filing Reminders Other Tax InformationTax Benefits for Survivors Income in Respect of a Decedent Deductions in Respect of a Decedent Estate Tax Deduction Gifts, Insurance, and Inheritances Other Items of Income Income Tax Return of an Estate— Form 1041Filing Requirements Income To Include Exemption and Deductions Credits, Tax, and Payments Name, Address, and Signature When and Where To File Distributions to BeneficiariesIncome That Must Be Distributed Currently Other Amounts Distributed Discharge of a Legal Obligation Character of Distributions How and When To Report Bequest Termination of Estate Estate and Gift TaxesApplicable Credit Amount Gift Tax Estate Tax Generation-Skipping Transfer Tax Comprehensive ExampleFinal Return for Decedent—Form 1040 Income Tax Return of an Estate—Form 1041 How To Get Tax HelpLow Income Taxpayer Clinics Personal Representative A personal representative of an estate is an executor, administrator, or anyone who is in charge of the decedent's property. 1040x electronically file Generally, an executor (or executrix) is named in a decedent's will to administer the estate and distribute properties as the decedent has directed. 1040x electronically file An administrator (or administratrix) is usually appointed by the court if no will exists, if no executor was named in the will, or if the named executor cannot or will not serve. 1040x electronically file In general, an executor and an administrator perform the same duties and have the same responsibilities. 1040x electronically file For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term “executor” includes anyone in actual or constructive possession of any property of the decedent. 1040x electronically file It includes, among others, the decedent's agents and representatives; safe-deposit companies, warehouse companies, and other custodians of property in this country; brokers holding securities of the decedent as collateral; and the debtors of the decedent who are in this country. 1040x electronically file Duties The primary duties of a personal representative are to collect all the decedent's assets, pay his or her creditors, and distribute the remaining assets to the heirs or other beneficiaries. 1040x electronically file The personal representative also must perform the following duties. 1040x electronically file Apply for an employer identification number (EIN) for the estate. 1040x electronically file File all tax returns, including income, estate and gift tax returns, when due. 1040x electronically file Pay the tax determined up to the date of discharge from duties. 1040x electronically file Other duties of the personal representative in federal tax matters are discussed in other sections of this publication. 1040x electronically file If any beneficiary is a nonresident alien, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent. 1040x electronically file Penalty. 1040x electronically file   There is a penalty for failure to file a tax return when due unless the failure is due to reasonable cause. 1040x electronically file Reliance on an agent (attorney, accountant, etc. 1040x electronically file ) is not reasonable cause for late filing. 1040x electronically file It is the personal representative's duty to file the returns for the decedent and the estate when due. 1040x electronically file Identification number. 1040x electronically file   The first action you should take if you are the personal representative for the decedent is to apply for an EIN for the estate. 1040x electronically file You should apply for this number as soon as possible because you need to enter it on returns, statements, and other documents you file concerning the estate. 1040x electronically file You also must give the number to payers of interest and dividends and other payers who must file a return concerning the estate. 1040x electronically file   You can get an EIN by applying online at www. 1040x electronically file irs. 1040x electronically file gov (click on "Apply for an EIN Online" under the Tools heading). 1040x electronically file Generally, if you apply online, you will receive your EIN immediately upon completing the application. 1040x electronically file You can also apply using Form SS-4, Application for Employer Identification Number. 1040x electronically file Generally, if you apply by mail, it takes about 4 weeks to get your EIN. 1040x electronically file See the form instructions for other ways to apply. 1040x electronically file   Payers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. 1040x electronically file After a decedent's death, Forms 1099 must reflect the identification number of the estate or beneficiary to whom the amounts are payable. 1040x electronically file As the personal representative handling the estate, you must furnish this identification number to the payer. 1040x electronically file For example, if interest is payable to the estate, the estate's EIN must be provided to the payer and used to report the interest on Form 1099-INT, Interest Income. 1040x electronically file If the interest is payable to a surviving joint owner, the survivor's identification number, such as an SSN or ITIN, must be provided to the payer and used to report the interest. 1040x electronically file   If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death, the payer should give you (or the survivor) a Form W-9, Request for Taxpayer Identification Number and Certification (or a similar substitute form). 1040x electronically file Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to the payer. 1040x electronically file    Do not use the deceased individual's identifying number to file an individual income tax return after the decedent's final tax return. 1040x electronically file Also do not use it to make estimated tax payments for a tax year after the year of death. 1040x electronically file Penalty. 1040x electronically file   If you do not include the EIN or the taxpayer identification number of another person where it is required on a return, statement, or other document, you are liable for a penalty for each failure, unless you can show reasonable cause. 1040x electronically file You also are liable for a penalty if you do not give the taxpayer identification number of another person when required on a return, statement, or other document. 1040x electronically file Notice of fiduciary relationship. 1040x electronically file   The term fiduciary means any person acting for another person. 1040x electronically file It applies to persons who have positions of trust on behalf of others. 1040x electronically file A personal representative for a decedent's estate is a fiduciary. 1040x electronically file Form 56. 1040x electronically file   If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the IRS stating this. 1040x electronically file Form 56, Notice Concerning Fiduciary Relationship, is used for this purpose. 1040x electronically file See the Instructions for Form 56 for filing requirements and other information. 1040x electronically file   File Form 56 as soon as all the necessary information (including the EIN) is available. 1040x electronically file It notifies the IRS that you, as the fiduciary, are assuming the powers, rights, duties, and privileges of the decedent. 1040x electronically file The notice remains in effect until you notify the IRS (by filing another Form 56) that your fiduciary relationship with the estate has terminated. 1040x electronically file Termination of fiduciary relationship. 1040x electronically file   Form 56 should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate has not been terminated. 1040x electronically file See Form 56 and its instructions for more information. 1040x electronically file   At the time of termination of the fiduciary relationship, you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 6905, to wind up your duties as fiduciary. 1040x electronically file See below for a discussion of these forms. 1040x electronically file Request for prompt assessment (charge) of tax. 1040x electronically file   The IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge any additional tax due. 1040x electronically file However, as a personal representative, you may request a prompt assessment of tax after the return has been filed. 1040x electronically file This reduces the time for making the assessment to 18 months from the date the written request for prompt assessment was received. 1040x electronically file This request can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. 1040x electronically file This may permit a quicker settlement of the tax liability of the estate and an earlier final distribution of the assets to the beneficiaries. 1040x electronically file Form 4810. 1040x electronically file   Form 4810 can be used for making this request. 1040x electronically file It must be filed separately from any other document. 1040x electronically file   As the personal representative for the decedent's estate, you are responsible for any additional taxes that may be due. 1040x electronically file You can request prompt assessment of any of the decedent's taxes (other than federal estate taxes) for any years for which the statutory period for assessment is open. 1040x electronically file This applies even though the returns were filed before the decedent's death. 1040x electronically file Failure to report income. 1040x electronically file   If you or the decedent failed to report substantial amounts of gross income (more than 25% of the gross income reported on the return) or filed a false or fraudulent return, your request for prompt assessment will not shorten the period during which the IRS may assess the additional tax. 1040x electronically file However, such a request may relieve you of personal liability for the tax if you did not have knowledge of the unpaid tax. 1040x electronically file Request for discharge from personal liability for tax. 1040x electronically file   An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate taxes. 1040x electronically file The request must be made after the returns for those taxes are filed. 1040x electronically file To make the request, file Form 5495. 1040x electronically file For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States. 1040x electronically file   Within 9 months after receipt of the request, the IRS will notify the executor of the amount of taxes due. 1040x electronically file If this amount is paid, the executor will be discharged from personal liability for any future deficiencies. 1040x electronically file If the IRS has not notified the executor, he or she will be discharged from personal liability at the end of the 9-month period. 1040x electronically file    Even if the executor is discharged from personal liability, the IRS will still be able to assess tax deficiencies against the executor to the extent he or she still has any of the decedent's property. 1040x electronically file Insolvent estate. 1040x electronically file   Generally, if a decedent's estate is insufficient to pay all the decedent's debts, the debts due to the United States must be paid first. 1040x electronically file Both the decedent's federal income tax liabilities at the time of death and the estate's income tax liability are debts due to the United States. 1040x electronically file The personal representative of an insolvent estate is personally responsible for any tax liability of the decedent or of the estate if he or she had notice of such tax obligations or failed to exercise due care in determining if such obligations existed before distribution of the estate's assets and before being discharged from duties. 1040x electronically file The extent of such personal responsibility is the amount of any other payments made before paying the debts due to the United States, except where such other debt paid has priority over the debts due to the United States. 1040x electronically file Income tax liabilities need not be formally assessed for the personal representative to be liable if he or she was aware or should have been aware of their existence. 1040x electronically file Fees Received by Personal Representatives All personal representatives must include fees paid to them from an estate in their gross income. 1040x electronically file If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on your Form 1040, line 21. 1040x electronically file If you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C or Schedule C-EZ of your Form 1040. 1040x electronically file If the estate operates a trade or business and you, as executor, actively participate in the trade or business while fulfilling your duties, any fees you receive related to the operation of the trade or business must be reported as self-employment income on Schedule C (or Schedule C-EZ) of your Form 1040. 1040x electronically file Final Income Tax Return for Decedent—Form 1040 The personal representative (defined earlier) must file the final income tax return (Form 1040) of the decedent for the year of death and any returns not filed for preceding years. 1040x electronically file A surviving spouse, under certain circumstances, may have to file the returns for the decedent. 1040x electronically file See Joint Return, later. 1040x electronically file Return for preceding year. 1040x electronically file   If an individual died after the close of the tax year, but before the return for that year was filed, the return for the year just closed will not be the final return. 1040x electronically file The return for that year will be a regular return and the personal representative must file it. 1040x electronically file Example. 1040x electronically file Samantha Smith died on March 21, 2013, before filing her 2012 tax return. 1040x electronically file Her personal representative must file her 2012 return by April 15, 2013. 1040x electronically file Her final tax return covering the period from January 1, 2013, to March 20, 2013, is due April 15, 2014. 1040x electronically file Name, Address, and Signature Write the word “DECEASED,” the decedent's name, and the date of death across the top of the tax return. 1040x electronically file If filing a joint return, write the name and address of the decedent and the surviving spouse in the name and address fields. 1040x electronically file If a joint return is not being filed, write the decedent's name in the name field and the personal representative's name and address in the address field. 1040x electronically file Third party designee. 1040x electronically file   You can check the “Yes” box in the Third Party Designee area on page 2 of the return to authorize the IRS to discuss the return with a friend, family member, or any other person you choose. 1040x electronically file This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the processing of the return. 1040x electronically file It also allows the designee to perform certain actions. 1040x electronically file See the Instructions for Form 1040 for details. 1040x electronically file Signature. 1040x electronically file   If a personal representative has been appointed, that person must sign the return. 1040x electronically file If it is a joint return, the surviving spouse must also sign it. 1040x electronically file If no personal representative has been appointed, the surviving spouse (on a joint return) signs the return and writes in the signature area “Filing as surviving spouse. 1040x electronically file ” If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. 1040x electronically file ” Paid preparer. 1040x electronically file   If you pay someone to prepare, assist in preparing, or review the tax return, that person must sign the return and fill in the other blanks in the Paid Preparer Use Only area of the return. 1040x electronically file See the Form 1040 instructions for details. 1040x electronically file When and Where To File The final income tax return is due at the same time the decedent's return would have been due had death not occurred. 1040x electronically file A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. 1040x electronically file However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the next business day. 1040x electronically file The tax return must be prepared for the year of death regardless of when during the year death occurred. 1040x electronically file Generally, you must file the final income tax return of the decedent with the Internal Revenue Service Center for the place where you live. 1040x electronically file A tax return for a decedent can be electronically filed. 1040x electronically file A personal representative may also obtain an income tax filing extension on behalf of a decedent. 1040x electronically file Filing Requirements The gross income, age, and filing status of a decedent generally determine whether a return must be filed. 1040x electronically file Gross income is all income received by an individual from any source in the form of money, goods, property, and services that is not tax-exempt. 1040x electronically file It includes gross receipts from self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods sold. 1040x electronically file In general, filing status depends on whether the decedent was considered single or married at the time of death. 1040x electronically file See the income tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. 1040x electronically file Refund A return must be filed to obtain a refund if tax was withheld from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return is not otherwise required to be filed. 1040x electronically file Also, the decedent may be entitled to other credits that result in a refund. 1040x electronically file These advance payments of tax and credits are discussed later under Credits, Other Taxes, and Payments. 1040x electronically file Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. 1040x electronically file   Form 1310 does not have to be filed if you are claiming a refund and you are: A surviving spouse filing an original or amended joint return with the decedent, or A court-appointed or certified personal representative filing the decedent’s original return and a copy of the court certificate showing your appointment is attached to the return. 1040x electronically file   If the personal representative is filing a claim for refund on Form 1040X, Amended U. 1040x electronically file S. 1040x electronically file Individual Income Tax Return, or Form 843, Claim for Refund and Request for Abatement, and the court certificate has already been filed with the IRS, attach Form 1310 and write “Certificate Previously Filed” at the bottom of the form. 1040x electronically file Example. 1040x electronically file Edward Green died before filing his tax return. 1040x electronically file You were appointed the personal representative for Edward's estate, and you file his Form 1040 showing a refund due. 1040x electronically file You do not need Form 1310 to claim the refund if you attach a copy of the court certificate showing you were appointed the personal representative. 1040x electronically file    If you are a surviving spouse and you receive a tax refund check in both your name and your deceased spouse's name, you can have the check reissued in your name alone. 1040x electronically file Return the joint-name check marked “VOID” to your local IRS office or the service center where you mailed your return, along with a written request for reissuance of the refund check. 1040x electronically file A new check will be issued in your name and mailed to you. 1040x electronically file Death certificate. 1040x electronically file   When filing the decedent's final income tax return, do not attach the death certificate or other proof of death to the final return. 1040x electronically file Instead, keep it for your records and provide it if requested. 1040x electronically file Nonresident Alien If the decedent was a nonresident alien who would have had to file Form 1040NR, U. 1040x electronically file S. 1040x electronically file Nonresident Alien Income Tax Return, you must file that form for the decedent's final tax year. 1040x electronically file See the Instructions for Form 1040NR for the filing requirements, due date, and where to file. 1040x electronically file Joint Return Generally, the personal representative and the surviving spouse can file a joint return for the decedent and the surviving spouse. 1040x electronically file However, the surviving spouse alone can file the joint return if no personal representative has been appointed before the due date for filing the final joint return for the year of death. 1040x electronically file This also applies to the return for the preceding year if the decedent died after the close of the preceding tax year and before filing the return for that year. 1040x electronically file The income of the decedent that was includible on his or her return for the year up to the date of death (see Income To Include, later) and the income of the surviving spouse for the entire year must be included in the final joint return. 1040x electronically file A final joint return with the decedent cannot be filed if the surviving spouse remarried before the end of the year of the decedent's death. 1040x electronically file The filing status of the decedent in this instance is married filing a separate return. 1040x electronically file For information about tax benefits to which a surviving spouse may be entitled, see Tax Benefits for Survivors, later, under Other Tax Information. 1040x electronically file Personal representative may revoke joint return election. 1040x electronically file   A court-appointed personal representative may revoke an election to file a joint return previously made by the surviving spouse alone. 1040x electronically file This is done by filing a separate return for the decedent within one year from the due date of the return (including any extensions). 1040x electronically file The joint return made by the surviving spouse will then be regarded as the separate return of that spouse by excluding the decedent's items and refiguring the tax liability. 1040x electronically file Relief from joint liability. 1040x electronically file   In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. 1040x electronically file If the decedent qualified for this relief while alive, the personal representative can pursue an existing request, or file a request, for relief from joint liability. 1040x electronically file For information on requesting this relief, see Publication 971, Innocent Spouse Relief. 1040x electronically file Income To Include The decedent's income includible on the final return is generally determined as if the person were still alive except that the taxable period is usually shorter because it ends on the date of death. 1040x electronically file The method of accounting regularly used by the decedent before death also determines the income includible on the final return. 1040x electronically file This section explains how some types of income are reported on the final return. 1040x electronically file For more information about accounting methods, see Publication 538, Accounting Periods and Methods. 1040x electronically file Cash Method If the decedent accounted for income under the cash method, only those items actually or constructively received before death are included on the final return. 1040x electronically file Constructive receipt of income. 1040x electronically file   Interest from coupons on the decedent's bonds is constructively received by the decedent if the coupons matured in the decedent's final tax year, but had not been cashed. 1040x electronically file Include the interest income on the final return. 1040x electronically file   Generally, a dividend is considered constructively received if it was available for use by the decedent without restriction. 1040x electronically file If the corporation customarily mailed its dividend checks, the dividend was includible when received. 1040x electronically file If the individual died between the time the dividend was declared and the time it was received in the mail, the decedent did not constructively receive it before death. 1040x electronically file Do not include the dividend in the final return. 1040x electronically file Accrual Method Generally, under an accrual method of accounting, income is reported when earned. 1040x electronically file If the decedent used an accrual method, only the income items normally accrued before death are included on the final return. 1040x electronically file Interest and Dividend Income (Forms 1099) Form(s) 1099 reporting interest and dividends earned by the decedent before death should be received and the amounts included on the decedent's final return. 1040x electronically file A separate Form 1099 should show the interest and dividends earned after the date of the decedent's death and paid to the estate or other recipient that must include those amounts on its return. 1040x electronically file You can request corrected Forms 1099 if these forms do not properly reflect the right recipient or amounts. 1040x electronically file For example, a Form 1099-INT, reporting interest payable to the decedent, may include income that should be reported on the final income tax return of the decedent, as well as income that the estate or other recipient should report, either as income earned after death or as income in respect of the decedent (discussed later). 1040x electronically file For income earned after death, you should ask the payer for a Form 1099 that properly identifies the recipient (by name and identification number) and the proper amount. 1040x electronically file If that is not possible, or if the form includes an amount that represents income in respect of the decedent, report the interest as shown next under How to report. 1040x electronically file See U. 1040x electronically file S. 1040x electronically file savings bonds acquired from decedent under Income in Respect of a Decedent, later, for information on savings bond interest that may have to be reported on the final return. 1040x electronically file How to report. 1040x electronically file   If you are preparing the decedent's final return and you have received a Form 1099-INT for the decedent that includes amounts belonging to the decedent and to another recipient (the decedent's estate or another beneficiary), report the total interest shown on Form 1099-INT on Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. 1040x electronically file Next, enter a subtotal of the interest shown on Forms 1099, and the interest reportable from other sources for which you did not receive Forms 1099. 1040x electronically file Then, show any interest (including any interest you receive as a nominee) belonging to another recipient separately and subtract it from the subtotal. 1040x electronically file Identify the amount of this adjustment as “Nominee Distribution” or other appropriate designation. 1040x electronically file   Report dividend income for which you received a Form 1099-DIV, Dividends and Distributions, on the appropriate schedule using the same procedure. 1040x electronically file    Note. 1040x electronically file If the decedent received amounts as a nominee, you must give the actual owner a Form 1099, unless the owner is the decedent's spouse. 1040x electronically file See General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) for more information on filing Forms 1099. 1040x electronically file Partnership Income The death of a partner closes the partnership's tax year for that partner. 1040x electronically file Generally, it does not close the partnership's tax year for the remaining partners. 1040x electronically file The decedent's distributive share of partnership items must be figured as if the partnership's tax year ended on the date the partner died. 1040x electronically file To avoid an interim closing of the partnership books, the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would have included for the entire partnership tax year. 1040x electronically file On the decedent's final return, include the decedent's distributive share of partnership items for the following periods. 1040x electronically file The partnership's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). 1040x electronically file The period, if any, from the end of the partnership's tax year in (1) to the decedent's date of death. 1040x electronically file Example. 1040x electronically file Mary Smith was a partner in XYZ partnership and reported her income on a tax year ending December 31. 1040x electronically file The partnership uses a tax year ending June 30. 1040x electronically file Mary died August 31, 2013, and her estate established its tax year through August 31. 1040x electronically file The distributive share of partnership items based on the decedent's partnership interest is reported as follows. 1040x electronically file Final Return for the Decedent—January 1 through August 31, 2013, includes XYZ partnership items from (a) the partnership tax year ending June 30, 2013, and (b) the partnership tax year beginning July 1, 2013, and ending August 31, 2013 (the date of death). 1040x electronically file Income Tax Return of the Estate—September 1, 2013, through August 31, 2014, includes XYZ partnership items for the period September 1, 2013, through June 30, 2014. 1040x electronically file S Corporation Income If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for the following periods. 1040x electronically file The corporation's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). 1040x electronically file The period, if any, from the end of the corporation's tax year in (1) to the decedent's date of death. 1040x electronically file Self-Employment Income Include self-employment income actually or constructively received or accrued, depending on the decedent's accounting method. 1040x electronically file For self-employment tax purposes only, the decedent's self-employment income will include the decedent's distributive share of a partnership's income or loss through the end of the month in which death occurred. 1040x electronically file For this purpose, the partnership's income or loss is considered to be earned ratably over the partnership's tax year. 1040x electronically file Community Income If the decedent was married and domiciled in a community property state, half of the income received and half of the expenses paid during the decedent's tax year by either the decedent or spouse may be considered to be the income and expenses of the other. 1040x electronically file For more information, see Publication 555, Community Property. 1040x electronically file HSA, Archer MSA, or Medicare Advantage MSA The treatment of an HSA (health savings account), an Archer MSA (medical savings account), or a Medicare Advantage MSA at the death of the account holder, depends on who acquires the interest in the account. 1040x electronically file If the decedent's estate acquires the interest, the fair market value (FMV) of the assets in the account on the date of death is included in income on the decedent's final return. 1040x electronically file The estate tax deduction, discussed later, does not apply to this amount. 1040x electronically file If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. 1040x electronically file For other information on HSAs, Archer MSAs, or Medicare Advantage MSAs, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. 1040x electronically file Coverdell Education Savings Account (ESA) Generally, the balance in a Coverdell ESA must be distributed within 30 days after the individual for whom the account was established reaches age 30, or dies, whichever is earlier. 1040x electronically file The treatment of the Coverdell ESA at the death of an individual under age 30 depends on who acquires the interest in the account. 1040x electronically file If the decedent's estate acquires the interest, the earnings on the account must be included on the final income tax return of the decedent. 1040x electronically file The estate tax deduction, discussed later, does not apply to this amount. 1040x electronically file If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. 1040x electronically file The age 30 limitation does not apply if the individual for whom the account was established or the beneficiary that acquires the account is an individual with special needs. 1040x electronically file This includes an individual who, because of a physical, mental, or emotional condition (including a learning disability), requires additional time to complete his or her education. 1040x electronically file For more information on Coverdell ESAs, see Publication 970, Tax Benefits for Education. 1040x electronically file Accelerated Death Benefits Accelerated death benefits are amounts received under a life insurance contract before the death of the insured individual. 1040x electronically file These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. 1040x electronically file Generally, if the decedent received accelerated death benefits on the life of a terminally or chronically ill individual, whether on his or her own life or on the life of another person, those benefits are not included in the decedent's income. 1040x electronically file For more information, see the discussion under Gifts, Insurance, and Inheritances under Other Tax Information, later. 1040x electronically file Exemptions and Deductions Generally, the rules for exemptions and deductions allowed to an individual also apply to the decedent's final income tax return. 1040x electronically file Show on the final return deductible items the decedent paid (or accrued, if the decedent reported deductions on an accrual method) before death. 1040x electronically file This section contains a detailed discussion of medical expenses because the tax treatment of the decedent's medical expenses can be different. 1040x electronically file See Medical Expenses, later. 1040x electronically file Exemptions You can claim the decedent's personal exemption on the final income tax return. 1040x electronically file If the decedent was another person's dependent (for example, a parent's), you cannot claim the personal exemption on the decedent's final return. 1040x electronically file Standard Deduction If you do not itemize deductions on the final return, the full amount of the appropriate standard deduction is allowed regardless of the date of death. 1040x electronically file For information on the appropriate standard deduction, see the Form 1040 income tax return instructions or Publication 501. 1040x electronically file Medical Expenses Medical expenses paid before death by the decedent are deductible, subject to limits, on the final income tax return if deductions are itemized. 1040x electronically file This includes expenses for the decedent, as well as for the decedent's spouse and dependents. 1040x electronically file Beginning in 2013, medical expenses exceeding 10% of adjusted gross income (AGI) may be deducted, unless the decedent or their spouse is age 65 or older. 1040x electronically file In that case medical expenses exceeding 7. 1040x electronically file 5% of AGI may be deducted. 1040x electronically file Qualified medical expenses are not deductible if paid with a tax-free distribution from an HSA or an Archer MSA. 1040x electronically file Election for decedent's expenses. 1040x electronically file   Medical expenses not paid before death are liabilities of the estate and are shown on the federal estate tax return (Form 706). 1040x electronically file However, if medical expenses for the decedent are paid out of the estate during the 1-year period beginning with the day after death, you can elect to treat all or part of the expenses as paid by the decedent at the time they were incurred. 1040x electronically file   If you make the election, you can claim all or part of the expenses on the decedent's income tax return (if deductions are itemized) rather than on the federal estate tax return (Form 706). 1040x electronically file You can deduct expenses incurred in the year of death on the final income tax return. 1040x electronically file You should file an amended return (Form 1040X) for medical expenses incurred in an earlier year, unless the statutory period for filing a claim for that year has expired. 1040x electronically file   The amount you can deduct on the income tax return is the amount above 10% of adjusted gross income (or 7. 1040x electronically file 5% of adjusted gross income if the decedent or the decedent's spouse was born before January 2, 1949). 1040x electronically file Amounts not deductible because of this percentage cannot be claimed on the federal estate tax return. 1040x electronically file Making the election. 1040x electronically file   You make the election by attaching a statement, in duplicate, to the decedent's income tax return or amended return. 1040x electronically file The statement must state that you have not claimed the amount as an estate tax deduction, and that the estate waives the right to claim the amount as a deduction. 1040x electronically file This election applies only to expenses incurred for the decedent, not to expenses incurred to provide medical care for dependents. 1040x electronically file Example. 1040x electronically file Richard Brown used the cash method of accounting and filed his income tax return on a calendar year basis. 1040x electronically file Richard died on June 1, 2013, at the age of 78, after incurring $800 in medical expenses. 1040x electronically file Of that amount, $500 was incurred in 2012 and $300 was incurred in 2013. 1040x electronically file Richard itemized his deductions when he filed his 2012 income tax return. 1040x electronically file The personal representative of the estate paid the entire $800 liability in August 2013. 1040x electronically file The personal representative may file an amended return (Form 1040X) for 2012 claiming the $500 medical expense as a deduction, subject to the 7. 1040x electronically file 5% limit. 1040x electronically file The $300 of expenses incurred in 2013 can be deducted on the final income tax return if deductions are itemized, subject to the 7. 1040x electronically file 5% limit. 1040x electronically file The personal representative must file a statement in duplicate with each return stating that these amounts have not been claimed on the federal estate tax return (Form 706), and waiving the right to claim such a deduction on Form 706 in the future. 1040x electronically file Medical expenses not paid by estate. 1040x electronically file   If you paid medical expenses for your deceased spouse or dependent, claim the expenses on your tax return for the year in which you paid them, whether they are paid before or after the decedent's death. 1040x electronically file If the decedent was a child of divorced or separated parents, the medical expenses can usually be claimed by both the custodial and noncustodial parent to the extent paid by that parent during the year. 1040x electronically file Insurance reimbursements. 1040x electronically file   Insurance reimbursements of previously deducted medical expenses due a decedent at the time of death and later received by the decedent's estate are includible in the income tax return of the estate (Form 1041) for the year the reimbursements are received. 1040x electronically file The reimbursements are also includible in the decedent's gross estate. 1040x electronically file No deduction for funeral expenses can be taken on the final Form 1040 of a decedent. 1040x electronically file These expenses may be deductible for estate tax purposes on Form 706. 1040x electronically file Deduction for Losses A decedent's net operating loss deduction from a prior year and any capital losses (including capital loss carryovers) can be deducted only on the decedent's final income tax return. 1040x electronically file A net operating loss on the decedent's final income tax return can be carried back to prior years. 1040x electronically file (See Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. 1040x electronically file ) You cannot deduct any unused net operating loss or capital loss on the estate's income tax return. 1040x electronically file At-risk loss limits. 1040x electronically file   Special at-risk rules apply to most activities that are engaged in as a trade or business or for the production of income. 1040x electronically file   These rules limit the deductible loss to the amount which the individual was considered at-risk in the activity. 1040x electronically file An individual generally will be considered at-risk to the extent of the money and the adjusted basis of property that he or she contributed to the activity and certain amounts the individual borrowed for use in the activity. 1040x electronically file An individual will be considered at-risk for amounts borrowed only if he or she was personally liable for the repayment or if the amounts borrowed were secured by property other than that used in the activity. 1040x electronically file The individual is not considered at-risk for borrowed amounts if the lender has an interest in the activity or if the lender is related to a person who has an interest in the activity. 1040x electronically file For more information, see Publication 925, Passive Activity and At-Risk Rules. 1040x electronically file Passive activity rules. 1040x electronically file   A passive activity is any trade or business activity in which the taxpayer does not materially participate. 1040x electronically file To determine material participation, see Publication 925. 1040x electronically file Rental activities are passive activities regardless of the taxpayer's participation, unless the taxpayer meets certain eligibility requirements. 1040x electronically file   Individuals, estates, and trusts can offset passive activity losses only against passive activity income. 1040x electronically file Passive activity losses or credits not allowed in one tax year can be carried forward to the next year. 1040x electronically file   If a passive activity interest is transferred because a taxpayer dies, the accumulated unused passive activity losses are allowed as a deduction against the decedent's income in the year of death. 1040x electronically file Losses are allowed only to the extent they are greater than the excess of the transferee's (recipient of the interest transferred) basis in the property over the decedent's adjusted basis in the property immediately before death. 1040x electronically file The part of the accumulated losses equal to the excess is not allowed as a deduction for any tax year. 1040x electronically file   Use Form 8582, Passive Activity Loss Limitations, to summarize losses and income from passive activities and to figure the amounts allowed. 1040x electronically file For more information, see Publication 925. 1040x electronically file Credits, Other Taxes, and Payments Discussed below are some of the tax credits, types of taxes that may be owed, income tax withheld, and estimated tax payments reported on the final return of a decedent. 1040x electronically file Credits On the final income tax return, you can claim any tax credits that applied to the decedent before death. 1040x electronically file Some of these credits are discussed next. 1040x electronically file Earned income credit. 1040x electronically file   If the decedent was an eligible individual, you can claim the earned income credit on the decedent's final return even though the return covers less than 12 months. 1040x electronically file If the allowable credit is more than the tax liability for the year, the excess is refunded. 1040x electronically file   For more information, see Publication 596, Earned Income Credit (EIC). 1040x electronically file Credit for the elderly or the disabled. 1040x electronically file   This credit is allowable on a decedent's final income tax return if the decedent met both of the following requirements in the year of death. 1040x electronically file The decedent: Was a “qualified individual,” and Had income (adjusted gross income (AGI) and nontaxable social security and pensions) less than certain limits. 1040x electronically file   For details on qualifying for or figuring the credit, see Publication 524, Credit for the Elderly or the Disabled. 1040x electronically file Child tax credit. 1040x electronically file   If the decedent had a qualifying child, you may be able to claim the child tax credit on the decedent's final return even though the return covers less than 12 months. 1040x electronically file You may be able to claim the additional child tax credit and get a refund if the credit is more than the decedent's liability. 1040x electronically file For more information, see the Instructions for Form 1040. 1040x electronically file Adoption credit. 1040x electronically file   Depending upon when the adoption was finalized, this credit may be taken on a decedent's final income tax return if the decedent: Adopted an eligible child and paid qualified adoption expenses, or Has a carryforward of an adoption credit from a prior year. 1040x electronically file   Also, if the decedent is survived by a spouse who meets the filing status of qualifying widow(er), unused adoption credit may be carried forward and used following the death of the decedent. 1040x electronically file See Form 8839, Qualified Adoption Expenses, and its instructions for more details. 1040x electronically file General business tax credit. 1040x electronically file   The general business credit available to a taxpayer is limited. 1040x electronically file Any credit arising in a tax year beginning before 1998 that has not been used up can be carried forward for up to 15 years. 1040x electronically file Any unused credit arising in a tax year beginning after 1997 has a 1-year carryback and a 20-year carryforward period. 1040x electronically file   After the carryforward period, a deduction may be allowed for any unused business credit. 1040x electronically file If the taxpayer dies before the end of the carryforward period, the deduction generally is allowed in the year of death. 1040x electronically file   For more information on the general business credit, see Publication 334, Tax Guide for Small Business. 1040x electronically file Other Taxes Taxes other than income tax that may be owed on the final return of a decedent include self-employment tax and alternative minimum tax, which are reported on Form 1040. 1040x electronically file Self-employment tax. 1040x electronically file   Self-employment tax may be owed on the final return if either of the following applied to the decedent in the year of death: Net earnings from self-employment (excluding income described in (2)) were $400 or more; or Wages from services performed as a church employee were $108. 1040x electronically file 28 or more. 1040x electronically file Alternative minimum tax (AMT). 1040x electronically file   The tax laws give special treatment to certain types of income and allow special deductions and credits for certain types of expenses. 1040x electronically file The alternative minimum tax (AMT) was enacted so taxpayers who benefit from these laws still pay at least a minimum amount of tax. 1040x electronically file In general, the AMT is the excess of the tentative minimum tax over the regular tax shown on the return. 1040x electronically file Form 6251. 1040x electronically file    Use Form 6251, Alternative Minimum Tax—Individuals, to determine if this tax applies to the decedent. 1040x electronically file See the form instructions for information on when you must attach Form 6251 to Form 1040. 1040x electronically file Form 8801. 1040x electronically file   If the decedent paid AMT in a previous year or had a credit carryforward, the decedent may be eligible for a minimum tax credit. 1040x electronically file See Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts. 1040x electronically file Payments of Tax The income tax withheld from the decedent's salary, wages, pensions, or annuities, and the amount paid as estimated tax are credits (advance payments of tax) that must be claimed on the final return. 1040x electronically file Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Income tax liability may be forgiven for a decedent who dies due to service in a combat zone, due to military or terrorist actions, as a result of a terrorist attack, or while serving in the line of duty as an astronaut. 1040x electronically file Combat Zone If a member of the Armed Forces of the United States dies while in active service in a combat zone or from wounds, disease, or injury incurred in a combat zone, the decedent's income tax liability is abated (forgiven) for the entire year in which death occurred and for any prior tax year ending on or after the first day the person served in a combat zone in active service. 1040x electronically file For this purpose, a qualified hazardous duty area is treated as a combat zone. 1040x electronically file If the tax (including interest, additions to the tax, and additional amounts) for these years has been assessed, the assessment will be forgiven. 1040x electronically file If the tax has been collected (regardless of the date of collection), that tax will be credited or refunded. 1040x electronically file Any of the decedent's income tax for tax years before those mentioned above that remains unpaid as of the actual (or presumptive) date of death will not be assessed. 1040x electronically file If any unpaid tax (including interest, additions to the tax, and additional amounts) has been assessed, this assessment will be forgiven. 1040x electronically file Also, if any tax was collected after the date of death, that amount will be credited or refunded. 1040x electronically file The date of death of a member of the Armed Forces reported as missing in action or as a prisoner of war is the date his or her name is removed from missing status for military pay purposes. 1040x electronically file This is true even if death actually occurred earlier. 1040x electronically file For other tax information for members of the Armed Forces, see Publication 3, Armed Forces' Tax Guide. 1040x electronically file Military or Terrorist Actions The decedent's income tax liability is forgiven if, at death, he or she was a military or civilian employee of the United States who died because of wounds or injury incurred: While a U. 1040x electronically file S. 1040x electronically file employee, and In a military or terrorist action. 1040x electronically file The forgiveness applies to the tax year in which death occurred and for any earlier tax year, beginning with the year before the year in which the wounds or injury occurred. 1040x electronically file Example. 1040x electronically file The income tax liability of a civilian employee of the United States who died in 2013 because of wounds incurred while a U. 1040x electronically file S. 1040x electronically file employee in a terrorist attack that occurred in 2008 will be forgiven for 2013 and for all prior tax years in the period 2007 through 2012. 1040x electronically file Refunds are allowed for the tax years for which the period for filing a claim for refund has not ended, as discussed later. 1040x electronically file Military or terrorist action defined. 1040x electronically file   A military or terrorist action means the following. 1040x electronically file Any terrorist activity that most of the evidence indicates was directed against the United States or any of its allies. 1040x electronically file Any military action involving the U. 1040x electronically file S. 1040x electronically file Armed Forces and resulting from violence or aggression against the United States or any of its allies, or the threat of such violence or aggression. 1040x electronically file   Terrorist activity includes criminal offenses intended to coerce, intimidate, or retaliate against the government or civilian population. 1040x electronically file Military action does not include training exercises. 1040x electronically file Any multinational force in which the United States is participating is treated as an ally of the United States. 1040x electronically file Determining if a terrorist activity or military action has occurred. 1040x electronically file   You may rely on published guidance from the IRS to determine if a particular event is considered a terrorist activity or military action. 1040x electronically file Specified Terrorist Victim The Victims of Terrorism Tax Relief Act of 2001 (the Act) provides tax relief for those injured or killed as a result of terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by terrorist attacks. 1040x electronically file Under the Act, the federal income tax liability of those killed in the following attacks (specified terrorist victim) is forgiven for certain tax years. 1040x electronically file The April 19, 1995, terrorist attack on the Alfred P. 1040x electronically file Murrah Federal Building (Oklahoma City). 1040x electronically file The September 11, 2001, terrorist attacks. 1040x electronically file The terrorist attacks involving anthrax occurring after September 10, 2001, and before January 1, 2002. 1040x electronically file The Act also exempts from federal income tax the following types of income. 1040x electronically file Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack. 1040x electronically file Certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in a terrorist attack. 1040x electronically file Certain death benefits paid by an employer to the survivor of an employee because the employee died as a result of a terrorist attack. 1040x electronically file Payments from the September 11th Victim Compensation Fund 2001. 1040x electronically file The Act also reduces the estate tax of individuals who die as a result of a terrorist attack. 1040x electronically file See Publication 3920, Tax Relief for Victims of Terrorist Attacks, for more information. 1040x electronically file Astronauts Legislation extended the tax relief available under the Victims of Terrorism Tax Relief Act of 2001 (the Act) to astronauts who died in the line of duty after December 31, 2002. 1040x electronically file The decedent's income tax liability is forgiven for the tax year in which death occurs, and for the tax year prior to death. 1040x electronically file For information on death benefit payments and the reduction of federal estate taxes, see Publication 3920. 1040x electronically file However, the discussions in that publication under Death Benefits and Estate Tax Reduction should be modified for astronauts (for example, by using the date of death of the astronaut instead of September 11, 2001). 1040x electronically file For more information on the Act, see Publication 3920. 1040x electronically file Claim for Credit or Refund If any of these tax-forgiveness situations applies to a prior year tax, any tax paid for which the period for filing a claim has not ended will be credited or refunded. 1040x electronically file If any tax is still due, it will be canceled. 1040x electronically file The normal period for filing a claim for credit or refund is 3 years after the return was filed or 2 years after the tax was paid, whichever is later. 1040x electronically file If death occurred in a combat zone or from wounds, disease, or injury incurred in a combat zone, the period for filing the claim is extended by: The amount of time served in the combat zone (including any period in which the individual was in missing status), plus The period of continuous qualified hospitalization for injury from service in the combat zone, if any, plus The next 180 days. 1040x electronically file Qualified hospitalization means any hospitalization outside the United States and any hospitalization in the United States of not more than 5 years. 1040x electronically file This extended period for filing the claim also applies to a member of the Armed Forces who was deployed outside the United States in a designated contingency operation. 1040x electronically file Filing a claim. 1040x electronically file   Use the following procedures to file a claim. 1040x electronically file If a U. 1040x electronically file S. 1040x electronically file individual income tax return (Form 1040, 1040A, or 1040EZ) has not been filed, you should make a claim for refund of any withheld income tax or estimated tax payments by filing Form 1040. 1040x electronically file Form W-2, Wage and Tax Statement, must accompany all returns. 1040x electronically file If a U. 1040x electronically file S. 1040x electronically file individual income tax return has been filed, you should make a claim for refund by filing Form 1040X. 1040x electronically file You must file a separate Form 1040X for each year in question. 1040x electronically file   You must file these returns and claims at the following address for regular mail (U. 1040x electronically file S. 1040x electronically file Postal Service). 1040x electronically file    Internal Revenue Service 333 W. 1040x electronically file Pershing, P5–6503 Kansas City, MO 64108   Identify all returns and claims for refund by writing “Iraq—KIA,” “Enduring Freedom—KIA,” “Kosovo Operation—KIA,” “Desert Storm—KIA,” or “Former Yugoslavia—KIA” in bold letters on the top of page 1 of the return or claim. 1040x electronically file On the applicable return, write the same phrase on the line for total tax. 1040x electronically file If the individual was killed in a terrorist or military action, put “KITA” on the front of the return and on the line for total tax. 1040x electronically file   Include an attachment showing the computation of the decedent's tax liability and a computation of the amount to be forgiven. 1040x electronically file On joint returns, make an allocation of the tax as described below under Joint returns. 1040x electronically file If you cannot make a proper allocation, attach a statement of all income and deductions allocable to each spouse and the IRS will make the proper allocation. 1040x electronically file   You must attach Form 1310 to all returns and claims for refund. 1040x electronically file However, for exceptions to filing Form 1310, see Form 1310. 1040x electronically file Statement of Person Claiming Refund Due a Deceased Taxpayer, under Refund, earlier. 1040x electronically file   You must also attach proof of death that includes a statement that the individual was a U. 1040x electronically file S. 1040x electronically file employee on the date of injury and on the date of death and died as the result of a military or terrorist action. 1040x electronically file For military and civilian employees of the Department of Defense, attach DD Form 1300, Report of Casualty. 1040x electronically file For other U. 1040x electronically file S. 1040x electronically file civilian employees killed in the United States, attach a death certificate and a certification (letter) from the federal employer. 1040x electronically file For other U. 1040x electronically file S. 1040x electronically file civilian employees killed overseas, attach a certification from the Department of State. 1040x electronically file   If you do not have enough tax information to file a timely claim for refund, you can suspend the period for filing a claim by filing Form 1040X. 1040x electronically file Attach Form 1310, any required documentation currently available, and a statement that you will file an amended claim as soon as you have the required tax information. 1040x electronically file Joint returns. 1040x electronically file   If a joint return was filed, only the decedent's part of the income tax liability is eligible for forgiveness. 1040x electronically file Determine the decedent's tax liability as follows. 1040x electronically file Figure the income tax for which the decedent would have been liable if a separate return had been filed. 1040x electronically file Figure the income tax for which the spouse would have been liable if a separate return had been filed. 1040x electronically file Multiply the joint tax liability by a fraction. 1040x electronically file The numerator of the fraction is the amount in (1), above. 1040x electronically file The denominator of the fraction is the total of (1) and (2). 1040x electronically file   The resulting amount from (3) above is the decedent's tax liability eligible for forgiveness. 1040x electronically file Filing Reminders To minimize the time needed to process the decedent's final return and issue any refund, be sure to follow these procedures. 1040x electronically file Write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. 1040x electronically file If a personal representative has been appointed, the personal representative must sign the return. 1040x electronically file If it is a joint return, the surviving spouse must also sign it. 1040x electronically file If you are the decedent's spouse filing a joint return with the decedent and no personal representative has been appointed, write “Filing as surviving spouse” in the area where you sign the return. 1040x electronically file If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. 1040x electronically file ” To claim a refund for the decedent, do the following. 1040x electronically file If you are the decedent's spouse filing a joint return with the decedent, file only the tax return to claim the refund. 1040x electronically file If you are the personal representative and the return is not a joint return filed with the decedent's surviving spouse, file the return and attach a copy of the certificate that shows your appointment by the court. 1040x electronically file (A power of attorney or a copy of the decedent's will is not acceptable evidence of your appointment as the personal representative. 1040x electronically file ) If you are filing an amended return, attach Form 1310 and a copy of the certificate of appointment (or, if you have already sent the certificate of appointment to IRS, write “Certificate Previously Filed” at the bottom of Form 1310). 1040x electronically file If you are not filing a joint return as the surviving spouse and a personal representative has not been appointed, file the return and attach Form 1310. 1040x electronically file Other Tax Information Discussed below is information about the effect of an individual's death on the income tax liability of the survivors (including widows and widowers), the beneficiaries, and the estate. 1040x electronically file Tax Benefits for Survivors Survivors can qualify for certain benefits when filing their own income tax returns. 1040x electronically file Joint return by surviving spouse. 1040x electronically file   A surviving spouse can file a joint return for the year of death and may qualify for special tax rates for the following 2 years, as explained under Qualifying widows and widowers, later. 1040x electronically file Decedent as your dependent. 1040x electronically file   If the decedent qualified as your dependent for a part of the year before death, you can claim the exemption for the dependent on your tax return, regardless of when death occurred during the year. 1040x electronically file   If the decedent was your qualifying child, you may be able to claim the child tax credit or the earned income credit. 1040x electronically file To determine if you qualify for the child tax credit, see the instructions for Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 48. 1040x electronically file To determine if you qualify for the earned income credit, see the instructions for Form 1040, lines 64a and 64b or Form 1040A, lines 38a and 38b. 1040x electronically file Qualifying widows and widowers. 1040x electronically file   If your spouse died within the 2 tax years preceding the year for which your return is being filed, you may be eligible to claim the filing status of qualifying widow(er) with dependent child and qualify to use the married-filing-jointly tax rates. 1040x electronically file Requirements. 1040x electronically file   Generally, you qualify for this special benefit if you meet all of the following requirements. 1040x electronically file You were entitled to file a joint return with your spouse for the year of death—whether or not you actually filed jointly. 1040x electronically file You did not remarry before the end of the current tax year. 1040x electronically file You have a child, stepchild, or foster child who qualifies as your dependent for the tax year. 1040x electronically file You provide more than half the cost of maintaining your home, which is the principal residence of that child for the entire year except for temporary absences. 1040x electronically file Example. 1040x electronically file William Burns' wife died in 2010. 1040x electronically file William has not remarried and continued throughout 2011 and 2012 to maintain a home for himself and his dependent child. 1040x electronically file For 2010, he was entitled to file a joint return for himself and his deceased wife. 1040x electronically file For 2011 and 2012, he qualifies to file as a qualifying widower with dependent child. 1040x electronically file For later years, he may qualify to file as a head of household. 1040x electronically file Figuring your tax. 1040x electronically file   Check the box on line 5 (Form 1040 or 1040A) under Filing Status on your tax return. 1040x electronically file Use the Tax Rate Schedule or the column in the Tax Table for Married filing jointly, which gives you the split-income benefits. 1040x electronically file   The last year you can file jointly with, or claim an exemption for, your deceased spouse is the year of death. 1040x electronically file Joint return filing rules. 1040x electronically file   If you are the surviving spouse and a personal representative is handling the estate for the decedent, you should coordinate filing your return for the year of death with this personal representative. 1040x electronically file See Joint Return under Final Income Tax Return for Decedent—Form 1040, earlier. 1040x electronically file Income in Respect of a Decedent All income the decedent would have received had death not occurred that was not properly includible on the final return, discussed earlier, is income in respect of a decedent. 1040x electronically file If the decedent is a specified terrorist victim (see Specified Terrorist Victim, earlier), income received after the date of death and before the end of the decedent's tax year (determined without regard to death) is excluded from the recipient's gross income. 1040x electronically file This exclusion does not apply to certain income. 1040x electronically file For more information, see Publication 3920. 1040x electronically file How To Report Income in respect of a decedent must be included in the income of one of the following. 1040x electronically file The decedent's estate, if the estate receives it. 1040x electronically file The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it. 1040x electronically file Any person to whom the estate properly distributes the right to receive it. 1040x electronically file If you have to include income in respect of a decedent in your gross income and an estate tax return (Form 706) was filed for the decedent, you may be able to claim a deduction for the estate tax paid on that income. 1040x electronically file See Estate Tax Deduction, later. 1040x electronically file Example 1. 1040x electronically file Frank Johnson owned and operated an apple orchard. 1040x electronically file He used the cash method of accounting. 1040x electronically file He sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but did not receive payment before his death. 1040x electronically file The proceeds from the sale are income in respect of a decedent. 1040x electronically file When the estate was settled, payment had not been made and the estate transferred the right to the payment to his widow. 1040x electronically file When Frank's widow collects the $2,000, she must include that amount in her return. 1040x electronically file It is not reported on the final return of the decedent or on the return of the estate. 1040x electronically file Example 2. 1040x electronically file Assume the same facts as in Example 1, except that Frank used the accrual method of accounting. 1040x electronically file The amount accrued from the sale of the apples would be included on his final return. 1040x electronically file Neither the estate nor the widow would realize income in respect of a decedent when the money is later paid. 1040x electronically file Example 3. 1040x electronically file On February 1, George High, a cash method taxpayer, sold his tractor for $3,000, payable March 1 of the same year. 1040x electronically file His adjusted basis in the tractor was $2,000. 1040x electronically file George died on February 15, before receiving payment. 1040x electronically file The gain to be reported as income in respect of a decedent is the $1,000 difference between the decedent's basis in the property and the sale proceeds. 1040x electronically file In other words, the income in respect of a decedent is the gain the decedent would have realized had he lived. 1040x electronically file Example 4. 1040x electronically file Cathy O'Neil was entitled to a large salary payment at the date of her death. 1040x electronically file The amount was to be paid in five annual installments. 1040x electronically file The estate, after collecting two installments, distributed the right to the remaining installments to you, the beneficiary. 1040x electronically file The payments are income in respect of a decedent. 1040x electronically file None of the payments were includible on Cathy's final return. 1040x electronically file The estate must include in its income the two installments it received, and you must include in your income each of the three installments as you receive them. 1040x electronically file Example 5. 1040x electronically file You inherited the right to receive renewal commissions on life insurance sold by your father before his death. 1040x electronically file You inherited the right from your mother, who acquired it by bequest from your father. 1040x electronically file Your mother died before she received all the commissions she had the right to receive, so you received the rest. 1040x electronically file The commissions are income in respect of a decedent. 1040x electronically file None of these commissions were includible in your father's final return. 1040x electronically file The commissions received by your mother were included in her income. 1040x electronically file The commissions you received are not includible in your mother's income, even on her final return. 1040x electronically file You must include them in your income. 1040x electronically file Character of income. 1040x electronically file   The character of the income you receive in respect of a decedent remains the same as it would have been to the decedent if he or she were alive. 1040x electronically file If the income would have been a capital gain to the decedent, it will be a capital gain to you. 1040x electronically file Transfer of right to income. 1040x electronically file   If you transfer your right to income in respect of a decedent, you must include in your income the greater of: The amount you receive for the right, or The fair market value of the right you transfer. 1040x electronically file   If you make a gift of such a right, you must include in your income the fair market value of the right at the time of the gift. 1040x electronically file   If the right to income from an installment obligation is transferred, the amount you must include in income is reduced by the basis of the obligation. 1040x electronically file See Installment obligations, later. 1040x electronically file Transfer defined. 1040x electronically file   A transfer for this purpose includes a sale, exchange, or other disposition, the satisfaction of an installment obligation at other than face value, or the cancellation of an installment obligation. 1040x electronically file Installment obligations. 1040x electronically file   If the decedent sold property using the installment method and you are collecting payments on an installment obligation acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that represents profit. 1040x electronically file Include in your income the same profit the decedent would have included had death not occurred. 1040x electronically file For more information, see Publication 537, Installment Sales. 1040x electronically file   If you dispose of an installment obligation acquired from a decedent (other than by transfer to the obligor), the rules explained in Publication 537 for figuring gain or loss on the disposition apply to you. 1040x electronically file Transfer to obligor. 1040x electronically file   A transfer of a right to income, discussed earlier, has occurred if the decedent (seller) sold property using the installment method and the installment obligation was transferred to the obligor (buyer or person legally obligated to pay the installments). 1040x electronically file A transfer also occurs if the obligation was canceled either at death or by the estate or person receiving the obligation from the decedent. 1040x electronically file An obligation that becomes unenforceable is treated as having been canceled. 1040x electronically file   If such a transfer occurs, the amount included in the income of the transferor (the estate or beneficiary) is the greater of the amount received or the fair market value of the installment obligation at the time of transfer, reduced by the basis of the obligation. 1040x electronically file The basis of the obligation is the decedent's basis, adjusted for all installment payments received after the decedent's death and before the transfer. 1040x electronically file   If the decedent and obligor were related persons, the fair market value of the obligation cannot be less than its face value. 1040x electronically file Specific Types of Income in Respect of a Decedent This section explains and provides examples of some specific types of income in respect of a decedent. 1040x electronically file Wages. 1040x electronically file   The entire amount of wages or other employee compensation earned by the decedent but unpaid at the time of death is income in respect of a decedent. 1040x electronically file The income is not reduced by any amounts withheld by the employer. 1040x electronically file If the income is $600 or more, the employer should report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar statement. 1040x electronically file   Wages paid as income in respect of a decedent are not subject to federal income tax withholding. 1040x electronically file However, if paid during the calendar year of death, they are subject to withholding for social security and Medicare taxes. 1040x electronically file These taxes should be included on the decedent's Form W-2 along with the taxes withheld before death. 1040x electronically file These wages are not included in box 1 of Form W-2. 1040x electronically file   Wages paid as income in respect of a decedent after the year of death generally are not subject to withholding for any federal taxe