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2006 Tax Return Software Free

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2006 Tax Return Software Free

2006 tax return software free 10. 2006 tax return software free   Education Savings Bond Program Table of Contents Introduction Who Can Cash In Bonds Tax FreeAdjusted qualified education expenses. 2006 tax return software free Eligible educational institution. 2006 tax return software free Dependent for whom you claim an exemption. 2006 tax return software free MAGI when using Form 1040A. 2006 tax return software free MAGI when using Form 1040. 2006 tax return software free Figuring the Tax-Free AmountEffect of the Amount of Your Income on the Amount of Your Exclusion Claiming the Exclusion Introduction Generally, you must pay tax on the interest earned on U. 2006 tax return software free S. 2006 tax return software free savings bonds. 2006 tax return software free If you do not include the interest in income in the years it is earned, you must include it in your income in the year in which you cash in the bonds. 2006 tax return software free However, when you cash in certain savings bonds under an education savings bond program, you may be able to exclude the interest from income. 2006 tax return software free Who Can Cash In Bonds Tax Free You may be able to cash in qualified U. 2006 tax return software free S. 2006 tax return software free savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions. 2006 tax return software free You pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. 2006 tax return software free Your modified adjusted gross income (MAGI) is less than the amount specified for your filing status. 2006 tax return software free Your filing status is not married filing separately. 2006 tax return software free Qualified U. 2006 tax return software free S. 2006 tax return software free savings bonds. 2006 tax return software free   A qualified U. 2006 tax return software free S. 2006 tax return software free savings bond is a series EE bond issued after 1989 or a series I bond. 2006 tax return software free The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners). 2006 tax return software free   The owner must be at least 24 years old before the bond's issue date. 2006 tax return software free The issue date is printed on the front of the savings bond. 2006 tax return software free    The issue date is not necessarily the date of purchase—it will be the first day of the month in which the bond is purchased (or posted, if bought electronically). 2006 tax return software free Qualified education expenses. 2006 tax return software free   These include the following items you pay for either yourself, your spouse, or a dependent for whom you claim an exemption. 2006 tax return software free Tuition and fees required to enroll at or attend an eligible educational institution. 2006 tax return software free Qualified education expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. 2006 tax return software free Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 8, Qualified Tuition Program). 2006 tax return software free Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 7, Coverdell Education Savings Account). 2006 tax return software free Adjusted qualified education expenses. 2006 tax return software free   You must reduce your qualified education expenses by all of the following tax-free benefits. 2006 tax return software free Tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). 2006 tax return software free Expenses used to figure the tax-free portion of distributions from a Coverdell ESA (see Qualified Education Expenses in chapter 7, Coverdell Education Savings Account). 2006 tax return software free Expenses used to figure the tax-free portion of distributions from a QTP (see Qualified education expenses in chapter 8, Qualified Tuition Program). 2006 tax return software free Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Qualified tuition reductions (see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), or Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ). 2006 tax return software free Any expenses used in figuring the American opportunity and lifetime learning credits. 2006 tax return software free See What Expenses Qualify in chapter 2, American Opportunity Credit, and What Expenses Qualify in chapter 3, Lifetime Learning Credit, for more information. 2006 tax return software free Eligible educational institution. 2006 tax return software free   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. 2006 tax return software free S. 2006 tax return software free Department of Education. 2006 tax return software free It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2006 tax return software free The educational institution should be able to tell you if it is an eligible educational institution. 2006 tax return software free   Certain educational institutions located outside the United States also participate in the U. 2006 tax return software free S. 2006 tax return software free Department of Education's Federal Student Aid (FSA) programs. 2006 tax return software free Dependent for whom you claim an exemption. 2006 tax return software free   You claim an exemption for a person if you list his or her name and other required information on Form 1040 (or Form 1040A), line 6c. 2006 tax return software free Modified adjusted gross income (MAGI). 2006 tax return software free   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return without taking into account this interest exclusion. 2006 tax return software free However, as discussed below, there may be other modifications. 2006 tax return software free MAGI when using Form 1040A. 2006 tax return software free   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). 2006 tax return software free MAGI when using Form 1040. 2006 tax return software free   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. 2006 tax return software free    Use the worksheet in the instructions for line 9 of Form 8815 to figure your MAGI. 2006 tax return software free If you claim any of the exclusion or deduction items (1)–(6) listed above, add the amount of the exclusion or deduction to the amount on line 5 of the worksheet. 2006 tax return software free Do not add in the deduction for (7) student loan interest, and (8) tuition and fees, or (9) domestic production activities because line 4 of the worksheet already includes these amounts. 2006 tax return software free Enter the total on Form 8815, line 9, as your modified adjusted gross income (MAGI). 2006 tax return software free    Because the deduction for interest expenses attributable to royalties and other investments is limited to your net investment income, you cannot figure the deduction until you have figured this interest exclusion. 2006 tax return software free Therefore, if you had interest expenses attributable to royalties and deductible on Schedule E (Form 1040), Supplemental Income and Loss, you must make a special computation of your deductible interest without regard to this exclusion to figure the net royalty income included in your MAGI. 2006 tax return software free See Royalties included in MAGI under Education Savings Bond Program in Publication 550, chapter 1. 2006 tax return software free Figuring the Tax-Free Amount If the total you receive when you cash in the bonds is not more than the adjusted qualified education expenses for the year, all of the interest on the bonds may be tax free. 2006 tax return software free However, if the total you receive when you cash in the bonds is more than the adjusted expenses, only part of the interest may be tax free. 2006 tax return software free To determine the tax-free amount, multiply the interest part of the proceeds by a fraction. 2006 tax return software free The numerator (top part) of the fraction is the adjusted qualified education expenses (AQEE) you paid during the year. 2006 tax return software free The denominator (bottom part) of the fraction is the total proceeds you received during the year. 2006 tax return software free Example. 2006 tax return software free In February 2013, Mark and Joan Washington, a married couple, cashed a qualified series EE U. 2006 tax return software free S. 2006 tax return software free savings bond. 2006 tax return software free They received proceeds of $9,000, representing principal of $6,000 and interest of $3,000. 2006 tax return software free In 2013, they paid $7,650 of their daughter's college tuition. 2006 tax return software free They are not claiming an American opportunity or lifetime learning credit for those expenses, and their daughter does not have any tax-free educational assistance. 2006 tax return software free Their MAGI for 2013 was $80,000. 2006 tax return software free   $3,000 interest × $7,650 AQEE  $9,000 proceeds = $2,550 tax-free interest   They can exclude $2,550 of interest in 2013. 2006 tax return software free They must pay tax on the remaining $450 ($3,000 − $2,550) interest. 2006 tax return software free Effect of the Amount of Your Income on the Amount of Your Exclusion The amount of your interest exclusion is gradually reduced (phased out) based on your MAGI and filing status. 2006 tax return software free Claiming the Exclusion Use Form 8815 to figure your education savings bond interest exclusion. 2006 tax return software free Enter your exclusion on line 3 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. 2006 tax return software free Attach Form 8815 to your tax return. 2006 tax return software free Prev  Up  Next   Home   More Online Publications
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Frequently Asked Questions: Do I Need a PTIN?

a. General Guidance

b. PTIN Scenarios

c. Supervised, Non-Signing, and Non-1040 Preparers

d. SSN Requirements for Obtaining a PTIN


a. General Guidance


1. Who needs a Preparer Tax Identification Number (PTIN)? (revised 2/22/12)

A PTIN must be obtained by all enrolled agents, as well as all tax return preparers who are compensated for preparing, or assisting in the preparation of, all or substantially all of any U.S. federal tax return, claim for refund, or other tax form submitted to the IRS except the following:

Form SS-4, Application for Employer Identification Number;
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding;
Form SS-16, Certificate of Election of Coverage under FICA;
Form W-2 series of returns;
Form W-7, Application for IRS Individual Taxpayer Identification Number;
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding;
Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment;
Form 872, Consent to Extend the Time to Assess Tax;
Form 906, Closing Agreement On Final Determination Covering Specific Matters;
Form 1098 series;
Form 1099 series;
Form 2848, Power of Attorney and Declaration of Representative;
Form 3115, Application for Change in Accounting Method;
Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits;
Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners;
Form 4419, Application for Filing Information Returns Electronically;
Form 5300, Application for Determination for Employee Benefit Plan;
Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans;
Form 5310, Application for Determination for Terminating Plan;
Form 5500 series;
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips;
Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests;
Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests;
Form 8508, Request for Waiver From Filing Information Returns Electronically;
Form 8717, User Fee for Employee Plan Determination, Opinion, and Advisory Letter Request;
Form 8809, Application for Extension of Time to File Information Return;
Form 8821, Tax Information Authorization;
Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program

Refer to the scenarios for additional guidance.

2. Are individuals who are active attorneys and certified public accountants required to obtain a PTIN if they do not prepare all or substantially all of any tax return? (revised 2/22/12)

Attorneys and certified public accountants do not need to obtain a PTIN unless they prepare for compensation all or substantially all of a federal tax return or claim for refund.

3. Are enrolled retirement plan agents required to obtain a PTIN? (posted 11/4/11)

Enrolled Retirement Plan Agents are only required to obtain a PTIN if they prepare or assist in the preparation of all or substantially all of any tax return or claim for refund that is not on the list of forms exempt from the PTIN requirement. ERPAs that prepare only Form 5300 or 5500 series returns are not required to obtain a PTIN. See Notice 2011-91 for more information.

4. Can multiple individuals or one office share one PTIN? (revised 6/9/11)

No, every individual who, for compensation, prepares or assists in the preparation of a tax return or claim for refund must have his or her own PTIN and each tax return preparer may only obtain one PTIN.

5. If I don't have a PTIN, can I still prepare tax returns for compensation? (revised 10/10/13)

No. You must have a PTIN to prepare tax returns for compensation. 

6. Is there an age requirement for obtaining a PTIN? (posted 9/30/10)

Yes, applicants must be at least 18 years of age.

7. What penalties can be imposed against tax return preparers who don't have a current PTIN? (revised 2/22/12)

Failure to have a current PTIN could result in the imposition of Internal Revenue Code section 6695 penalties, injunction, and/or disciplinary action by the IRS Office of Professional Responsibility.

8. What is the difference between a PTIN and an EFIN? Does a preparer need both? (revised 2/22/12)

A Preparer Tax Identification Number (PTIN) is a number issued by the IRS to paid tax return preparers. It is used as the tax return preparer’s identification number and, when applicable, must be placed in the Paid Preparer section of a tax return that the tax return preparer prepared for compensation. There is an initial fee of $64.25 and an annual renewal fee of $63.00.

An Electronic Filing Identification Number (EFIN) is a number issued by the IRS to individuals or firms that have been approved as authorized IRS e-file providers.  It is included with all electronic return data transmitted to the IRS.  There is no fee for an EFIN.

Preparer Tax Identification Numbers are issued to individuals.  Electronic Filing Identification Numbers are issued to individuals or firms.  Most preparers need both.

9. If an employee of a business prepares the business’ tax returns as part of their job responsibilities, do they need to obtain a PTIN? (revised 9/28/10)

No. An employee who prepares his employer’s federal tax returns is not required to sign as a paid preparer. Accordingly, unless the employee prepares other federal tax returns for compensation, he or she is not required to register and obtain a PTIN.

10. Are e-file transmitters or intermediate service providers that do not prepare returns subject to the PTIN requirements? (revised 9/28/10)

No. E-file providers that assist in the formatting and transmission of tax returns electronically, but do not prepare all or substantially all of a federal tax return or claim for refund for compensation, are not required to obtain a PTIN.

11. Will the IRS share my PTIN application information with other people? (revised 4/19/12)

The law allows vendors and others to obtain the PTIN holder listing. PTIN holders are not allowed to opt out of the disclosure of their contact information because Freedom of Information Act (FOIA) laws make the information public. If you receive unwanted email solicitations due to this required disclosure, the Federal Trade Commission, Bureau of Consumer Protection can best advise you whether an email violates the CAN-SPAM Act of 2003 and how to report violations.

You should also review the PTIN application Privacy Policy.

In order to maintain privacy PTIN holders may want to review and/or update contact information


b. PTIN Scenarios


1. I am a tax return preparer, and I have a PTIN.  My firm employs a bookkeeper.  She gathers client receipts and invoices, and organizes and records all information for me.  Although I use the information that our bookkeeper has compiled, I prepare my clients’ tax returns and make all substantive determinations that go into computing the tax liability.  Does my bookkeeper need to have a PTIN? (posted 9/28/10)

No, she is not a tax return preparer, and is not required to have a PTIN.

2. I am a tax return preparer, and I have a PTIN.  Every tax filing season I hire two paid interns from the accounting program at a local college to help me during the busy season.  The interns perform data entry from the tax organizer that my clients fill out, and assemble the documentation that the clients have submitted.  Where clients have submitted incomplete information, or more information is needed, the interns may call clients to gather information missing from the tax organizer, but they are not allowed to provide advice or answer tax law questions.  I prepare and sign all my clients’ returns.  Do my interns need to have a PTIN?  (posted 9/28/10)

No, the interns are not tax return preparers, and are not required to have a PTIN.

3. Same facts as above, but in order to help my interns get exposure to the tax system, I allow them to work with clients who have very simple tax situations, and prepare the Form 1040-EZ.  I review the forms carefully, and sign them.  Are my interns required to have PTINs? (posted 9/28/10)

Yes, the interns are tax return preparers and are required to have a PTIN, whether or not they sign the returns.

4. I am a tax return preparer, and I have a PTIN.  I have an administrative assistant in the office who also performs data entry during tax filing season.  At times, clients call and provide him with information, which he records in the system.  Using the data he has entered, I meet with my clients and provide advice as needed.   I then prepare and sign their returns.  Is my administrative assistant required to have a PTIN? posted 9/28/10)

No, the administrative assistant is not a tax return preparer, and is not required to have a PTIN.

5. I am a retired tax professional, and I volunteer during the tax filing season.  I volunteer at a VITA site, where I prepare individual tax returns for lower-income individuals for no compensation.  Do I need to have a PTIN? (revised 10/10/13)

No, you are not required to have a PTIN.

6. I run a small tax return preparation business that is heavily software-based.  I employ four associates who sit with taxpayers and walk through a step-by-step software program that uses an “interview” process that results in a draft tax return.  I check and sign the returns, and I have a PTIN.  Do my four associates need to have a PTIN? (posted 9/28/10)

You will need to perform additional analysis to determine whether your four associates must have a PTIN.  The answer depends on the specific circumstances of your firm.  In general, if individuals prepare, or assist in preparing, all or substantially all of a tax return, including making determinations that affect tax liability, they must have a PTIN.

7. I am a reporting agent who prepares Forms 94X series returns for my clients for compensation.  I do not exercise any discretion or independent judgment on my client's underlying tax positions and I do not render tax advice to any of my clients.  Do I need a PTIN?  (revised 1/3/11)

No.  The PTIN regulations incorporate the carve-out from the definition of tax return preparer in Treasury Regulation section 301.7701–15(f) for individuals who provide only typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund.  Example one under Treasury Regulation section 301.7701-15(f)(6) provides that reporting agents who do not exercise any discretion or independent judgment on the client's underlying tax positions and who do not render tax advice to any clients are carved-out under this exception and, therefore, are not tax return preparers.

8. I am a reporting agent who prepares Forms 94X series returns for my clients for compensation.  On occasion, my clients ask me for assistance with issues such as determining whether their workers are employees or independent contractors for federal tax purposes.  Do I need a PTIN? (revised 1/3/11)

Yes.  The PTIN regulations require all tax return preparers who are compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund of tax to register and obtain a PTIN.  The carve-out from the definition of tax return preparer for individuals who provide only typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund does not apply to reporting agents who render tax advice to any client (example two under Treasury Regulation section 301.7701-15(f)(6)).

9. I am a retirement plan administrator who prepares Forms 5500 and the accompanying schedules for my clients. I also prepare Forms 8955-SSA and Form 5558 for my clients. While the Form 5500 series returns are included in the list of forms exempted from the PTIN requirements in Notice 2011-6, the Forms 8955-SSA and Forms 5558 are not included in that list. Am I required to obtain a PTIN? (posted 3/4/11)

No. The Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Participants, and Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, are, for purposes of Notice 2011-6, part of the "Form 5500 series" of tax returns inasmuch as these forms are prepared either in conjunction with the filing of a retirement plan's Form 5500 filing or to request an extension of time to file a Form 5500 series tax return.

10. Is an attorney or a certified public accountant required to obtain a PTIN if the attorney or certified public accountant only advises a client regarding an issue that is reflected on a claim for refund? (posted 3/4/11)

An attorney or certified public accountant is required to obtain a PTIN if the attorney or certified public accountant prepares, or assists in preparing, all or substantially all of a return or claim for refund. Under the authority of section 1.6109-2(h), however, an attorney or certified public accountant will not be required to obtain a PTIN if the attorney or certified public accountant only advises a client regarding an issue that is reflected on a claim for refund and neither the attorney or certified public accountant nor any person in the firm of the attorney or certified public accountant signs or is required to sign the claim for refund under Treasury Regulation sections 301.7701-15(b)(1) and 1.6695-1(b). The attorney or certified public accountant in question is still a nonsigning tax return preparer subject to penalty under section 6694 if the attorney or certified public accountant has prepared all or a substantial portion of the claim for refund within the meaning of Treasury Regulation section 301.7701-15(b)(3).

11. Our company prepares Forms 2290 for our clients.  It is the only federal tax form we prepare.  Are our employees subject to any of the new regulations? (revised 2/7/13)

Yes, any individual who receives compensation for preparing Forms 2290 is required to register with the IRS and obtain a PTIN.

12. If someone only prepares or assists with preparing Form 1023 for compensation, should they obtain a PTIN? (posted 3/7/12)
 
Generally yes.  More information about PTIN requirements for preparers of exempt organization forms is available here


c. Supervised, Non-Signing, and Non-1040 Preparers


1.  What is a supervised preparer?  Do supervised preparers need a PTIN? (revised 2/7/13)

A supervised preparer is a non-signing preparer who is employed by a law firm, CPA firm or other recognized firm (a firm that is at least 80 percent owned by attorneys, CPAs, or enrolled agents).  The returns they prepare are signed by a supervising attorney, CPA or enrolled agent at the firm. 

A supervised preparer does need a PTIN and must provide their supervisor’s PTIN on their PTIN application or renewal.

Additional guidance on supervised preparers is available in Notice 2011-6 (or view the Fact Sheet).

2. I own a tax preparation business and I review and sign all the returns my employees prepare.  Do they need PTINs?  (revised 2/7/13)

Yes.  Anyone you hire to prepare tax returns needs a PTIN regardless of whether you review and sign the returns.

3. What are the requirements for people who prepare returns other than the Form 1040 series? (revised 2/7/13)

Non-1040 preparers generally need a PTIN.  For exemptions to the PTIN requirement, see FAQ 1 at the top of this page under General Guidance

4. When multiple paid preparers are involved in preparation and/or review of a return, who is required to sign the return?  (posted 8/11/10)

Existing Treasury regulations under sections 1.6695-1(b) and 301.7701-15(b)(1) provide that a signing tax return preparer is the individual tax return preparer who has the primary responsibility for the overall accuracy of the preparation of a return.  The PTIN requirements, which require all preparers to register and obtain a PTIN, do not change the existing rules regarding who is the signing tax return preparer.

5. Are non-signing preparers disclosed on each return prepared even if another preparer reviews and signs it? (revised 2/7/13)

No, the names of non-signing preparers are not disclosed on the return.  Although there is no plan to expand the paid preparer section of the return to include non-signing preparers, they still are required to have a PTIN.

6. If I don't prepare any Form 1040 returns but prepare returns that flow-through to Forms 1040 such as Schedules K-1 for Forms 1065 or 1120S, how do I answer the question, &quotDo you prepare Form 1040 series tax returns?&quot (posted 10/12/11)
 
You should answer &quotno&quot.


d. SSN Requirements for Obtaining a PTIN


1. Is a social security number required to obtain a PTIN? (revised 4/13/11)

Individuals generally are required to provide their social security numbers when they obtain a PTIN.  However, U.S. citizens who have a conscientious objection to obtaining a social security number for religious reasons and foreign persons who are not eligible to obtain a social security number and have a permanent non-U.S. address may obtain a PTIN without a social security number.  These individuals are required to provide supplemental documentation to verify their identity and substantiate their eligibility for a PTIN under these specific exceptions.  See questions 2 and 3 below or Revenue Procedure 2010-41 for additional guidance.

Individuals who have an Individual Taxpayer Identification Number (ITIN) are not eligible for a PTIN unless they are foreign persons with a permanent non-U.S. address, and can provide documentation to support that status.

2. How do U.S. citizens without a social security number due to a conscientious objection for religious reasons obtain a PTIN? (updated 3/21/14)

U.S. citizens who have a conscientious objection to obtaining a social security number for religious reasons must complete Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8945, PTIN Supplemental Application For U.S. Citizens Without a Social Security Number Due To Conscientious Religious Objection.

Documentation to substantiate identity, U.S. citizenship, and status as a member of a recognized religious group must accompany the Form 8945.  Documentation requirements and mailing information are included in the Form 8945 instructions. Allow 4-6 weeks to process your PTIN application.

3. How do foreign preparers without a social security number obtain a PTIN? (updated 3/21/14)

A foreign preparer who does not have and is not eligible to obtain a social security number and is neither a citizen of the U.S. nor a resident alien of the U.S. as defined in section 7701(b)(1)(A) will need to complete the Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8946, PTIN Supplemental Application For Foreign Persons Without a Social Security Number. Only preparers that have a foreign (non-U.S.) address may file this form.

Individuals who have an Individual Taxpayer Identification Number (ITIN) are not eligible for a PTIN unless they are foreign persons with a permanent non-U.S. address.

Documentation to substantiate identity and eligibility must accompany the Form 8946. Documentation requirements and mailing information are included in the Form 8946 instructions.

Allow 4-6 weeks to process your PTIN application.  

4. I have a social security number, but have not filed an income tax return with the IRS. My individual income tax returns were filed with the Departamento de Hacienda (Puerto Rico). How do I obtain a PTIN? (updated 3/21/2014)

A Puerto Rican resident who has never filed a U.S. individual income tax return must submit a paper Form W-12 PTIN application. Ensure the address on Line 15 of the Form W-12 matches the information from your Hacienda tax return information. 

Include the following with your W-12 application:

  • Check or money order for $64.25 (make payable to IRS Tax Pro PTIN Fee)  
  • An original, certified, or notarized copy of your social security card along with one other government issued document that contains a current photo ID. Examples of acceptable supporting documents are listed below. All documents must be a current original, certified, or notarized and must verify your name. Refer to Form W-12 instructions for complete information regarding acceptable supporting documentation and application requirements.
    Examples of acceptable supporting documents:
    - Passport/Passport Card
    - Driver's License
    - U.S. State ID Card
    - Military ID Card
    - National ID card

Return to Return Preparer Program FAQs

Page Last Reviewed or Updated: 21-Mar-2014

The 2006 Tax Return Software Free

2006 tax return software free 2. 2006 tax return software free   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. 2006 tax return software free You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. 2006 tax return software free This chapter discusses accounting methods. 2006 tax return software free For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. 2006 tax return software free Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. 2006 tax return software free Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. 2006 tax return software free Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. 2006 tax return software free A material item is one that affects the proper time for inclusion of income or allowance of a deduction. 2006 tax return software free An item considered material for financial statement purposes is generally also considered material for income tax purposes. 2006 tax return software free See Publication 538 for more information. 2006 tax return software free You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. 2006 tax return software free If you later want to change your accounting method, you generally must get IRS approval. 2006 tax return software free How to obtain IRS approval is discussed later under Changes in Methods of Accounting . 2006 tax return software free Types of accounting methods. 2006 tax return software free   Generally, you can use any of the following accounting methods. 2006 tax return software free Each method is discussed in detail below. 2006 tax return software free Cash method. 2006 tax return software free Accrual method. 2006 tax return software free Special methods of accounting for certain items of income and expenses. 2006 tax return software free Combination (hybrid) method using elements of two or more of the above. 2006 tax return software free Business and other items. 2006 tax return software free   You can account for business and personal items using different accounting methods. 2006 tax return software free For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. 2006 tax return software free Two or more businesses. 2006 tax return software free   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. 2006 tax return software free Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. 2006 tax return software free Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. 2006 tax return software free However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. 2006 tax return software free See Accrual Method Required , later. 2006 tax return software free Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. 2006 tax return software free Items of income include money received as well as property or services received. 2006 tax return software free If you receive property or services, you must include the fair market value (FMV) of the property or services in income. 2006 tax return software free See chapter 3 for information on how to report farm income on your income tax return. 2006 tax return software free Constructive receipt. 2006 tax return software free   Income is constructively received when an amount is credited to your account or made available to you without restriction. 2006 tax return software free You do not need to have possession of the income for it to be treated as income for the tax year. 2006 tax return software free If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. 2006 tax return software free Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. 2006 tax return software free Direct payments and counter-cyclical payments. 2006 tax return software free   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. 2006 tax return software free Delaying receipt of income. 2006 tax return software free   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. 2006 tax return software free You must report the income in the year the money or property is received or made available to you without restriction. 2006 tax return software free Example. 2006 tax return software free Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. 2006 tax return software free She was told in December that her payment was available. 2006 tax return software free She requested not to be paid until January 2014. 2006 tax return software free However, she must still include this payment in her 2013 income because it was made available to her in 2013. 2006 tax return software free Debts paid by another person or canceled. 2006 tax return software free   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. 2006 tax return software free If you receive income in this way, you constructively receive the income when the debt is canceled or paid. 2006 tax return software free See Cancellation of Debt in chapter 3. 2006 tax return software free Deferred payment contract. 2006 tax return software free   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. 2006 tax return software free However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. 2006 tax return software free Example. 2006 tax return software free You are a farmer who uses the cash method and a calendar tax year. 2006 tax return software free You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. 2006 tax return software free You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. 2006 tax return software free However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. 2006 tax return software free Repayment of income. 2006 tax return software free   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. 2006 tax return software free If the repayment is more than $3,000, a special rule applies. 2006 tax return software free For details, see Repayments in chapter 11 of Publication 535, Business Expenses. 2006 tax return software free Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. 2006 tax return software free This includes business expenses for which you contest liability. 2006 tax return software free However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. 2006 tax return software free See chapter 4 for information on how to deduct farm business expenses on your income tax return. 2006 tax return software free Prepayment. 2006 tax return software free   Generally, you cannot deduct expenses paid in advance. 2006 tax return software free This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 2006 tax return software free Example. 2006 tax return software free On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. 2006 tax return software free In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. 2006 tax return software free In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. 2006 tax return software free An exception applies if the expense qualifies for the 12-month rule. 2006 tax return software free See Publication 538 for more information and examples. 2006 tax return software free See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. 2006 tax return software free Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. 2006 tax return software free The purpose of an accrual method of accounting is to correctly match income and expenses. 2006 tax return software free Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. 2006 tax return software free See Accrual Method Required and Farm Inventory , later. 2006 tax return software free Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. 2006 tax return software free Under this rule, include an amount in income on the earliest of the following dates. 2006 tax return software free When you receive payment. 2006 tax return software free When the income amount is due to you. 2006 tax return software free When you earn the income. 2006 tax return software free When title passes. 2006 tax return software free If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. 2006 tax return software free Inventory. 2006 tax return software free   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. 2006 tax return software free An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. 2006 tax return software free See Publication 538 for more information. 2006 tax return software free Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. 2006 tax return software free Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. 2006 tax return software free The all-events test has been met. 2006 tax return software free This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. 2006 tax return software free Economic performance has occurred. 2006 tax return software free Economic performance. 2006 tax return software free   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. 2006 tax return software free If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. 2006 tax return software free If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. 2006 tax return software free Example. 2006 tax return software free Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. 2006 tax return software free She entered into a contract with ABC Farm Consulting in 2012. 2006 tax return software free The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. 2006 tax return software free It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. 2006 tax return software free Jane paid ABC Farm Consulting $2,000 in December 2012. 2006 tax return software free Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. 2006 tax return software free Economic performance for Jane's liability in the contract occurs as the services are provided. 2006 tax return software free Jane incurs the $2,000 cost in 2013. 2006 tax return software free An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. 2006 tax return software free For more information, see Economic Performance in Publication 538. 2006 tax return software free Special rule for related persons. 2006 tax return software free   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. 2006 tax return software free Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. 2006 tax return software free For more information, see Internal Revenue Code section 267. 2006 tax return software free Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. 2006 tax return software free A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. 2006 tax return software free A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. 2006 tax return software free A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. 2006 tax return software free A tax shelter. 2006 tax return software free Note. 2006 tax return software free Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). 2006 tax return software free Family corporation. 2006 tax return software free   A family corporation is generally a corporation that meets one of the following ownership requirements. 2006 tax return software free Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. 2006 tax return software free Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. 2006 tax return software free Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. 2006 tax return software free For more information on family corporations, see Internal Revenue Code section 447. 2006 tax return software free Tax shelter. 2006 tax return software free   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. 2006 tax return software free Its principal purpose is the avoidance or evasion of federal income tax. 2006 tax return software free It is a farming syndicate. 2006 tax return software free A farming syndicate is an entity that meets either of the following tests. 2006 tax return software free Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. 2006 tax return software free More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. 2006 tax return software free   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. 2006 tax return software free   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. 2006 tax return software free Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. 2006 tax return software free This record should show the actual count or measurement of the inventory. 2006 tax return software free It should also show all factors that enter into its valuation, including quality and weight, if applicable. 2006 tax return software free Hatchery business. 2006 tax return software free   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. 2006 tax return software free Products held for sale. 2006 tax return software free   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. 2006 tax return software free , must be included in inventory. 2006 tax return software free Supplies. 2006 tax return software free   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. 2006 tax return software free Deduct the cost of supplies in the year used or consumed in operations. 2006 tax return software free Do not include incidental supplies in inventory as these are deductible in the year of purchase. 2006 tax return software free Livestock. 2006 tax return software free   Livestock held primarily for sale must be included in inventory. 2006 tax return software free Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. 2006 tax return software free See also Unit-livestock-price method , later. 2006 tax return software free If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. 2006 tax return software free Growing crops. 2006 tax return software free   Generally, growing crops are not required to be included in inventory. 2006 tax return software free However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. 2006 tax return software free See Uniform capitalization rules below. 2006 tax return software free Also see Uniform Capitalization Rules in  chapter 6. 2006 tax return software free Items to include in inventory. 2006 tax return software free   Your inventory should include all items held for sale, or for use as feed, seed, etc. 2006 tax return software free , whether raised or purchased, that are unsold at the end of the year. 2006 tax return software free Uniform capitalization rules. 2006 tax return software free   The following applies if you are required to use an accrual method of accounting. 2006 tax return software free The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. 2006 tax return software free The costs of animals are subject to the uniform capitalization rules. 2006 tax return software free Inventory valuation methods. 2006 tax return software free   The following methods, described below, are those generally available for valuing inventory. 2006 tax return software free The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. 2006 tax return software free Cost. 2006 tax return software free Lower of cost or market. 2006 tax return software free Farm-price method. 2006 tax return software free Unit-livestock-price method. 2006 tax return software free Cost and lower of cost or market methods. 2006 tax return software free   See Publication 538 for information on these valuation methods. 2006 tax return software free If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. 2006 tax return software free However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. 2006 tax return software free Farm-price method. 2006 tax return software free   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. 2006 tax return software free Market price is the current price at the nearest market in the quantities you usually sell. 2006 tax return software free Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. 2006 tax return software free If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. 2006 tax return software free Unit-livestock-price method. 2006 tax return software free   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. 2006 tax return software free You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. 2006 tax return software free The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. 2006 tax return software free Unit prices and classifications are subject to approval by the IRS on examination of your return. 2006 tax return software free You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. 2006 tax return software free IRS approval is not required for these adjustments. 2006 tax return software free Any other changes in unit prices or classifications do require IRS approval. 2006 tax return software free   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. 2006 tax return software free This method accounts only for the increase in cost of raising an animal to maturity. 2006 tax return software free It does not provide for any decrease in the animal's market value after it reaches maturity. 2006 tax return software free Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. 2006 tax return software free   Do not include sold or lost animals in the year-end inventory. 2006 tax return software free If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. 2006 tax return software free The animals on hand at the end of the year are considered those most recently acquired. 2006 tax return software free   You must include in inventory all livestock purchased primarily for sale. 2006 tax return software free You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. 2006 tax return software free However, you must be consistent from year to year, regardless of the method you have chosen. 2006 tax return software free You cannot change your method without obtaining approval from the IRS. 2006 tax return software free   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. 2006 tax return software free If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. 2006 tax return software free However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. 2006 tax return software free This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. 2006 tax return software free It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. 2006 tax return software free Uniform capitalization rules. 2006 tax return software free   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. 2006 tax return software free This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. 2006 tax return software free Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. 2006 tax return software free Example 1. 2006 tax return software free You are a farmer who uses an accrual method of accounting. 2006 tax return software free You keep your books on the calendar year basis. 2006 tax return software free You sell grain in December 2013 but you are not paid until January 2014. 2006 tax return software free Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. 2006 tax return software free Example 2. 2006 tax return software free Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. 2006 tax return software free Under this method, you include the sales proceeds in income for 2014, the year you receive payment. 2006 tax return software free Deduct the costs of producing the grain in the year you pay for them. 2006 tax return software free Special Methods of Accounting There are special methods of accounting for certain items of income and expense. 2006 tax return software free Crop method. 2006 tax return software free   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. 2006 tax return software free You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. 2006 tax return software free Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. 2006 tax return software free    See chapter 4 for details on deducting the costs of operating a farm. 2006 tax return software free Also see Regulations section 1. 2006 tax return software free 162-12. 2006 tax return software free Other special methods. 2006 tax return software free   Other special methods of accounting apply to the following items. 2006 tax return software free Amortization, see chapter 7. 2006 tax return software free Casualties, see chapter 11. 2006 tax return software free Condemnations, see chapter 11. 2006 tax return software free Depletion, see chapter 7. 2006 tax return software free Depreciation, see chapter 7. 2006 tax return software free Farm business expenses, see chapter 4. 2006 tax return software free Farm income, see chapter 3. 2006 tax return software free Installment sales, see chapter 10. 2006 tax return software free Soil and water conservation expenses, see chapter 5. 2006 tax return software free Thefts, see chapter 11. 2006 tax return software free Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. 2006 tax return software free However, the following restrictions apply. 2006 tax return software free If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. 2006 tax return software free If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. 2006 tax return software free Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). 2006 tax return software free Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. 2006 tax return software free You may also have to pay a fee. 2006 tax return software free To obtain approval, you must generally file Form 3115. 2006 tax return software free There are instances when you can obtain automatic consent to change certain methods of accounting. 2006 tax return software free See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. 2006 tax return software free For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. 2006 tax return software free Also see Publication 538. 2006 tax return software free Prev  Up  Next   Home   More Online Publications