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2010 Tax Software Free Download

2010 tax software free download Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). 2010 tax software free download Low Income Taxpayer Clinics (LITCs). 2010 tax software free download Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. 2010 tax software free download All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. 2010 tax software free download The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). 2010 tax software free download After notice and hearing, the bankruptcy court may extend the period for another 30 days. 2010 tax software free download Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. 2010 tax software free download Note. 2010 tax software free download Individual debtors should use their home address when filing Form 1040 with the IRS. 2010 tax software free download Returns should not be filed “in care of” the trustee's address. 2010 tax software free download Ordering tax transcripts and copies of returns. 2010 tax software free download   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. 2010 tax software free download The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. 2010 tax software free download If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. 2010 tax software free download Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. 2010 tax software free download Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. 2010 tax software free download A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. 2010 tax software free download To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. 2010 tax software free download It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. 2010 tax software free download 00 per tax return for copies of the returns. 2010 tax software free download Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. 2010 tax software free download If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. 2010 tax software free download Tax returns and payment of taxes in chapter 11 cases. 2010 tax software free download   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. 2010 tax software free download Disclosure of debtor's return information to trustee. 2010 tax software free download   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. 2010 tax software free download If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. 2010 tax software free download    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. 2010 tax software free download Material interest is generally defined as a financial or monetary interest. 2010 tax software free download Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 2010 tax software free download   However, the U. 2010 tax software free download S. 2010 tax software free download Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. 2010 tax software free download Disclosure of bankruptcy estate's return information to debtor. 2010 tax software free download    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. 2010 tax software free download Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. 2010 tax software free download Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. 2010 tax software free download Chapter 13 relief is not available to corporations or partnerships. 2010 tax software free download The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. 2010 tax software free download In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. 2010 tax software free download S. 2010 tax software free download Individual Income Tax Return. 2010 tax software free download On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. 2010 tax software free download Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. 2010 tax software free download To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. 2010 tax software free download See Debt Cancellation, later. 2010 tax software free download Interest on trust accounts in chapter 13 cases. 2010 tax software free download   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. 2010 tax software free download This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. 2010 tax software free download S. 2010 tax software free download Trustee system. 2010 tax software free download The interest is also not taxable to the trustee as income. 2010 tax software free download Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. 2010 tax software free download The bankruptcy estate in a chapter 7 case is represented by a trustee. 2010 tax software free download The trustee is appointed to administer the estate and liquidate any nonexempt assets. 2010 tax software free download In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. 2010 tax software free download However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. 2010 tax software free download During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. 2010 tax software free download The bankruptcy trustee files a Form 1041 for the bankruptcy estate. 2010 tax software free download However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). 2010 tax software free download Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. 2010 tax software free download Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). 2010 tax software free download For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 2010 tax software free download Debtor's Election To End Tax Year – Form 1040 Short tax years. 2010 tax software free download   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. 2010 tax software free download If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. 2010 tax software free download The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. 2010 tax software free download   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. 2010 tax software free download Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. 2010 tax software free download    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. 2010 tax software free download Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. 2010 tax software free download Note. 2010 tax software free download The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. 2010 tax software free download Making the Election - Filing Requirements First short tax year. 2010 tax software free download   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. 2010 tax software free download The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. 2010 tax software free download Second short tax year. 2010 tax software free download   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. 2010 tax software free download   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. 2010 tax software free download To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. 2010 tax software free download Example. 2010 tax software free download Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. 2010 tax software free download If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. 2010 tax software free download Jane's second short year runs from May 8, 2012, through December 31, 2012. 2010 tax software free download To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. 2010 tax software free download To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. 2010 tax software free download The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. 2010 tax software free download S. 2010 tax software free download Individual Tax Return. 2010 tax software free download The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. 2010 tax software free download The debtor must file Form 4868 by the due date of the return for the first short tax year. 2010 tax software free download The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. 2010 tax software free download Election by debtor's spouse. 2010 tax software free download   If the debtor is married, the debtor's spouse may join in the election to end the tax year. 2010 tax software free download If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. 2010 tax software free download The debtor must elect by the due date for filing the return for the first short tax year. 2010 tax software free download Once the election is made, it cannot be revoked for the first short tax year. 2010 tax software free download However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. 2010 tax software free download Later bankruptcy of spouse. 2010 tax software free download    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. 2010 tax software free download   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. 2010 tax software free download If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. 2010 tax software free download However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. 2010 tax software free download The debtor and the spouse are precluded from this election because they have different tax years. 2010 tax software free download This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. 2010 tax software free download Example 1. 2010 tax software free download Paul and Mary Harris are calendar-year taxpayers. 2010 tax software free download Paul's voluntary chapter 7 bankruptcy case begins on March 4. 2010 tax software free download If Paul does not make an election, his tax year does not end on March 3. 2010 tax software free download If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. 2010 tax software free download Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. 2010 tax software free download They must make the election by July 15, the due date for filing the joint return. 2010 tax software free download Example 2. 2010 tax software free download Fred and Ethel Barnes are calendar-year taxpayers. 2010 tax software free download Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. 2010 tax software free download Ethel could elect to end her tax year on October 31. 2010 tax software free download If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. 2010 tax software free download Her first tax year is January 1–October 31, and her second year is November 1–December 31. 2010 tax software free download If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. 2010 tax software free download If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. 2010 tax software free download Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. 2010 tax software free download Example 3. 2010 tax software free download Jack and Karen Thomas are calendar-year taxpayers. 2010 tax software free download Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. 2010 tax software free download Karen elected to close her tax year on April 9 and Jack joins in Karen's election. 2010 tax software free download Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. 2010 tax software free download The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. 2010 tax software free download Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). 2010 tax software free download If Karen does join in, she would have the same 3 short tax years as Jack. 2010 tax software free download Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. 2010 tax software free download Annualizing taxable income. 2010 tax software free download   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. 2010 tax software free download See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. 2010 tax software free download Dismissal of bankruptcy case. 2010 tax software free download   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. 2010 tax software free download It is as if no bankruptcy estate was created for tax purposes. 2010 tax software free download In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. 2010 tax software free download Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. 2010 tax software free download Attach a statement to the amended returns explaining why the debtor is filing an amended return. 2010 tax software free download Taxes and the Bankruptcy Estate Property of the bankruptcy estate. 2010 tax software free download   At the commencement of a bankruptcy case a bankruptcy estate is created. 2010 tax software free download Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. 2010 tax software free download This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. 2010 tax software free download However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. 2010 tax software free download Note. 2010 tax software free download Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. 2010 tax software free download Excluded property is never included in the estate. 2010 tax software free download Transfer of assets between debtor and bankruptcy estate. 2010 tax software free download   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. 2010 tax software free download The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. 2010 tax software free download For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. 2010 tax software free download The estate assumes the same basis, holding period, and character of the transferred assets. 2010 tax software free download Also, the estate generally accounts for the transferred assets in the same manner as debtor. 2010 tax software free download   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. 2010 tax software free download The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. 2010 tax software free download Abandoned property. 2010 tax software free download    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. 2010 tax software free download If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. 2010 tax software free download Separate taxable entity. 2010 tax software free download   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. 2010 tax software free download The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. 2010 tax software free download S. 2010 tax software free download Income Tax Return for Estates and Trusts, and paying its taxes. 2010 tax software free download The debtor remains responsible for filing his or her own returns on Form 1040, U. 2010 tax software free download S. 2010 tax software free download Individual Income Tax Return, and paying taxes on income that does not belong to the estate. 2010 tax software free download Employer identification number. 2010 tax software free download   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 2010 tax software free download The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 2010 tax software free download See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 2010 tax software free download    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 2010 tax software free download Income, deductions, and credits – Form 1040. 2010 tax software free download   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). 2010 tax software free download Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. 2010 tax software free download The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. 2010 tax software free download See Debt Cancellation, below. 2010 tax software free download Note. 2010 tax software free download The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. 2010 tax software free download Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. 2010 tax software free download However, other exclusions, such as the insolvency exclusion, may apply. 2010 tax software free download Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. 2010 tax software free download    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. 2010 tax software free download Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. 2010 tax software free download   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. 2010 tax software free download Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. 2010 tax software free download Income of the estate in individual chapter 11 cases. 2010 tax software free download    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. 2010 tax software free download Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. 2010 tax software free download S. 2010 tax software free download C. 2010 tax software free download section 1115). 2010 tax software free download Note. 2010 tax software free download A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. 2010 tax software free download Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). 2010 tax software free download Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. 2010 tax software free download See Administrative expenses, below. 2010 tax software free download Conversion or dismissal of chapter 11 cases. 2010 tax software free download   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. 2010 tax software free download If the chapter 11 case is converted to a chapter 7 case, 11 U. 2010 tax software free download S. 2010 tax software free download C. 2010 tax software free download section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. 2010 tax software free download Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. 2010 tax software free download If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. 2010 tax software free download Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. 2010 tax software free download Note. 2010 tax software free download Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). 2010 tax software free download Administrative expenses. 2010 tax software free download   Allowable expenses include administrative expenses. 2010 tax software free download    Administrative expenses can only be deducted by the estate, never by the debtor. 2010 tax software free download   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. 2010 tax software free download These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. 2010 tax software free download See IRC section 67(e). 2010 tax software free download Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. 2010 tax software free download Note. 2010 tax software free download The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. 2010 tax software free download See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. 2010 tax software free download Administrative expense loss. 2010 tax software free download   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. 2010 tax software free download The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. 2010 tax software free download The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. 2010 tax software free download For a discussion of NOLs, see Publication 536. 2010 tax software free download Attribute carryovers. 2010 tax software free download   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. 2010 tax software free download These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. 2010 tax software free download The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. 2010 tax software free download   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. 2010 tax software free download See Debt Cancellation, later. 2010 tax software free download   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. 2010 tax software free download The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. 2010 tax software free download Note. 2010 tax software free download The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. 2010 tax software free download See Administrative expense loss, above. 2010 tax software free download Passive and at-risk activities. 2010 tax software free download   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. 2010 tax software free download Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. 2010 tax software free download These transfers include the return of exempt property and abandonment of estate property to the debtor. 2010 tax software free download Carrybacks from the debtor's activities. 2010 tax software free download   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. 2010 tax software free download Carrybacks from the bankruptcy estate. 2010 tax software free download   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. 2010 tax software free download The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. 2010 tax software free download Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. 2010 tax software free download    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. 2010 tax software free download The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. 2010 tax software free download These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. 2010 tax software free download The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. 2010 tax software free download The same method must be used to allocate the income and the withheld tax. 2010 tax software free download Example. 2010 tax software free download If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. 2010 tax software free download Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. 2010 tax software free download See IRC section 31(a). 2010 tax software free download   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. 2010 tax software free download In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. 2010 tax software free download    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. 2010 tax software free download The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. 2010 tax software free download Note. 2010 tax software free download The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). 2010 tax software free download   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. 2010 tax software free download Self-employment taxes in individual chapter 11 cases. 2010 tax software free download   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. 2010 tax software free download Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. 2010 tax software free download   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. 2010 tax software free download Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. 2010 tax software free download This schedule includes self-employment income earned post-petition and the attributable deductions. 2010 tax software free download The debtor must pay any self-employment tax imposed by IRC section 1401. 2010 tax software free download Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. 2010 tax software free download   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. 2010 tax software free download However, section 1115 of the Bankruptcy Code (11 U. 2010 tax software free download S. 2010 tax software free download C. 2010 tax software free download section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. 2010 tax software free download See Notice 2006-83. 2010 tax software free download   The reporting and withholding obligations of a debtor's employer also do not change. 2010 tax software free download An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. 2010 tax software free download Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. 2010 tax software free download   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. 2010 tax software free download See IRC section 6109(a)(2). 2010 tax software free download As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). 2010 tax software free download   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. 2010 tax software free download See Notice 2006-83. 2010 tax software free download An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. 2010 tax software free download   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. 2010 tax software free download However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. 2010 tax software free download See Employment Tax Regulations section 31. 2010 tax software free download 3402(f)(2)-1. 2010 tax software free download Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. 2010 tax software free download See IRC section 6654(a). 2010 tax software free download Notice required in converted and dismissed cases. 2010 tax software free download   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. 2010 tax software free download The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. 2010 tax software free download This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. 2010 tax software free download   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. 2010 tax software free download Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. 2010 tax software free download However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. 2010 tax software free download After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. 2010 tax software free download Employment taxes. 2010 tax software free download   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 2010 tax software free download See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. 2010 tax software free download   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 2010 tax software free download For a further discussion of employment taxes, see Employment Taxes, later. 2010 tax software free download Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . 2010 tax software free download The bankruptcy court case number is . 2010 tax software free download Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. 2010 tax software free download   Year Taxpayer   Estate 1. 2010 tax software free download Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. 2010 tax software free download Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. 2010 tax software free download Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. 2010 tax software free download Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. 2010 tax software free download   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. 2010 tax software free download This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. 2010 tax software free download   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). 2010 tax software free download   These amounts are generally adjusted annually. 2010 tax software free download See the present year Form 1041 Instructions at www. 2010 tax software free download irs. 2010 tax software free download gov/form1041 for the current dollar amounts. 2010 tax software free download Accounting period. 2010 tax software free download   A bankruptcy estate may have a fiscal year. 2010 tax software free download However, this period cannot be longer than 12 months. 2010 tax software free download Change of accounting period. 2010 tax software free download   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. 2010 tax software free download This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. 2010 tax software free download The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. 2010 tax software free download Employer identification number. 2010 tax software free download   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 2010 tax software free download The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 2010 tax software free download    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 2010 tax software free download   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. 2010 tax software free download irs. 2010 tax software free download gov/businesses/small. 2010 tax software free download The EIN is issued immediately once the application information is validated. 2010 tax software free download By telephone at 1-800-829-4933 from 7:00 a. 2010 tax software free download m. 2010 tax software free download to 7:00 p. 2010 tax software free download m. 2010 tax software free download in the trustee's or debtor-in-possession's local time zone. 2010 tax software free download Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. 2010 tax software free download   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. 2010 tax software free download For more details, see Pub. 2010 tax software free download 583, Starting a Business and Keeping Records. 2010 tax software free download   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. 2010 tax software free download Figuring tax due. 2010 tax software free download   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. 2010 tax software free download However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. 2010 tax software free download The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. 2010 tax software free download The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. 2010 tax software free download Tax rate schedule. 2010 tax software free download The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. 2010 tax software free download When to file. 2010 tax software free download   Calendar year bankruptcy estates must file Form 1041 by April 15th. 2010 tax software free download Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. 2010 tax software free download For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. 2010 tax software free download If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. 2010 tax software free download Note. 2010 tax software free download The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. 2010 tax software free download Transmittal for Form 1040. 2010 tax software free download   Form 1041 is used as a transmittal for Form 1040. 2010 tax software free download If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. 2010 tax software free download   Prepare the bankruptcy estate's return by completing Form 1040. 2010 tax software free download In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. 2010 tax software free download ” Then, attach Form 1040 to the Form 1041 transmittal. 2010 tax software free download Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. 2010 tax software free download An example of a bankruptcy estate's tax return is prepared below. 2010 tax software free download Note. 2010 tax software free download The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. 2010 tax software free download Payment of Tax Due Payment methods. 2010 tax software free download   Payment of tax due may be made by check or money order or by credit or debit card. 2010 tax software free download For information on how to make payments electronically by credit or debit card, go to irs. 2010 tax software free download gov/e-pay. 2010 tax software free download      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. 2010 tax software free download To enroll in EFTPS, go to eftps. 2010 tax software free download gov or call 1-800-555-4477. 2010 tax software free download For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. 2010 tax software free download Payment voucher – Form 1041-V. 2010 tax software free download   Form 1041-V accompanies payments made by check or money order for Form 1041. 2010 tax software free download The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. 2010 tax software free download Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. 2010 tax software free download We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. 2010 tax software free download Estimated tax – Form 1041-ES. 2010 tax software free download   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. 2010 tax software free download See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. 2010 tax software free download Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 2010 tax software free download Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. 2010 tax software free download If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. 2010 tax software free download   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. 2010 tax software free download Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. 2010 tax software free download The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 2010 tax software free download If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 2010 tax software free download , with their individual income tax returns. 2010 tax software free download Tax Return Example – Form 1041 This publication is not revised annually. 2010 tax software free download Future changes to the forms and their instructions may not be reflected in this example. 2010 tax software free download Note. 2010 tax software free download The following return was prepared for tax year 2011. 2010 tax software free download In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). 2010 tax software free download Facts and circumstances. 2010 tax software free download   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. 2010 tax software free download Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. 2010 tax software free download   The estate received the following assets from Mr. 2010 tax software free download Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. 2010 tax software free download   Also, the estate received a $251,500 capital loss carryover. 2010 tax software free download   Mr. 2010 tax software free download Smith's bankruptcy case was closed on December 31, 2011. 2010 tax software free download During 2011, Mr. 2010 tax software free download Smith was relieved of $70,000 of debt by the bankruptcy court. 2010 tax software free download The estate chose a calendar year as its tax year. 2010 tax software free download Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. 2010 tax software free download Schedule B (Form 1040). 2010 tax software free download    The certificate of deposit earned $5,500 of interest during 2011. 2010 tax software free download Joan reports this interest on Schedule B. 2010 tax software free download She completes this schedule and enters the result on Form 1040. 2010 tax software free download Form 4562. 2010 tax software free download   Joan enters the depreciation allowed on Form 4562. 2010 tax software free download She completes the form and enters the result on Schedule E. 2010 tax software free download Schedule E (Form 1040). 2010 tax software free download   The commercial real estate was rented through the date of sale. 2010 tax software free download Joan reports the income and expenses on Schedule E. 2010 tax software free download She enters the net income on Form 1040. 2010 tax software free download Form 4797. 2010 tax software free download   The commercial real estate was sold on July 1, 2011, for $280,000. 2010 tax software free download The property was purchased in 2001 at a cost of $250,000. 2010 tax software free download The total depreciation allowable as of the date of sale was $120,000. 2010 tax software free download Additionally, $25,000 of selling expenses were incurred. 2010 tax software free download Joan reports the gain or loss from the sale on Form 4797. 2010 tax software free download She completes the form and enters the gain on Schedule D (Form 1040). 2010 tax software free download   Mr. 2010 tax software free download Smith's former residence was sold on September 30, 2011. 2010 tax software free download The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. 2010 tax software free download This sale is excluded from gross income under IRC section 121. 2010 tax software free download Note. 2010 tax software free download Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). 2010 tax software free download Bankruptcy estates succeed to this exclusion at the commencement of the case. 2010 tax software free download See Regulation section 1. 2010 tax software free download 1398-3. 2010 tax software free download Schedule D (Form 1040). 2010 tax software free download   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). 2010 tax software free download She enters the results on Form 1040. 2010 tax software free download Form 1040, page 1. 2010 tax software free download   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. 2010 tax software free download Schedule A (Form 1040). 2010 tax software free download   During 2011, the estate paid mortgage interest and real property tax on Mr. 2010 tax software free download Smith's former residence. 2010 tax software free download It also paid income tax to the state. 2010 tax software free download Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. 2010 tax software free download Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. 2010 tax software free download She completes the Schedule A and enters the result on page 2 of Form 1040. 2010 tax software free download Form 1040, page 2. 2010 tax software free download   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. 2010 tax software free download She then enters the estate's estimated tax payments and figures the amount the estate still owes. 2010 tax software free download Form 982. 2010 tax software free download   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. 2010 tax software free download Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. 2010 tax software free download See Debt Cancellation, later. 2010 tax software free download After the bankruptcy case ends, Mr. 2010 tax software free download Smith will assume the estate's tax attributes. 2010 tax software free download Mr. 2010 tax software free download Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). 2010 tax software free download Note. 2010 tax software free download If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. 2010 tax software free download Form 1041. 2010 tax software free download   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. 2010 tax software free download She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. 2010 tax software free download This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Schedule A This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Schedule B This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Schedule D This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Schedule E This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 2119 This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 4562 This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. 2010 tax software free download Otherwise, you do not have any carryovers. 2010 tax software free download 1. 2010 tax software free download Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. 2010 tax software free download If a loss, enclose the amount in parentheses 1. 2010 tax software free download 19,880   2. 2010 tax software free download Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. 2010 tax software free download 1,500   3. 2010 tax software free download Combine lines 1 and 2. 2010 tax software free download If zero or less, enter -0- 3. 2010 tax software free download 21,380   4. 2010 tax software free download Enter the smaller of line 2 or line 3 4. 2010 tax software free download 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. 2010 tax software free download       5. 2010 tax software free download Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. 2010 tax software free download 0   6. 2010 tax software free download Enter any gain from your 2010 Schedule D, line 15. 2010 tax software free download If a loss, enter -0- 6. 2010 tax software free download         7. 2010 tax software free download Add lines 4 and 6 7. 2010 tax software free download 1,500   8. 2010 tax software free download Short-term capital loss carryover for 2011. 2010 tax software free download Subtract line 7 from line 5. 2010 tax software free download If zero or less, enter -0-. 2010 tax software free download If more than zero, also enter this amount on Schedule D, line 6 8. 2010 tax software free download 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. 2010 tax software free download       9. 2010 tax software free download Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. 2010 tax software free download 251,500   10. 2010 tax software free download Enter any gain from your 2010 Schedule D, line 7. 2010 tax software free download If a loss, enter -0- 10. 2010 tax software free download 0       11. 2010 tax software free download Subtract line 5 from line 4. 2010 tax software free download If zero or less, enter -0- 11. 2010 tax software free download 1,500       12. 2010 tax software free download Add lines 10 and 11 12. 2010 tax software free download 1,500   13. 2010 tax software free download Long-term capital loss carryover for 2011. 2010 tax software free download Subtract line 12 from line 9. 2010 tax software free download If zero or less, enter -0-. 2010 tax software free download If more than zero, also enter this amount on Schedule D, line 14 13. 2010 tax software free download 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. 2010 tax software free download The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. 2010 tax software free download In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. 2010 tax software free download The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. 2010 tax software free download Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. 2010 tax software free download However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. 2010 tax software free download A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. 2010 tax software free download However, It may or may not be included in the individual partners' income. 2010 tax software free download See Partnerships, below under Debt Cancellation. 2010 tax software free download Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. 2010 tax software free download A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. 2010 tax software free download The following discussion only highlights bankruptcy tax rules applying to corporations. 2010 tax software free download The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. 2010 tax software free download Therefore, you may wish to seek the help of a professional tax advisor. 2010 tax software free download See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. 2010 tax software free download Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. 2010 tax software free download However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. 2010 tax software free download A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. 2010 tax software free download In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. 2010 tax software free download In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. 2010 tax software free download Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. 2010 tax software free download In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. 2010 tax software free download IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. 2010 tax software free download IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. 2010 tax software free download In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. 2010 tax software free download No loss is recognized in this situation. 2010 tax software free download Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. 2010 tax software free download To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. 2010 tax software free download The exemption request must be submitted to the local IRS Insolvency Office handling the case. 2010 tax software free download The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. 2010 tax software free download The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. 2010 tax software free download ” The statement must be signed by the trustee, receiver or assignee. 2010 tax software free download The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). 2010 tax software free download The IRS will act on your request within 90 days. 2010 tax software free download Disclosure of return information to trustee. 2010 tax software free download   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. 2010 tax software free download However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. 2010 tax software free download Material interest is generally defined as a financial or monetary interest. 2010 tax software free download Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 2010 tax software free download Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. 2010 tax software free download Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. 2010 tax software free download QSFs are required to file an annual income tax return, Form 1120-SF, U. 2010 tax software free download S. 2010 tax software free download Income Tax Return for Settlement Funds. 2010 tax software free download More information about QSFs may be found in Treasury Regulation sections 1. 2010 tax software free download 468B-1 through -5. 2010 tax software free download Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. 2010 tax software free download After a return is filed, the IRS will either accept the return as filed or select the return for examination. 2010 tax software free download Under examination the IRS may redetermine the tax liability shown on the return. 2010 tax software free download If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. 2010 tax software free download See Court Jurisdiction over Tax Matters, later. 2010 tax software free download Prompt Determination Requests Pursuant to Rev. 2010 tax software free download Proc. 2010 tax software free download 2006-24, 2006-22 I. 2010 tax software free download R. 2010 tax software free download B. 2010 tax software free download 943, www. 2010 tax software free download irs. 2010 tax software free download gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. 2010 tax software free download irs. 2010 tax software free download gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. 2010 tax software free download Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). 2010 tax software free download Making the request for determination. 2010 tax software free download   As detailed in Rev. 2010 tax software free download Proc. 2010 tax software free download 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. 2010 tax software free download O. 2010 tax software free download Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). 2010 tax software free download   The request must be submitted in duplicate and must be executed under penalties of perjury. 2010 tax software free download In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. 2010 tax software free download The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. 2010 tax software free download The name and location of the office where the return was filed. 2010 tax software free download The name of the debtor. 2010 tax software free download Debtor's social security number, TIN, or EIN. 2010 tax software free download Type of bankruptcy estate. 2010 tax software free download Bankruptcy case number. 2010 tax software free download Court where the bankruptcy case is pending. 2010 tax software free download   The copy of the return(s) submitted with the request must be an exact copy of a valid return. 2010 tax software free download A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. 2010 tax software free download    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. 2010 tax software free download A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. 2010 tax software free download Examination of return. 2010 tax software free download   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. 2010 tax software free download If the return is selected for examination, it will be examined as soon as possible. 2010 tax software free download The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. 2010 tax software free download   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. 2010 tax software free download   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. 2010 tax software free download   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. 2010 tax software free download Note. 2010 tax software free download An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. 2010 tax software free download   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei
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The 2010 Tax Software Free Download

2010 tax software free download 6. 2010 tax software free download   Tuition and Fees Deduction Table of Contents IntroductionWhat is the tax benefit of the tuition and fees deduction. 2010 tax software free download Can You Claim the DeductionWho Can Claim the Deduction Who Cannot Claim the Deduction What Expenses QualifyQualified Education Expenses No Double Benefit Allowed Expenses That Do Not Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Claiming the Deduction Illustrated Example Introduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). 2010 tax software free download You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. 2010 tax software free download The qualified expenses must be for higher education, as explained later under Qualified Education Expenses . 2010 tax software free download What is the tax benefit of the tuition and fees deduction. 2010 tax software free download   The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. 2010 tax software free download   This deduction is taken as an adjustment to income. 2010 tax software free download This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). 2010 tax software free download This deduction may be beneficial to you if you do not qualify for the American opportunity or lifetime learning credits. 2010 tax software free download You can choose the education benefit that will give you the lowest tax. 2010 tax software free download You may want to compare the tuition and fees deduction to the education credits. 2010 tax software free download See chapter 2, American Opportunity Credit and chapter 3, Lifetime Learning Credit for more information on the education credits. 2010 tax software free download Table 6-1. 2010 tax software free download Tuition and Fees Deduction at a Glance summarizes the features of the tuition and fees deduction. 2010 tax software free download Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. 2010 tax software free download Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. 2010 tax software free download You pay qualified education expenses of higher education. 2010 tax software free download You pay the education expenses for an eligible student. 2010 tax software free download The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. 2010 tax software free download The term “qualified education expenses” is defined later under Qualified Education Expenses . 2010 tax software free download “Eligible student” is defined later under Who Is an Eligible Student . 2010 tax software free download For more information on claiming the deduction for a dependent, see Who Can Claim a Dependent's Expenses , later. 2010 tax software free download Table 6-1. 2010 tax software free download Tuition and Fees Deduction at a Glance Do not rely on this table alone. 2010 tax software free download Refer to the text for complete details. 2010 tax software free download Question Answer What is the maximum benefit? You can reduce your income subject to tax by up to $4,000. 2010 tax software free download What is the limit on modified adjusted gross income (MAGI)? $160,000 if married filing a joint return; $80,000 if single, head of household, or qualifying widow(er). 2010 tax software free download Where is the deduction taken? As an adjustment to income on  Form 1040 or Form 1040A. 2010 tax software free download For whom must the expenses be paid? A student enrolled in an eligible educational institution who is either: •you,  •your spouse, or  •your dependent for whom you claim an exemption. 2010 tax software free download What tuition and fees are deductible? Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. 2010 tax software free download Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. 2010 tax software free download Your filing status is married filing separately. 2010 tax software free download Another person can claim an exemption for you as a dependent on his or her tax return. 2010 tax software free download You cannot take the deduction even if the other person does not actually claim that exemption. 2010 tax software free download Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). 2010 tax software free download You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. 2010 tax software free download More information on nonresident aliens can be found in Publication 519. 2010 tax software free download What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. 2010 tax software free download Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period beginning in 2013 or in the first 3 months of 2014. 2010 tax software free download For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 deduction. 2010 tax software free download Academic period. 2010 tax software free download   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. 2010 tax software free download In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. 2010 tax software free download Paid with borrowed funds. 2010 tax software free download   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. 2010 tax software free download Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. 2010 tax software free download Treat loan disbursements sent directly to the educational institution as paid on the date the institution credits the student's account. 2010 tax software free download Student withdraws from class(es). 2010 tax software free download   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. 2010 tax software free download Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. 2010 tax software free download Eligible educational institution. 2010 tax software free download   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. 2010 tax software free download S. 2010 tax software free download Department of Education. 2010 tax software free download It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. 2010 tax software free download The educational institution should be able to tell you if it is an eligible educational institution. 2010 tax software free download   Certain educational institutions located outside the United States also participate in the U. 2010 tax software free download S. 2010 tax software free download Department of Education's Federal Student Aid (FSA) programs. 2010 tax software free download Related expenses. 2010 tax software free download   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. 2010 tax software free download Prepaid expenses. 2010 tax software free download   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring an education credit for 2013 only. 2010 tax software free download See Academic period , earlier. 2010 tax software free download For example, you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). 2010 tax software free download You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). 2010 tax software free download In the following examples, assume that each student is an eligible student and each college or university an eligible educational institution. 2010 tax software free download Example 1. 2010 tax software free download Jackson is a sophomore in University V's degree program in dentistry. 2010 tax software free download This year, in addition to tuition, he is required to pay a fee to the university for the rental of the dental equipment he will use in this program. 2010 tax software free download Because the equipment rental fee must be paid to University V for enrollment and attendance, Jackson's equipment rental fee is a qualified education expense. 2010 tax software free download Example 2. 2010 tax software free download Donna and Charles, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. 2010 tax software free download The college has no policy about how students should obtain these materials, but any student who purchases them from College W's bookstore will receive a bill directly from the college. 2010 tax software free download Charles bought his books from a friend, so what he paid for them is not a qualified education expense. 2010 tax software free download Donna bought hers at College W's bookstore. 2010 tax software free download Although Donna paid College W directly for her first-year books and materials, her payment is not a qualified education expense because the books and materials are not required to be purchased from College W for enrollment or attendance at the institution. 2010 tax software free download Example 3. 2010 tax software free download When Marci enrolled at College X for her freshman year, she had to pay a separate student activity fee in addition to her tuition. 2010 tax software free download This activity fee is required of all students, and is used solely to fund on-campus organizations and activities run by students, such as the student newspaper and the student government. 2010 tax software free download No portion of the fee covers personal expenses. 2010 tax software free download Although labeled as a student activity fee, the fee is required for Marci's enrollment and attendance at College X. 2010 tax software free download Therefore, it is a qualified expense. 2010 tax software free download No Double Benefit Allowed You cannot do any of the following. 2010 tax software free download Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. 2010 tax software free download Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. 2010 tax software free download Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). 2010 tax software free download For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 2010 tax software free download See Coordination With Tuition and Fees Deduction in chapter 8, Qualified Tuition Program, later. 2010 tax software free download Deduct qualified education expenses that have been paid with tax-free interest on U. 2010 tax software free download S. 2010 tax software free download savings bonds (Form 8815). 2010 tax software free download See Figuring the Tax-Free Amount in chapter 10, Education Savings Bond Program, later. 2010 tax software free download Deduct qualified education expenses that have been paid with tax-free educational assistance, such as a scholarship, grant, or assistance provided by an employer. 2010 tax software free download See the following section on Adjustments to Qualified Education Expenses. 2010 tax software free download Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. 2010 tax software free download The result is the amount of adjusted qualified education expenses for each student. 2010 tax software free download You must also reduce qualified education expenses by the other amounts referred to in No Double Benefit Allowed , earlier. 2010 tax software free download Tax-free educational assistance. 2010 tax software free download   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. 2010 tax software free download See Academic period , earlier. 2010 tax software free download   Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. 2010 tax software free download This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). 2010 tax software free download   If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed , later. 2010 tax software free download If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed , later. 2010 tax software free download   This tax-free education assistance includes: The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. 2010 tax software free download Generally, any scholarship or fellowship is treated as tax free. 2010 tax software free download However, a scholarship or fellowship is not treated as tax free to the extent the student includes it in gross income (if the student is required to file a tax return for the year the scholarship or fellowship is received) and either of the following is true. 2010 tax software free download The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2010 tax software free download The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2010 tax software free download You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year it is received. 2010 tax software free download For details, see Adjustments to Qualified Education Expenses in chapters 2 and 3. 2010 tax software free download Refunds. 2010 tax software free download   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year. 2010 tax software free download Some tax-free educational assistance received after 2013 may be treated as a refund. 2010 tax software free download See Tax-free educational assistance , earlier. 2010 tax software free download Refunds received in 2013. 2010 tax software free download   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses for 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. 2010 tax software free download Refunds received after 2013 but before your income tax return is filed. 2010 tax software free download   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid before you file an income tax return for 2013, the amount of qualified education expenses for 2013 is reduced by the amount of the refund. 2010 tax software free download Refunds received after 2013 and after your income tax return is filed. 2010 tax software free download   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is paid after you file an income tax return for 2013, you may need to repay some or all of the credit. 2010 tax software free download See Credit recapture , later. 2010 tax software free download Coordination with Coverdell education savings accounts and qualified tuition programs. 2010 tax software free download   Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). 2010 tax software free download For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. 2010 tax software free download Credit recapture. 2010 tax software free download    If any tax-free educational assistance for the qualified education expenses paid in 2013 or any refund of your qualified education expenses paid in 2013 is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. 2010 tax software free download You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing that amount by the amount of the refund or tax-free educational assistance. 2010 tax software free download You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). 2010 tax software free download Include that amount as an additional tax for the year the refund or tax-free assistance was received. 2010 tax software free download Example. 2010 tax software free download   You paid $3,500 of qualified education expenses in December 2013, and your child began college in January 2014. 2010 tax software free download You claimed $3,500 as the tuition and fees deduction on your 2013 income tax return. 2010 tax software free download The reduction reduced your taxable income by $3,500. 2010 tax software free download Also, you claimed no tax credits in 2013. 2010 tax software free download Your child withdrew from two classes and you received a refund of $2,000 in 2014 after you filed your 2013 tax return. 2010 tax software free download Refigure your 2013 tuition and fees deduction using $1,500 of qualified education expense instead of the $3,500. 2010 tax software free download The refigured tuition and fees deduction is $1,500. 2010 tax software free download Do not file an amended 2013 tax return to account for this adjustment. 2010 tax software free download Instead, include the difference of $2,000 (but only to the extent this difference would have increased your 2013 tax) on the “Other income” line of your 2014 Form 1040. 2010 tax software free download You cannot file Form 1040A for 2014. 2010 tax software free download Amounts that do not reduce qualified education expenses. 2010 tax software free download   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. 2010 tax software free download   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. 2010 tax software free download The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses as defined in Qualified education expenses in chapter 1, Scholarships, Fellowships, Grants, and Tuition Restrictions. 2010 tax software free download The use of the money is not restricted. 2010 tax software free download Example 1. 2010 tax software free download In 2013, Jackie paid $3,000 for tuition and $5,000 for room and board at University X. 2010 tax software free download The university did not require her to pay any fees in addition to her tuition in order to enroll in or attend classes. 2010 tax software free download To help pay these costs, she was awarded a $2,000 scholarship and a $4,000 student loan. 2010 tax software free download The terms of the scholarship state that it can be used to pay any of Jackie's college expenses. 2010 tax software free download University X applies the $2,000 scholarship against Jackie's $8,000 total bill, and Jackie pays the $6,000 balance of her bill from University X with a combination of her student loan and her savings. 2010 tax software free download Jackie does not report any portion of the scholarship as income on her tax return. 2010 tax software free download In figuring the tuition and fees deduction, Jackie must reduce her qualified education expenses by the amount of the scholarship ($2,000) because she excluded the entire scholarship from her income. 2010 tax software free download The student loan is not tax-free educational assistance, so she does not need to reduce her qualified expenses by any part of the loan proceeds. 2010 tax software free download Jackie is treated as having paid $1,000 in qualified education expenses ($3,000 tuition – $2,000 scholarship) in 2013. 2010 tax software free download Example 2. 2010 tax software free download The facts are the same as in Example 1, except that Jackie reports her entire scholarship as income on her tax return. 2010 tax software free download Because Jackie reported the entire $2,000 scholarship in her income, she does not need to reduce her qualified education expenses. 2010 tax software free download Jackie is treated as having paid $3,000 in qualified education expenses. 2010 tax software free download Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. 2010 tax software free download This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. 2010 tax software free download Sports, games, hobbies, and noncredit courses. 2010 tax software free download   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. 2010 tax software free download However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. 2010 tax software free download Comprehensive or bundled fees. 2010 tax software free download   Some eligible educational institutions combine all of their fees for an academic period into one amount. 2010 tax software free download If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. 2010 tax software free download The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T. 2010 tax software free download See Figuring the Deduction , later, for more information about Form 1098-T. 2010 tax software free download Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (as defined under Qualified Education Expenses , earlier). 2010 tax software free download Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. 2010 tax software free download For you to be able to deduct qualified education expenses for your dependent, you must claim an exemption for that individual. 2010 tax software free download You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c. 2010 tax software free download IF your dependent is an eligible student and you. 2010 tax software free download . 2010 tax software free download . 2010 tax software free download AND. 2010 tax software free download . 2010 tax software free download . 2010 tax software free download THEN. 2010 tax software free download . 2010 tax software free download . 2010 tax software free download claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. 2010 tax software free download Your dependent cannot take a deduction. 2010 tax software free download claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 2010 tax software free download do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. 2010 tax software free download do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. 2010 tax software free download Expenses paid by dependent. 2010 tax software free download   If your dependent pays qualified education expenses, no one can take a tuition and fees deduction for those expenses. 2010 tax software free download Neither you nor your dependent can deduct the expenses. 2010 tax software free download For purposes of the tuition and fees deduction, you are not treated as paying any expenses actually paid by a dependent for whom you or anyone other than the dependent can claim an exemption. 2010 tax software free download This rule applies even if you do not claim an exemption for your dependent on your tax return. 2010 tax software free download Expenses paid by you. 2010 tax software free download   If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring your tuition and fees deduction. 2010 tax software free download Expenses paid under divorce decree. 2010 tax software free download   Qualified education expenses paid directly to an eligible educational institution for a student under a court-approved divorce decree are treated as paid by the student. 2010 tax software free download Only the student would be eligible to take a tuition and fees deduction for that payment, and then only if no one else could claim an exemption for the student. 2010 tax software free download Expenses paid by others. 2010 tax software free download   Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. 2010 tax software free download In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. 2010 tax software free download If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. 2010 tax software free download If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. 2010 tax software free download If the student is your dependent, no one can deduct the payments. 2010 tax software free download Example. 2010 tax software free download In 2013, Ms. 2010 tax software free download Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. 2010 tax software free download For purposes of deducting tuition and fees, Dan is treated as receiving the money from his grandmother and, in turn, paying his own qualified education expenses. 2010 tax software free download If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. 2010 tax software free download If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. 2010 tax software free download Baker's payment. 2010 tax software free download Tuition reduction. 2010 tax software free download   When an eligible educational institution provides a reduction in tuition to an employee of the institution (or spouse or dependent child of an employee), the amount of the reduction may or may not be taxable. 2010 tax software free download If it is taxable, the employee is treated as receiving a payment of that amount and, in turn, paying it to the educational institution on behalf of the student. 2010 tax software free download For more information on tuition reductions, see Qualified Tuition Reduction , in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. 2010 tax software free download Figuring the Deduction The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. 2010 tax software free download See Effect of the Amount of Your Income on the Amount of Your Deduction , later. 2010 tax software free download Form 1098-T. 2010 tax software free download   To help you figure your tuition and fees deduction, the student should receive Form 1098-T (see Appendix A for a completed example of Form 1098-T). 2010 tax software free download Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. 2010 tax software free download An institution may choose to report either payments received (box 1), or amounts billed (box 2), for qualified education expenses. 2010 tax software free download However, the amount in boxes 1 and 2 of Form 1098-T might be different than what you paid. 2010 tax software free download When figuring the deduction, use only the amounts you paid in 2013 for qualified education expenses. 2010 tax software free download   In addition, Form 1098-T should give other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements or refunds, and whether the student was enrolled at least half-time or was a graduate student. 2010 tax software free download    The eligible educational institution may ask for a completed Form W-9S or similar statement to obtain the student's name, address, and taxpayer identification number. 2010 tax software free download Effect of the Amount of Your Income on the Amount of Your Deduction If your MAGI is not more than $65,000 ($130,000 if you are married filing jointly), your maximum tuition and fees deduction is $4,000. 2010 tax software free download If your MAGI is larger than $65,000 ($130,000 if you are married filing jointly), but is not more than $80,000 ($160,000 if you are married filing jointly), your maximum deduction is $2,000. 2010 tax software free download No tuition and fees deduction is allowed if your MAGI is larger than $80,000 ($160,000 if you are married filing jointly). 2010 tax software free download Modified adjusted gross income (MAGI). 2010 tax software free download   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for tuition and fees. 2010 tax software free download However, as discussed below, there may be other modifications. 2010 tax software free download MAGI when using Form 1040A. 2010 tax software free download   If you file Form 1040A, your MAGI is the AGI on line 22 of that form, figured without taking into account any amount on line 19 (tuition and fees deduction). 2010 tax software free download MAGI when using Form 1040. 2010 tax software free download   If you file Form 1040, your MAGI is the AGI on line 38 of that form, figured without taking into account any amount on line 34 (tuition and fees deduction) or line 35 (domestic production activities deduction), 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, and Exclusion of income by bona fide residents of Puerto Rico. 2010 tax software free download   Table 6-2 shows how the amount of your MAGI can affect your tuition and fees deduction. 2010 tax software free download   You can use Worksheet 6-1. 2010 tax software free download MAGI for the Tuition and Fees Deduction , later, to figure your MAGI. 2010 tax software free download Table 6-2. 2010 tax software free download Effect of MAGI on Maximum Tuition and Fees Deduction IF your filing status is. 2010 tax software free download . 2010 tax software free download . 2010 tax software free download AND your MAGI is. 2010 tax software free download . 2010 tax software free download . 2010 tax software free download THEN your maximum tuition and fees deduction is. 2010 tax software free download . 2010 tax software free download . 2010 tax software free download single,  head of household, or qualifying widow(er) not more than $65,000 $4,000. 2010 tax software free download more than $65,000  but not more than $80,000 $2,000. 2010 tax software free download more than $80,000 $0. 2010 tax software free download married filing joint return not more than $130,000 $4,000. 2010 tax software free download more than $130,000 but not more than $160,000 $2,000. 2010 tax software free download more than $160,000 $0. 2010 tax software free download Claiming the Deduction You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A. 2010 tax software free download Enter the deduction on Form 1040, line 34, or Form 1040A, line 19. 2010 tax software free download A filled-in Form 8917 is shown at the end of this chapter. 2010 tax software free download Illustrated Example Tim Pfister, a single taxpayer, enrolled full-time at a local college to earn a degree in engineering. 2010 tax software free download This is the first year of his postsecondary education. 2010 tax software free download During 2013, he paid $3,600 for his qualified 2013 tuition expense. 2010 tax software free download Both he and the college meet all of the requirements for the tuition and fees deduction. 2010 tax software free download Tim's total income (Form 1040, line 22) and MAGI are $26,000. 2010 tax software free download He figures his deduction of $3,600 as shown on Form 8917, later. 2010 tax software free download Worksheet 6-1. 2010 tax software free download MAGI for the Tuition and Fees Deduction Use this worksheet if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. 2010 tax software free download Before using this worksheet, you must complete Form 1040, lines 7 through 33, and figure any amount to be entered on the dotted line next to line 36. 2010 tax software free download 1. 2010 tax software free download Enter the amount from Form 1040, line 22   1. 2010 tax software free download         2. 2010 tax software free download Enter the total from Form 1040, lines 23 through 33   2. 2010 tax software free download               3. 2010 tax software free download Enter the total of any amounts entered on the dotted line next to Form 1040, line 36   3. 2010 tax software free download               4. 2010 tax software free download Add lines 2 and 3   4. 2010 tax software free download         5. 2010 tax software free download Subtract line 4 from line 1   5. 2010 tax software free download         6. 2010 tax software free download Enter your foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18)   6. 2010 tax software free download         7. 2010 tax software free download Enter your foreign housing deduction (Form 2555, line 50)   7. 2010 tax software free download         8. 2010 tax software free download Enter the amount of income from Puerto Rico you are excluding   8. 2010 tax software free download         9. 2010 tax software free download Enter the amount of income from American Samoa you are  excluding (Form 4563, line 15)   9. 2010 tax software free download         10. 2010 tax software free download Add lines 5 through 9. 2010 tax software free download This is your modified adjusted gross income   10. 2010 tax software free download     Note. 2010 tax software free download If the amount on line 10 is more than $80,000 ($160,000 if married filing jointly),  you cannot take the deduction for tuition and fees. 2010 tax software free download       This image is too large to be displayed in the current screen. 2010 tax software free download Please click the link to view the image. 2010 tax software free download Form 8917 for Tim Pfister Prev  Up  Next   Home   More Online Publications