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2011 1040 Tax Forms

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2011 1040 Tax Forms

2011 1040 tax forms 2. 2011 1040 tax forms   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. 2011 1040 tax forms You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. 2011 1040 tax forms This chapter discusses accounting methods. 2011 1040 tax forms For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. 2011 1040 tax forms Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. 2011 1040 tax forms Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. 2011 1040 tax forms Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. 2011 1040 tax forms A material item is one that affects the proper time for inclusion of income or allowance of a deduction. 2011 1040 tax forms An item considered material for financial statement purposes is generally also considered material for income tax purposes. 2011 1040 tax forms See Publication 538 for more information. 2011 1040 tax forms You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. 2011 1040 tax forms If you later want to change your accounting method, you generally must get IRS approval. 2011 1040 tax forms How to obtain IRS approval is discussed later under Changes in Methods of Accounting . 2011 1040 tax forms Types of accounting methods. 2011 1040 tax forms   Generally, you can use any of the following accounting methods. 2011 1040 tax forms Each method is discussed in detail below. 2011 1040 tax forms Cash method. 2011 1040 tax forms Accrual method. 2011 1040 tax forms Special methods of accounting for certain items of income and expenses. 2011 1040 tax forms Combination (hybrid) method using elements of two or more of the above. 2011 1040 tax forms Business and other items. 2011 1040 tax forms   You can account for business and personal items using different accounting methods. 2011 1040 tax forms For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. 2011 1040 tax forms Two or more businesses. 2011 1040 tax forms   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. 2011 1040 tax forms Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. 2011 1040 tax forms Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. 2011 1040 tax forms However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. 2011 1040 tax forms See Accrual Method Required , later. 2011 1040 tax forms Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. 2011 1040 tax forms Items of income include money received as well as property or services received. 2011 1040 tax forms If you receive property or services, you must include the fair market value (FMV) of the property or services in income. 2011 1040 tax forms See chapter 3 for information on how to report farm income on your income tax return. 2011 1040 tax forms Constructive receipt. 2011 1040 tax forms   Income is constructively received when an amount is credited to your account or made available to you without restriction. 2011 1040 tax forms You do not need to have possession of the income for it to be treated as income for the tax year. 2011 1040 tax forms If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. 2011 1040 tax forms Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. 2011 1040 tax forms Direct payments and counter-cyclical payments. 2011 1040 tax forms   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. 2011 1040 tax forms Delaying receipt of income. 2011 1040 tax forms   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. 2011 1040 tax forms You must report the income in the year the money or property is received or made available to you without restriction. 2011 1040 tax forms Example. 2011 1040 tax forms Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. 2011 1040 tax forms She was told in December that her payment was available. 2011 1040 tax forms She requested not to be paid until January 2014. 2011 1040 tax forms However, she must still include this payment in her 2013 income because it was made available to her in 2013. 2011 1040 tax forms Debts paid by another person or canceled. 2011 1040 tax forms   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. 2011 1040 tax forms If you receive income in this way, you constructively receive the income when the debt is canceled or paid. 2011 1040 tax forms See Cancellation of Debt in chapter 3. 2011 1040 tax forms Deferred payment contract. 2011 1040 tax forms   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. 2011 1040 tax forms However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. 2011 1040 tax forms Example. 2011 1040 tax forms You are a farmer who uses the cash method and a calendar tax year. 2011 1040 tax forms You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. 2011 1040 tax forms You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. 2011 1040 tax forms However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. 2011 1040 tax forms Repayment of income. 2011 1040 tax forms   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. 2011 1040 tax forms If the repayment is more than $3,000, a special rule applies. 2011 1040 tax forms For details, see Repayments in chapter 11 of Publication 535, Business Expenses. 2011 1040 tax forms Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. 2011 1040 tax forms This includes business expenses for which you contest liability. 2011 1040 tax forms However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. 2011 1040 tax forms See chapter 4 for information on how to deduct farm business expenses on your income tax return. 2011 1040 tax forms Prepayment. 2011 1040 tax forms   Generally, you cannot deduct expenses paid in advance. 2011 1040 tax forms This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 2011 1040 tax forms Example. 2011 1040 tax forms On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. 2011 1040 tax forms In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. 2011 1040 tax forms In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. 2011 1040 tax forms An exception applies if the expense qualifies for the 12-month rule. 2011 1040 tax forms See Publication 538 for more information and examples. 2011 1040 tax forms See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. 2011 1040 tax forms Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. 2011 1040 tax forms The purpose of an accrual method of accounting is to correctly match income and expenses. 2011 1040 tax forms Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. 2011 1040 tax forms See Accrual Method Required and Farm Inventory , later. 2011 1040 tax forms Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. 2011 1040 tax forms Under this rule, include an amount in income on the earliest of the following dates. 2011 1040 tax forms When you receive payment. 2011 1040 tax forms When the income amount is due to you. 2011 1040 tax forms When you earn the income. 2011 1040 tax forms When title passes. 2011 1040 tax forms If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. 2011 1040 tax forms Inventory. 2011 1040 tax forms   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. 2011 1040 tax forms An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. 2011 1040 tax forms See Publication 538 for more information. 2011 1040 tax forms Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. 2011 1040 tax forms Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. 2011 1040 tax forms The all-events test has been met. 2011 1040 tax forms This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. 2011 1040 tax forms Economic performance has occurred. 2011 1040 tax forms Economic performance. 2011 1040 tax forms   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. 2011 1040 tax forms If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. 2011 1040 tax forms If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. 2011 1040 tax forms Example. 2011 1040 tax forms Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. 2011 1040 tax forms She entered into a contract with ABC Farm Consulting in 2012. 2011 1040 tax forms The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. 2011 1040 tax forms It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. 2011 1040 tax forms Jane paid ABC Farm Consulting $2,000 in December 2012. 2011 1040 tax forms Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. 2011 1040 tax forms Economic performance for Jane's liability in the contract occurs as the services are provided. 2011 1040 tax forms Jane incurs the $2,000 cost in 2013. 2011 1040 tax forms An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. 2011 1040 tax forms For more information, see Economic Performance in Publication 538. 2011 1040 tax forms Special rule for related persons. 2011 1040 tax forms   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. 2011 1040 tax forms Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. 2011 1040 tax forms For more information, see Internal Revenue Code section 267. 2011 1040 tax forms Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. 2011 1040 tax forms A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. 2011 1040 tax forms A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. 2011 1040 tax forms A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. 2011 1040 tax forms A tax shelter. 2011 1040 tax forms Note. 2011 1040 tax forms Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). 2011 1040 tax forms Family corporation. 2011 1040 tax forms   A family corporation is generally a corporation that meets one of the following ownership requirements. 2011 1040 tax forms Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. 2011 1040 tax forms Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. 2011 1040 tax forms Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. 2011 1040 tax forms For more information on family corporations, see Internal Revenue Code section 447. 2011 1040 tax forms Tax shelter. 2011 1040 tax forms   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. 2011 1040 tax forms Its principal purpose is the avoidance or evasion of federal income tax. 2011 1040 tax forms It is a farming syndicate. 2011 1040 tax forms A farming syndicate is an entity that meets either of the following tests. 2011 1040 tax forms Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. 2011 1040 tax forms More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. 2011 1040 tax forms   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. 2011 1040 tax forms   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. 2011 1040 tax forms Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. 2011 1040 tax forms This record should show the actual count or measurement of the inventory. 2011 1040 tax forms It should also show all factors that enter into its valuation, including quality and weight, if applicable. 2011 1040 tax forms Hatchery business. 2011 1040 tax forms   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. 2011 1040 tax forms Products held for sale. 2011 1040 tax forms   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. 2011 1040 tax forms , must be included in inventory. 2011 1040 tax forms Supplies. 2011 1040 tax forms   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. 2011 1040 tax forms Deduct the cost of supplies in the year used or consumed in operations. 2011 1040 tax forms Do not include incidental supplies in inventory as these are deductible in the year of purchase. 2011 1040 tax forms Livestock. 2011 1040 tax forms   Livestock held primarily for sale must be included in inventory. 2011 1040 tax forms Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. 2011 1040 tax forms See also Unit-livestock-price method , later. 2011 1040 tax forms If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. 2011 1040 tax forms Growing crops. 2011 1040 tax forms   Generally, growing crops are not required to be included in inventory. 2011 1040 tax forms However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. 2011 1040 tax forms See Uniform capitalization rules below. 2011 1040 tax forms Also see Uniform Capitalization Rules in  chapter 6. 2011 1040 tax forms Items to include in inventory. 2011 1040 tax forms   Your inventory should include all items held for sale, or for use as feed, seed, etc. 2011 1040 tax forms , whether raised or purchased, that are unsold at the end of the year. 2011 1040 tax forms Uniform capitalization rules. 2011 1040 tax forms   The following applies if you are required to use an accrual method of accounting. 2011 1040 tax forms The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. 2011 1040 tax forms The costs of animals are subject to the uniform capitalization rules. 2011 1040 tax forms Inventory valuation methods. 2011 1040 tax forms   The following methods, described below, are those generally available for valuing inventory. 2011 1040 tax forms The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. 2011 1040 tax forms Cost. 2011 1040 tax forms Lower of cost or market. 2011 1040 tax forms Farm-price method. 2011 1040 tax forms Unit-livestock-price method. 2011 1040 tax forms Cost and lower of cost or market methods. 2011 1040 tax forms   See Publication 538 for information on these valuation methods. 2011 1040 tax forms If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. 2011 1040 tax forms However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. 2011 1040 tax forms Farm-price method. 2011 1040 tax forms   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. 2011 1040 tax forms Market price is the current price at the nearest market in the quantities you usually sell. 2011 1040 tax forms Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. 2011 1040 tax forms If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. 2011 1040 tax forms Unit-livestock-price method. 2011 1040 tax forms   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. 2011 1040 tax forms You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. 2011 1040 tax forms The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. 2011 1040 tax forms Unit prices and classifications are subject to approval by the IRS on examination of your return. 2011 1040 tax forms You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. 2011 1040 tax forms IRS approval is not required for these adjustments. 2011 1040 tax forms Any other changes in unit prices or classifications do require IRS approval. 2011 1040 tax forms   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. 2011 1040 tax forms This method accounts only for the increase in cost of raising an animal to maturity. 2011 1040 tax forms It does not provide for any decrease in the animal's market value after it reaches maturity. 2011 1040 tax forms Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. 2011 1040 tax forms   Do not include sold or lost animals in the year-end inventory. 2011 1040 tax forms If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. 2011 1040 tax forms The animals on hand at the end of the year are considered those most recently acquired. 2011 1040 tax forms   You must include in inventory all livestock purchased primarily for sale. 2011 1040 tax forms You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. 2011 1040 tax forms However, you must be consistent from year to year, regardless of the method you have chosen. 2011 1040 tax forms You cannot change your method without obtaining approval from the IRS. 2011 1040 tax forms   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. 2011 1040 tax forms If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. 2011 1040 tax forms However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. 2011 1040 tax forms This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. 2011 1040 tax forms It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. 2011 1040 tax forms Uniform capitalization rules. 2011 1040 tax forms   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. 2011 1040 tax forms This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. 2011 1040 tax forms Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. 2011 1040 tax forms Example 1. 2011 1040 tax forms You are a farmer who uses an accrual method of accounting. 2011 1040 tax forms You keep your books on the calendar year basis. 2011 1040 tax forms You sell grain in December 2013 but you are not paid until January 2014. 2011 1040 tax forms Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. 2011 1040 tax forms Example 2. 2011 1040 tax forms Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. 2011 1040 tax forms Under this method, you include the sales proceeds in income for 2014, the year you receive payment. 2011 1040 tax forms Deduct the costs of producing the grain in the year you pay for them. 2011 1040 tax forms Special Methods of Accounting There are special methods of accounting for certain items of income and expense. 2011 1040 tax forms Crop method. 2011 1040 tax forms   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. 2011 1040 tax forms You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. 2011 1040 tax forms Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. 2011 1040 tax forms    See chapter 4 for details on deducting the costs of operating a farm. 2011 1040 tax forms Also see Regulations section 1. 2011 1040 tax forms 162-12. 2011 1040 tax forms Other special methods. 2011 1040 tax forms   Other special methods of accounting apply to the following items. 2011 1040 tax forms Amortization, see chapter 7. 2011 1040 tax forms Casualties, see chapter 11. 2011 1040 tax forms Condemnations, see chapter 11. 2011 1040 tax forms Depletion, see chapter 7. 2011 1040 tax forms Depreciation, see chapter 7. 2011 1040 tax forms Farm business expenses, see chapter 4. 2011 1040 tax forms Farm income, see chapter 3. 2011 1040 tax forms Installment sales, see chapter 10. 2011 1040 tax forms Soil and water conservation expenses, see chapter 5. 2011 1040 tax forms Thefts, see chapter 11. 2011 1040 tax forms Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. 2011 1040 tax forms However, the following restrictions apply. 2011 1040 tax forms If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. 2011 1040 tax forms If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. 2011 1040 tax forms Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). 2011 1040 tax forms Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. 2011 1040 tax forms You may also have to pay a fee. 2011 1040 tax forms To obtain approval, you must generally file Form 3115. 2011 1040 tax forms There are instances when you can obtain automatic consent to change certain methods of accounting. 2011 1040 tax forms See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. 2011 1040 tax forms For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. 2011 1040 tax forms Also see Publication 538. 2011 1040 tax forms Prev  Up  Next   Home   More Online Publications
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Contact My Local Office in New Hampshire

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Manchester  1000 Elm St. 9th Floor
Manchester, NH 03101 

Monday-Friday - 8:30 a.m. - 4:30 p.m.

 

Services Provided

(603) 668-6763 
Nashua  410 Amherst St.
Nashua, NH 03063 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(603) 594-8370 
Portsmouth  80 Daniel St.
Portsmouth, NH 03801 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)
 

Services Provided

(603) 430-9598 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses). 

For information on where to file your tax return please see Where to File Addresses

The Taxpayer Advocate Service: Call (603)433-0571 in Portsmouth or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
1000 Elm St., Suite 900
Manchester, NH  03101

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The 2011 1040 Tax Forms

2011 1040 tax forms 5. 2011 1040 tax forms   Taxes Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: When To Deduct Taxes Real Estate TaxesSeparate elections. 2011 1040 tax forms Making the election. 2011 1040 tax forms Form 3115. 2011 1040 tax forms Income TaxesAccrual of contested income taxes. 2011 1040 tax forms Employment Taxes Other TaxesAdditional Medicare Tax. 2011 1040 tax forms What's New Additional Medicare Tax. 2011 1040 tax forms  Beginning in 2013, you must withhold a 0. 2011 1040 tax forms 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. 2011 1040 tax forms Also, self-employed individuals may be required to pay Additional Medicare Tax on self-employment income. 2011 1040 tax forms See Employment Taxes , and Self-employment tax , later. 2011 1040 tax forms Introduction You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. 2011 1040 tax forms You cannot deduct federal income taxes, estate and gift taxes, or state inheritance, legacy, and succession taxes. 2011 1040 tax forms Topics - This chapter discusses: When to deduct taxes Real estate taxes Income taxes Employment taxes Other taxes Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 510 Excise Taxes 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch SE (Form 1040) Self-Employment Tax 3115 Application for Change in Accounting Method 8959 Additional Medicare Tax See chapter 12 for information about getting publications and forms. 2011 1040 tax forms When To Deduct Taxes Generally, you can only deduct taxes in the year you pay them. 2011 1040 tax forms This applies whether you use the cash method or an accrual method of accounting. 2011 1040 tax forms Under an accrual method, you can deduct a tax before you pay it if you meet the exception for recurring items discussed under Economic Performance in Publication 538. 2011 1040 tax forms You can also elect to ratably accrue real estate taxes as discussed later under Real Estate Taxes . 2011 1040 tax forms Limit on accrual of taxes. 2011 1040 tax forms   A taxing jurisdiction can require the use of a date for accruing taxes that is earlier than the date it originally required. 2011 1040 tax forms However, if you use an accrual method, and can deduct the tax before you pay it, use the original accrual date for the year of change and all future years to determine when you can deduct the tax. 2011 1040 tax forms Example. 2011 1040 tax forms Your state imposes a tax on personal property used in a trade or business conducted in the state. 2011 1040 tax forms This tax is assessed and becomes a lien as of July 1 (accrual date). 2011 1040 tax forms In 2013, the state changed the assessment and lien dates from July 1, 2014, to December 31, 2013, for property tax year 2014. 2011 1040 tax forms Use the original accrual date (July 1, 2014) to determine when you can deduct the tax. 2011 1040 tax forms You must also use the July 1 accrual date for all future years to determine when you can deduct the tax. 2011 1040 tax forms Uniform capitalization rules. 2011 1040 tax forms   Uniform capitalization rules apply to certain taxpayers who produce real property or tangible personal property for use in a trade or business or for sale to customers. 2011 1040 tax forms They also apply to certain taxpayers who acquire property for resale. 2011 1040 tax forms Under these rules, you either include certain costs in inventory or capitalize certain expenses related to the property, such as taxes. 2011 1040 tax forms For more information, see chapter 1. 2011 1040 tax forms Carrying charges. 2011 1040 tax forms   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. 2011 1040 tax forms You can elect to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. 2011 1040 tax forms For more information, see chapter 7. 2011 1040 tax forms Refunds of taxes. 2011 1040 tax forms   If you receive a refund for any taxes you deducted in an earlier year, include the refund in income to the extent the deduction reduced your federal income tax in the earlier year. 2011 1040 tax forms For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1. 2011 1040 tax forms    You must include in income any interest you receive on tax refunds. 2011 1040 tax forms Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. 2011 1040 tax forms The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. 2011 1040 tax forms Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. 2011 1040 tax forms See Taxes for local benefits , later. 2011 1040 tax forms If you use an accrual method, you generally cannot accrue real estate taxes until you pay them to the government authority. 2011 1040 tax forms However, you can elect to ratably accrue the taxes during the year. 2011 1040 tax forms See Electing to ratably accrue , later. 2011 1040 tax forms Taxes for local benefits. 2011 1040 tax forms   Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. 2011 1040 tax forms These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. 2011 1040 tax forms You should increase the basis of your property by the amount of the assessment. 2011 1040 tax forms   You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. 2011 1040 tax forms If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax. 2011 1040 tax forms Example. 2011 1040 tax forms To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. 2011 1040 tax forms The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. 2011 1040 tax forms The city is paying the principal and interest with the annual payments made by the property owners. 2011 1040 tax forms The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. 2011 1040 tax forms The part of the payments used to pay the interest charges on the bonds is deductible as taxes. 2011 1040 tax forms Charges for services. 2011 1040 tax forms   Water bills, sewerage, and other service charges assessed against your business property are not real estate taxes, but are deductible as business expenses. 2011 1040 tax forms Purchase or sale of real estate. 2011 1040 tax forms   If real estate is sold, the real estate taxes must be allocated between the buyer and the seller. 2011 1040 tax forms   The buyer and seller must allocate the real estate taxes according to the number of days in the real property tax year (the period to which the tax imposed relates) that each owned the property. 2011 1040 tax forms Treat the seller as paying the taxes up to but not including the date of sale. 2011 1040 tax forms Treat the buyer as paying the taxes beginning with the date of sale. 2011 1040 tax forms You can usually find this information on the settlement statement you received at closing. 2011 1040 tax forms   If you (the seller) use an accrual method and have not elected to ratably accrue real estate taxes, you are considered to have accrued your part of the tax on the date you sell the property. 2011 1040 tax forms Example. 2011 1040 tax forms Alberto Verde, a calendar year accrual method taxpayer, owns real estate in Olmo County. 2011 1040 tax forms He has not elected to ratably accrue property taxes. 2011 1040 tax forms November 30 of each year is the assessment and lien date for the current real property tax year, which is the calendar year. 2011 1040 tax forms He sold the property on June 30, 2013. 2011 1040 tax forms Under his accounting method he would not be able to claim a deduction for the taxes because the sale occurred before November 30. 2011 1040 tax forms He is treated as having accrued his part of the tax, 181/366  (January 1–June 29), on June 30, and he can deduct it for 2013. 2011 1040 tax forms Electing to ratably accrue. 2011 1040 tax forms   If you use an accrual method, you can elect to accrue real estate tax related to a definite period ratably over that period. 2011 1040 tax forms Example. 2011 1040 tax forms Juan Sanchez is a calendar year taxpayer who uses an accrual method. 2011 1040 tax forms His real estate taxes for the real property tax year, July 1, 2013, to June 30, 2014, are $1,200. 2011 1040 tax forms July 1 is the assessment and lien date. 2011 1040 tax forms If Juan elects to ratably accrue the taxes, $600 will accrue in 2013 ($1,200 × 6/12, July 1–December 31) and the balance will accrue in 2014. 2011 1040 tax forms Separate elections. 2011 1040 tax forms   You can elect to ratably accrue the taxes for each separate trade or business and for nonbusiness activities if you account for them separately. 2011 1040 tax forms Once you elect to ratably accrue real estate taxes, you must use that method unless you get permission from the IRS to change. 2011 1040 tax forms See Form 3115 , later. 2011 1040 tax forms Making the election. 2011 1040 tax forms   If you elect to ratably accrue the taxes for the first year in which you incur real estate taxes, attach a statement to your income tax return for that year. 2011 1040 tax forms The statement should show all the following items. 2011 1040 tax forms The trades or businesses to which the election applies and the accounting method or methods used. 2011 1040 tax forms The period to which the taxes relate. 2011 1040 tax forms The computation of the real estate tax deduction for that first year. 2011 1040 tax forms   Generally, you must file your return by the due date (including extensions). 2011 1040 tax forms However, if you timely filed your return for the year without electing to ratably accrue, you can still make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). 2011 1040 tax forms Attach the statement to the amended return and write “Filed pursuant to section 301. 2011 1040 tax forms 9100-2” on the statement. 2011 1040 tax forms File the amended return at the same address where you filed the original return. 2011 1040 tax forms Form 3115. 2011 1040 tax forms    If you elect to ratably accrue real estate taxes for a year after the first year in which you incur real estate taxes, or if you want to revoke your election to ratably accrue real estate taxes, file Form 3115. 2011 1040 tax forms For more information, including applicable time frames for filing, see the Instructions for Form 3115. 2011 1040 tax forms Note. 2011 1040 tax forms If you are filing an application for a change in accounting method filed after January 9, 2011, for a year of change ending after April 29, 2010, see Revenue Procedure 2011-14, 2011-4 I. 2011 1040 tax forms R. 2011 1040 tax forms B. 2011 1040 tax forms 330, as modified and clarified by Revenue Procedure 2012-19, 2012-14 I. 2011 1040 tax forms R. 2011 1040 tax forms B. 2011 1040 tax forms 689, and Revenue Procedure 2012-20, 2012-14 I. 2011 1040 tax forms R. 2011 1040 tax forms B. 2011 1040 tax forms 700, or any successor. 2011 1040 tax forms Revenue Procedure 2011-14 is available at  www. 2011 1040 tax forms irs. 2011 1040 tax forms gov/irb/2011-04IRB/ar08. 2011 1040 tax forms html. 2011 1040 tax forms Income Taxes This section discusses federal, state, local, and foreign income taxes. 2011 1040 tax forms Federal income taxes. 2011 1040 tax forms   You cannot deduct federal income taxes. 2011 1040 tax forms State and local income taxes. 2011 1040 tax forms   A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. 2011 1040 tax forms An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). 2011 1040 tax forms   However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense. 2011 1040 tax forms Accrual of contested income taxes. 2011 1040 tax forms   If you use an accrual method, and you contest a state or local income tax liability, you must accrue and deduct any contested amount in the tax year in which the liability is finally determined. 2011 1040 tax forms   If additional state or local income taxes for a prior year are assessed in a later year, you can deduct the taxes in the year in which they were originally imposed (the prior year) if the tax liability is not contested. 2011 1040 tax forms You cannot deduct them in the year in which the liability is finally determined. 2011 1040 tax forms    The filing of an income tax return is not considered a contest and, in the absence of an overt act of protest, you can deduct the tax in the prior year. 2011 1040 tax forms Also, you can deduct any additional taxes in the prior year if you do not show some affirmative evidence of denial of the liability. 2011 1040 tax forms   However, if you consistently deduct additional assessments in the year they are paid or finally determined (including those for which there was no contest), you must continue to do so. 2011 1040 tax forms You cannot take a deduction in the earlier year unless you receive permission to change your method of accounting. 2011 1040 tax forms For more information on accounting methods, see When Can I Deduct an Expense in chapter 1. 2011 1040 tax forms Foreign income taxes. 2011 1040 tax forms   Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. 2011 1040 tax forms S. 2011 1040 tax forms possession. 2011 1040 tax forms However, an individual cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. 2011 1040 tax forms S. 2011 1040 tax forms tax under the foreign earned income exclusion or the foreign housing exclusion. 2011 1040 tax forms For information on these exclusions, see Publication 54, Tax Guide for U. 2011 1040 tax forms S. 2011 1040 tax forms Citizens and Resident Aliens Abroad. 2011 1040 tax forms For information on the foreign tax credit, see Publication 514, Foreign Tax Credit for Individuals. 2011 1040 tax forms Employment Taxes If you have employees, you must withhold various taxes from your employees' pay. 2011 1040 tax forms Most employers must withhold their employees' share of social security, Medicare taxes, and Additional Medicare Tax (if applicable) along with state and federal income taxes. 2011 1040 tax forms You may also need to pay certain employment taxes from your own funds. 2011 1040 tax forms These include your share of social security and Medicare taxes as an employer, along with unemployment taxes. 2011 1040 tax forms Note. 2011 1040 tax forms Additional Medicare Tax is only imposed on the employee. 2011 1040 tax forms There is no employer share of Additional Medicare Tax. 2011 1040 tax forms Your deduction for wages paid is not reduced by the social security and Medicare taxes, Additional Medicare Tax, and income taxes you withhold from your employees. 2011 1040 tax forms You can deduct the employment taxes you must pay from your own funds as taxes. 2011 1040 tax forms Example. 2011 1040 tax forms You pay your employee $18,000 a year. 2011 1040 tax forms However, after you withhold various taxes, your employee receives $14,500. 2011 1040 tax forms You also pay an additional $1,500 in employment taxes. 2011 1040 tax forms You should deduct the full $18,000 as wages. 2011 1040 tax forms You can deduct the $1,500 you pay from your own funds as taxes. 2011 1040 tax forms For more information on employment taxes, see Publication 15 (Circular E). 2011 1040 tax forms Unemployment fund taxes. 2011 1040 tax forms   As an employer, you may have to make payments to a state unemployment compensation fund or to a state disability benefit fund. 2011 1040 tax forms Deduct these payments as taxes. 2011 1040 tax forms Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. 2011 1040 tax forms Excise taxes. 2011 1040 tax forms   Generally, you can deduct as a business expense all excise taxes that are ordinary and necessary expenses of carrying on your trade or business. 2011 1040 tax forms However, see Fuel taxes , later. 2011 1040 tax forms   For more information on excise taxes, see Publication 510. 2011 1040 tax forms Franchise taxes. 2011 1040 tax forms   You can deduct corporate franchise taxes as a business expense. 2011 1040 tax forms Fuel taxes. 2011 1040 tax forms   Generally, taxes on gasoline, diesel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. 2011 1040 tax forms Do not deduct these taxes as a separate item. 2011 1040 tax forms   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. 2011 1040 tax forms For more information, see Publication 510. 2011 1040 tax forms Occupational taxes. 2011 1040 tax forms   You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. 2011 1040 tax forms Personal property tax. 2011 1040 tax forms   You can deduct any tax imposed by a state or local government on personal property used in your trade or business. 2011 1040 tax forms Sales tax. 2011 1040 tax forms   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. 2011 1040 tax forms If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. 2011 1040 tax forms If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. 2011 1040 tax forms If the property is depreciable, add the sales tax to the basis for depreciation. 2011 1040 tax forms For more information on basis, see Publication 551. 2011 1040 tax forms    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. 2011 1040 tax forms Also, do not include these taxes in gross receipts or sales. 2011 1040 tax forms Self-employment tax. 2011 1040 tax forms   You can deduct part of your self-employment tax as a business expense in figuring your adjusted gross income. 2011 1040 tax forms This deduction only affects your income tax. 2011 1040 tax forms It does not affect your net earnings from self-employment or your self-employment tax. 2011 1040 tax forms   To deduct the tax, enter on Form 1040, line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). 2011 1040 tax forms   For more information on self-employment tax, see Publication 334. 2011 1040 tax forms Additional Medicare Tax. 2011 1040 tax forms   Beginning in 2013, you may be required to pay Additional Medicare Tax on self-employment income. 2011 1040 tax forms See Form 8959 and the Instructions for Form 8959 for more information on the Additional Medicare Tax. 2011 1040 tax forms Prev  Up  Next   Home   More Online Publications