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2012 Form 1040a

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2012 Form 1040a

2012 form 1040a 2. 2012 form 1040a   Filing Status Table of Contents What's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. 2012 form 1040a Divorce and remarriage. 2012 form 1040a Annulled marriages. 2012 form 1040a Head of household or qualifying widow(er) with dependent child. 2012 form 1040a Considered married. 2012 form 1040a Same-sex marriage. 2012 form 1040a Spouse died during the year. 2012 form 1040a Married persons living apart. 2012 form 1040a Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child What's New Filing status for same-sex married couples. 2012 form 1040a  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. 2012 form 1040a See Same-sex marriage under Marital Status, later. 2012 form 1040a Introduction This chapter helps you determine which filing status to use. 2012 form 1040a There are five filing statuses. 2012 form 1040a Single. 2012 form 1040a Married Filing Jointly. 2012 form 1040a Married Filing Separately. 2012 form 1040a Head of Household. 2012 form 1040a Qualifying Widow(er) With Dependent Child. 2012 form 1040a If more than one filing status applies to you, choose the one that will give you the lowest tax. 2012 form 1040a You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 20), and your tax (chapter 30). 2012 form 1040a You also use your filing status to determine whether you are eligible to claim certain deductions and credits. 2012 form 1040a Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 519 U. 2012 form 1040a S. 2012 form 1040a Tax Guide for Aliens 555 Community Property Marital Status In general, your filing status depends on whether you are considered unmarried or married. 2012 form 1040a Unmarried persons. 2012 form 1040a   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. 2012 form 1040a State law governs whether you are married or legally separated under a divorce or separate maintenance decree. 2012 form 1040a Divorced persons. 2012 form 1040a   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. 2012 form 1040a Divorce and remarriage. 2012 form 1040a   If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. 2012 form 1040a Annulled marriages. 2012 form 1040a    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. 2012 form 1040a You must file Form 1040X, Amended U. 2012 form 1040a S. 2012 form 1040a Individual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and are not closed by the statute of limitations for filing a tax return. 2012 form 1040a Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. 2012 form 1040a If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). 2012 form 1040a However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. 2012 form 1040a Head of household or qualifying widow(er) with dependent child. 2012 form 1040a   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. 2012 form 1040a See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. 2012 form 1040a Married persons. 2012 form 1040a   If you are considered married, you and your spouse can file a joint return or separate returns. 2012 form 1040a Considered married. 2012 form 1040a   You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. 2012 form 1040a You are married and living together as a married couple. 2012 form 1040a You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. 2012 form 1040a You are married and living apart, but not legally separated under a decree of divorce or separate maintenance. 2012 form 1040a You are separated under an interlocutory (not final) decree of divorce. 2012 form 1040a Same-sex marriage. 2012 form 1040a   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. 2012 form 1040a The term “spouse” includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. 2012 form 1040a However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. 2012 form 1040a For more details, see Publication 501. 2012 form 1040a Spouse died during the year. 2012 form 1040a   If your spouse died during the year, you are considered married for the whole year for filing status purposes. 2012 form 1040a   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. 2012 form 1040a For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . 2012 form 1040a   If you remarried before the end of the tax year, you can file a joint return with your new spouse. 2012 form 1040a Your deceased spouse's filing status is married filing separately for that year. 2012 form 1040a Married persons living apart. 2012 form 1040a   If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. 2012 form 1040a If you qualify to file as head of household instead of married filing separately, your standard deduction will be higher. 2012 form 1040a Also, your tax may be lower, and you may be able to claim the earned income credit. 2012 form 1040a See Head of Household , later. 2012 form 1040a Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. 2012 form 1040a To determine your marital status, see Marital Status , earlier. 2012 form 1040a Widow(er). 2012 form 1040a   Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. 2012 form 1040a You may, however, be able to use another filing status that will give you a lower tax. 2012 form 1040a See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. 2012 form 1040a How to file. 2012 form 1040a   You can file Form 1040. 2012 form 1040a If you have taxable income of less than $100,000, you may be able to file Form 1040A. 2012 form 1040a If, in addition, you have no dependents, and are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. 2012 form 1040a If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. 2012 form 1040a Use the Single column of the Tax Table or Section A of the Tax Computation Worksheet to figure your tax. 2012 form 1040a Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. 2012 form 1040a On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. 2012 form 1040a You can file a joint return even if one of you had no income or deductions. 2012 form 1040a If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. 2012 form 1040a Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. 2012 form 1040a If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). 2012 form 1040a You can choose the method that gives the two of you the lower combined tax. 2012 form 1040a How to file. 2012 form 1040a   If you file as married filing jointly, you can use Form 1040. 2012 form 1040a If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. 2012 form 1040a If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. 2012 form 1040a If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. 2012 form 1040a Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. 2012 form 1040a Spouse died. 2012 form 1040a   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. 2012 form 1040a See Spouse died during the year under Marital Status, earlier, for more information. 2012 form 1040a   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. 2012 form 1040a Divorced persons. 2012 form 1040a   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. 2012 form 1040a Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. 2012 form 1040a Accounting period. 2012 form 1040a   Both of you must use the same accounting period, but you can use different accounting methods. 2012 form 1040a See Accounting Periods and Accounting Methods in chapter 1. 2012 form 1040a Joint responsibility. 2012 form 1040a   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. 2012 form 1040a This means that if one spouse does not pay the tax due, the other may have to. 2012 form 1040a Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. 2012 form 1040a One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. 2012 form 1040a You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. 2012 form 1040a Divorced taxpayer. 2012 form 1040a   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. 2012 form 1040a This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. 2012 form 1040a Relief from joint responsibility. 2012 form 1040a   In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. 2012 form 1040a You can ask for relief no matter how small the liability. 2012 form 1040a   There are three types of relief available. 2012 form 1040a Innocent spouse relief. 2012 form 1040a Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or have not lived together for the 12 months ending on the date the election for this relief is filed). 2012 form 1040a Equitable relief. 2012 form 1040a    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. 2012 form 1040a Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. 2012 form 1040a Signing a joint return. 2012 form 1040a   For a return to be considered a joint return, both spouses generally must sign the return. 2012 form 1040a Spouse died before signing. 2012 form 1040a   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. 2012 form 1040a If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. 2012 form 1040a Spouse away from home. 2012 form 1040a   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time. 2012 form 1040a Injury or disease prevents signing. 2012 form 1040a   If your spouse cannot sign because of disease or injury and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). 2012 form 1040a ” Be sure to also sign in the space provided for your signature. 2012 form 1040a Attach a dated statement, signed by you, to the return. 2012 form 1040a The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. 2012 form 1040a Signing as guardian of spouse. 2012 form 1040a   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. 2012 form 1040a Spouse in combat zone. 2012 form 1040a   You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. 2012 form 1040a Attach a signed statement to your return explaining that your spouse is serving in a combat zone. 2012 form 1040a For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. 2012 form 1040a Other reasons spouse cannot sign. 2012 form 1040a    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). 2012 form 1040a Attach the power of attorney (or a copy of it) to your tax return. 2012 form 1040a You can use Form 2848, Power of Attorney and Declaration of Representative. 2012 form 1040a Nonresident alien or dual-status alien. 2012 form 1040a   Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. 2012 form 1040a However, if one spouse was a nonresident alien or dual-status alien who was married to a U. 2012 form 1040a S. 2012 form 1040a citizen or resident alien at the end of the year, the spouses can choose to file a joint return. 2012 form 1040a If you do file a joint return, you and your spouse are both treated as U. 2012 form 1040a S. 2012 form 1040a residents for the entire tax year. 2012 form 1040a See chapter 1 of Publication 519. 2012 form 1040a Married Filing Separately You can choose married filing separately as your filing status if you are married. 2012 form 1040a This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. 2012 form 1040a If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. 2012 form 1040a You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). 2012 form 1040a This can apply to you even if you are not divorced or legally separated. 2012 form 1040a If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. 2012 form 1040a The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. 2012 form 1040a See Head of Household , later, for more information. 2012 form 1040a You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. 2012 form 1040a However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). 2012 form 1040a This way you can make sure you are using the filing status that results in the lowest combined tax. 2012 form 1040a When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. 2012 form 1040a How to file. 2012 form 1040a   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. 2012 form 1040a You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. 2012 form 1040a You can file Form 1040. 2012 form 1040a If your taxable income is less than $100,000, you may be able to file Form 1040A. 2012 form 1040a Select this filing status by checking the box on line 3 of either form. 2012 form 1040a Enter your spouse's full name and SSN or ITIN in the spaces provided. 2012 form 1040a If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. 2012 form 1040a Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. 2012 form 1040a Special Rules If you choose married filing separately as your filing status, the following special rules apply. 2012 form 1040a Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. 2012 form 1040a   Your tax rate generally is higher than on a joint return. 2012 form 1040a Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. 2012 form 1040a You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). 2012 form 1040a If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. 2012 form 1040a For more information about these expenses, the credit, and the exclusion, see chapter 32. 2012 form 1040a You cannot take the earned income credit. 2012 form 1040a You cannot take the exclusion or credit for adoption expenses in most cases. 2012 form 1040a You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. 2012 form 1040a You cannot exclude any interest income from qualified U. 2012 form 1040a S. 2012 form 1040a savings bonds you used for higher education expenses. 2012 form 1040a If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. 2012 form 1040a The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. 2012 form 1040a Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). 2012 form 1040a If your spouse itemizes deductions, you cannot claim the standard deduction. 2012 form 1040a If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. 2012 form 1040a Adjusted gross income (AGI) limits. 2012 form 1040a   If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. 2012 form 1040a Individual retirement arrangements (IRAs). 2012 form 1040a   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. 2012 form 1040a Your deduction is reduced or eliminated if your income is more than a certain amount. 2012 form 1040a This amount is much lower for married individuals who file separately and lived together at any time during the year. 2012 form 1040a For more information, see How Much Can You Deduct in chapter 17. 2012 form 1040a Rental activity losses. 2012 form 1040a   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income, up to $25,000. 2012 form 1040a This is called a special allowance. 2012 form 1040a However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. 2012 form 1040a Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. 2012 form 1040a See Limits on Rental Losses in chapter 9. 2012 form 1040a Community property states. 2012 form 1040a   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. 2012 form 1040a See Publication 555. 2012 form 1040a Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. 2012 form 1040a You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. 2012 form 1040a This does not include any extensions. 2012 form 1040a A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. 2012 form 1040a Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. 2012 form 1040a Exception. 2012 form 1040a   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. 2012 form 1040a The personal representative has 1 year from the due date of the return (including extensions) to make the change. 2012 form 1040a See Publication 559, Survivors, Executors, and Administrators, for more information on filing a return for a decedent. 2012 form 1040a Head of Household You may be able to file as head of household if you meet all the following requirements. 2012 form 1040a You are unmarried or “considered unmarried” on the last day of the year. 2012 form 1040a See Marital Status , earlier, and Considered Unmarried , later. 2012 form 1040a You paid more than half the cost of keeping up a home for the year. 2012 form 1040a A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). 2012 form 1040a However, if the qualifying person is your dependent parent, he or she does not have to live with you. 2012 form 1040a See Special rule for parent , later, under Qualifying Person. 2012 form 1040a If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. 2012 form 1040a You will also receive a higher standard deduction than if you file as single or married filing separately. 2012 form 1040a Kidnapped child. 2012 form 1040a   A child may qualify you to file as head of household even if the child has been kidnapped. 2012 form 1040a For more information, see Publication 501. 2012 form 1040a How to file. 2012 form 1040a   If you file as head of household, you can use Form 1040. 2012 form 1040a If your taxable income is less than $100,000, you may be able to file Form 1040A. 2012 form 1040a Indicate your choice of this filing status by checking the box on line 4 of either form. 2012 form 1040a Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. 2012 form 1040a Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. 2012 form 1040a You are considered unmarried on the last day of the tax year if you meet all the following tests. 2012 form 1040a You file a separate return (defined earlier under Joint Return After Separate Returns ). 2012 form 1040a You paid more than half the cost of keeping up your home for the tax year. 2012 form 1040a Your spouse did not live in your home during the last 6 months of the tax year. 2012 form 1040a Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. 2012 form 1040a See Temporary absences , under Qualifying Person, later. 2012 form 1040a Your home was the main home of your child, stepchild, or foster child for more than half the year. 2012 form 1040a (See Home of qualifying person , under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year. 2012 form 1040a ) You must be able to claim an exemption for the child. 2012 form 1040a However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3, or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chapter 3. 2012 form 1040a The general rules for claiming an exemption for a dependent are explained under Exemptions for Dependents in chapter 3. 2012 form 1040a If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. 2012 form 1040a See Publication 555 for more information. 2012 form 1040a Nonresident alien spouse. 2012 form 1040a   You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. 2012 form 1040a However, your spouse is not a qualifying person for head of household purposes. 2012 form 1040a You must have another qualifying person and meet the other tests to be eligible to file as a head of household. 2012 form 1040a Choice to treat spouse as resident. 2012 form 1040a   You are considered married if you choose to treat your spouse as a resident alien. 2012 form 1040a See Publication 519. 2012 form 1040a Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. 2012 form 1040a You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2–1. 2012 form 1040a Worksheet 2-1. 2012 form 1040a Cost of Keeping Up a Home   Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $ Minus total amount you paid   () Amount others paid   $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. 2012 form 1040a Costs you include. 2012 form 1040a   Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. 2012 form 1040a   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. 2012 form 1040a However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. 2012 form 1040a Costs you do not include. 2012 form 1040a   Do not include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. 2012 form 1040a Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. 2012 form 1040a Qualifying Person See Table 2-1 to see who is a qualifying person. 2012 form 1040a Any person not described in Table 2-1 is not a qualifying person. 2012 form 1040a Table 2-1. 2012 form 1040a Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. 2012 form 1040a See the text of this chapter for the other requirements you must meet to claim head of household filing status. 2012 form 1040a IF the person is your . 2012 form 1040a . 2012 form 1040a . 2012 form 1040a   AND . 2012 form 1040a . 2012 form 1040a . 2012 form 1040a   THEN that person is . 2012 form 1040a . 2012 form 1040a . 2012 form 1040a qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. 2012 form 1040a   he or she is married and you can claim an exemption for him or her   a qualifying person. 2012 form 1040a   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. 2012 form 1040a 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. 2012 form 1040a 6   you cannot claim an exemption for him or her   not a qualifying person. 2012 form 1040a qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and you can claim an exemption for him or her5   a qualifying person. 2012 form 1040a   he or she did not live with you more than half the year   not a qualifying person. 2012 form 1040a   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. 2012 form 1040a   you cannot claim an exemption for him or her   not a qualifying person. 2012 form 1040a 1A person cannot qualify more than one taxpayer to use the head of household filing status for the year. 2012 form 1040a 2The term “qualifying child” is defined in chapter 3. 2012 form 1040a Note. 2012 form 1040a If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. 2012 form 1040a If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. 2012 form 1040a 3This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. 2012 form 1040a 4The term “ qualifying relative ” is defined in chapter 3. 2012 form 1040a 5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. 2012 form 1040a See Multiple Support Agreement in chapter 3. 2012 form 1040a 6See Special rule for parent . 2012 form 1040a Example 1—child. 2012 form 1040a Your unmarried son lived with you all year and was 18 years old at the end of the year. 2012 form 1040a He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. 2012 form 1040a As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for you to claim head of household filing status. 2012 form 1040a Example 2—child who is not qualifying person. 2012 form 1040a The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. 2012 form 1040a Because he does not meet the age test (explained under Qualifying Child in chapter 3), your son is not your qualifying child. 2012 form 1040a Because he does not meet the gross income test (explained later under Qualifying Relative in chapter 3), he is not your qualifying relative. 2012 form 1040a As a result, he is not your qualifying person for head of household purposes. 2012 form 1040a Example 3—girlfriend. 2012 form 1040a Your girlfriend lived with you all year. 2012 form 1040a Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3. 2012 form 1040a See Table 2-1. 2012 form 1040a Example 4—girlfriend's child. 2012 form 1040a The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. 2012 form 1040a He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test in chapter 3). 2012 form 1040a As a result, he is not your qualifying person for head of household purposes. 2012 form 1040a Home of qualifying person. 2012 form 1040a   Generally, the qualifying person must live with you for more than half of the year. 2012 form 1040a Special rule for parent. 2012 form 1040a   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. 2012 form 1040a However, you must be able to claim an exemption for your father or mother. 2012 form 1040a Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. 2012 form 1040a   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. 2012 form 1040a Death or birth. 2012 form 1040a   You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. 2012 form 1040a If the individual is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. 2012 form 1040a If the individual is anyone else, see Publication 501. 2012 form 1040a Temporary absences. 2012 form 1040a   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. 2012 form 1040a It must be reasonable to assume the absent person will return to the home after the temporary absence. 2012 form 1040a You must continue to keep up the home during the absence. 2012 form 1040a Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. 2012 form 1040a The year of death is the last year for which you can file jointly with your deceased spouse. 2012 form 1040a See Married Filing Jointly , earlier. 2012 form 1040a You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. 2012 form 1040a For example, if your spouse died in 2012, and you have not remarried, you may be able to use this filing status for 2013 and 2014. 2012 form 1040a This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). 2012 form 1040a It does not entitle you to file a joint return. 2012 form 1040a How to file. 2012 form 1040a   If you file as qualifying widow(er) with dependent child, you can use Form 1040. 2012 form 1040a If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. 2012 form 1040a Check the box on line 5 of either form. 2012 form 1040a Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. 2012 form 1040a Eligibility rules. 2012 form 1040a   You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all of the following tests. 2012 form 1040a You were entitled to file a joint return with your spouse for the year your spouse died. 2012 form 1040a It does not matter whether you actually filed a joint return. 2012 form 1040a Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. 2012 form 1040a You have a child or stepchild for whom you can claim an exemption. 2012 form 1040a This does not include a foster child. 2012 form 1040a This child lived in your home all year, except for temporary absences. 2012 form 1040a See Temporary absences , earlier, under Head of Household. 2012 form 1040a There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. 2012 form 1040a You paid more than half the cost of keeping up a home for the year. 2012 form 1040a See Keeping Up a Home , earlier, under Head of Household. 2012 form 1040a Example. 2012 form 1040a John's wife died in 2011. 2012 form 1040a John has not remarried. 2012 form 1040a During 2012 and 2013, he continued to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. 2012 form 1040a For 2011 he was entitled to file a joint return for himself and his deceased wife. 2012 form 1040a For 2012 and 2013, he can file as qualifying widower with a dependent child. 2012 form 1040a After 2013 he can file as head of household if he qualifies. 2012 form 1040a Death or birth. 2012 form 1040a    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. 2012 form 1040a You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. 2012 form 1040a Kidnapped child. 2012 form 1040a   A child may qualify you for qualifying widow(er) with dependent child, even if the child has been kidnapped. 2012 form 1040a See Publication 501. 2012 form 1040a    As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. 2012 form 1040a Prev  Up  Next   Home   More Online Publications
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HIRE Act: Questions and Answers for Employers

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

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Page Last Reviewed or Updated: 26-Dec-2013

The 2012 Form 1040a

2012 form 1040a 10. 2012 form 1040a   Business Bad Debts Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Definition of Business Bad DebtAccrual method. 2012 form 1040a Cash method. 2012 form 1040a Debt acquired from a decedent. 2012 form 1040a Liquidation. 2012 form 1040a Types of Business Bad Debts When a Debt Becomes Worthless How To Claim a Business Bad DebtSpecific Charge-Off Method Nonaccrual-Experience Method Recovery of a Bad DebtNet operating loss (NOL) carryover. 2012 form 1040a Introduction You have a bad debt if you cannot collect money owed to you. 2012 form 1040a A bad debt is either a business bad debt or a nonbusiness bad debt. 2012 form 1040a This chapter discusses only business bad debts. 2012 form 1040a Generally, a business bad debt is one that comes from operating your trade or business. 2012 form 1040a You can deduct business bad debts on Schedule C (Form 1040) or your applicable business income tax return. 2012 form 1040a All other bad debts are nonbusiness bad debts and are deductible only as short-term capital losses. 2012 form 1040a For more information on nonbusiness bad debts, see Publication 550. 2012 form 1040a Topics - This chapter discusses: Definition of business bad debt When a debt becomes worthless How to claim a business bad debt Recovery of a bad debt Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 556 Examination of Returns, Appeal Rights, and Claims for Refund Form (and Instructions) Schedule C (Form 1040) Profit or Loss From Business 1040X Amended U. 2012 form 1040a S. 2012 form 1040a Individual Income Tax Return 1045 Application for Tentative Refund 1139 Corporation Application for Tentative Refund 3115 Application for Change in Accounting Method See chapter 12 for information about getting publications and forms. 2012 form 1040a Definition of Business Bad Debt A business bad debt is a loss from the worthlessness of a debt that was either: Created or acquired in your trade or business, or Closely related to your trade or business when it became partly or totally worthless. 2012 form 1040a A debt is closely related to your trade or business if your primary motive for incurring the debt is business related. 2012 form 1040a Bad debts of a corporation (other than an S corporation) are always business bad debts. 2012 form 1040a Credit sales. 2012 form 1040a   Business bad debts are mainly the result of credit sales to customers. 2012 form 1040a Goods that have been sold, but not yet paid for, and services that have been performed, but not yet paid for, are recorded in your books as either accounts receivable or notes receivable. 2012 form 1040a After a reasonable period of time, if you have tried to collect the amount due, but are unable to do so, the uncollectible part becomes a business bad debt. 2012 form 1040a   Accounts or notes receivable valued at fair market value (FMV) when received are deductible only at that value, even though the FMV may be less than the face value. 2012 form 1040a If you purchased an account receivable for less than its face value, and the receivable subsequently becomes worthless, the most you are allowed to deduct is the amount you paid to acquire it. 2012 form 1040a    You can claim a business bad debt deduction only if the amount owed to you was previously included in gross income. 2012 form 1040a This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest. 2012 form 1040a Accrual method. 2012 form 1040a   If you use the accrual method of accounting, you generally report income as you earn it. 2012 form 1040a You can only claim a bad debt deduction for an uncollectible receivable if you have previously included the uncollectible amount in income. 2012 form 1040a   If you qualify, you can use the nonaccrual-experience method of accounting discussed later. 2012 form 1040a Under this method, you do not have to accrue income that, based on your experience, you do not expect to collect. 2012 form 1040a Cash method. 2012 form 1040a   If you use the cash method of accounting, you generally report income when you receive payment. 2012 form 1040a You cannot claim a bad debt deduction for amounts owed to you because you never included those amounts in income. 2012 form 1040a For example, a cash basis architect cannot claim a bad debt deduction if a client fails to pay the bill because the architect's fee was never included in income. 2012 form 1040a Debts from a former business. 2012 form 1040a   If you sell your business but retain its receivables, these debts are business debts because they arose out of your trade or business. 2012 form 1040a If any of these receivables subsequently become worthless, the loss is still a business bad debt. 2012 form 1040a Debt acquired from a decedent. 2012 form 1040a   The character of a loss from debts of a business acquired from a decedent is determined in the same way as debts acquired on the purchase of a business. 2012 form 1040a The executor of the decedent's estate treats any loss from the debts as a business bad debt if the debts were closely related to the decedent's trade or business when they became worthless. 2012 form 1040a Otherwise, a loss from these debts becomes a nonbusiness bad debt for the decedent's estate. 2012 form 1040a Liquidation. 2012 form 1040a   If you liquidate your business and some of the accounts receivable that you retain become worthless, they become business bad debts. 2012 form 1040a Types of Business Bad Debts Business bad debts may result from the following. 2012 form 1040a Loans to clients and suppliers. 2012 form 1040a   If you loan money to a client, supplier, employee, or distributor for a business reason and you are unable to collect the loan after attempting to do so, you have a business bad debt. 2012 form 1040a Debts owed by political parties. 2012 form 1040a   If a political party (or other organization that accepts contributions or spends money to influence elections) owes you money and the debt becomes worthless, you can claim a bad debt deduction only if all of the following requirements are met. 2012 form 1040a You use the accrual method of accounting. 2012 form 1040a The debt arose from the sale of goods or services in the ordinary course of your trade or business. 2012 form 1040a More than 30% of your receivables accrued in the year of the sale were from sales to political parties. 2012 form 1040a You made substantial and continuing efforts to collect on the debt. 2012 form 1040a Loan or capital contribution. 2012 form 1040a   You cannot claim a bad debt deduction for a loan you made to a corporation if, based on the facts and circumstances, the loan is actually a contribution to capital. 2012 form 1040a Debts of an insolvent partner. 2012 form 1040a   If your business partnership breaks up and one of your former partners becomes insolvent, you may have to pay more than your pro rata share of the partnership's debts. 2012 form 1040a If you pay any part of the insolvent partner's share of the debts, you can claim a bad debt deduction for the amount you paid that is attributable to the insolvent partner's share. 2012 form 1040a Business loan guarantee. 2012 form 1040a   If you guarantee a debt that subsequently becomes worthless, the debt can qualify as a business bad debt if all the following requirements are met. 2012 form 1040a You made the guarantee in the course of your trade or business. 2012 form 1040a You have a legal duty to pay the debt. 2012 form 1040a You made the guarantee before the debt became worthless. 2012 form 1040a You meet this requirement if you reasonably expected you would not have to pay the debt without full reimbursement from the borrower. 2012 form 1040a You received reasonable consideration for making the guarantee. 2012 form 1040a You meet this requirement if you made the guarantee in accord with normal business practice or for a good faith business purpose. 2012 form 1040a Example. 2012 form 1040a Jane Zayne owns the Zayne Dress Company. 2012 form 1040a She guaranteed payment of a $20,000 note for Elegant Fashions, a dress outlet. 2012 form 1040a Elegant Fashions is one of Zayne's largest clients. 2012 form 1040a Elegant Fashions later defaulted on the loan. 2012 form 1040a As a result, Ms. 2012 form 1040a Zayne paid the remaining balance of the loan in full to the bank. 2012 form 1040a She can claim a business bad debt deduction only for the amount she paid, since her guarantee was made in the course of her trade or business for a good faith business purpose. 2012 form 1040a She was motivated by the desire to retain one of her better clients and keep a sales outlet. 2012 form 1040a Deductible in the year paid. 2012 form 1040a   If you make a payment on a loan you guaranteed, you can deduct it in the year paid, unless you have rights against the borrower. 2012 form 1040a Rights against a borrower. 2012 form 1040a   When you make payment on a loan you guaranteed, you may have the right to take the place of the lender. 2012 form 1040a The debt is then owed to you. 2012 form 1040a If you have this right, or some other right to demand payment from the borrower, you cannot claim a bad debt deduction until these rights become partly or totally worthless. 2012 form 1040a Joint debtor. 2012 form 1040a   If two or more debtors jointly owe you money, your inability to collect from one does not enable you to deduct a proportionate amount as a bad debt. 2012 form 1040a Sale of mortgaged property. 2012 form 1040a   If mortgaged or pledged property is sold for less than the debt, the unpaid, uncollectible balance of the debt is a bad debt. 2012 form 1040a When a Debt Becomes Worthless A debt becomes worthless when there is no longer any chance the amount owed will be paid. 2012 form 1040a This may occur when the debt is due or prior to that date. 2012 form 1040a To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. 2012 form 1040a It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. 2012 form 1040a Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. 2012 form 1040a Property received for debt. 2012 form 1040a   If you receive property in partial settlement of a debt, reduce the debt by the property's FMV, which becomes the property's basis. 2012 form 1040a You can deduct the remaining debt as a bad debt if and when it becomes worthless. 2012 form 1040a   If you later sell the property for more than its basis, any gain on the sale is due to the appreciation of the property. 2012 form 1040a It is not a recovery of a bad debt. 2012 form 1040a For information on the sale of an asset, see Publication 544. 2012 form 1040a How To Claim a Business Bad Debt There are two methods to claim a business bad debt. 2012 form 1040a The specific charge-off method. 2012 form 1040a The nonaccrual-experience method. 2012 form 1040a Generally, you must use the specific charge-off method. 2012 form 1040a However, you may use the nonaccrual-experience method if you meet the requirements discussed later under Nonaccrual-Experience Method . 2012 form 1040a Specific Charge-Off Method If you use the specific charge-off method, you can deduct specific business bad debts that become either partly or totally worthless during the tax year. 2012 form 1040a However, with respect to partly worthless bad debts, your deduction is limited to the amount you charged off on your books during the year. 2012 form 1040a Partly worthless debts. 2012 form 1040a   You can deduct specific bad debts that become partly uncollectible during the tax year. 2012 form 1040a Your tax deduction is limited to the amount you charge off on your books during the year. 2012 form 1040a You do not have to charge off and deduct your partly worthless debts annually. 2012 form 1040a You can delay the charge off until a later year. 2012 form 1040a However, you cannot deduct any part of a debt after the year it becomes totally worthless. 2012 form 1040a Significantly modified debt. 2012 form 1040a   An exception to the charge-off rule exists for debt which has been significantly modified and on which the holder recognized gain. 2012 form 1040a For more information, see Regulations section 1. 2012 form 1040a 166-3(a)(3). 2012 form 1040a Deduction disallowed. 2012 form 1040a   Generally, you can claim a partial bad debt deduction only in the year you make the charge-off on your books. 2012 form 1040a If, under audit, the IRS does not allow your deduction and the debt becomes partly worthless in a later tax year, you can deduct the amount you charged off in that year plus the disallowed amount charged off in the earlier year. 2012 form 1040a The charge-off in the earlier year, unless reversed on your books, fulfills the charge-off requirement for the later year. 2012 form 1040a Totally worthless debts. 2012 form 1040a   If a debt becomes totally worthless in the current tax year, you can deduct the entire amount, less any amount deducted in an earlier tax year when the debt was only partly worthless. 2012 form 1040a   You do not have to make an actual charge-off on your books to claim a bad debt deduction for a totally worthless debt. 2012 form 1040a However, you may want to do so. 2012 form 1040a If you do not and the IRS later rules the debt is only partly worthless, you will not be allowed a deduction for the debt in that tax year because a deduction of a partly worthless bad debt is limited to the amount actually charged off. 2012 form 1040a See Partly worthless debts, earlier. 2012 form 1040a Filing a claim for refund. 2012 form 1040a   If you did not deduct a bad debt on your original return for the year it became worthless, you can file a claim for a credit or refund. 2012 form 1040a If the bad debt was totally worthless, you must file the claim by the later of the following dates. 2012 form 1040a 7 years from the date your original return was due (not including extensions). 2012 form 1040a 2 years from the date you paid the tax. 2012 form 1040a   If the claim is for a partly worthless bad debt, you must file the claim by the later of the following dates. 2012 form 1040a 3 years from the date you filed your original return. 2012 form 1040a 2 years from the date you paid the tax. 2012 form 1040a You may have longer to file the claim if you were unable to manage your financial affairs due to a physical or mental impairment. 2012 form 1040a Such an impairment requires proof of existence. 2012 form 1040a   For details and more information about filing a claim, see Publication 556. 2012 form 1040a Use one of the following forms to file a claim. 2012 form 1040a For more information, see the instructions for the applicable form. 2012 form 1040a Table 10-1. 2012 form 1040a Forms Used To File a Claim IF you filed as a. 2012 form 1040a . 2012 form 1040a . 2012 form 1040a THEN file. 2012 form 1040a . 2012 form 1040a . 2012 form 1040a Sole proprietor or farmer Form 1040X Corporation Form 1120X S corporation Form 1120S and check box H(4) Partnership Form 1065X if filing on paper or  Form 1065 and check box G(5) if filing electronically Nonaccrual-Experience Method If you use an accrual method of accounting and qualify under the rules explained in this section, you can use the nonaccrual-experience method for bad debts. 2012 form 1040a Under this method, you do not accrue service related income you expect to be uncollectible. 2012 form 1040a Because the expected uncollectible amounts are not included in income, these amounts are not later deducted from income. 2012 form 1040a Generally, you can use the nonaccrual-experience method for accounts receivable for services you performed only if: The services are provided in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, or the performing arts, or You meet the $5 million gross receipts test for all prior years. 2012 form 1040a Service related income. 2012 form 1040a   You can use the nonaccrual-experience method only for amounts earned by performing services. 2012 form 1040a You cannot use this method for amounts owed to you from activities such as lending money, selling goods, or acquiring receivables or other rights to receive payment. 2012 form 1040a Gross receipts test. 2012 form 1040a   To find out if you meet the $5 million gross receipts test for all prior years, you must figure the average annual gross receipts for each prior year. 2012 form 1040a If your average annual gross receipts for any year exceeds $5 million, you cannot use the non-accural experience method. 2012 form 1040a   The average annual gross receipts for any year is the average of gross receipts from the year in question and the 2 previous years. 2012 form 1040a For example, if you were figuring the average annual gross receipts for 2013, you would average your gross receipts for 2011, 2012, and 2013. 2012 form 1040a Interest or penalty charged. 2012 form 1040a   Generally, you cannot use the nonaccrual-experience method for amounts due on which you charge interest or a late payment penalty. 2012 form 1040a However, do not treat a discount offered for early payment as the charging of interest or a penalty if both the following apply. 2012 form 1040a You otherwise accrue the full amount due as gross income at the time you provide the services. 2012 form 1040a You treat the discount allowed for early payment as an adjustment to gross income in the year of payment. 2012 form 1040a Change in accounting method. 2012 form 1040a   Generally, you must obtain consent to change to a nonaccrual-experience method (other than one of the safe harbor methods) or to change from one method to another. 2012 form 1040a See Form 3115 and the Instructions for Form 3115 for more information. 2012 form 1040a Recovery of a Bad Debt If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. 2012 form 1040a The amount you include is limited to the amount you actually deducted. 2012 form 1040a However, you can exclude the amount deducted that did not reduce your tax. 2012 form 1040a Report the recovery as “Other income” on the appropriate business form or schedule. 2012 form 1040a See Recoveries in Publication 525 for more information. 2012 form 1040a Net operating loss (NOL) carryover. 2012 form 1040a   If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. 2012 form 1040a A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. 2012 form 1040a For more information about NOLs, see Publication 536. 2012 form 1040a Also, see the Instructions for Form 1045, and the Instructions for Form 1139. 2012 form 1040a Prev  Up  Next   Home   More Online Publications