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2012 State Tax Forms

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2012 State Tax Forms

2012 state tax forms 1. 2012 state tax forms   Deducting Business Expenses Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: What Can I Deduct?Cost of Goods Sold Capital Expenses Capital versus Deductible Expenses Personal versus Business Expenses How Much Can I Deduct?Not-for-profit limits. 2012 state tax forms At-risk limits. 2012 state tax forms Passive activities. 2012 state tax forms Net operating loss. 2012 state tax forms When Can I Deduct an Expense?Economic performance. 2012 state tax forms Not-for-Profit ActivitiesGross Income Limit on Deductions What's New Optional safe harbor method to determine the business use of a home deduction. 2012 state tax forms  Beginning in 2013, you can use the optional safe harbor method to determine the deduction for the business use of your home. 2012 state tax forms See Optional safe harbor method under Business use of your home , later. 2012 state tax forms Introduction This chapter covers the general rules for deducting business expenses. 2012 state tax forms Business expenses are the costs of carrying on a trade or business, and they are usually deductible if the business is operated to make a profit. 2012 state tax forms Topics - This chapter discusses: What you can deduct How much you can deduct When you can deduct Not-for-profit activities Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 529 Miscellaneous Deductions 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 538 Accounting Periods and Methods 542 Corporations 547 Casualties, Disasters, and Thefts 587 Business Use of Your Home 925 Passive Activity and At-Risk Rules 936 Home Mortgage Interest Deduction 946 How To Depreciate Property Form (and Instructions) Sch A (Form 1040) Itemized Deductions 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit See chapter 12 for information about getting publications and forms. 2012 state tax forms What Can I Deduct? To be deductible, a business expense must be both ordinary and necessary. 2012 state tax forms An ordinary expense is one that is common and accepted in your industry. 2012 state tax forms A necessary expense is one that is helpful and appropriate for your trade or business. 2012 state tax forms An expense does not have to be indispensable to be considered necessary. 2012 state tax forms Even though an expense may be ordinary and necessary, you may not be allowed to deduct the expense in the year you paid or incurred it. 2012 state tax forms In some cases you may not be allowed to deduct the expense at all. 2012 state tax forms Therefore, it is important to distinguish usual business expenses from expenses that include the following. 2012 state tax forms The expenses used to figure cost of goods sold, Capital expenses, and Personal expenses. 2012 state tax forms Cost of Goods Sold If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. 2012 state tax forms Some of your business expenses may be included in figuring cost of goods sold. 2012 state tax forms Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. 2012 state tax forms If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense. 2012 state tax forms The following are types of expenses that go into figuring cost of goods sold. 2012 state tax forms The cost of products or raw materials, including freight. 2012 state tax forms Storage. 2012 state tax forms Direct labor (including contributions to pension or annuity plans) for workers who produce the products. 2012 state tax forms Factory overhead. 2012 state tax forms Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for certain production or resale activities. 2012 state tax forms Indirect costs include rent, interest, taxes, storage, purchasing, processing, repackaging, handling, and administrative costs. 2012 state tax forms This rule does not apply to personal property you acquire for resale if your average annual gross receipts (or those of your predecessor) for the preceding 3 tax years are not more than $10 million. 2012 state tax forms For more information, see the following sources. 2012 state tax forms Cost of goods sold—chapter 6 of Publication 334. 2012 state tax forms Inventories—Publication 538. 2012 state tax forms Uniform capitalization rules—Publication 538 and section 263A of the Internal Revenue Code and the related regulations. 2012 state tax forms Capital Expenses You must capitalize, rather than deduct, some costs. 2012 state tax forms These costs are a part of your investment in your business and are called “capital expenses. 2012 state tax forms ” Capital expenses are considered assets in your business. 2012 state tax forms In general, you capitalize three types of costs. 2012 state tax forms Business start-up costs (See Tip below). 2012 state tax forms Business assets. 2012 state tax forms Improvements. 2012 state tax forms You can elect to deduct or amortize certain business start-up costs. 2012 state tax forms See chapters 7 and 8. 2012 state tax forms Cost recovery. 2012 state tax forms   Although you generally cannot take a current deduction for a capital expense, you may be able to recover the amount you spend through depreciation, amortization, or depletion. 2012 state tax forms These recovery methods allow you to deduct part of your cost each year. 2012 state tax forms In this way, you are able to recover your capital expense. 2012 state tax forms See Amortization (chapter 8) and Depletion (chapter 9) in this publication. 2012 state tax forms A taxpayer can elect to deduct a portion of the costs of certain depreciable property as a section 179 deduction. 2012 state tax forms A greater portion of these costs can be deducted if the property is qualified disaster assistance property. 2012 state tax forms See Publication 946 for details. 2012 state tax forms Going Into Business The costs of getting started in business, before you actually begin business operations, are capital expenses. 2012 state tax forms These costs may include expenses for advertising, travel, or wages for training employees. 2012 state tax forms If you go into business. 2012 state tax forms   When you go into business, treat all costs you had to get your business started as capital expenses. 2012 state tax forms   Usually you recover costs for a particular asset through depreciation. 2012 state tax forms Generally, you cannot recover other costs until you sell the business or otherwise go out of business. 2012 state tax forms However, you can choose to amortize certain costs for setting up your business. 2012 state tax forms See Starting a Business in chapter 8 for more information on business start-up costs. 2012 state tax forms If your attempt to go into business is unsuccessful. 2012 state tax forms   If you are an individual and your attempt to go into business is not successful, the expenses you had in trying to establish yourself in business fall into two categories. 2012 state tax forms The costs you had before making a decision to acquire or begin a specific business. 2012 state tax forms These costs are personal and nondeductible. 2012 state tax forms They include any costs incurred during a general search for, or preliminary investigation of, a business or investment possibility. 2012 state tax forms The costs you had in your attempt to acquire or begin a specific business. 2012 state tax forms These costs are capital expenses and you can deduct them as a capital loss. 2012 state tax forms   If you are a corporation and your attempt to go into a new trade or business is not successful, you may be able to deduct all investigatory costs as a loss. 2012 state tax forms   The costs of any assets acquired during your unsuccessful attempt to go into business are a part of your basis in the assets. 2012 state tax forms You cannot take a deduction for these costs. 2012 state tax forms You will recover the costs of these assets when you dispose of them. 2012 state tax forms Business Assets There are many different kinds of business assets; for example, land, buildings, machinery, furniture, trucks, patents, and franchise rights. 2012 state tax forms You must fully capitalize the cost of these assets, including freight and installation charges. 2012 state tax forms Certain property you produce for use in your trade or business must be capitalized under the uniform capitalization rules. 2012 state tax forms See Regulations section 1. 2012 state tax forms 263A-2 for information on these rules. 2012 state tax forms Improvements Improvements are generally major expenditures. 2012 state tax forms Some examples are: new electric wiring, a new roof, a new floor, new plumbing, bricking up windows to strengthen a wall, and lighting improvements. 2012 state tax forms The costs of making improvements to a business asset are capital expenses if the improvements add to the value of the asset, appreciably lengthen the time you can use it, or adapt it to a different use. 2012 state tax forms Beginning in 2014, you must capitalize as improvements costs that are for the betterment of a unit of property, restore the unit of property, or adapt the unit of property to a new or different use. 2012 state tax forms Temporary regulations allow you to capitalize costs meeting the above criteria for tax years beginning after 2011. 2012 state tax forms However, you can currently deduct repairs that keep your property in a normal efficient operating condition as a business expense. 2012 state tax forms Treat as repairs amounts paid to replace parts of a machine that only keep it in a normal operating condition. 2012 state tax forms Restoration plan. 2012 state tax forms   Capitalize the cost of reconditioning, improving, or altering your property as part of a general restoration plan to make it suitable for your business. 2012 state tax forms This applies even if some of the work would by itself be classified as repairs. 2012 state tax forms Capital versus Deductible Expenses To help you distinguish between capital and deductible expenses, different examples are given below. 2012 state tax forms Motor vehicles. 2012 state tax forms   You usually capitalize the cost of a motor vehicle you use in your business. 2012 state tax forms You can recover its cost through annual deductions for depreciation. 2012 state tax forms   There are dollar limits on the depreciation you can claim each year on passenger automobiles used in your business. 2012 state tax forms See Publication 463. 2012 state tax forms   Generally, repairs you make to your business vehicle are currently deductible. 2012 state tax forms However, amounts you pay to recondition and overhaul a business vehicle are capital expenses and are recovered through depreciation. 2012 state tax forms Roads and driveways. 2012 state tax forms    The cost of building a private road on your business property and the cost of replacing a gravel driveway with a concrete one are capital expenses you may be able to depreciate. 2012 state tax forms The cost of maintaining a private road on your business property is a deductible expense. 2012 state tax forms Tools. 2012 state tax forms   Unless the uniform capitalization rules apply, amounts spent for tools used in your business are deductible expenses if the tools have a life expectancy of less than 1 year or their cost is minor. 2012 state tax forms Machinery parts. 2012 state tax forms   Unless the uniform capitalization rules apply, the cost of replacing short-lived parts of a machine to keep it in good working condition, but not add to its life, is a deductible expense. 2012 state tax forms Heating equipment. 2012 state tax forms   The cost of changing from one heating system to another is a capital expense. 2012 state tax forms Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. 2012 state tax forms However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. 2012 state tax forms You can deduct the business part. 2012 state tax forms For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you generally can deduct 70% of the interest as a business expense. 2012 state tax forms The remaining 30% is personal interest and generally is not deductible. 2012 state tax forms See chapter 4 for information on deducting interest and the allocation rules. 2012 state tax forms Business use of your home. 2012 state tax forms   If you use part of your home for business, you may be able to deduct expenses for the business use of your home. 2012 state tax forms These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. 2012 state tax forms   To qualify to claim expenses for the business use of your home, you must meet both of the following tests. 2012 state tax forms The business part of your home must be used exclusively and regularly for your trade or business. 2012 state tax forms The business part of your home must be: Your principal place of business, or A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) used in connection with your trade or business. 2012 state tax forms   You generally do not have to meet the exclusive use test for the part of your home that you regularly use either for the storage of inventory or product samples, or as a daycare facility. 2012 state tax forms   Your home office qualifies as your principal place of business if you meet the following requirements. 2012 state tax forms You use the office exclusively and regularly for administrative or management activities of your trade or business. 2012 state tax forms You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. 2012 state tax forms   If you have more than one business location, determine your principal place of business based on the following factors. 2012 state tax forms The relative importance of the activities performed at each location. 2012 state tax forms If the relative importance factor does not determine your principal place of business, consider the time spent at each location. 2012 state tax forms Optional safe harbor method. 2012 state tax forms   Beginning in 2013, individual taxpayers can use the optional safe harbor method to determine the amount of deductible expenses attributable to certain business use of a residence during the tax year. 2012 state tax forms This method is an alternative to the calculation, allocation, and substantiation of actual expenses. 2012 state tax forms   The deduction under the optional method is limited to $1,500 per year based on $5 a square foot for up to 300 square feet. 2012 state tax forms Under this method, you claim your allowable mortgage interest, real estate taxes, and casualty losses on the home as itemized deductions on Schedule A (Form 1040). 2012 state tax forms You are not required to allocate these deductions between personal and business use, as is required under the regular method. 2012 state tax forms If you use the optional method, you cannot depreciate the portion of your home used in a trade or business. 2012 state tax forms   Business expenses unrelated to the home, such as advertising, supplies, and wages paid to employees, are still fully deductible. 2012 state tax forms All of the requirements discussed earlier under Business use of your home still apply. 2012 state tax forms   For more information on the deduction for business use of your home, including the optional safe harbor method, see Publication 587. 2012 state tax forms    If you were entitled to deduct depreciation on the part of your home used for business, you cannot exclude the part of the gain from the sale of your home that equals any depreciation you deducted (or could have deducted) for periods after May 6, 1997. 2012 state tax forms Business use of your car. 2012 state tax forms   If you use your car exclusively in your business, you can deduct car expenses. 2012 state tax forms If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. 2012 state tax forms Generally, commuting expenses between your home and your business location, within the area of your tax home, are not deductible. 2012 state tax forms   You can deduct actual car expenses, which include depreciation (or lease payments), gas and oil, tires, repairs, tune-ups, insurance, and registration fees. 2012 state tax forms Or, instead of figuring the business part of these actual expenses, you may be able to use the standard mileage rate to figure your deduction. 2012 state tax forms Beginning in 2013, the standard mileage rate is 56. 2012 state tax forms 5 cents per mile. 2012 state tax forms   If you are self-employed, you can also deduct the business part of interest on your car loan, state and local personal property tax on the car, parking fees, and tolls, whether or not you claim the standard mileage rate. 2012 state tax forms   For more information on car expenses and the rules for using the standard mileage rate, see Publication 463. 2012 state tax forms How Much Can I Deduct? Generally, you can deduct the full amount of a business expense if it meets the criteria of ordinary and necessary and it is not a capital expense. 2012 state tax forms Recovery of amount deducted (tax benefit rule). 2012 state tax forms   If you recover part of an expense in the same tax year in which you would have claimed a deduction, reduce your current year expense by the amount of the recovery. 2012 state tax forms If you have a recovery in a later year, include the recovered amount in income in that year. 2012 state tax forms However, if part of the deduction for the expense did not reduce your tax, you do not have to include that part of the recovered amount in income. 2012 state tax forms   For more information on recoveries and the tax benefit rule, see Publication 525. 2012 state tax forms Payments in kind. 2012 state tax forms   If you provide services to pay a business expense, the amount you can deduct is limited to your out-of-pocket costs. 2012 state tax forms You cannot deduct the cost of your own labor. 2012 state tax forms   Similarly, if you pay a business expense in goods or other property, you can deduct only what the property costs you. 2012 state tax forms If these costs are included in the cost of goods sold, do not deduct them again as a business expense. 2012 state tax forms Limits on losses. 2012 state tax forms   If your deductions for an investment or business activity are more than the income it brings in, you have a loss. 2012 state tax forms There may be limits on how much of the loss you can deduct. 2012 state tax forms Not-for-profit limits. 2012 state tax forms   If you carry on your business activity without the intention of making a profit, you cannot use a loss from it to offset other income. 2012 state tax forms See Not-for-Profit Activities , later. 2012 state tax forms At-risk limits. 2012 state tax forms   Generally, a deductible loss from a trade or business or other income-producing activity is limited to the investment you have “at risk” in the activity. 2012 state tax forms You are at risk in any activity for the following. 2012 state tax forms The money and adjusted basis of property you contribute to the activity. 2012 state tax forms Amounts you borrow for use in the activity if: You are personally liable for repayment, or You pledge property (other than property used in the activity) as security for the loan. 2012 state tax forms For more information, see Publication 925. 2012 state tax forms Passive activities. 2012 state tax forms   Generally, you are in a passive activity if you have a trade or business activity in which you do not materially participate, or a rental activity. 2012 state tax forms In general, deductions for losses from passive activities only offset income from passive activities. 2012 state tax forms You cannot use any excess deductions to offset other income. 2012 state tax forms In addition, passive activity credits can only offset the tax on net passive income. 2012 state tax forms Any excess loss or credits are carried over to later years. 2012 state tax forms Suspended passive losses are fully deductible in the year you completely dispose of the activity. 2012 state tax forms For more information, see Publication 925. 2012 state tax forms Net operating loss. 2012 state tax forms   If your deductions are more than your income for the year, you may have a “net operating loss. 2012 state tax forms ” You can use a net operating loss to lower your taxes in other years. 2012 state tax forms See Publication 536 for more information. 2012 state tax forms   See Publication 542 for information about net operating losses of corporations. 2012 state tax forms When Can I Deduct an Expense? When you can deduct an expense depends on your accounting method. 2012 state tax forms An accounting method is a set of rules used to determine when and how income and expenses are reported. 2012 state tax forms The two basic methods are the cash method and the accrual method. 2012 state tax forms Whichever method you choose must clearly reflect income. 2012 state tax forms For more information on accounting methods, see Publication 538. 2012 state tax forms Cash method. 2012 state tax forms   Under the cash method of accounting, you generally deduct business expenses in the tax year you pay them. 2012 state tax forms Accrual method. 2012 state tax forms   Under an accrual method of accounting, you generally deduct business expenses when both of the following apply. 2012 state tax forms The all-events test has been met. 2012 state tax forms The test is met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. 2012 state tax forms Economic performance has occurred. 2012 state tax forms Economic performance. 2012 state tax forms   You generally cannot deduct or capitalize a business expense until economic performance occurs. 2012 state 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 the property is used. 2012 state tax forms If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. 2012 state tax forms Example. 2012 state tax forms Your tax year is the calendar year. 2012 state tax forms In December 2013, the Field Plumbing Company did some repair work at your place of business and sent you a bill for $600. 2012 state tax forms You paid it by check in January 2014. 2012 state tax forms If you use the accrual method of accounting, deduct the $600 on your tax return for 2013 because all events have occurred to “fix” the fact of liability (in this case the work was completed), the liability can be determined, and economic performance occurred in that year. 2012 state tax forms If you use the cash method of accounting, deduct the expense on your 2014 return. 2012 state tax forms Prepayment. 2012 state tax forms   You generally cannot deduct expenses in advance, even if you pay them in advance. 2012 state tax forms This rule applies to both the cash and accrual methods. 2012 state tax forms It applies to prepaid interest, prepaid insurance premiums, and any other 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. 2012 state tax forms Example. 2012 state tax forms In 2013, you sign a 10-year lease and immediately pay your rent for the first 3 years. 2012 state tax forms Even though you paid the rent for 2013, 2014, and 2015, you can only deduct the rent for 2013 on your 2013 tax return. 2012 state tax forms You can deduct the rent for 2014 and 2015 on your tax returns for those years. 2012 state tax forms Contested liability. 2012 state tax forms   Under the cash method, you can deduct a contested liability only in the year you pay the liability. 2012 state tax forms Under the accrual method, you can deduct contested liabilities such as taxes (except foreign or U. 2012 state tax forms S. 2012 state tax forms possession income, war profits, and excess profits taxes) either in the tax year you pay the liability (or transfer money or other property to satisfy the obligation) or in the tax year you settle the contest. 2012 state tax forms However, to take the deduction in the year of payment or transfer, you must meet certain conditions. 2012 state tax forms See Regulations section 1. 2012 state tax forms 461-2. 2012 state tax forms Related person. 2012 state tax forms   Under an accrual method of accounting, you generally deduct expenses when you incur them, even if you have not yet paid them. 2012 state tax forms However, if you and the person you owe are related and that person uses the cash method of accounting, you must pay the expense before you can deduct it. 2012 state tax forms Your deduction is allowed when the amount is includible in income by the related cash method payee. 2012 state tax forms See Related Persons in Publication 538. 2012 state tax forms Not-for-Profit Activities If you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. 2012 state tax forms Activities you do as a hobby, or mainly for sport or recreation, are often not entered into for profit. 2012 state tax forms The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. 2012 state tax forms It does not apply to corporations other than S corporations. 2012 state tax forms In determining whether you are carrying on an activity for profit, several factors are taken into account. 2012 state tax forms No one factor alone is decisive. 2012 state tax forms Among the factors to consider are whether: You carry on the activity in a businesslike manner, The time and effort you put into the activity indicate you intend to make it profitable, You depend on the income for your livelihood, Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), You change your methods of operation in an attempt to improve profitability, You (or your advisors) have the knowledge needed to carry on the activity as a successful business, You were successful in making a profit in similar activities in the past, The activity makes a profit in some years, and You can expect to make a future profit from the appreciation of the assets used in the activity. 2012 state tax forms Presumption of profit. 2012 state tax forms   An activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. 2012 state tax forms Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. 2012 state tax forms The activity must be substantially the same for each year within this period. 2012 state tax forms You have a profit when the gross income from an activity exceeds the deductions. 2012 state tax forms   If a taxpayer dies before the end of the 5-year (or 7-year) period, the “test” period ends on the date of the taxpayer's death. 2012 state tax forms   If your business or investment activity passes this 3- (or 2-) years-of-profit test, the IRS will presume it is carried on for profit. 2012 state tax forms This means the limits discussed here will not apply. 2012 state tax forms You can take all your business deductions from the activity, even for the years that you have a loss. 2012 state tax forms You can rely on this presumption unless the IRS later shows it to be invalid. 2012 state tax forms Using the presumption later. 2012 state tax forms   If you are starting an activity and do not have 3 (or 2) years showing a profit, you can elect to have the presumption made after you have the 5 (or 7) years of experience allowed by the test. 2012 state tax forms   You can elect to do this by filing Form 5213. 2012 state tax forms Filing this form postpones any determination that your activity is not carried on for profit until 5 (or 7) years have passed since you started the activity. 2012 state tax forms   The benefit gained by making this election is that the IRS will not immediately question whether your activity is engaged in for profit. 2012 state tax forms Accordingly, it will not restrict your deductions. 2012 state tax forms Rather, you will gain time to earn a profit in the required number of years. 2012 state tax forms If you show 3 (or 2) years of profit at the end of this period, your deductions are not limited under these rules. 2012 state tax forms If you do not have 3 (or 2) years of profit, the limit can be applied retroactively to any year with a loss in the 5-year (or 7-year) period. 2012 state tax forms   Filing Form 5213 automatically extends the period of limitations on any year in the 5-year (or 7-year) period to 2 years after the due date of the return for the last year of the period. 2012 state tax forms The period is extended only for deductions of the activity and any related deductions that might be affected. 2012 state tax forms    You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity, or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. 2012 state tax forms Gross Income Gross income from a not-for-profit activity includes the total of all gains from the sale, exchange, or other disposition of property, and all other gross receipts derived from the activity. 2012 state tax forms Gross income from the activity also includes capital gains and rents received for the use of property which is held in connection with the activity. 2012 state tax forms You can determine gross income from any not-for-profit activity by subtracting the cost of goods sold from your gross receipts. 2012 state tax forms However, if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of accounting. 2012 state tax forms Limit on Deductions If your activity is not carried on for profit, take deductions in the following order and only to the extent stated in the three categories. 2012 state tax forms If you are an individual, these deductions may be taken only if you itemize. 2012 state tax forms These deductions may be taken on Schedule A (Form 1040). 2012 state tax forms Category 1. 2012 state tax forms   Deductions you can take for personal as well as for business activities are allowed in full. 2012 state tax forms For individuals, all nonbusiness deductions, such as those for home mortgage interest, taxes, and casualty losses, belong in this category. 2012 state tax forms Deduct them on the appropriate lines of Schedule A (Form 1040). 2012 state tax forms For tax years beginning after December 31, 2008, you can deduct a casualty loss on property you own for personal use only to the extent it is more than $500 and exceeds 10% of your adjusted gross income (AGI). 2012 state tax forms The 10% AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009, and individuals are allowed to claim the net disaster losses even if they do not itemize their deductions. 2012 state tax forms The reduction amount returns to $100 for tax years beginning after December 31, 2009. 2012 state tax forms See Publication 547 for more information on casualty losses. 2012 state tax forms For the limits that apply to home mortgage interest, see Publication 936. 2012 state tax forms Category 2. 2012 state tax forms   Deductions that do not result in an adjustment to the basis of property are allowed next, but only to the extent your gross income from the activity is more than your deductions under the first category. 2012 state tax forms Most business deductions, such as those for advertising, insurance premiums, interest, utilities, and wages, belong in this category. 2012 state tax forms Category 3. 2012 state tax forms   Business deductions that decrease the basis of property are allowed last, but only to the extent the gross income from the activity exceeds the deductions you take under the first two categories. 2012 state tax forms Deductions for depreciation, amortization, and the part of a casualty loss an individual could not deduct in category (1) belong in this category. 2012 state tax forms Where more than one asset is involved, allocate depreciation and these other deductions proportionally. 2012 state tax forms    Individuals must claim the amounts in categories (2) and (3) as miscellaneous deductions on Schedule A (Form 1040). 2012 state tax forms They are subject to the 2%-of-adjusted-gross-income limit. 2012 state tax forms See Publication 529 for information on this limit. 2012 state tax forms Example. 2012 state tax forms Adriana is engaged in a not-for-profit activity. 2012 state tax forms The income and expenses of the activity are as follows. 2012 state tax forms Gross income $3,200 Subtract:     Real estate taxes $700   Home mortgage interest 900   Insurance 400   Utilities 700   Maintenance 200   Depreciation on an automobile 600   Depreciation on a machine 200 3,700 Loss $(500)   Adriana must limit her deductions to $3,200, the gross income she earned from the activity. 2012 state tax forms The limit is reached in category (3), as follows. 2012 state tax forms Limit on deduction $3,200 Category 1: Taxes and interest $1,600   Category 2: Insurance, utilities, and maintenance 1,300 2,900 Available for Category 3 $ 300   The $800 of depreciation is allocated between the automobile and machine as follows. 2012 state tax forms $600 $800 x $300 = $225 depreciation for the automobile             $200 $800 x $300 = $75 depreciation for the machine The basis of each asset is reduced accordingly. 2012 state tax forms Adriana includes the $3,200 of gross income on line 21 (other income) of Form 1040. 2012 state tax forms The $1,600 for category (1) is deductible in full on the appropriate lines for taxes and interest on Schedule A (Form 1040). 2012 state tax forms Adriana deducts the remaining $1,600 ($1,300 for category (2) and $300 for category (3)) as other miscellaneous deductions on Schedule A (Form 1040) subject to the 2%-of-adjusted-gross-income limit. 2012 state tax forms Partnerships and S corporations. 2012 state tax forms   If a partnership or S corporation carries on a not-for-profit activity, these limits apply at the partnership or S corporation level. 2012 state tax forms They are reflected in the individual shareholder's or partner's distributive shares. 2012 state tax forms More than one activity. 2012 state tax forms   If you have several undertakings, each may be a separate activity or several undertakings may be combined. 2012 state tax forms The following are the most significant facts and circumstances in making this determination. 2012 state tax forms The degree of organizational and economic interrelationship of various undertakings. 2012 state tax forms The business purpose that is (or might be) served by carrying on the various undertakings separately or together in a business or investment setting. 2012 state tax forms The similarity of the undertakings. 2012 state tax forms   The IRS will generally accept your characterization if it is supported by facts and circumstances. 2012 state tax forms    If you are carrying on two or more different activities, keep the deductions and income from each one separate. 2012 state tax forms Figure separately whether each is a not-for-profit activity. 2012 state tax forms Then figure the limit on deductions and losses separately for each activity that is not for profit. 2012 state tax forms Prev  Up  Next   Home   More Online Publications
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Honoring Victims

On September 11, 2001, terrorists hijacked four commercial airliners to strike targets in the United States. Nearly 3,000 people died as a result of the attacks.

By presidential proclamation, Americans are called on to participate in a moment of silence beginning at 8:46 AM Eastern Daylight Time on September 11. They may also observe the day with ceremonies and activities, including remembrance services. Flags should be displayed at half-staff in honor of the individuals who lost their lives.

Many Americans will serve in their communities in honor of 9/11 as part of the National Day of Service and Remembrance. Service projects range from food drives and home repairs to neighborhood cleanups and disaster preparation activities. In many areas, volunteers will honor veterans, soldiers, or first responders by collecting donations, assembling care packages, and writing thank you letters.

Learn how you can participate in public service on the National Day of Service and Remembrance.

Other activities you may take related to 9/11:

9/11 Memorials

Keeping America Safe

Emergency responders continue to train and prepare for the possibility of future attacks. Learn how you can prepare for a disaster or emergency, or learn more about the National Terrorism Advisory System. You may also review the U.S. Department of Homeland Security's progress report of the 9/11 Commission recommendations.

The U.S. State Department recommends that U.S. citizens abroad enroll in the Smart Travelers Enrollment Program.

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The 2012 State Tax Forms

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