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2013 Form 1040ez

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2013 Form 1040ez

2013 form 1040ez 32. 2013 form 1040ez   Child and Dependent Care Credit Table of Contents Reminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. 2013 form 1040ez Employment Taxes for Household Employers Reminders Taxpayer identification number needed for each qualifying person. 2013 form 1040ez  You must include on line 2 of Form 2441 the name and taxpayer identification number (generally the social security number) of each qualifying person. 2013 form 1040ez See Taxpayer identification number under Qualifying Person Test, later. 2013 form 1040ez You may have to pay employment taxes. 2013 form 1040ez  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. 2013 form 1040ez Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 2013 form 1040ez See Employment Taxes for Household Employers , later. 2013 form 1040ez Introduction This chapter discusses the credit for child and dependent care expenses and covers the following topics. 2013 form 1040ez Tests you must meet to claim the credit. 2013 form 1040ez How to figure the credit. 2013 form 1040ez How to claim the credit. 2013 form 1040ez Employment taxes you may have to pay as a household employer. 2013 form 1040ez You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. 2013 form 1040ez The credit can be up to 35% of your expenses. 2013 form 1040ez To qualify, you must pay these expenses so you can work or look for work. 2013 form 1040ez This credit should not be confused with the child tax credit discussed in chapter 34. 2013 form 1040ez Dependent care benefits. 2013 form 1040ez   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. 2013 form 1040ez You must complete Form 2441, Part III, before you can figure the amount of your credit. 2013 form 1040ez See Dependent Care Benefits under How To Figure the Credit, later. 2013 form 1040ez Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-7 Application for IRS Individual Taxpayer Identification Number W-10 Dependent Care Provider's Identification and Certification Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040 or Form 1040A, not Form 1040EZ, and meet all the following tests. 2013 form 1040ez The care must be for one or more qualifying persons who are identified on Form 2441. 2013 form 1040ez (See Qualifying Person Test . 2013 form 1040ez ) You (and your spouse if filing jointly) must have earned income during the year. 2013 form 1040ez (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. 2013 form 1040ez ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. 2013 form 1040ez (See Work-Related Expense Test , later. 2013 form 1040ez ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. 2013 form 1040ez If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. 2013 form 1040ez You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. 2013 form 1040ez (See Payments to Relatives or Dependents under Work-Related Expense Test, later. 2013 form 1040ez ) Your filing status may be single, head of household, or qualifying widow(er) with dependent child. 2013 form 1040ez If you are married, you must file a joint return, unless an exception applies to you. 2013 form 1040ez (See Joint Return Test , later. 2013 form 1040ez ) You must identify the care provider on your tax return. 2013 form 1040ez (See Provider Identification Test , later. 2013 form 1040ez ) If you exclude or deduct dependent care benefits provided by a dependent care benefits plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). 2013 form 1040ez (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. 2013 form 1040ez See Reduced Dollar Limit under How To Figure the Credit, later. 2013 form 1040ez ) These tests are presented in Figure 32-A and are also explained in detail in this chapter. 2013 form 1040ez Figure 32-A. 2013 form 1040ez Can You Claim the Credit? Please click here for the text description of the image. 2013 form 1040ez Figure 32-A Can You Claim the Credit? Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. 2013 form 1040ez A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart, later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 2013 form 1040ez Dependent defined. 2013 form 1040ez   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. 2013 form 1040ez To be your dependent, a person must be your qualifying child (or your qualifying relative). 2013 form 1040ez Qualifying child. 2013 form 1040ez   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. 2013 form 1040ez More information. 2013 form 1040ez   For more information about who is a dependent or a qualifying child, see chapter 3. 2013 form 1040ez Physically or mentally not able to care for oneself. 2013 form 1040ez   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. 2013 form 1040ez Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. 2013 form 1040ez Person qualifying for part of year. 2013 form 1040ez   You determine a person's qualifying status each day. 2013 form 1040ez For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. 2013 form 1040ez Also see Yearly limit under Dollar Limit, later. 2013 form 1040ez Birth or death of otherwise qualifying person. 2013 form 1040ez   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home for more than half the time he or she was alive in 2013. 2013 form 1040ez Taxpayer identification number. 2013 form 1040ez   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). 2013 form 1040ez If the correct information is not shown, the credit may be reduced or disallowed. 2013 form 1040ez Individual taxpayer identification number (ITIN) for aliens. 2013 form 1040ez   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. 2013 form 1040ez The ITIN is entered wherever an SSN is requested on a tax return. 2013 form 1040ez To apply for an ITIN, see Form W-7. 2013 form 1040ez   An ITIN is for tax use only. 2013 form 1040ez It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. 2013 form 1040ez S. 2013 form 1040ez law. 2013 form 1040ez Adoption taxpayer identification number (ATIN). 2013 form 1040ez   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. 2013 form 1040ez File Form W-7A, Application for Taxpayer Identification Number for Pending U. 2013 form 1040ez S. 2013 form 1040ez Adoptions. 2013 form 1040ez Child of divorced or separated parents or parents living apart. 2013 form 1040ez   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. 2013 form 1040ez   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. 2013 form 1040ez If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. 2013 form 1040ez For details and an exception for a parent who works at night, see Pub. 2013 form 1040ez 501. 2013 form 1040ez   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. 2013 form 1040ez Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. 2013 form 1040ez Earned income. 2013 form 1040ez   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. 2013 form 1040ez A net loss from self-employment reduces earned income. 2013 form 1040ez Earned income also includes strike benefits and any disability pay you report as wages. 2013 form 1040ez   Generally, only taxable compensation is included. 2013 form 1040ez However, you can elect to include nontaxable combat pay in earned income. 2013 form 1040ez If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. 2013 form 1040ez (In other words, if one of you makes the election, the other one can also make it but does not have to. 2013 form 1040ez ) You should figure your credit both ways and make the election if it gives you a greater tax benefit. 2013 form 1040ez Members of certain religious faiths opposed to social security. 2013 form 1040ez   Certain income earned by persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes may not be considered earned income for this purpose. 2013 form 1040ez See Earned Income Test in Publication 503. 2013 form 1040ez Not earned income. 2013 form 1040ez   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarship or fellowship grants, except for those reported on a Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received by you, Income of nonresident aliens that is not effectively connected with a U. 2013 form 1040ez S. 2013 form 1040ez trade or business, or Any amount received for work while an inmate in a penal institution. 2013 form 1040ez Rule for student-spouse or spouse not able to care for self. 2013 form 1040ez   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. 2013 form 1040ez (Your spouse also must live with you for more than half the year. 2013 form 1040ez )   If you are filing a joint return, this rule also applies to you. 2013 form 1040ez You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. 2013 form 1040ez   Figure the earned income of the nonworking spouse described under (1) or (2) above as explained under Earned Income Limit , later. 2013 form 1040ez   This rule applies to only one spouse for any one month. 2013 form 1040ez If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. 2013 form 1040ez Full-time student. 2013 form 1040ez   You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. 2013 form 1040ez You must have been a full-time student for some part of each of 5 calendar months during the year. 2013 form 1040ez (The months need not be consecutive. 2013 form 1040ez ) School. 2013 form 1040ez   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. 2013 form 1040ez A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 2013 form 1040ez Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. 2013 form 1040ez Expenses are considered work-related only if both of the following are true. 2013 form 1040ez They allow you (and your spouse if filing jointly) to work or look for work. 2013 form 1040ez They are for a qualifying person's care. 2013 form 1040ez Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. 2013 form 1040ez If you are married, generally both you and your spouse must work or look for work. 2013 form 1040ez One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. 2013 form 1040ez Your work can be for others or in your own business or partnership. 2013 form 1040ez It can be either full time or part time. 2013 form 1040ez Work also includes actively looking for work. 2013 form 1040ez However, if you do not find a job and have no earned income for the year, you cannot take this credit. 2013 form 1040ez See Earned Income Test , earlier. 2013 form 1040ez An expense is not considered work-related merely because you had it while you were working. 2013 form 1040ez The purpose of the expense must be to allow you to work. 2013 form 1040ez Whether your expenses allow you to work or look for work depends on the facts. 2013 form 1040ez Example 1. 2013 form 1040ez The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. 2013 form 1040ez Example 2. 2013 form 1040ez You work during the day. 2013 form 1040ez Your spouse works at night and sleeps during the day. 2013 form 1040ez You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. 2013 form 1040ez Your expenses are considered work-related. 2013 form 1040ez Volunteer work. 2013 form 1040ez    For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. 2013 form 1040ez Work for part of year. 2013 form 1040ez   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. 2013 form 1040ez For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work-related. 2013 form 1040ez However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). 2013 form 1040ez Temporary absence from work. 2013 form 1040ez   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. 2013 form 1040ez Instead, you can figure your credit including the expenses you paid for the period of absence. 2013 form 1040ez   An absence of 2 weeks or less is a short, temporary absence. 2013 form 1040ez An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. 2013 form 1040ez Example. 2013 form 1040ez You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. 2013 form 1040ez You become ill and miss 4 months of work but receive sick pay. 2013 form 1040ez You continue to pay the nanny to care for the children while you are ill. 2013 form 1040ez Your absence is not a short, temporary absence, and your expenses are not considered work-related. 2013 form 1040ez Part-time work. 2013 form 1040ez   If you work part-time, you generally must figure your expenses for each day. 2013 form 1040ez However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. 2013 form 1040ez Any day when you work at least 1 hour is a day of work. 2013 form 1040ez Example 1. 2013 form 1040ez You work 3 days a week. 2013 form 1040ez While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. 2013 form 1040ez You can pay the center $150 for any 3 days a week or $250 for 5 days a week. 2013 form 1040ez Your child attends the center 5 days a week. 2013 form 1040ez Your work-related expenses are limited to $150 a week. 2013 form 1040ez Example 2. 2013 form 1040ez The facts are the same as in Example 1 except the center does not offer a 3-day option. 2013 form 1040ez The entire $250 weekly fee may be a work-related expense. 2013 form 1040ez Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. 2013 form 1040ez You do not have to choose the least expensive way of providing care. 2013 form 1040ez The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. 2013 form 1040ez Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. 2013 form 1040ez Expenses for household services qualify if part of the services is for the care of qualifying persons. 2013 form 1040ez See Household services , later. 2013 form 1040ez Expenses not for care. 2013 form 1040ez   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. 2013 form 1040ez However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. 2013 form 1040ez   Child support payments are not for care and do not qualify for the credit. 2013 form 1040ez Education. 2013 form 1040ez   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. 2013 form 1040ez Expenses to attend kindergarten or a higher grade are not expenses for care. 2013 form 1040ez Do not use these expenses to figure your credit. 2013 form 1040ez   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. 2013 form 1040ez   Summer school and tutoring programs are not for care. 2013 form 1040ez Example 1. 2013 form 1040ez You take your 3-year-old child to a nursery school that provides lunch and educational activities as a part of its preschool childcare service. 2013 form 1040ez The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. 2013 form 1040ez You can count the total cost when you figure the credit. 2013 form 1040ez Example 2. 2013 form 1040ez You place your 10-year-old child in a boarding school so you can work full time. 2013 form 1040ez Only the part of the boarding school expense that is for the care of your child is a work-related expense. 2013 form 1040ez You can count that part of the expense in figuring your credit if it can be separated from the cost of education. 2013 form 1040ez You cannot count any part of the amount you pay the school for your child's education. 2013 form 1040ez Care outside your home. 2013 form 1040ez   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. 2013 form 1040ez Dependent care center. 2013 form 1040ez   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. 2013 form 1040ez   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. 2013 form 1040ez Camp. 2013 form 1040ez   The cost of sending your child to an overnight camp is not considered a work-related expense. 2013 form 1040ez The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. 2013 form 1040ez Transportation. 2013 form 1040ez   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. 2013 form 1040ez This includes transportation by bus, subway, taxi, or private car. 2013 form 1040ez However, transportation not provided by a care provider is not for the care of a qualifying person. 2013 form 1040ez Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. 2013 form 1040ez Fees and deposits. 2013 form 1040ez   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. 2013 form 1040ez However, a forfeited deposit is not for the care of a qualifying person if care is not provided. 2013 form 1040ez Example 1. 2013 form 1040ez You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. 2013 form 1040ez The fee you paid is a work-related expense. 2013 form 1040ez Example 2. 2013 form 1040ez You placed a deposit with a preschool to reserve a place for your 3-year-old child. 2013 form 1040ez You later sent your child to a different preschool and forfeited the deposit. 2013 form 1040ez The forfeited deposit is not for care and so is not a work-related expense. 2013 form 1040ez Household services. 2013 form 1040ez   Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. 2013 form 1040ez   Household services are ordinary and usual services done in and around your home that are necessary to run your home. 2013 form 1040ez They include the services of a housekeeper, maid, or cook. 2013 form 1040ez However, they do not include the services of a chauffeur, bartender, or gardener. 2013 form 1040ez See Household Services in Publication 503 for more information. 2013 form 1040ez   In this chapter, the term housekeeper refers to any household employee whose services include the care of a qualifying person. 2013 form 1040ez Taxes paid on wages. 2013 form 1040ez   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. 2013 form 1040ez See Employment Taxes for Household Employers , later. 2013 form 1040ez Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. 2013 form 1040ez However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. 2013 form 1040ez Joint Return Test Generally, married couples must file a joint return to take the credit. 2013 form 1040ez However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. 2013 form 1040ez Legally separated. 2013 form 1040ez   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. 2013 form 1040ez You may be eligible to take the credit on your return using head of household filing status. 2013 form 1040ez Married and living apart. 2013 form 1040ez   You are not considered married and are eligible to take the credit if all the following apply. 2013 form 1040ez You file a return apart from your spouse. 2013 form 1040ez Your home is the home of a qualifying person for more than half the year. 2013 form 1040ez You pay more than half the cost of keeping up your home for the year. 2013 form 1040ez Your spouse does not live in your home for the last 6 months of the year. 2013 form 1040ez Costs of keeping up a home. 2013 form 1040ez   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. 2013 form 1040ez   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. 2013 form 1040ez   They also do not include the purchase, permanent improvement, or replacement of property. 2013 form 1040ez For example, you cannot include the cost of replacing a water heater. 2013 form 1040ez However, you can include the cost of repairing a water heater. 2013 form 1040ez Death of spouse. 2013 form 1040ez   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. 2013 form 1040ez If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's return. 2013 form 1040ez Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. 2013 form 1040ez Use Form 2441, Part I, to show the information. 2013 form 1040ez If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). 2013 form 1040ez Information needed. 2013 form 1040ez   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. 2013 form 1040ez   If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. 2013 form 1040ez If the care provider is an organization, then it is the employer identification number (EIN). 2013 form 1040ez   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). 2013 form 1040ez In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. 2013 form 1040ez   If you cannot provide all of the information or if the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. 2013 form 1040ez Getting the information. 2013 form 1040ez   You can use Form W-10 to request the required information from the care provider. 2013 form 1040ez If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10 including: A copy of the provider's social security card, A copy of the provider's completed Form W-4 if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the information. 2013 form 1040ez    You should keep this information with your tax records. 2013 form 1040ez Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. 2013 form 1040ez Due diligence. 2013 form 1040ez   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. 2013 form 1040ez However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. 2013 form 1040ez   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. 2013 form 1040ez Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. 2013 form 1040ez Provider refusal. 2013 form 1040ez   If the provider refuses to give you their identifying information, you should report on Form 2441 whatever information you have (such as the name and address). 2013 form 1040ez Enter “See Attached Statement” in the columns calling for the information you do not have. 2013 form 1040ez Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. 2013 form 1040ez Be sure to write your name and social security number on this statement. 2013 form 1040ez The statement will show that you used due diligence in trying to furnish the necessary information. 2013 form 1040ez U. 2013 form 1040ez S. 2013 form 1040ez citizens and resident aliens living abroad. 2013 form 1040ez   If you are living abroad, your care provider may not have, and may not be required to get, a U. 2013 form 1040ez S. 2013 form 1040ez taxpayer identification number (for example, an SSN or EIN). 2013 form 1040ez If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. 2013 form 1040ez How To Figure the Credit Your credit is a percentage of your work-related expenses. 2013 form 1040ez Your expenses are subject to the earned income limit and the dollar limit. 2013 form 1040ez The percentage is based on your adjusted gross income. 2013 form 1040ez Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. 2013 form 1040ez Expenses prepaid in an earlier year. 2013 form 1040ez   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. 2013 form 1040ez Claim the expenses for the later year as if they were actually paid in that later year. 2013 form 1040ez Expenses not paid until the following year. 2013 form 1040ez   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. 2013 form 1040ez You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. 2013 form 1040ez See Payments for prior year's expenses under Amount of Credit in Publication 503. 2013 form 1040ez    If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. 2013 form 1040ez You may be able to claim a credit for them on your 2014 return. 2013 form 1040ez Expenses reimbursed. 2013 form 1040ez   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. 2013 form 1040ez Example. 2013 form 1040ez You paid work-related expenses of $3,000. 2013 form 1040ez You are reimbursed $2,000 by a state social services agency. 2013 form 1040ez You can use only $1,000 to figure your credit. 2013 form 1040ez Medical expenses. 2013 form 1040ez   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. 2013 form 1040ez You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. 2013 form 1040ez   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. 2013 form 1040ez However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. 2013 form 1040ez    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. 2013 form 1040ez Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. 2013 form 1040ez See Reduced Dollar Limit , later. 2013 form 1040ez But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. 2013 form 1040ez Dependent care benefits. 2013 form 1040ez   Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. 2013 form 1040ez Your salary may have been reduced to pay for these benefits. 2013 form 1040ez If you received benefits as an employee, they should be shown in box 10 of your Form W-2. 2013 form 1040ez See Statement for employee , later. 2013 form 1040ez Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. 2013 form 1040ez Enter the amount of these benefits on Form 2441, Part III, line 12. 2013 form 1040ez Exclusion or deduction. 2013 form 1040ez   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. 2013 form 1040ez Your employer can tell you whether your benefit plan qualifies. 2013 form 1040ez To claim the exclusion, you must complete Part III of Form 2441. 2013 form 1040ez You cannot use Form 1040EZ. 2013 form 1040ez   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. 2013 form 1040ez Therefore, you would not get an exclusion from wages. 2013 form 1040ez Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. 2013 form 1040ez To claim the deduction, you must use Form 2441. 2013 form 1040ez   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). 2013 form 1040ez The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. 2013 form 1040ez See Earned Income Limit, later. 2013 form 1040ez    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. 2013 form 1040ez Statement for employee. 2013 form 1040ez   Your employer must give you a Form W-2 (or similar statement) showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. 2013 form 1040ez Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. 2013 form 1040ez Effect of exclusion on credit. 2013 form 1040ez   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. 2013 form 1040ez Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. 2013 form 1040ez Earned income is defined under Earned Income Test , earlier. 2013 form 1040ez For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. 2013 form 1040ez Separated spouse. 2013 form 1040ez   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test , earlier), you are not considered married for purposes of the earned income limit. 2013 form 1040ez Use only your income in figuring the earned income limit. 2013 form 1040ez Surviving spouse. 2013 form 1040ez   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. 2013 form 1040ez Community property laws. 2013 form 1040ez   You should disregard community property laws when you figure earned income for this credit. 2013 form 1040ez You or your spouse is a student or not able to care for self. 2013 form 1040ez   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. 2013 form 1040ez His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. 2013 form 1040ez Spouse works. 2013 form 1040ez   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. 2013 form 1040ez Spouse qualifies for part of month. 2013 form 1040ez    If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. 2013 form 1040ez You are a student or not able to care for self. 2013 form 1040ez   These rules also apply if you are a student or not able to care for yourself and you are filing a joint return. 2013 form 1040ez For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). 2013 form 1040ez If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. 2013 form 1040ez Both spouses qualify. 2013 form 1040ez   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. 2013 form 1040ez Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. 2013 form 1040ez This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. 2013 form 1040ez If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. 2013 form 1040ez This $6,000 limit does not need to be divided equally among them. 2013 form 1040ez For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. 2013 form 1040ez Yearly limit. 2013 form 1040ez   The dollar limit is a yearly limit. 2013 form 1040ez The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. 2013 form 1040ez Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. 2013 form 1040ez Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. 2013 form 1040ez Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. 2013 form 1040ez Your reduced dollar limit is figured on Form 2441, Part III. 2013 form 1040ez See Dependent Care Benefits , earlier, for information on excluding or deducting these benefits. 2013 form 1040ez Example 1. 2013 form 1040ez George is a widower with one child and earns $24,000 a year. 2013 form 1040ez He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. 2013 form 1040ez His employer pays an additional $1,000 under a dependent care benefit plan. 2013 form 1040ez This $1,000 is excluded from George's income. 2013 form 1040ez Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. 2013 form 1040ez This is because his dollar limit is reduced as shown next. 2013 form 1040ez   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. 2013 form 1040ez Randall is married and both he and his wife are employed. 2013 form 1040ez Each has earned income in excess of $6,000. 2013 form 1040ez They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. 2013 form 1040ez Randall's work-related expenses are $6,000 for the year. 2013 form 1040ez Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. 2013 form 1040ez Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. 2013 form 1040ez Although the dollar limit for his work- related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. 2013 form 1040ez This is because his dollar limit is reduced as shown next. 2013 form 1040ez   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits Randall selects from employer's cafeteria plan and excludes from income −5,000 3) Reduced dollar limit on expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. 2013 form 1040ez This percentage depends on your adjusted gross income shown on Form 1040, line 38, or Form 1040A, line 22. 2013 form 1040ez The following table shows the percentage to use based on adjusted gross income. 2013 form 1040ez   IF your adjusted gross income is: THEN the percentage is:       Over   But not over         $0   $15,000   35%       15,000   17,000   34%       17,000   19,000   33%       19,000   21,000   32%       21,000   23,000   31%       23,000   25,000   30%       25,000   27,000   29%       27,000   29,000   28%       29,000   31,000   27%       31,000   33,000   26%       33,000   35,000   25%       35,000   37,000   24%       37,000   39,000   23%       39,000   41,000   22%       41,000   43,000   21%       43,000   No limit   20%   How To Claim the Credit To claim the credit, you can file Form 1040 or Form 1040A. 2013 form 1040ez You cannot claim the credit on Form 1040EZ. 2013 form 1040ez Form 1040 or 1040A. 2013 form 1040ez   You must complete Form 2441 and attach it to your Form 1040 or 1040A. 2013 form 1040ez Enter the credit on Form 1040, line 48, or Form 1040A, line 29. 2013 form 1040ez Limit on credit. 2013 form 1040ez   The amount of credit you can claim is generally limited to the amount of your tax. 2013 form 1040ez For more information, see the Instructions for Form 2441. 2013 form 1040ez Tax credit not refundable. 2013 form 1040ez   You cannot get a refund for any part of the credit that is more than this limit. 2013 form 1040ez Recordkeeping. 2013 form 1040ez You should keep records of your work-related expenses. 2013 form 1040ez Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and the length of the disability. 2013 form 1040ez Other records you should keep to support your claim for the credit are described earlier under Provider Identification Test . 2013 form 1040ez Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. 2013 form 1040ez If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. 2013 form 1040ez If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. 2013 form 1040ez Self-employed persons who are in business for themselves are not household employees. 2013 form 1040ez Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. 2013 form 1040ez If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. 2013 form 1040ez This control could include providing rules of conduct and appearance and requiring regular reports. 2013 form 1040ez In this case, you do not have to pay employment taxes. 2013 form 1040ez But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. 2013 form 1040ez If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. 2013 form 1040ez Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. 2013 form 1040ez Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. 2013 form 1040ez Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. 2013 form 1040ez For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. 2013 form 1040ez State employment tax. 2013 form 1040ez   You may also have to pay state unemployment tax. 2013 form 1040ez Contact your state unemployment tax office for information. 2013 form 1040ez You should also find out whether you need to pay or collect other state employment taxes or carry workers' compensation insurance. 2013 form 1040ez For a list of state unemployment tax agencies, visit the U. 2013 form 1040ez S. 2013 form 1040ez Department of Labor's website. 2013 form 1040ez A link to that website is in Publication 926, or you can find it with an online search. 2013 form 1040ez Prev  Up  Next   Home 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Letter 757C Frequently Asked Questions (FAQs)

What is the letter telling me?

You failed to meet the terms of your established Installment Agreement by making the specified payment amount on the established due date.

What do I have to do?

You may call the toll free number in this letter. The person who answers the phone will assist you.

How much time do I have?

You should contact us or pay your balance due as soon as possible.

What happens if I don't take any action?

Since you failed to meet the terms of the agreement we could proceed to enforce collection action by filing a levy on your bank account or wages or file a lien on your personal property.

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You should call the phone number provided in the letter as soon as possible.

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Page Last Reviewed or Updated: 30-Jan-2014

The 2013 Form 1040ez

2013 form 1040ez 3. 2013 form 1040ez   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. 2013 form 1040ez Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. 2013 form 1040ez Certain contracts held by a charitable remainder trust. 2013 form 1040ez Excise Taxes. 2013 form 1040ez Indoor tanning services. 2013 form 1040ez Application for Recognition of ExemptionPolitical activity. 2013 form 1040ez Private delivery service. 2013 form 1040ez Amendments to organizing documents required. 2013 form 1040ez How to show reasonable action and good faith. 2013 form 1040ez Not acting reasonably and in good faith. 2013 form 1040ez Prejudicing the interest of the Government. 2013 form 1040ez Procedure for requesting extension. 2013 form 1040ez More information. 2013 form 1040ez Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. 2013 form 1040ez Grass roots expenditures. 2013 form 1040ez Lobbying nontaxable amount. 2013 form 1040ez Grass roots nontaxable amount. 2013 form 1040ez Organization that no longer qualifies. 2013 form 1040ez Tax on organization. 2013 form 1040ez Tax on managers. 2013 form 1040ez Taxes on organizations. 2013 form 1040ez Taxes on managers. 2013 form 1040ez Political expenditures. 2013 form 1040ez Correction of expenditure. 2013 form 1040ez Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. 2013 form 1040ez Religious. 2013 form 1040ez Charitable. 2013 form 1040ez Scientific. 2013 form 1040ez Testing for public safety. 2013 form 1040ez Literary. 2013 form 1040ez Educational. 2013 form 1040ez Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). 2013 form 1040ez The prevention of cruelty to children or animals. 2013 form 1040ez To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. 2013 form 1040ez A trust is a fund or foundation and will qualify. 2013 form 1040ez However, an individual or a partnership will not qualify. 2013 form 1040ez Examples. 2013 form 1040ez   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. 2013 form 1040ez Child care organizations. 2013 form 1040ez   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. 2013 form 1040ez Instrumentalities. 2013 form 1040ez   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). 2013 form 1040ez Examples of a qualifying instrumentality might include state schools, universities, or hospitals. 2013 form 1040ez However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. 2013 form 1040ez A state or municipality itself does not qualify for exemption. 2013 form 1040ez Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. 2013 form 1040ez Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. 2013 form 1040ez Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. 2013 form 1040ez Fundraising events. 2013 form 1040ez   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. 2013 form 1040ez This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. 2013 form 1040ez   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. 2013 form 1040ez If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. 2013 form 1040ez You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. 2013 form 1040ez See Disclosure of Quid Pro Quo Contributions in chapter 2. 2013 form 1040ez Exemption application not filed. 2013 form 1040ez   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. 2013 form 1040ez Separate fund—contributions that are deductible. 2013 form 1040ez   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. 2013 form 1040ez   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. 2013 form 1040ez A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. 2013 form 1040ez Personal benefit contracts. 2013 form 1040ez   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. 2013 form 1040ez   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. 2013 form 1040ez Certain annuity contracts. 2013 form 1040ez   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). 2013 form 1040ez Certain contracts held by a charitable remainder trust. 2013 form 1040ez   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. 2013 form 1040ez Excise tax. 2013 form 1040ez   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. 2013 form 1040ez The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. 2013 form 1040ez Excise Taxes. 2013 form 1040ez   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. 2013 form 1040ez Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. 2013 form 1040ez Indoor tanning services. 2013 form 1040ez   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. 2013 form 1040ez For more information, go to IRS. 2013 form 1040ez gov and select Affordable Care Act Tax Provisions. 2013 form 1040ez Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. 2013 form 1040ez For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. 2013 form 1040ez See the organization headings that follow for specific information your organization may need to provide. 2013 form 1040ez Form 1023. 2013 form 1040ez   Your organization must file its application for recognition of exemption on Form 1023. 2013 form 1040ez See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. 2013 form 1040ez Some organizations are not required to file Form 1023. 2013 form 1040ez See Organizations Not Required To File Form 1023, later. 2013 form 1040ez    Additional information to help you complete your application can be found online. 2013 form 1040ez Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. 2013 form 1040ez See Exemption Requirements - Section 501(c)(3) Organizations. 2013 form 1040ez   Form 1023 and accompanying statements must show that all of the following are true. 2013 form 1040ez The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. 2013 form 1040ez ) specified in the introduction to this chapter. 2013 form 1040ez No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. 2013 form 1040ez You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. 2013 form 1040ez The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. 2013 form 1040ez See Political activity, next, and Lobbying Expenditures , near the end of this chapter. 2013 form 1040ez Political activity. 2013 form 1040ez   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). 2013 form 1040ez Such participation or intervention includes the publishing or distributing of statements. 2013 form 1040ez   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. 2013 form 1040ez Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. 2013 form 1040ez Effective date of exemption. 2013 form 1040ez   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. 2013 form 1040ez These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. 2013 form 1040ez If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. 2013 form 1040ez Otherwise, exemption will be recognized only from the date of receipt. 2013 form 1040ez The date of receipt is the date of the U. 2013 form 1040ez S. 2013 form 1040ez postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. 2013 form 1040ez Private delivery service. 2013 form 1040ez   If a private delivery service designated by the IRS, rather than the U. 2013 form 1040ez S. 2013 form 1040ez Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. 2013 form 1040ez The following private delivery services have been designated by the IRS. 2013 form 1040ez DHL Express (DHL): DHL “Same Day” Service. 2013 form 1040ez Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. 2013 form 1040ez United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 2013 form 1040ez M. 2013 form 1040ez , UPS Worldwide Express Plus, and UPS Worldwide Express. 2013 form 1040ez Amendments to organizing documents required. 2013 form 1040ez   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. 2013 form 1040ez If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. 2013 form 1040ez Extensions of time for filing. 2013 form 1040ez   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. 2013 form 1040ez Automatic 12-month extension. 2013 form 1040ez Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. 2013 form 1040ez To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. 2013 form 1040ez 9100-2. 2013 form 1040ez ” Discretionary extensions. 2013 form 1040ez An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. 2013 form 1040ez How to show reasonable action and good faith. 2013 form 1040ez   An organization acted reasonably and showed good faith if at least one of the following is true. 2013 form 1040ez The organization requests relief before its failure to file is discovered by the IRS. 2013 form 1040ez The organization failed to file because of intervening events beyond its control. 2013 form 1040ez The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. 2013 form 1040ez The organization reasonably relied upon the written advice of the IRS. 2013 form 1040ez The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. 2013 form 1040ez An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. 2013 form 1040ez Not acting reasonably and in good faith. 2013 form 1040ez   An organization has not acted reasonably and in good faith under the following circumstances. 2013 form 1040ez It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. 2013 form 1040ez It was informed of the requirement to file and related tax consequences, but chose not to file. 2013 form 1040ez It uses hindsight in requesting relief. 2013 form 1040ez The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. 2013 form 1040ez Prejudicing the interest of the Government. 2013 form 1040ez   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. 2013 form 1040ez Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. 2013 form 1040ez The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. 2013 form 1040ez The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. 2013 form 1040ez Procedure for requesting extension. 2013 form 1040ez   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. 2013 form 1040ez A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. 2013 form 1040ez Any documents relevant to the application. 2013 form 1040ez An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. 2013 form 1040ez If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. 2013 form 1040ez This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. 2013 form 1040ez ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. 2013 form 1040ez This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. 2013 form 1040ez The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. 2013 form 1040ez These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. 2013 form 1040ez ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. 2013 form 1040ez The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. 2013 form 1040ez The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. 2013 form 1040ez   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. 2013 form 1040ez Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. 2013 form 1040ez More information. 2013 form 1040ez   For more information about these procedures, see Regulations sections 301. 2013 form 1040ez 9100-1, 301. 2013 form 1040ez 9100-2, 301. 2013 form 1040ez 9100-3, Revenue Procedure 2013-4, section 6. 2013 form 1040ez 04, 2013-1 I. 2013 form 1040ez R. 2013 form 1040ez B. 2013 form 1040ez 126, and Revenue Procedure 2013-8, 2013-1 I. 2013 form 1040ez R. 2013 form 1040ez B. 2013 form 1040ez 237. 2013 form 1040ez See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. 2013 form 1040ez Notification from the IRS. 2013 form 1040ez   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. 2013 form 1040ez Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. 2013 form 1040ez These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. 2013 form 1040ez Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). 2013 form 1040ez These organizations are exempt automatically if they meet the requirements of section 501(c)(3). 2013 form 1040ez Filing Form 1023 to establish exemption. 2013 form 1040ez   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. 2013 form 1040ez By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. 2013 form 1040ez A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. 2013 form 1040ez Private foundations. 2013 form 1040ez   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. 2013 form 1040ez Gross receipts test. 2013 form 1040ez   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. 2013 form 1040ez   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. 2013 form 1040ez For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. 2013 form 1040ez The organization must file Form 1023 within 90 days after the end of its second tax year. 2013 form 1040ez   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. 2013 form 1040ez However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. 2013 form 1040ez Example. 2013 form 1040ez   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. 2013 form 1040ez It was incorporated on January 1, 2009, and files returns on a calendar-year basis. 2013 form 1040ez It did not file a Form 1023. 2013 form 1040ez The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. 2013 form 1040ez Therefore, it did not have to file Form 1023 and is exempt for those years. 2013 form 1040ez However, for 2010, 2011, and 2012 the total gross receipts were $15,900. 2013 form 1040ez Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. 2013 form 1040ez If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. 2013 form 1040ez The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. 2013 form 1040ez   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. 2013 form 1040ez See the procedures for this extension discussed earlier. 2013 form 1040ez Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. 2013 form 1040ez This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. 2013 form 1040ez Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. 2013 form 1040ez These conditions for exemption are referred to as the organizational test. 2013 form 1040ez Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. 2013 form 1040ez Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). 2013 form 1040ez The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. 2013 form 1040ez Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. 2013 form 1040ez Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. 2013 form 1040ez In interpreting an organization's articles, the law of the state where the organization was created is controlling. 2013 form 1040ez If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. 2013 form 1040ez The following are examples illustrating the organizational test. 2013 form 1040ez Example 1. 2013 form 1040ez Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). 2013 form 1040ez These articles appropriately limit the organization's purposes. 2013 form 1040ez The organization meets the organizational test. 2013 form 1040ez Example 2. 2013 form 1040ez An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. 2013 form 1040ez The organization will not be properly limited as to its purposes since all research is not scientific. 2013 form 1040ez The organization does not meet the organizational test. 2013 form 1040ez Example 3. 2013 form 1040ez An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). 2013 form 1040ez The organization meets the organizational test. 2013 form 1040ez Example 4. 2013 form 1040ez If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. 2013 form 1040ez Example 5. 2013 form 1040ez If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. 2013 form 1040ez On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. 2013 form 1040ez Example 6. 2013 form 1040ez If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. 2013 form 1040ez Such purposes are vague and may be accomplished other than in an exempt manner. 2013 form 1040ez Example 7. 2013 form 1040ez A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. 2013 form 1040ez A hospital may or may not be exempt depending on the manner in which it is operated. 2013 form 1040ez Example 8. 2013 form 1040ez An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. 2013 form 1040ez Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. 2013 form 1040ez This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. 2013 form 1040ez If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. 2013 form 1040ez Dedication. 2013 form 1040ez   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. 2013 form 1040ez Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. 2013 form 1040ez Distribution. 2013 form 1040ez   Revenue Procedure 82-2, 1982-1 C. 2013 form 1040ez B. 2013 form 1040ez 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. 2013 form 1040ez The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. 2013 form 1040ez   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. 2013 form 1040ez Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. 2013 form 1040ez Sample articles of organization. 2013 form 1040ez   See sample articles of organization in the Appendix in the back of this publication. 2013 form 1040ez Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. 2013 form 1040ez In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. 2013 form 1040ez You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. 2013 form 1040ez If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. 2013 form 1040ez See also Private Schools , discussed later. 2013 form 1040ez Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. 2013 form 1040ez Advocacy of a position. 2013 form 1040ez   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. 2013 form 1040ez The mere presentation of unsupported opinion is not educational. 2013 form 1040ez Method not educational. 2013 form 1040ez   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). 2013 form 1040ez The following factors may indicate that the method is not educational. 2013 form 1040ez The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. 2013 form 1040ez The facts that purport to support the viewpoint are distorted. 2013 form 1040ez The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. 2013 form 1040ez The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. 2013 form 1040ez   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. 2013 form 1040ez Qualifying organizations. 2013 form 1040ez   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. 2013 form 1040ez College book stores, cafeterias, restaurants, etc. 2013 form 1040ez   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. 2013 form 1040ez Alumni association. 2013 form 1040ez   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. 2013 form 1040ez If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . 2013 form 1040ez Athletic organization. 2013 form 1040ez   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. 2013 form 1040ez If it is not so engaged, your organization may be exempt as a social club described in chapter 4. 2013 form 1040ez Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. 2013 form 1040ez If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. 2013 form 1040ez Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. 2013 form 1040ez The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. 2013 form 1040ez (This information also must be projected, so far as may be feasible, for the next academic year. 2013 form 1040ez ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. 2013 form 1040ez A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. 2013 form 1040ez A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. 2013 form 1040ez The public school district and county in which the school is located. 2013 form 1040ez How to determine racial composition. 2013 form 1040ez   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. 2013 form 1040ez Nevertheless, a statement of the method by which the racial composition was determined must be supplied. 2013 form 1040ez The identity of individual students or members of the faculty and administrative staff should not be included with this information. 2013 form 1040ez   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. 2013 form 1040ez Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. 2013 form 1040ez Also, the school must circulate information that clearly states the school's admission policies. 2013 form 1040ez A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. 2013 form 1040ez The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. 2013 form 1040ez The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. 2013 form 1040ez Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. 2013 form 1040ez A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. 2013 form 1040ez A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. 2013 form 1040ez Policy statement. 2013 form 1040ez   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. 2013 form 1040ez Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. 2013 form 1040ez Publicity requirement. 2013 form 1040ez   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. 2013 form 1040ez Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. 2013 form 1040ez To satisfy this requirement, the school must use one of the following two methods. 2013 form 1040ez Method one. 2013 form 1040ez   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. 2013 form 1040ez Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. 2013 form 1040ez When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. 2013 form 1040ez If this method is used, the notice must meet the following printing requirements. 2013 form 1040ez It must appear in a section of the newspaper likely to be read by prospective students and their families. 2013 form 1040ez It must occupy at least 3 column inches. 2013 form 1040ez It must have its title printed in at least 12 point bold face type. 2013 form 1040ez It must have the remaining text printed in at least 8 point type. 2013 form 1040ez The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. 2013 form 1040ez It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. 2013 form 1040ez   Method two. 2013 form 1040ez   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. 2013 form 1040ez If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. 2013 form 1040ez In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. 2013 form 1040ez The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. 2013 form 1040ez Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. 2013 form 1040ez Exceptions. 2013 form 1040ez   The publicity requirements will not apply in the following situations. 2013 form 1040ez First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. 2013 form 1040ez These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. 2013 form 1040ez If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. 2013 form 1040ez Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . 2013 form 1040ez   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. 2013 form 1040ez The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. 2013 form 1040ez   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. 2013 form 1040ez Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. 2013 form 1040ez   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. 2013 form 1040ez The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. 2013 form 1040ez In this regard, it is each school's responsibility to determine whether either of the exceptions applies. 2013 form 1040ez Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. 2013 form 1040ez Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. 2013 form 1040ez Facilities and programs. 2013 form 1040ez   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. 2013 form 1040ez Scholarship and loan programs. 2013 form 1040ez   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. 2013 form 1040ez This must be known throughout the general community being served by the school and should be referred to in its publicity. 2013 form 1040ez Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. 2013 form 1040ez Certification. 2013 form 1040ez   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. 2013 form 1040ez   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. 2013 form 1040ez Recordkeeping requirements. 2013 form 1040ez With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. 2013 form 1040ez Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. 2013 form 1040ez Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. 2013 form 1040ez Copies of all materials used by or on behalf of the school to solicit contributions. 2013 form 1040ez Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. 2013 form 1040ez (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. 2013 form 1040ez ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. 2013 form 1040ez However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. 2013 form 1040ez The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. 2013 form 1040ez Similarly, the IRS does not require a school to keep records prohibited under state or federal law. 2013 form 1040ez Exceptions. 2013 form 1040ez   The school does not have to independently maintain these records for IRS use if both of the following are true. 2013 form 1040ez Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. 2013 form 1040ez The school maintains copies of these reports from which this information is readily obtainable. 2013 form 1040ez If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. 2013 form 1040ez Failure to maintain records. 2013 form 1040ez   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. 2013 form 1040ez Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. 2013 form 1040ez However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. 2013 form 1040ez Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). 2013 form 1040ez Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. 2013 form 1040ez Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. 2013 form 1040ez Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. 2013 form 1040ez The rest of this section contains a description of the information to be provided by certain specific organizations. 2013 form 1040ez This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. 2013 form 1040ez Each of the following organizations must submit the information described. 2013 form 1040ez Charitable organization supporting education. 2013 form 1040ez   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. 2013 form 1040ez Scholarships. 2013 form 1040ez   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. 2013 form 1040ez Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. 2013 form 1040ez How and by whom the recipients are or will be selected. 2013 form 1040ez If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. 2013 form 1040ez If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. 2013 form 1040ez A copy of the scholarship application form and any brochures or literature describing the scholarship program. 2013 form 1040ez Hospital. 2013 form 1040ez   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. 2013 form 1040ez   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. 2013 form 1040ez You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. 2013 form 1040ez Submit also an appraisal showing the fair rental value of the rented space. 2013 form 1040ez Clinic. 2013 form 1040ez   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. 2013 form 1040ez Home for the aged. 2013 form 1040ez   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. 2013 form 1040ez Community nursing bureau. 2013 form 1040ez   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. 2013 form 1040ez Organization providing loans. 2013 form 1040ez   If you make, or will make, loans for charitable and educational purposes, submit the following information. 2013 form 1040ez An explanation of the circumstances under which such loans are, or will be, made. 2013 form 1040ez Criteria for selection, including the rules of eligibility. 2013 form 1040ez How and by whom the recipients are or will be selected. 2013 form 1040ez Manner of repayment of the loan. 2013 form 1040ez Security required, if any. 2013 form 1040ez Interest charged, if any, and when payable. 2013 form 1040ez Copies in duplicate of the loan application and any brochures or literature describing the loan program. 2013 form 1040ez Public-interest law firms. 2013 form 1040ez   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. 2013 form 1040ez How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. 2013 form 1040ez Whether the organization will accept fees for its services. 2013 form 1040ez A description of the cases litigated or to be litigated and how they benefit the public generally. 2013 form 1040ez Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. 2013 form 1040ez Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. 2013 form 1040ez Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. 2013 form 1040ez Acceptance of attorneys' fees. 2013 form 1040ez   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. 2013 form 1040ez Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. 2013 form 1040ez   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. 2013 form 1040ez All fee awards must be paid to the organization and not to its individual staff attorneys. 2013 form 1040ez Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. 2013 form 1040ez Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. 2013 form 1040ez   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. 2013 form 1040ez   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. 2013 form 1040ez Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. 2013 form 1040ez That the particular religious beliefs of the organization are truly and sincerely held. 2013 form 1040ez That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. 2013 form 1040ez Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. 2013 form 1040ez If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. 2013 form 1040ez Churches. 2013 form 1040ez   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. 2013 form 1040ez In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. 2013 form 1040ez   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. 2013 form 1040ez Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. 2013 form 1040ez The IRS considers the facts and circumstances of each organization applying for church status. 2013 form 1040ez Convention or association of churches. 2013 form 1040ez   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. 2013 form 1040ez Integrated auxiliaries. 2013 form 1040ez   An organization is an integrated auxiliary of a church if all the following are true. 2013 form 1040ez The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). 2013 form 1040ez It is affiliated with a church or a convention or association of churches. 2013 form 1040ez It is internally supported. 2013 form 1040ez An organization is internally supported unless both of the following are true. 2013 form 1040ez It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). 2013 form 1040ez It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. 2013 form 1040ez Special rule. 2013 form 1040ez   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. 2013 form 1040ez   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. 2013 form 1040ez   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. 2013 form 1040ez Scientific Organizations You must show that your organization's research will be carried on in the public interest. 2013 form 1040ez Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. 2013 form 1040ez Aiding in the scientific education of college or university students. 2013 form 1040ez Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th