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Amend Colorado Tax Return

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Amend Colorado Tax Return

Amend colorado tax return Publication 523 - Main Content Table of Contents Main HomeVacant land. Amend colorado tax return Factors used to determine main home. Amend colorado tax return Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining BasisCost As Basis Basis Other Than Cost Adjusted Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Nonqualified Use Business Use or Rental of HomeUnrecaptured section 1250 gain. Amend colorado tax return Property Used Partly for Business or Rental Reporting the SaleSeller-financed mortgage. Amend colorado tax return Individual taxpayer identification number (ITIN). Amend colorado tax return More information. Amend colorado tax return Comprehensive Examples Special SituationsException for sales to related persons. Amend colorado tax return Deducting Taxes in the Year of SaleForm 1099-S. Amend colorado tax return More information. Amend colorado tax return Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of First-Time Homebuyer CreditExample. Amend colorado tax return Worksheets How To Get Tax HelpLow Income Taxpayer Clinics Main Home This section explains the term “main home. Amend colorado tax return ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Amend colorado tax return To exclude gain under the rules in this publication, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Amend colorado tax return Land. Amend colorado tax return   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Amend colorado tax return Example. Amend colorado tax return You buy a piece of land and move your main home to it. Amend colorado tax return Then, you sell the land on which your main home was located. Amend colorado tax return This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Amend colorado tax return Vacant land. Amend colorado tax return   The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land. Amend colorado tax return If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. Amend colorado tax return See Excluding the Gain , later. Amend colorado tax return The destruction of your home is treated as a sale of your home. Amend colorado tax return As a result, you may be able to meet these requirements if you sell vacant land used as a part of your main home within 2 years from the date of the destruction of your main home. Amend colorado tax return For information, see Publication 547. Amend colorado tax return More than one home. Amend colorado tax return   If you have more than one home, you can exclude gain only from the sale of your main home. Amend colorado tax return You must include in income the gain from the sale of any other home. Amend colorado tax return If you have two homes and live in each of them, your main home is ordinarily the one you live in most of the time during the year. Amend colorado tax return Example 1. Amend colorado tax return You own two homes, one in New York and one in Florida. Amend colorado tax return From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Amend colorado tax return In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Amend colorado tax return You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Amend colorado tax return Example 2. Amend colorado tax return You own a house, but you live in another house that you rent. Amend colorado tax return The rented house is your main home. Amend colorado tax return Example 3. Amend colorado tax return You own two homes, one in Virginia and one in New Hampshire. Amend colorado tax return In 2009 and 2010, you lived in the Virginia home. Amend colorado tax return In 2011 and 2012, you lived in the New Hampshire home. Amend colorado tax return In 2013, you lived again in the Virginia home. Amend colorado tax return Your main home in 2009, 2010, and 2013 is the Virginia home. Amend colorado tax return Your main home in 2011 and 2012 is the New Hampshire home. Amend colorado tax return You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Amend colorado tax return Factors used to determine main home. Amend colorado tax return   In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Amend colorado tax return Those factors include the following. Amend colorado tax return Your place of employment. Amend colorado tax return The location of your family members' main home. Amend colorado tax return Your mailing address for bills and correspondence. Amend colorado tax return The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. Amend colorado tax return The location of the banks you use. Amend colorado tax return The location of recreational clubs and religious organizations of which you are a member. Amend colorado tax return Property used partly as your main home. Amend colorado tax return   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Amend colorado tax return For details, see Business Use or Rental of Home , later. Amend colorado tax return Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Amend colorado tax return Subtract the adjusted basis from the amount realized to get your gain or loss. Amend colorado tax return     Selling price     − Selling expenses       Amount realized     − Adjusted basis       Gain or loss   Gain. Amend colorado tax return   Gain is the excess of the amount realized over the adjusted basis of the property. Amend colorado tax return Loss. Amend colorado tax return   Loss is the excess of the adjusted basis over the amount realized for the property. Amend colorado tax return Selling Price The selling price is the total amount you receive for your home. Amend colorado tax return It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Amend colorado tax return Personal property. Amend colorado tax return   The selling price of your home does not include amounts you received for personal property sold with your home. Amend colorado tax return Personal property is property that is not a permanent part of the home. Amend colorado tax return Examples are furniture, draperies, rugs, a washer and dryer, and lawn equipment. Amend colorado tax return Separately stated amounts you received for these items should not be shown on Form 1099-S (discussed later). Amend colorado tax return Any gains from sales of personal property must be included in your income, but not as part of the sale of your home. Amend colorado tax return Payment by employer. Amend colorado tax return   You may have to sell your home because of a job transfer. Amend colorado tax return If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Amend colorado tax return Your employer will include it as wages in box 1 of your Form W-2 and you will include it in your income on Form 1040, line 7, or on Form 1040NR, line 8. Amend colorado tax return Option to buy. Amend colorado tax return   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Amend colorado tax return If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Amend colorado tax return Report this amount on Form 1040, line 21, or on Form 1040NR, line 21. Amend colorado tax return Form 1099-S. Amend colorado tax return   If you received Form 1099-S, box 2 (gross proceeds) should show the total amount you received for your home. Amend colorado tax return   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Amend colorado tax return Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Amend colorado tax return Amount Realized The amount realized is the selling price minus selling expenses. Amend colorado tax return Selling expenses. Amend colorado tax return   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Amend colorado tax return ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Amend colorado tax return This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Amend colorado tax return For information on how to figure your home's adjusted basis, see Determining Basis , later. Amend colorado tax return Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Amend colorado tax return Gain on sale. Amend colorado tax return   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, generally is taxable. Amend colorado tax return Loss on sale. Amend colorado tax return   If the amount realized is less than the adjusted basis, the difference is a loss. Amend colorado tax return Generally, a loss on the sale of your main home cannot be deducted. Amend colorado tax return Jointly owned home. Amend colorado tax return   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Amend colorado tax return Separate returns. Amend colorado tax return   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Amend colorado tax return Your ownership interest is generally determined by state law. Amend colorado tax return Joint owners not married. Amend colorado tax return   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Amend colorado tax return Each of you applies the rules discussed in this publication on an individual basis. Amend colorado tax return Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Amend colorado tax return Foreclosure or repossession. Amend colorado tax return   If your home was foreclosed on or repossessed, you have a disposition. Amend colorado tax return See Publication 4681 to determine if you have ordinary income, gain, or loss. Amend colorado tax return More information. Amend colorado tax return   If part of a home is used for business or rental purposes, see Foreclosures and Repossessions in chapter 1 of Publication 544 for more information. Amend colorado tax return Publication 544 has examples of how to figure gain or loss on a foreclosure or repossession. Amend colorado tax return Abandonment. Amend colorado tax return   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Amend colorado tax return Trading (exchanging) homes. Amend colorado tax return   If you trade your home for another home, treat the trade as a sale and a purchase. Amend colorado tax return Example. Amend colorado tax return You owned and lived in a home with an adjusted basis of $41,000. Amend colorado tax return A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Amend colorado tax return This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 − $41,000). Amend colorado tax return If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Amend colorado tax return Transfer to spouse. Amend colorado tax return   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss (unless the Exception, discussed next, applies). Amend colorado tax return This is true even if you receive cash or other consideration for the home. Amend colorado tax return As a result, the rules explained in this publication do not apply. Amend colorado tax return   If you owned your home jointly with your spouse and transfer your interest in the home to your spouse, or to your former spouse incident to your divorce, the same rule applies. Amend colorado tax return You have no gain or loss. Amend colorado tax return Exception. Amend colorado tax return   These transfer rules do not apply if your spouse or former spouse is a nonresident alien. Amend colorado tax return In that case, you generally will have a gain or loss. Amend colorado tax return More information. Amend colorado tax return    See Property Settlements in Publication 504, Divorced or Separated Individuals, for more information. Amend colorado tax return Involuntary conversion. Amend colorado tax return   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Amend colorado tax return This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations (see Home destroyed or condemned ). Amend colorado tax return Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Amend colorado tax return Your basis in your home is determined by how you got the home. Amend colorado tax return Generally, your basis is its cost if you bought it or built it. Amend colorado tax return If you got it in some other way (inheritance, gift, etc. Amend colorado tax return ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Amend colorado tax return While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Amend colorado tax return The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Amend colorado tax return To figure your adjusted basis, you can use Worksheet 1, near the end of this publication. Amend colorado tax return Filled-in examples of that worksheet are included in the Comprehensive Examples , later. Amend colorado tax return Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Amend colorado tax return Purchase. Amend colorado tax return   If you bought your home, your basis is its cost to you. Amend colorado tax return This includes the purchase price and certain settlement or closing costs. Amend colorado tax return In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Amend colorado tax return If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed later. Amend colorado tax return Seller-paid points. Amend colorado tax return   If the person who sold you your home paid points on your loan, you may have to reduce your home's basis by the amount of the points, as shown in the following chart. Amend colorado tax return    IF you bought your home. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return THEN reduce your home's basis by the seller-paid points. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return after 1990 but before April 4, 1994 only if you deducted them as home mortgage interest in the year paid. Amend colorado tax return after April 3, 1994 even if you did not deduct them. Amend colorado tax return Settlement fees or closing costs. Amend colorado tax return   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Amend colorado tax return You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Amend colorado tax return A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Amend colorado tax return   Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Amend colorado tax return   Some of the settlement fees or closing costs that you can include in your basis are: Abstract fees (abstract of title fees), Charges for installing utility services, Legal fees (including fees for the title search and preparing the sales contract and deed), Recording fees, Survey fees, Transfer or stamp taxes, Owner's title insurance, and Any amounts the seller owes that you agree to pay, such as: Certain real estate taxes (discussed later), Back interest, Recording or mortgage fees, Charges for improvements or repairs, and Sales commissions. Amend colorado tax return   Some settlement fees and closing costs you cannot include in your basis are: Fire insurance premiums, Rent for occupancy of the house before closing, Charges for utilities or other services related to occupancy of the house before closing, Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994), Charges connected with getting a mortgage loan, such as: Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs), Loan assumption fees, Cost of a credit report, Fee for an appraisal required by a lender, and Fees for refinancing a mortgage. Amend colorado tax return Real estate taxes. Amend colorado tax return   Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart. Amend colorado tax return    IF. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return AND. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return THEN the taxes. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return you pay taxes that the seller owed on the home up to the date of sale the seller does not reimburse you are added to the basis of your home. Amend colorado tax return the seller reimburses you do not affect the basis of your home. Amend colorado tax return the seller pays taxes for you (taxes owed beginning on the date of sale) you do not reimburse the seller are subtracted from the basis of your home. Amend colorado tax return you reimburse the seller do not affect the basis of your home. Amend colorado tax return Construction. Amend colorado tax return   If you contracted to have your house built on land you own, your basis is: The cost of the land, plus The amount it cost you to complete the house, including: The cost of labor and materials, Any amounts paid to a contractor, Any architect's fees, Building permit charges, Utility meter and connection charges, and Legal fees directly connected with building the house. Amend colorado tax return   Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. Amend colorado tax return It also includes certain settlement or closing costs. Amend colorado tax return You may have to reduce your basis by points the seller paid for you. Amend colorado tax return For more information, see Seller-paid points and Settlement fees or closing costs , earlier. Amend colorado tax return Built by you. Amend colorado tax return   If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. Amend colorado tax return Do not include in the cost of the house: The value of your own labor, or The value of any other labor you did not pay for. Amend colorado tax return Temporary housing. Amend colorado tax return   If a builder gave you temporary housing while your home was being finished, you must reduce your basis by the part of the contract price that was for the temporary housing. Amend colorado tax return To figure the amount of the reduction, multiply the contract price by a fraction. Amend colorado tax return The numerator is the value of the temporary housing, and the denominator is the sum of the value of the temporary housing plus the value of the new home. Amend colorado tax return Cooperative apartment. Amend colorado tax return   If you are a tenant-stockholder in a cooperative housing corporation, your basis in the cooperative apartment used as your home is usually the cost of your stock in the corporation. Amend colorado tax return This may include your share of a mortgage on the apartment building. Amend colorado tax return Condominium. Amend colorado tax return   To determine your basis in a condominium apartment used as your home, use the same rules as for any other home. Amend colorado tax return Basis Other Than Cost You must use a basis other than cost, such as adjusted basis or fair market value, if you received your home as a gift, inheritance, a trade, or from your spouse. Amend colorado tax return These situations are discussed in the following pages. Amend colorado tax return Also, the instructions for Worksheet 1 (near the end of the publication) address each of these issues. Amend colorado tax return Other special rules may apply in certain situations. Amend colorado tax return If you converted the property, or some part of it, to business or rental use, see Property Changed to Business or Rental Use, in Publication 551. Amend colorado tax return Home received as gift. Amend colorado tax return   Use the following chart to find the basis of a home you received as a gift. Amend colorado tax return IF the donor's adjusted basis at the time of the gift was. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return THEN your basis is. Amend colorado tax return . Amend colorado tax return . Amend colorado tax return more than the fair market value of the home at that time the same as the donor's adjusted basis at the time of the gift. Amend colorado tax return   Exception: If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of the gift as your basis. Amend colorado tax return If using the fair market value results in a gain, you have neither gain nor loss. Amend colorado tax return equal to or less than the fair market value at that time, and you received the gift before 1977 the smaller of the: • donor's adjusted basis, plus  any federal gift tax paid on  the gift, or • the home's fair market value  at the time of the gift. Amend colorado tax return equal to or less than the fair market value at that time, and you received the gift after 1976 the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home (explained next). Amend colorado tax return Fair market value. Amend colorado tax return   The fair market value of property at the time of the gift is the value of the property as appraised for purposes of the federal gift tax. Amend colorado tax return If the gift was not subject to the federal gift tax, the fair market value is the value as appraised for the purposes of a state gift tax. Amend colorado tax return Part of federal gift tax due to net increase in value. Amend colorado tax return   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Amend colorado tax return The numerator of the fraction is the net increase in the value of the home, and the denominator is the value of the home for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Amend colorado tax return The net increase in the value of the home is its fair market value minus the donor's adjusted basis immediately before the gift. Amend colorado tax return Home acquired from a decedent who died before or after 2010. Amend colorado tax return   If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). Amend colorado tax return If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. Amend colorado tax return If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes. Amend colorado tax return Surviving spouse. Amend colorado tax return   If you are a surviving spouse and you owned your home jointly, your basis in the home will change. Amend colorado tax return The new basis for the interest your spouse owned will be its fair market value on the date of death (or alternate valuation date). Amend colorado tax return The basis in your interest will remain the same. Amend colorado tax return Your new basis in the home is the total of these two amounts. Amend colorado tax return   If you and your spouse owned the home either as tenants by the entirety or as joint tenants with right of survivorship, you will each be considered to have owned one-half of the home. Amend colorado tax return Example. Amend colorado tax return Your jointly owned home (owned as joint tenants with right of survivorship) had an adjusted basis of $50,000 on the date of your spouse's death, and the fair market value on that date was $100,000. Amend colorado tax return Your new basis in the home is $75,000 ($25,000 for one-half of the adjusted basis plus $50,000 for one-half of the fair market value). Amend colorado tax return Community property. Amend colorado tax return   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), each spouse is usually considered to own half of the community property. Amend colorado tax return When either spouse dies, the total fair market value of the community property becomes the basis of the entire property, including the part belonging to the surviving spouse. Amend colorado tax return For this to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Amend colorado tax return   For more information about community property, see Publication 555, Community Property. Amend colorado tax return    If you are selling a home in which you acquired an interest from a decedent who died in 2010, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your basis. Amend colorado tax return Home received as trade. Amend colorado tax return   If you acquired your home as a trade for other property, in most cases, the basis of your home is the fair market value (at the time of the trade) of the property you gave up. Amend colorado tax return If you traded one home for another, you have made a sale and purchase. Amend colorado tax return In that case, you may have a gain. Amend colorado tax return See Trading (exchanging) homes under Dispositions Other Than Sales, earlier, for an example of figuring the gain. Amend colorado tax return Home received from spouse. Amend colorado tax return   If you received your home from your spouse or from your former spouse incident to your divorce, your basis in the home depends on the date of the transfer. Amend colorado tax return Transfers after July 18, 1984. Amend colorado tax return   If you received the home after July 18, 1984, there was no gain or loss on the transfer. Amend colorado tax return In most cases, your basis in this home is the same as your spouse's (or former spouse's) adjusted basis just before you received it. Amend colorado tax return This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other considerations. Amend colorado tax return   If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, in most cases, your basis in the half interest received from your spouse is the same as your spouse's adjusted basis just before the transfer. Amend colorado tax return This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. Amend colorado tax return Your basis in the half interest you already owned does not change. Amend colorado tax return Your new basis in the home is the total of these two amounts. Amend colorado tax return Transfers before July 19, 1984. Amend colorado tax return   If you received your home before July 19, 1984, in exchange for your release of marital rights, in most cases, your basis in the home is generally its fair market value at the time you received it. Amend colorado tax return More information. Amend colorado tax return   For more information on property received from a spouse or former spouse, see Property Settlements in Publication 504. Amend colorado tax return Involuntary conversion. Amend colorado tax return   If your home is destroyed or condemned, you may receive insurance proceeds or a condemnation award. Amend colorado tax return If you acquired a replacement home with these proceeds, the basis is its cost decreased by any gain not recognized on the conversion under the rules explained in: Publication 547, in the case of a home that was destroyed, or Chapter 1 of Publication 544, in the case of a home that was condemned. Amend colorado tax return Example. Amend colorado tax return A fire destroyed your home that you owned and used for only 6 months. Amend colorado tax return The home had an adjusted basis of $80,000 and the insurance company paid you $130,000 for the loss. Amend colorado tax return Your gain is $50,000 ($130,000 − $80,000). Amend colorado tax return You bought a replacement home for $100,000. Amend colorado tax return The part of your gain that is taxable is $30,000 ($130,000 − $100,000), the unspent part of the payment from the insurance company. Amend colorado tax return The rest of the gain ($20,000) is not taxable, so that amount reduces your basis in the new home. Amend colorado tax return The basis of the new home is figured as follows. Amend colorado tax return Cost of replacement home $100,000 Minus: Gain not recognized 20,000 Basis of the replacement home $80,000 More information. Amend colorado tax return   For more information about basis, see Publication 551. Amend colorado tax return Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Amend colorado tax return To figure your adjusted basis, you can use Worksheet 1, found toward the end of this publication. Amend colorado tax return Filled-in examples of that worksheet are included in Comprehensive Examples , later. Amend colorado tax return Recordkeeping. Amend colorado tax return You should keep records to prove your home's adjusted basis. Amend colorado tax return Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Amend colorado tax return But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Amend colorado tax return Keep records proving the basis of both homes as long as they are needed for tax purposes. Amend colorado tax return The records you should keep include: Proof of the home's purchase price and purchase expenses; Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; Any Form 982 you filed to exclude any discharge of qualified principal residence indebtedness; Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Amend colorado tax return Increases to Basis These include the following. Amend colorado tax return Additions and other improvements that have a useful life of more than 1 year. Amend colorado tax return Special assessments for local improvements. Amend colorado tax return Amounts you spent after a casualty to restore damaged property. Amend colorado tax return Improvements. Amend colorado tax return   These add to the value of your home, prolong its useful life, or adapt it to new uses. Amend colorado tax return You add the cost of additions and other improvements to the basis of your property. Amend colorado tax return   The following chart lists some other examples of improvements. Amend colorado tax return Examples of Improvements That Increase Basis Additions Bedroom Bathroom Deck Garage Porch Patio Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence  Retaining wall Sprinkler system Swimming pool  Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system  Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances  Kitchen modernization  Flooring Wall-to-wall carpeting  Insulation Attic Walls Floors Pipes and duct work Improvements no longer part of home. Amend colorado tax return   Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Amend colorado tax return Example. Amend colorado tax return You put wall-to-wall carpeting in your home 15 years ago. Amend colorado tax return Later, you replaced that carpeting with new wall-to-wall carpeting. Amend colorado tax return The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Amend colorado tax return Repairs. Amend colorado tax return   These maintain your home in good condition but do not add to its value or prolong its life. Amend colorado tax return You do not add their cost to the basis of your property. Amend colorado tax return Examples. Amend colorado tax return Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs. Amend colorado tax return Exception. Amend colorado tax return   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. Amend colorado tax return For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. Amend colorado tax return Decreases to Basis These include the following. Amend colorado tax return Discharge of qualified principal residence indebtedness that was excluded from income (but not below zero). Amend colorado tax return For details, see Publication 4681. Amend colorado tax return Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Amend colorado tax return For details, see Publication 4681. Amend colorado tax return Gain you postponed from the sale of a previous home before May 7, 1997. Amend colorado tax return Deductible casualty losses. Amend colorado tax return Insurance payments you received or expect to receive for casualty losses. Amend colorado tax return Payments you received for granting an easement or right-of-way. Amend colorado tax return Depreciation allowed or allowable if you used your home for business or rental purposes. Amend colorado tax return Energy-related credits allowed for expenditures made on the residence. Amend colorado tax return (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Amend colorado tax return ) Adoption credit you claimed for improvements added to the basis of your home. Amend colorado tax return Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Amend colorado tax return Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Amend colorado tax return An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Amend colorado tax return District of Columbia first-time homebuyer credit allowed on the purchase of a principal residence in the District of Columbia. Amend colorado tax return General sales taxes claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Amend colorado tax return Discharges of qualified principal residence indebtedness. Amend colorado tax return   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Amend colorado tax return This exclusion applies to discharges made after 2006 and before 2014. Amend colorado tax return If you choose to exclude this income, you must reduce (but not below zero) the basis of your principal residence by the amount excluded from gross income. Amend colorado tax return   File Form 982 with your tax return. Amend colorado tax return See the form's instructions for detailed information. Amend colorado tax return    A decrease in basis due to a discharge of qualified principal residence indebtedness that is excluded from income occurs only if you retain ownership of the principal residence after a discharge. Amend colorado tax return In most cases, this would occur in a refinancing or a restructuring of the mortgage. Amend colorado tax return Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Amend colorado tax return This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Amend colorado tax return To qualify, you must meet the ownership and use tests described later. Amend colorado tax return You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Amend colorado tax return This choice can be made (or revoked) at any time before the expiration of a 3-year period beginning on the due date of your return (not including extensions) for the year of the sale. Amend colorado tax return You can use Worksheet 2 (near the end of this publication) to figure the amount of your exclusion and your taxable gain, if any. Amend colorado tax return If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Amend colorado tax return See Publication 505, Tax Withholding and Estimated Tax. Amend colorado tax return Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Amend colorado tax return You meet the ownership test. Amend colorado tax return You meet the use test. Amend colorado tax return During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Amend colorado tax return For details on gain allocated to periods of nonqualified use, see Nonqualified Use , later. Amend colorado tax return If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed. Amend colorado tax return You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Amend colorado tax return Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Amend colorado tax return This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Amend colorado tax return Exception. Amend colorado tax return   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Amend colorado tax return However, the maximum amount you may be able to exclude will be reduced. Amend colorado tax return See Reduced Maximum Exclusion , later. Amend colorado tax return Example 1—home owned and occupied for at least 2 years. Amend colorado tax return Mya bought and moved into her main home in September 2011. Amend colorado tax return She sold the home at a gain in October 2013. Amend colorado tax return During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Amend colorado tax return She meets the ownership and use tests. Amend colorado tax return Example 2—ownership test met but use test not met. Amend colorado tax return Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Amend colorado tax return He later sold the home for a gain in June 2013. Amend colorado tax return He owned the home during the entire 5-year period ending on the date of sale. Amend colorado tax return He meets the ownership test but not the use test. Amend colorado tax return He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Amend colorado tax return Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Amend colorado tax return You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Amend colorado tax return Example. Amend colorado tax return Naomi bought and moved into a house in July 2009. Amend colorado tax return She lived there for 13 months and then moved in with a friend. Amend colorado tax return She later moved back into her house and lived there for 12 months until she sold it in August 2013. Amend colorado tax return Naomi meets the ownership and use tests because, during the 5-year period ending on the date of sale, she owned the house for more than 2 years and lived in it for a total of 25 (13 + 12) months. Amend colorado tax return Temporary absence. Amend colorado tax return   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Amend colorado tax return The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Amend colorado tax return Example 1. Amend colorado tax return David Johnson, who is single, bought and moved into his home on February 1, 2011. Amend colorado tax return Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Amend colorado tax return David sold the house on March 1, 2013. Amend colorado tax return Although the total time David lived in his home is less than 2 years (21 months), he meets the use requirement and may exclude gain. Amend colorado tax return The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Amend colorado tax return Example 2. Amend colorado tax return Professor Paul Beard, who is single, bought and moved into a house in December 2010, went abroad for a 1-year sabbatical leave in January 2012, returned to the house in January 2013, and sold it at a gain in February 2013. Amend colorado tax return Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Amend colorado tax return He cannot exclude any part of his gain because he did not use the residence for the required 2 years. Amend colorado tax return Ownership and use tests met at different times. Amend colorado tax return   You can meet the ownership and use tests during different 2-year periods. Amend colorado tax return However, you must meet both tests during the 5-year period ending on the date of the sale. Amend colorado tax return Example. Amend colorado tax return Beginning in 2002, Helen Jones lived in a rented apartment. Amend colorado tax return The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Amend colorado tax return In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Amend colorado tax return On July 12, 2013, while still living in her daughter's home, she sold her condominium. Amend colorado tax return Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Amend colorado tax return She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Amend colorado tax return She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Amend colorado tax return The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Amend colorado tax return Cooperative apartment. Amend colorado tax return   If you sold stock as a tenant-shareholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitled you to occupy as your main home for at least 2 years. Amend colorado tax return Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Amend colorado tax return Exception for individuals with a disability. Amend colorado tax return   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Amend colorado tax return Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Amend colorado tax return   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Amend colorado tax return Previous home destroyed or condemned. Amend colorado tax return   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Amend colorado tax return This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home (see Involuntary Conversions in Publication 551). Amend colorado tax return Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Amend colorado tax return Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Amend colorado tax return   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty (defined later) as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Amend colorado tax return You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on qualified official extended duty (defined later) or as an enrolled volunteer or volunteer leader of the Peace Corps. Amend colorado tax return This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Amend colorado tax return   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Amend colorado tax return Example. Amend colorado tax return John bought and moved into a home in 2005. Amend colorado tax return He lived in it as his main home for 2½ years. Amend colorado tax return For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. Amend colorado tax return He then sold the home at a gain in 2013. Amend colorado tax return To meet the use test, John chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. Amend colorado tax return This means he can disregard those 6 years. Amend colorado tax return Therefore, John's 5-year test period consists of the 5 years before he went on qualified official extended duty. Amend colorado tax return He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. Amend colorado tax return Period of suspension. Amend colorado tax return   The period of suspension cannot last more than 10 years. Amend colorado tax return Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. Amend colorado tax return You cannot suspend the 5-year period for more than one property at a time. Amend colorado tax return You can revoke your choice to suspend the 5-year period at any time. Amend colorado tax return Example. Amend colorado tax return Mary bought a home on April 1, 1997. Amend colorado tax return She used it as her main home until August 31, 2000. Amend colorado tax return On September 1, 2000, she went on qualified official extended duty with the Navy. Amend colorado tax return She did not live in the house again before selling it on July 31, 2013. Amend colorado tax return Mary chooses to use the entire 10-year suspension period. Amend colorado tax return Therefore, the suspension period would extend back from July 31, 2013, to August 1, 2003, and the 5-year test period would extend back to August 1, 1998. Amend colorado tax return During that period, Mary owned the house all 5 years and lived in it as her main home from August 1, 1998, until August 31, 2000, a period of more than 24 months. Amend colorado tax return She meets the ownership and use tests because she owned and lived in the home for at least 2 years during this test period. Amend colorado tax return Uniformed services. Amend colorado tax return   The uniformed services are: The Armed Forces (the Army, Navy, Air Force, Marine Corps, and Coast Guard), The commissioned corps of the National Oceanic and Atmospheric Administration, and The commissioned corps of the Public Health Service. Amend colorado tax return Foreign Service member. Amend colorado tax return   For purposes of the choice to suspend the 5-year test period for ownership and use, you are a member of the Foreign Service if you are any of the following. Amend colorado tax return A Chief of mission. Amend colorado tax return An Ambassador at large. Amend colorado tax return A member of the Senior Foreign Service. Amend colorado tax return A Foreign Service officer. Amend colorado tax return Part of the Foreign Service personnel. Amend colorado tax return Employee of the intelligence community. Amend colorado tax return   For purposes of the choice to suspend the 5-year test period for ownership and use, you are an employee of the intelligence community if you are an employee of any of the following. Amend colorado tax return The Office of the Director of National Intelligence. Amend colorado tax return The Central Intelligence Agency. Amend colorado tax return The National Security Agency. Amend colorado tax return The Defense Intelligence Agency. Amend colorado tax return The National Geospatial-Intelligence Agency. Amend colorado tax return The National Reconnaissance Office and any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs. Amend colorado tax return Any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard. Amend colorado tax return The Bureau of Intelligence and Research of the Department of State. Amend colorado tax return Any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information. Amend colorado tax return Qualified official extended duty. Amend colorado tax return   You are on qualified official extended duty if you are on extended duty while: Serving at a duty station at least 50 miles from your main home, or Living in Government quarters under Government orders. Amend colorado tax return   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. Amend colorado tax return Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Amend colorado tax return (But see Special rules for joint returns, next. Amend colorado tax return ) Special rules for joint returns. Amend colorado tax return   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Amend colorado tax return You are married and file a joint return for the year. Amend colorado tax return Either you or your spouse meets the ownership test. Amend colorado tax return Both you and your spouse meet the use test. Amend colorado tax return During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Amend colorado tax return If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Amend colorado tax return For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Amend colorado tax return Example 1—one spouse sells a home. Amend colorado tax return Emily sells her home in June 2013 for a gain of $300,000. Amend colorado tax return She marries Jamie later in the year. Amend colorado tax return She meets the ownership and use tests, but Jamie does not. Amend colorado tax return Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Amend colorado tax return The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Amend colorado tax return Example 2—each spouse sells a home. Amend colorado tax return The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Amend colorado tax return He meets the ownership and use tests on his home, but Emily does not. Amend colorado tax return Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Amend colorado tax return However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Amend colorado tax return Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Amend colorado tax return The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Amend colorado tax return Sale of main home by surviving spouse. Amend colorado tax return   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Amend colorado tax return   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Amend colorado tax return The sale or exchange took place after 2008. Amend colorado tax return The sale or exchange took place no more than 2 years after the date of death of your spouse. Amend colorado tax return You have not remarried. Amend colorado tax return You and your spouse met the use test at the time of your spouse's death. Amend colorado tax return You or your spouse met the ownership test at the time of your spouse's death. Amend colorado tax return Neither you nor your spouse excluded gain from the sale of another home during the last 2 years before the date of death. Amend colorado tax return The ownership and use tests were described earlier. Amend colorado tax return Example. Amend colorado tax return Harry owned and used a house as his main home since 2009. Amend colorado tax return Harry and Wilma married on July 1, 2013, and from that date they used Harry's house as their main home. Amend colorado tax return Harry died on August 15, 2013, and Wilma inherited the property. Amend colorado tax return Wilma sold the property on September 1, 2013, at which time she had not remarried. Amend colorado tax return Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Amend colorado tax return Home transferred from spouse. Amend colorado tax return   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Amend colorado tax return Use of home after divorce. Amend colorado tax return   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Amend colorado tax return Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Amend colorado tax return This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Amend colorado tax return In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Amend colorado tax return A change in place of employment. Amend colorado tax return Health. Amend colorado tax return Unforeseen circumstances. Amend colorado tax return Qualified individual. Amend colorado tax return   For purposes of the reduced maximum exclusion, a qualified individual is any of the following. Amend colorado tax return You. Amend colorado tax return Your spouse. Amend colorado tax return A co-owner of the home. Amend colorado tax return A person whose main home is the same as yours. Amend colorado tax return Primary reason for sale. Amend colorado tax return   One of the three reasons above will be considered to be the primary reason you sold your home if either (1) or (2) is true. Amend colorado tax return You qualify under a “safe harbor. Amend colorado tax return ” This is a specific set of facts and circumstances that, if applicable, qualifies you to claim a reduced maximum exclusion. Amend colorado tax return Safe harbors corresponding to the reasons listed above are described later. Amend colorado tax return A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances. Amend colorado tax return  Factors that may be relevant in determining your primary reason for sale include whether: Your sale and the circumstances causing it were close in time, The circumstances causing your sale occurred during the time you owned and used the property as your main home, The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home, Your financial ability to maintain the property became materially impaired, The suitability of the property as your main home materially changed, and During the time you owned the property, you used it as your home. Amend colorado tax return Change in Place of Employment You may qualify for a reduced exclusion if the primary reason for the sale of your main home is a change in the location of employment of a qualified individual. Amend colorado tax return Employment. Amend colorado tax return   For this purpose, employment includes the start of work with a new employer or continuation of work with the same employer. Amend colorado tax return It also includes the start or continuation of self-employment. Amend colorado tax return Distance safe harbor. Amend colorado tax return   A change in place of employment is considered to be the reason you sold your home if: The change occurred during the period you owned and used the property as your main home, and The new place of employment is at least 50 miles farther from the home you sold than was the former place of employment (or, if there was no former place of employment, the distance between your new place of employment and the home sold is at least 50 miles). Amend colorado tax return Example. Amend colorado tax return Justin was unemployed and living in a townhouse in Florida he had owned and used as his main home since 2012. Amend colorado tax return He got a job in North Carolina and sold his townhouse in 2013. Amend colorado tax return Because the distance between Justin's new place of employment and the home he sold is at least 50 miles, the sale satisfies the conditions of the distance safe harbor. Amend colorado tax return Justin's sale of his home is considered to be because of a change in place of employment, and he is entitled to claim a reduced maximum exclusion of gain from the sale. Amend colorado tax return Health The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual, or To obtain or provide medical or personal care for a qualified individual suffering from a disease, illness, or injury. Amend colorado tax return The sale of your home is not because of health if the sale merely benefits a qualified individual's general health or well-being. Amend colorado tax return For purposes of this reason, a qualified individual includes, in addition to the individuals listed earlier under Qualified individual , any of the following family members of these individuals. Amend colorado tax return Parent, grandparent, stepmother, stepfather. Amend colorado tax return Child, grandchild, stepchild, adopted child, eligible foster child. Amend colorado tax return Brother, sister, stepbrother, stepsister, half-brother, half-sister. Amend colorado tax return Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. Amend colorado tax return Uncle, aunt, nephew, niece, or cousin. Amend colorado tax return Example. Amend colorado tax return In 2012, Chase and Lauren, spouses, bought a house that they used as their main home. Amend colorado tax return Lauren's father has a chronic disease and is unable to care for himself. Amend colorado tax return In 2013, Chase and Lauren sold their home in order to move into Lauren's father's house to provide care for him. Amend colorado tax return Because the primary reason for the sale of their home was to provide care for Lauren's father, Chase and Lauren are entitled to a reduced maximum exclusion. Amend colorado tax return Doctor's recommendation safe harbor. Amend colorado tax return   Health is considered to be the reason you sold your home if, for one or more of the reasons listed at the beginning of this discussion, a doctor recommends a change of residence. Amend colorado tax return Unforeseen Circumstances The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying that home. Amend colorado tax return You are not considered to have an unforeseen circumstance if the primary reason you sold your home was that you preferred to get a different home or because your finances improved. Amend colorado tax return Specific event safe harbors. Amend colorado tax return   Unforeseen circumstances are considered to be the reason for selling your home if any of the following events occurred while you owned and used the property as your main home. Amend colorado tax return An involuntary conversion of your home, such as when your home is destroyed or condemned. Amend colorado tax return Natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible. Amend colorado tax return In the case of qualified individuals (listed earlier under Qualified individual ): Death, Unemployment (if the individual is eligible for unemployment compensation), A change in employment or self-employment status that results in the individual's inability to pay reasonable basic living expenses (listed under Reasonable basic living expenses , later) for his or her household, Divorce or legal separation under a decree of divorce or separate maintenance, or Multiple births resulting from the same pregnancy. Amend colorado tax return An event the IRS determined to be an unforeseen circumstance in published guidance of general applicability. Amend colorado tax return For example, the IRS determined the September 11, 2001, terrorist attacks to be an unforeseen circumstance. Amend colorado tax return Reasonable basic living expenses. Amend colorado tax return   Reasonable basic living expenses for your household include the following. Amend colorado tax return Amounts spent for food. Amend colorado tax return Amounts spent for clothing. Amend colorado tax return Housing and related expenses. Amend colorado tax return Medical expenses. Amend colorado tax return Transportation expenses. Amend colorado tax return Tax payments. Amend colorado tax return Court-ordered payments. Amend colorado tax return Expenses reasonably necessary to produce income. Amend colorado tax return   Any of these amounts spent to maintain an affluent or luxurious standard of living are not reasonable basic living expenses. Amend colorado tax return Nonqualified Use Gain from the sale or exchange of the main home is not excludable from income if it is allocable to periods of nonqualified use. Amend colorado tax return Nonqualified use means any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions (see next). Amend colorado tax return Exceptions. Amend colorado tax return   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Amend colorado tax return Calculation. Amend colorado tax return   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain (net of any depreciation allowed or allowable on the property for periods after May 6, 1997) by the following fraction:   Total nonqualified use during the period of ownership after 2008     Total period of ownership     This calculation can be found in Worksheet 2, line 10, later in this publication. Amend colorado tax return   For examples of this calculation, see Business Use or Rental of Home , next. Amend colorado tax return Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income if you meet the ownership and use tests. Amend colorado tax return Example 1. Amend colorado tax return On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Amend colorado tax return She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Amend colorado tax return The house was rented from June 1, 2009, to March 31, 2011. Amend colorado tax return Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Amend colorado tax return Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Amend colorado tax return During the 5-year period ending on the date of the sale (January 31, 2008–January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Amend colorado tax return Five-Year Period Used as Home Used as Rental 1/31/08 – 5/31/09 16 months   6/01/09 – 3/31/11   22 months 4/01/11 – 1/31/13 22 months     38 months 22 months       During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Amend colorado tax return Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain, as shown on Worksheet 2. Amend colorado tax return Example 2. Amend colorado tax return William owned and used a house as his main home from 2007 through 2010. Amend colorado tax return On January 1, 2011, he moved to another state. Amend colorado tax return He rented his house from that date until April 30, 2013, when he sold it. Amend colorado tax return During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Amend colorado tax return Because it was rental property at the time of the sale, he must report the sale on Form 4797. Amend colorado tax return Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Amend colorado tax return Because he met the ownership and use tests, he can exclude gain up to $250,000. Amend colorado tax return However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Amend colorado tax return Depreciation after May 6, 1997. Amend colorado tax return   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Amend colorado tax return If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Amend colorado tax return Unrecaptured section 1250 gain. Amend colorado tax return   This is the part of any long-term capital gain from the sale of your home that is due to depreciation and cannot be excluded. Amend colorado tax return To figure the amount of unrecaptured section 1250 gain to be reported on Schedule D (Form 1040), you must also take into account certain gains or losses from the sale of property other than your home. Amend colorado tax return Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions for this purpose. Amend colorado tax return Worksheet 2. Amend colorado tax return Taxable Gain on Sale of Home—Completed Example 1 for Amy Part 1. Amend colorado tax return Gain or (Loss) on Sale       1. Amend colorado tax return   Selling price of home 1. Amend colorado tax return     2. Amend colorado tax return   Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) 2. Amend colorado tax return     3. Amend colorado tax return   Subtract line 2 from line 1. Amend colorado tax return This is the amount realized 3. Amend colorado tax return     4. Amend colorado tax return   Adjusted basis of home sold (from Worksheet 1, line 13) 4. Amend colorado tax return     5. Amend colorado tax return   Gain or (loss) on the sale. Amend colorado tax return Subtract line 4 from line 3. Amend colorado tax return If this is a loss, stop here 5. Amend colorado tax return 200,000   Part 2. Amend colorado tax return Exclusion and Taxable Gain       6. Amend colorado tax return   Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. Amend colorado tax return If none, enter -0- 6. Amend colorado tax return 10,000   7. Amend colorado tax return   Subtract line 6 from line 5. Amend colorado tax return If the result is less than zero, enter -0- 7. Amend colorado tax return 190,000   8. Amend colorado tax return   Aggregate number of days of nonqualified use after 2008. Amend colorado tax return If none, enter -0-. Amend colorado tax return  If line 8 is equal to zero, skip to line 12 and enter the amount from line 7 on line 12 8. Amend colorado tax return 668   9. Amend colorado tax return   Number of days taxpayer owned the property 9. Amend colorado tax return 2,080   10. Amend colorado tax return   Divide the amount on line 8 by the amount on line 9. Amend colorado tax return Enter the result as a decimal (rounded to at least 3 places). Amend colorado tax return But do not enter an amount greater than 1. Amend colorado tax return 00 10. Amend colorado tax return 0. Amend colorado tax return 321   11. Amend colorado tax return   Gain allocated to nonqualified use. Amend colorado tax return (Line 7 multiplied by line 10) 11. Amend colorado tax return 60,990   12. Amend colorado tax return   Gain eligible for exclusion. Amend colorado tax return Subtract line 11 from line 7 12. Amend colorado tax return 129,010   13. Amend colorado tax return   If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion ). Amend colorado tax return  If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. Amend colorado tax return If you do  not qualify to exclude gain, enter -0- 13. Amend colorado tax return 250,000   14. Amend colorado tax return   Exclusion. Amend colorado tax return Enter the smaller of line 12 or line 13 14. Amend colorado tax return 129,010   15. Amend colorado tax return   Taxable gain. Amend colorado tax return Subtract line 14 from line 5. Amend colorado tax return Report your taxable gain as described under Reporting the Sale . Amend colorado tax return If the amount on line 6 is more than zero, complete line 16 15. Amend colorado tax return 70,990   16. Amend colorado tax return   Enter the smaller of line 6 or line 15. Amend colorado tax return Enter this amount on line 12 of the Unrecaptured Section 1250 Gain  Worksheet in the instructions for Schedule D (Form 1040) 16. Amend colorado tax return 10,000 Property Used Partly for Business or Rental If you use property partly as a home and partly for business or to produce rental income, the treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. Amend colorado tax return Part of Home Used for Business or Rental If the part of your property used for business or to produce rental income is within your home, such as a room used as a home office for a business, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home. Amend colorado tax return In addition, you do not need to report the sale of the business or rental part on Form 4797. Amend colorado tax return This is true whether or not you were entitled to claim any depreciation. Amend colorado tax return However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, 1997. Amend colorado tax return See Depreciation after May 6, 1997, earlier. Amend colorado tax return Example 1. Amend colorado tax return Ray sold his main home in 2013 at a $30,000 gain. Amend colorado tax return He has no gains or losses from the sale of property other than the gain from the sale of his home. Amend colorado tax return He meets the ownership and use tests to exclude the gain from his income. Amend colorado tax return However, he used part of the home as a business office in 2012 and claimed $500 depreciation. Amend colorado tax return Because the business office was part of his home (not separate from it), he does not have to allocate the gain on the sale between the business part of the property and the part used as a home. Amend colorado tax return In addition, he does not have to report any part of the gain on Form 4797. Amend colorado tax return Because Ray was entitled to take a depreciation deduction, he must recognize $500 of the gain as unrecaptured section 1250 gain. Amend colorado tax return He reports his gain, exclusion, and the taxable gain of $500 on Form 8949 and Schedule D (Form 1040). Amend colorado tax return Example 2. Amend colorado tax return The facts are the same as in Example 1 except that Ray was not entitled to claim depreciation for the business use of his home. Amend colorado tax return Since Ray did not claim any depreciation, he can exclude the entire $30,000 gain. Amend colorado tax return Separate Part of Property Used for Business or Rental You may have used part of your property as your home and a separate part of it for business or to produce rental income. Amend colorado tax return Examples are: A working farm on which your house was located, A duplex in w
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Understanding your CP12A Notice

We made changes to correct the Earned Income Credit (EIC) claimed on your tax return.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Review the notice, and compare our changes to the information on your tax return.
  • If you agree with the changes we made, do nothing; you should receive a refund check in 4-6 weeks, as long as you don't owe other tax or debts we're required to collect.
  • If you don't agree, call 1-800-829-8374 to review your account or contact us by mail. Include any correspondence or documentation.

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Answers to Common Questions

How can I find out what caused my tax return to change?
Please contact us at the toll free number listed on the top right corner of your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the changes we made to your account. However, if you're unable to provide us with additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case to examination for audit. This step gives you formal appeal rights, including the right to appeal our decision in court. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don't contact us within the 60 day period, you'll lose your right to appeal our decision before payment of tax.

My child is turning 18 this year. Can I still get the Additional Child Tax Credit?
No. Your child must be under the age of 17 at the end of 2010 to qualify for both the Child Tax Credit and the Additional Child Tax Credit.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 19-Feb-2014

The Amend Colorado Tax Return

Amend colorado tax return Publication 556 - Main Content Table of Contents Examination of ReturnsIf Your Return Is Examined Interest Netting Abatement of Interest Due to Error or Delay by the IRS Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Offer in Compromise Appeal RightsAppeal Within the IRS Appeals to the Courts Refund or Credit of Overpayments Before Final Determination Claims for RefundTime for Filing a Claim for Refund Limit on Amount of Refund Processing Claims for Refund Reduced Refund How To Get Tax Help Examination of Returns Your return may be examined for a variety of reasons, and the examination may take place in any one of several ways. Amend colorado tax return After the examination, if any changes to your tax are proposed, you can either agree with those changes and pay any additional tax you may owe, or you can disagree with the changes and appeal the decision. Amend colorado tax return Examination selection criteria. Amend colorado tax return   Your return may be selected for examination on the basis of computer scoring. Amend colorado tax return A computer program called the Discriminant Inventory Function System (DIF) assigns a numeric score to each individual and some corporate tax returns after they have been processed. Amend colorado tax return If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability. Amend colorado tax return   Your return may also be selected for examination on the basis of information received from third-party documentation, such as Forms 1099 and W-2, that does not match the information reported on your return. Amend colorado tax return Or, your return may be selected to address both the questionable treatment of an item and to study the behavior of similar taxpayers (a market segment) in handling a tax issue. Amend colorado tax return   In addition, your return may be selected as a result of information received from other sources on potential noncompliance with the tax laws or inaccurate filing. Amend colorado tax return This information can come from a number of sources, including newspapers, public records, and individuals. Amend colorado tax return The information is evaluated for reliability and accuracy before it is used as the basis of an examination or investigation. Amend colorado tax return Notice of IRS contact of third parties. Amend colorado tax return    The IRS must give you reasonable notice before contacting other persons about your tax matters. Amend colorado tax return You must be given reasonable notice in advance that, in examining or collecting your tax liability, the IRS may contact third parties such as your neighbors, banks, employers, or employees. Amend colorado tax return The IRS must also give you notice of specific contacts by providing you with a record of persons contacted on both a periodic basis and upon your request. Amend colorado tax return    This provision does not apply: To any pending criminal investigation, When providing notice would jeopardize collection of any tax liability, Where providing notice may result in reprisal against any person, or When you authorized the contact. Amend colorado tax return Taxpayer Advocate Service. Amend colorado tax return   The Taxpayer Advocate Service is an independent organization within the IRS whose goal is to help taxpayers resolve problems with the IRS. Amend colorado tax return If you have an ongoing issue with the IRS that has not been resolved through normal processes, or your problems with the IRS are causing financial difficulty, contact the Taxpayer Advocate Service. Amend colorado tax return    Before contacting the Taxpayer Advocate Service, you should first discuss any problem with a supervisor. Amend colorado tax return Your local Taxpayer Advocate will assist you if you are unable to resolve the problem with the supervisor. Amend colorado tax return   For more information, see Publication 1546. Amend colorado tax return See How To Get Tax Help , near the end of this publication, for more information about contacting the Taxpayer Advocate Service. Amend colorado tax return Comments from small business. Amend colorado tax return    The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards have been established to receive comments from small business about federal agency enforcement actions. Amend colorado tax return The Ombudsman will annually evaluate the enforcement activities of each agency and rate their responsiveness to small business. Amend colorado tax return If you wish to comment on the enforcement actions of the IRS, you can take any of the following steps. Amend colorado tax return Fax your comments to 1-202-481-5719. Amend colorado tax return Write to the following address: Office of the National Ombudsman U. Amend colorado tax return S. Amend colorado tax return Small Business Administration 409 3rd Street, SW Washington, DC 20416 Call 1-888-734-3247. Amend colorado tax return Send an email to ombudsman@sba. Amend colorado tax return gov. Amend colorado tax return File a comment or complaint online at www. Amend colorado tax return sba. Amend colorado tax return gov/ombudsman. Amend colorado tax return If Your Return Is Examined Some examinations are handled entirely by mail. Amend colorado tax return Examinations not handled by mail can take place in your home, your place of business, an Internal Revenue office, or the office of your authorized representative. Amend colorado tax return If the time, place, or method is not convenient for you, the examiner will try to work out something more suitable. Amend colorado tax return However, the IRS makes the final determination of when, where, and how the examination will take place. Amend colorado tax return Throughout the examination, you can act on your own behalf or have someone represent you or accompany you. Amend colorado tax return If you filed a joint return, either you or your spouse, or both, can meet with the IRS. Amend colorado tax return The person representing you can be any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled agent (a person enrolled to practice before the IRS), an enrolled actuary, or the person who prepared the return and signed it as the preparer. Amend colorado tax return If you want someone to represent you in your absence, you must furnish that person with proper written authorization. Amend colorado tax return You can use Form 2848 or any other properly written authorization. Amend colorado tax return If you want to consult with an attorney, a certified public accountant, an enrolled agent, or any other person permitted to represent a taxpayer during an interview for examining a tax return or collecting tax, you should make arrangements with that person to be available for the interview. Amend colorado tax return In most cases, the IRS must suspend the interview and reschedule it. Amend colorado tax return The IRS cannot suspend the interview if you are there because of an administrative summons. Amend colorado tax return Third party authorization. Amend colorado tax return   If you checked the box in the signature area of your income tax return (Form 1040, Form 1040A, or Form 1040EZ) to allow the IRS to discuss your return with another person (a third party designee), this authorization does not replace Form 2848. Amend colorado tax return The box you checked on your return only authorizes the other person to receive information about the processing of your return and the status of your refund during the period your return is being processed. Amend colorado tax return For more information, see the instructions for your return. Amend colorado tax return Confidentiality privilege. Amend colorado tax return   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. Amend colorado tax return   Confidential communications are those that: Advise you on tax matters within the scope of the practitioner's authority to practice before the IRS, Would be confidential between an attorney and you, and Relate to noncriminal tax matters before the IRS, or Relate to noncriminal tax proceedings brought in federal court by or against the United States. Amend colorado tax return   In the case of communications in connection with the promotion of a person's participation in a tax shelter, the confidentiality privilege does not apply to written communications between a federally authorized practitioner and that person, any director, officer, employee, agent, or representative of that person, or any other person holding a capital or profits interest in that person. Amend colorado tax return   A tax shelter is any entity, plan, or arrangement, a significant purpose of which is the avoidance or evasion of income tax. Amend colorado tax return Recordings. Amend colorado tax return    You can make an audio recording of the examination interview. Amend colorado tax return Your request to record the interview should be made in writing. Amend colorado tax return You must notify the examiner 10 days in advance and bring your own recording equipment. Amend colorado tax return The IRS also can record an interview. Amend colorado tax return If the IRS initiates the recording, you must be notified 10 days in advance and you can get a copy of the recording at your expense. Amend colorado tax return Transfers to another area. Amend colorado tax return    Generally, your return is examined in the area where you live. Amend colorado tax return But if your return can be examined more quickly and conveniently in another area, such as where your books and records are located, you can ask to have the case transferred to that area. Amend colorado tax return Repeat examinations. Amend colorado tax return    The IRS tries to avoid repeat examinations of the same items, but sometimes this happens. Amend colorado tax return If your tax return was examined for the same items in either of the 2 previous years and no change was proposed to your tax liability, please contact the IRS as soon as possible to see if the examination should be discontinued. Amend colorado tax return The Examination An examination usually begins when you are notified that your return has been selected. Amend colorado tax return The IRS will tell you which records you will need. Amend colorado tax return The examination can proceed more easily if you gather your records before any interview. Amend colorado tax return Any proposed changes to your return will be explained to you or your authorized representative. Amend colorado tax return It is important that you understand the reasons for any proposed changes. Amend colorado tax return You should not hesitate to ask about anything that is unclear to you. Amend colorado tax return The IRS must follow the tax laws set forth by Congress in the Internal Revenue Code. Amend colorado tax return The IRS also follows Treasury Regulations, other rules, and procedures that were written to administer the tax laws and court decisions. Amend colorado tax return However, the IRS can lose cases that involve taxpayers with the same issue and still apply its interpretation of the law to your situation. Amend colorado tax return Most taxpayers agree to changes proposed by examiners, and the examinations are closed at this level. Amend colorado tax return If you do not agree, you can appeal any proposed change by following the procedures provided to you by the IRS. Amend colorado tax return A more complete discussion of appeal rights is found later under Appeal Rights . Amend colorado tax return If You Agree If you agree with the proposed changes, you can sign an agreement form and pay any additional tax you may owe. Amend colorado tax return You must pay interest on any additional tax. Amend colorado tax return If you pay when you sign the agreement, the interest is generally figured from the due date of your return (excluding any extension of time to file) to the date of your payment. Amend colorado tax return If you do not pay the additional tax when you sign the agreement, you will receive a bill that includes interest. Amend colorado tax return If you pay the amount due within 10 business days of the billing date, you will not have to pay more interest or penalties. Amend colorado tax return This period is extended to 21 calendar days if the amount due is less than $100,000. Amend colorado tax return If you are due a refund, you will receive it sooner if you sign the agreement form. Amend colorado tax return You will be paid interest on the refund. Amend colorado tax return If the IRS accepts your tax return as filed, you will receive a letter in a few weeks stating that the examiner proposed no changes to your return. Amend colorado tax return You should keep this letter with your tax records. Amend colorado tax return If You Do Not Agree If you do not agree with the proposed changes, the examiner will explain your appeal rights. Amend colorado tax return If your examination takes place in an IRS office, you can request an immediate meeting with the examiner's supervisor to explain your position. Amend colorado tax return If an agreement is reached, your case will be closed. Amend colorado tax return If you cannot reach an agreement with the supervisor at this meeting, or if the examination took place outside of an IRS office, the examiner will write up your case explaining your position and the IRS's position. Amend colorado tax return The examiner will forward your case for processing. Amend colorado tax return Fast track mediation. Amend colorado tax return   The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from: Examinations (audits), Offers in compromise, Trust fund recovery penalties, and Other collection actions. Amend colorado tax return   Most cases that are not docketed in any court qualify for fast track mediation. Amend colorado tax return Mediation can take place at a conference you request with a supervisor, or later. Amend colorado tax return The process involves an Appeals Officer who has been trained in mediation. Amend colorado tax return You may represent yourself at the mediation session, or someone else can act as your representative. Amend colorado tax return For more information, see Publication 3605. Amend colorado tax return 30-day letter and 90-day letter. Amend colorado tax return   Within a few weeks after your closing conference with the examiner and/or supervisor, you will receive a package with: A letter (known as a 30-day letter) notifying you of your right to appeal the proposed changes within 30 days, A copy of the examination report explaining the examiner's proposed changes, An agreement or waiver form, and A copy of Publication 5. Amend colorado tax return You generally have 30 days from the date of the 30-day letter to tell the IRS whether you will accept or appeal the proposed changes. Amend colorado tax return The letter will explain what steps you should take, depending on which action you choose. Amend colorado tax return Be sure to follow the instructions carefully. Amend colorado tax return Appeal Rights are explained later. Amend colorado tax return 90-day letter. Amend colorado tax return   If you do not respond to the 30-day letter, or if you later do not reach an agreement with an Appeals Officer, the IRS will send you a 90-day letter, which is also known as a notice of deficiency. Amend colorado tax return You will have 90 days (150 days if it is addressed to you outside the United States) from the date of this notice to file a petition with the Tax Court. Amend colorado tax return Filing a petition with the Tax Court is discussed later under Appeals to the Courts and Tax Court . Amend colorado tax return The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. Amend colorado tax return Suspension of interest and penalties. Amend colorado tax return   Generally, the IRS has 3 years from the date you filed your return (or the date the return was due, if later) to assess any additional tax. Amend colorado tax return However, if you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you, stating your liability and the basis for that liability, within a 36-month period beginning on the later of: The date on which you filed your tax return, or The due date (without extensions) of your tax return. Amend colorado tax return If the IRS mails a notice after the 36-month period, interest and certain penalties applicable to the suspension period will be suspended. Amend colorado tax return   The suspension period begins the day after the close of the 36-month period and ends 21 days after the IRS mails a notice to you stating your liability and the basis for that liability. Amend colorado tax return Also, the suspension period applies separately to each notice stating your liability and the basis for that liability received by you. Amend colorado tax return    The suspension does not apply to a: Failure-to-pay penalty, Fraudulent tax return, Penalty, interest, addition to tax, or additional amount with respect to any tax liability shown on your return or with respect to any gross misstatement, Penalty, interest, addition to tax, or additional amount with respect to any reportable transaction that is not adequately disclosed or any listed transaction, or Criminal penalty. Amend colorado tax return Seeking relief from improperly assessed interest. Amend colorado tax return   You can seek relief if interest is assessed for periods during which interest should have been suspended because the IRS did not mail a notice to you in a timely manner. Amend colorado tax return   If you believe that interest was assessed with respect to a period during which interest should have been suspended, submit Form 843, writing “Section 6404(g) Notification” at the top of the form, with the IRS Service Center where you filed your return. Amend colorado tax return The IRS will review the Form 843 and notify you whether interest will be abated. Amend colorado tax return If the IRS does not abate interest, you can pay the disputed interest assessment and file a claim for refund. Amend colorado tax return If your claim is denied or not acted upon within 6 months from the date you filed it, you can file suit for a refund in your United States District Court or in the United States Court of Federal Claims. Amend colorado tax return   If you believe that an IRS officer or employee has made an unreasonable error or delay in performing a ministerial or managerial act (discussed later under Abatement of Interest Due to Error or Delay by the IRS ), file Form 843 with the IRS Service Center where you filed the tax return. Amend colorado tax return If the IRS denies your claim, the Tax Court may be able to review that determination. Amend colorado tax return See Tax Court can review failure to abate interest later under Abatement of Interest Due to Error or Delay by the IRS . Amend colorado tax return If you later agree. Amend colorado tax return    If you agree with the examiner's changes after receiving the examination report or the 30-day letter, sign and return either the examination report or the waiver form. Amend colorado tax return Keep a copy for your records. Amend colorado tax return You can pay any additional amount you owe without waiting for a bill. Amend colorado tax return Include interest on the additional tax at the applicable rate. Amend colorado tax return This interest rate is usually for the period from the due date of the return (excluding any extension of time to file) to the date of payment. Amend colorado tax return The examiner can tell you the interest rate(s) or help you figure the amount. Amend colorado tax return   You must pay interest on penalties and additions to tax for failing to file returns, for overstating valuations, for understating valuations on estate and gift tax returns, and for substantially understating tax liability. Amend colorado tax return Interest is generally figured from the date (including extensions) the tax return is required to be filed to the date you pay the penalty and/or additions to tax. Amend colorado tax return   If you pay the amount due within 10 business days after the date of notice and demand for immediate payment, you will not have to pay any additional penalties and interest. Amend colorado tax return This period is extended to 21 calendar days if the amount due is less than $100,000. Amend colorado tax return How To Stop Interest From Accruing If you think that you will owe additional tax at the end of the examination, you can stop the further accrual of interest by sending money to the IRS to cover all or part of the amount you think you will owe. Amend colorado tax return Interest on part or all of any amount you owe will stop accruing on the date the IRS receives your money. Amend colorado tax return You can send an amount either in the form of a deposit in the nature of a cash bond or as a payment of tax. Amend colorado tax return Both a deposit and a payment stop any further accrual of interest. Amend colorado tax return However, making a deposit or payment will stop the accrual of interest on only the amount you sent. Amend colorado tax return Because of compounding rules, interest will continue to accrue on accrued interest, even though you have paid the underlying tax. Amend colorado tax return To stop the accrual of interest on both tax and interest, you must make a deposit or payment for both the tax and interest that has accrued as of the date of deposit or payment. Amend colorado tax return Payment or Deposit Deposits differ from payments in two ways: You can have all or part of your deposit returned to you without filing for a refund. Amend colorado tax return However, if you request and receive your deposit and the IRS later assesses a deficiency for that period and type of tax, interest will be figured as if the funds were never on deposit. Amend colorado tax return Also, your deposit will not be returned if one of the following situations applies: The IRS assesses a tax liability. Amend colorado tax return The IRS determines that, by returning the deposit, it may not be able to collect a future deficiency. Amend colorado tax return The IRS determines that the deposit should be applied against another tax liability. Amend colorado tax return Deposits returned to you will include interest based on the Federal short-term rate determined under section 6621(b). Amend colorado tax return The deposit returned will be treated as a tax payment to the extent of the disputed tax. Amend colorado tax return A disputed tax means the amount of tax specified at the time of deposit as a reasonable estimate of the maximum amount of any tax owed by you, such as the deficiency proposed in the 30-day letter. Amend colorado tax return Notice not mailed. Amend colorado tax return    If you send money before the IRS mails you a notice of deficiency, you can ask the IRS to treat it as a deposit. Amend colorado tax return You must make your request in writing. Amend colorado tax return   If, after being notified of a proposed liability but before the IRS mails you a notice of deficiency, you send an amount large enough to cover the proposed liability, it will be considered a payment unless you request in writing that it be treated as a deposit. Amend colorado tax return Keep copies of all correspondence you send to the IRS. Amend colorado tax return   If the amount you send is at least as much as the proposed liability and you do not request that it be treated as a deposit, the IRS will not send you a notice of deficiency. Amend colorado tax return If you do not receive a notice of deficiency, you cannot take your case to the Tax Court. Amend colorado tax return See Tax Court , later under Appeal Rights . Amend colorado tax return Notice mailed. Amend colorado tax return    If, after the IRS mails the notice of deficiency, you send money without written instructions, it will be treated as a payment. Amend colorado tax return You will still be able to petition the Tax Court. Amend colorado tax return   If you send money after receiving a notice of deficiency and you have specified in writing that it is a “deposit in the nature of a cash bond,” the IRS will treat it as a deposit if you send it before either: The close of the 90-day or 150-day period for filing a petition with the Tax Court to appeal the deficiency, or The date the Tax Court decision is final, if you have filed a petition. Amend colorado tax return Using a Deposit To Pay the Tax If you agree with the examiner's proposed changes after the examination, your deposit will be applied against any amount you may owe. Amend colorado tax return The IRS will not mail you a notice of deficiency and you will not have the right to take your case to the Tax Court. Amend colorado tax return If you do not agree to the full amount of the deficiency after the examination, the IRS will mail you a notice of deficiency. Amend colorado tax return Your deposit will be applied against the proposed deficiency unless you write to the IRS before the end of the 90-day or 150-day period stating that you still want the money to be treated as a deposit. Amend colorado tax return You will still have the right to take your case to the Tax Court. Amend colorado tax return Installment Agreement Request You can request a monthly installment plan if you cannot pay the full amount you owe. Amend colorado tax return To be valid, your request must be approved by the IRS. Amend colorado tax return However, if you owe $10,000 or less in tax and you meet certain other criteria, the IRS must accept your request. Amend colorado tax return Before you request an installment agreement, you should consider other less costly alternatives, such as a bank loan. Amend colorado tax return You will continue to be charged interest and penalties on the amount you owe until it is paid in full. Amend colorado tax return Unless your income is below a certain level, the fee for an approved installment agreement has increased to $105 ($52 if you make your payments by electronic funds withdrawal). Amend colorado tax return If your income is below a certain level, you may qualify to pay a reduced fee of $43. Amend colorado tax return For more information about installment agreements, see Form 9465, Installment Agreement Request. Amend colorado tax return Interest Netting If you owe interest to the IRS on an underpayment for the same period the IRS owes you interest on an overpayment, the IRS will figure interest on the underpayment and overpayment at the same interest rate (up to the amount of the overpayment). Amend colorado tax return As a result, the net rate is zero for that period. Amend colorado tax return Abatement of Interest Due to Error or Delay by the IRS The IRS may abate (reduce) the amount of interest you owe if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act (discussed later). Amend colorado tax return Only the amount of interest on income, estate, gift, generation-skipping, and certain excise taxes can be reduced. Amend colorado tax return The amount of interest will not be reduced if you or anyone related to you contributed significantly to the error or delay. Amend colorado tax return Also, the interest will be reduced only if the error or delay happened after the IRS contacted you in writing about the deficiency or payment on which the interest is based. Amend colorado tax return An audit notification letter is such a contact. Amend colorado tax return The IRS cannot reduce the amount of interest due to a general administrative decision, such as a decision on how to organize the processing of tax returns. Amend colorado tax return Ministerial act. Amend colorado tax return    This is a procedural or mechanical act, not involving the exercise of judgment or discretion, during the processing of a case after all prerequisites (for example, conferences and review by supervisors) have taken place. Amend colorado tax return A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act. Amend colorado tax return Example 1. Amend colorado tax return You move from one state to another before the IRS selects your tax return for examination. Amend colorado tax return A letter stating that your return has been selected is sent to your old address and then forwarded to your new address. Amend colorado tax return When you get the letter, you respond with a request that the examination be transferred to the area office closest to your new address. Amend colorado tax return The examination group manager approves your request. Amend colorado tax return After your request has been approved, the transfer is a ministerial act. Amend colorado tax return The IRS can reduce the interest because of any unreasonable delay in transferring the case. Amend colorado tax return Example 2. Amend colorado tax return An examination of your return reveals tax due for which a notice of deficiency (90-day letter) will be issued. Amend colorado tax return After you and the IRS discuss the issues, the notice is prepared and reviewed. Amend colorado tax return After the review process, issuing the notice of deficiency is a ministerial act. Amend colorado tax return If there is an unreasonable delay in sending the notice of deficiency to you, the IRS can reduce the interest resulting from the delay. Amend colorado tax return Managerial act. Amend colorado tax return    This is an administrative act during the processing of a case that involves the loss of records or the exercise of judgment or discretion concerning the management of personnel. Amend colorado tax return A decision concerning the proper application of federal tax law (or other federal or state law) is not a managerial act. Amend colorado tax return Example. Amend colorado tax return A revenue agent is examining your tax return. Amend colorado tax return During the middle of the examination, the agent is sent to an extended training course. Amend colorado tax return The agent's supervisor decides not to reassign your case, so the work is unreasonably delayed until the agent returns. Amend colorado tax return Interest from the unreasonable delay can be abated since both the decision to send the agent to the training class and not to reassign the case are managerial acts. Amend colorado tax return How to request abatement of interest. Amend colorado tax return    You request an abatement (reduction) of interest on Form 843. Amend colorado tax return You should file the claim with the IRS Service Center where you filed the tax return that was affected by the error or delay. Amend colorado tax return   If you have already paid the interest and you would like a credit or refund of interest paid, you must file Form 843 within 3 years from the date you filed your original return or 2 years from the date you paid the interest, whichever is later. Amend colorado tax return If you have not paid any of the interest, these time limitations for filing Form 843 do not apply. Amend colorado tax return   Generally, you should file a separate Form 843 for each tax period and each type of tax. Amend colorado tax return However, complete only one Form 843 if the interest is from an IRS error or delay that affected your tax for more than one tax period or for more than one type of tax (for example, where 2 or more tax years were being examined). Amend colorado tax return   If your request for abatement of interest is denied, you can appeal the decision to the IRS Appeals Office. Amend colorado tax return Tax Court can review failure to abate interest. Amend colorado tax return    The Tax Court can review the IRS's refusal to abate (reduce) interest if all of the following requirements are met: You filed a request for abatement of interest (Form 843) with the IRS after July 30,1996. Amend colorado tax return The IRS has mailed you a notice of final determination or a notice of disallowance. Amend colorado tax return You file a petition with the Tax Court within 180 days of the mailing of the notice of final determination or the notice of disallowance. Amend colorado tax return   The following requirements must also be met: For individual and estate taxpayers — your net worth must not exceed $2 million as of the filing date of your petition for review. Amend colorado tax return For this purpose, individuals filing a joint return shall be treated as separate individuals. Amend colorado tax return For charities and certain cooperatives — you must not have more than 500 employees as of the filing date of your petition for review. Amend colorado tax return For all other taxpayers — your net worth must not exceed $7 million, and you must not have more than 500 employees as of the filing date of your petition for review. Amend colorado tax return Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions If you are (or were) affected by a Presidentially declared disaster occurring after 1996 or a terrorist or military action occurring after September 10, 2001, the IRS may abate (reduce) the amount of interest you owe on certain taxes. Amend colorado tax return The IRS may abate interest for the period of any additional time to file or pay that the IRS provides on account of the disaster or the terrorist or military action. Amend colorado tax return The IRS will issue a notice or news release indicating who are affected taxpayers and stating the period of relief. Amend colorado tax return If you are eligible for relief from interest, but were charged interest for the period of relief, the IRS may retroactively abate your interest. Amend colorado tax return To the extent possible, the IRS can take the following actions: Make appropriate adjustments to your account. Amend colorado tax return Notify you when the adjustments are made. Amend colorado tax return Refund any interest paid by you where appropriate. Amend colorado tax return For more information on disaster area losses, see Disaster Area Losses in Publication 547. Amend colorado tax return For more information on other tax relief for victims of terrorist attacks, see Publication 3920. Amend colorado tax return Offer in Compromise In certain circumstances, the IRS will allow you to pay less than the full amount you owe. Amend colorado tax return If you think you may qualify, you should submit your offer by filing Form 656, Offer in Compromise. Amend colorado tax return The IRS may accept your offer for any of the following reasons: There is doubt about the amount you owe (or whether you owe it). Amend colorado tax return There is doubt as to whether you can pay the amount you owe based on your financial situation. Amend colorado tax return An economic hardship would result if you had to pay the full amount owed. Amend colorado tax return Your case presents compelling reasons that the IRS determines are a sufficient basis for compromise. Amend colorado tax return If your offer is rejected, you have 30 days to ask the Appeals Office of the IRS to reconsider your offer. Amend colorado tax return The IRS offers fast track mediation services to help taxpayers resolve many issues including a dispute regarding an offer in compromise. Amend colorado tax return For more information, see Publication 3605. Amend colorado tax return Generally, if you submit an offer in compromise, the IRS will delay certain collection activities. Amend colorado tax return The IRS usually will not levy (take) your property to settle your tax bill during the following periods: While the IRS is evaluating your offer in compromise. Amend colorado tax return The 30 days immediately after the offer is rejected. Amend colorado tax return While your timely-filed appeal is being considered by Appeals. Amend colorado tax return Also, if the IRS rejects your original offer and you submit a revised offer within 30 days of the rejection, the IRS generally will not levy your property while it considers your revised offer. Amend colorado tax return For more information about submitting an offer in compromise, see Form 656. Amend colorado tax return Appeal Rights Because people sometimes disagree on tax matters, the IRS has an appeals system. Amend colorado tax return Most differences can be settled within this system without expensive and time-consuming court trials. Amend colorado tax return However, your reasons for disagreeing must come within the scope of the tax laws. Amend colorado tax return For example, you cannot appeal your case based only on moral, religious, political, constitutional, conscientious, or similar grounds. Amend colorado tax return In most instances, you may be eligible to take your case to court if you do not reach an agreement at your appeals conference, or if you do not want to appeal your case to the IRS Office of Appeals. Amend colorado tax return See Appeals to the Courts , later, for more information. Amend colorado tax return Appeal Within the IRS You can appeal an IRS tax decision to a local Appeals Office, which is separate from and independent of the IRS office taking the action you disagree with. Amend colorado tax return The Appeals Office is the only level of appeal within the IRS. Amend colorado tax return Conferences with Appeals Office personnel are held in an informal manner by correspondence, by telephone, or at a personal conference. Amend colorado tax return If you want an appeals conference, follow the instructions in the letter you received. Amend colorado tax return Your request will be sent to the Appeals Office to arrange a conference at a convenient time and place. Amend colorado tax return You or your representative should be prepared to discuss all disputed issues at the conference. Amend colorado tax return Most differences are settled at this level. Amend colorado tax return If agreement is not reached at your appeals conference, you may be eligible to take your case to court. Amend colorado tax return See Appeals to the Courts , later. Amend colorado tax return Protests and Small Case Requests When you request an Appeals conference, you may also need to file either a formal written protest or a small case request with the office named in the letter you received. Amend colorado tax return Also, see the special appeal request procedures in Publication 1660. Amend colorado tax return Written protest. Amend colorado tax return   You need to file a written protest in the following cases: All employee plan and exempt organization cases without regard to the dollar amount at issue. Amend colorado tax return All partnership and S corporation cases without regard to the dollar amount at issue. Amend colorado tax return All other cases, unless you qualify for the small case request procedure, or other special appeal procedures such as requesting Appeals consideration of liens, levies, seizures, or installment agreements. Amend colorado tax return   If you must submit a written protest, see the instructions in Publication 5 about the information you need to provide. Amend colorado tax return The IRS urges you to provide as much information as you can, as it will help speed up your appeal. Amend colorado tax return That will save you both time and money. Amend colorado tax return    Be sure to send the protest within the time limit specified in the letter you received. Amend colorado tax return Small case request. Amend colorado tax return   If the total amount for any tax period is not more than $25,000, you may make a small case request instead of filing a formal written protest. Amend colorado tax return In figuring the total amount, include a proposed increase or decrease in tax (including penalties), or claimed refund. Amend colorado tax return If you are making an offer in compromise, include total unpaid tax, penalty, and interest due. Amend colorado tax return For a small case request, follow the instructions in our letter to you by sending a letter: Requesting Appeals consideration, Indicating the changes you do not agree with, and Indicating the reasons why you do not agree. Amend colorado tax return Representation You can represent yourself at your appeals conference, or you can be represented by any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled actuary, or an enrolled agent. Amend colorado tax return If your representative attends a conference without you, he or she can receive or inspect confidential information only if you have filed a power of attorney or a tax information authorization. Amend colorado tax return You can use a Form 2848 or any other properly written power of attorney or authorization. Amend colorado tax return You can also bring witnesses to support your position. Amend colorado tax return Confidentiality privilege. Amend colorado tax return   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. Amend colorado tax return See Confidentiality privilege under If Your Return Is Examined , earlier. Amend colorado tax return Appeals to the Courts If you and the IRS still disagree after the appeals conference, you may be entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or a United States District Court. Amend colorado tax return These courts are independent of the IRS. Amend colorado tax return If you elect to bypass the IRS's appeals system, you may be able to take your case to one of the courts listed above. Amend colorado tax return However, a case petitioned to the United States Tax Court will normally be considered for settlement by an Appeals Officer before the Tax Court hears the case. Amend colorado tax return If you unreasonably fail to pursue the IRS's appeals system, or if your case is intended primarily to cause a delay, or your position is frivolous or groundless, the Tax Court may impose a penalty of up to $25,000. Amend colorado tax return See Appeal Within the IRS, earlier. Amend colorado tax return Prohibition on requests to taxpayers to give up rights to bring civil action. Amend colorado tax return   The Government cannot ask you to waive your right to sue the United States or a Government officer or employee for any action taken in connection with the tax laws. Amend colorado tax return However, your right to sue can be waived if: You knowingly and voluntarily waive that right, The request to waive that right is made in writing to your attorney or other federally authorized practitioner, or The request is made in person and your attorney or other representative is present. Amend colorado tax return Burden of proof. Amend colorado tax return   For court proceedings resulting from examinations started after July 22, 1998, the IRS generally has the burden of proof for any factual issue if you have met the following requirements: You introduced credible evidence relating to the issue. Amend colorado tax return You complied with all substantiation requirements of the Internal Revenue Code. Amend colorado tax return You maintained all records required by the Internal Revenue Code. Amend colorado tax return You cooperated with all reasonable requests by the IRS for information regarding the preparation and related tax treatment of any item reported on your tax return. Amend colorado tax return You had a net worth of $7 million or less and not more than 500 employees at the time your tax liability is contested in any court proceeding if your tax return is for a corporation, partnership, or trust. Amend colorado tax return    The burden of proof does not change on an issue when another provision of the tax laws requires a specific burden of proof with respect to that issue. Amend colorado tax return Use of statistical information. Amend colorado tax return   In the case of an individual, the IRS has the burden of proof in court proceedings based on any IRS reconstruction of income solely through the use of statistical information on unrelated taxpayers. Amend colorado tax return Penalties. Amend colorado tax return   The IRS has the burden of initially producing evidence in court proceedings with respect to the liability of any individual taxpayer for any penalty, addition to tax, or additional amount imposed by the tax laws. Amend colorado tax return Recovering litigation or administrative costs. Amend colorado tax return   These are the expenses that you pay to defend your position to the IRS or the courts. Amend colorado tax return You may be able to recover reasonable litigation or administrative costs if all of the following conditions apply: You are the prevailing party. Amend colorado tax return You exhaust all administrative remedies within the IRS. Amend colorado tax return Your net worth is below a certain limit (see Net worth requirements , later). Amend colorado tax return You do not unreasonably delay the proceeding. Amend colorado tax return You apply for administrative costs within 90 days of the date on which the final decision of the IRS Office of Appeals as to the determination of the tax, interest, or penalty was mailed to you. Amend colorado tax return You apply for litigation costs within the time frames provided by Tax Court Rule 231, found at http://www. Amend colorado tax return ustaxcourt. Amend colorado tax return gov  www. Amend colorado tax return ustaxcourt. Amend colorado tax return gov . Amend colorado tax return   Prevailing party, reasonable litigation costs, and reasonable administrative costs are explained later. Amend colorado tax return Note. Amend colorado tax return If the IRS denies your award of administrative costs, and you want to appeal, you must petition the Tax Court within 90 days of the date on which the IRS mails the denial notice. Amend colorado tax return Prevailing party. Amend colorado tax return   Generally, you are the prevailing party if: You substantially prevail with respect to the amount in controversy or on the most significant tax issue or set of issues in question, and You meet the net worth requirements, discussed later. Amend colorado tax return   You will not be treated as the prevailing party if the United States establishes that its position was substantially justified. Amend colorado tax return The position of the United States is presumed not to be substantially justified if the IRS: Did not follow its applicable published guidance (such as regulations, revenue rulings, notices, announcements, private letter rulings, technical advice memoranda, and determination letters issued to the taxpayer) in the proceeding (This presumption can be overcome by evidence. Amend colorado tax return ), or Has lost in courts of appeal for other circuits on substantially similar issues. Amend colorado tax return   The court will generally decide who is the prevailing party. Amend colorado tax return Reasonable litigation costs. Amend colorado tax return   These include the following costs: Reasonable court costs. Amend colorado tax return The reasonable costs of studies, analyses, engineering reports, tests, or projects found by the court to be necessary for the preparation of your case. Amend colorado tax return The reasonable costs of expert witnesses. Amend colorado tax return Attorney fees that generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. Amend colorado tax return See Attorney fees , later. Amend colorado tax return Reasonable administrative costs. Amend colorado tax return   These include the following costs: Any administrative fees or similar charges imposed by the IRS. Amend colorado tax return The reasonable costs of studies, analyses, engineering reports, tests, or projects. Amend colorado tax return The reasonable costs of expert witnesses. Amend colorado tax return Attorney fees that generally may not exceed $125 per hour. Amend colorado tax return See Attorney fees , later. Amend colorado tax return Timing of costs. Amend colorado tax return    Administrative costs can be awarded for costs incurred after the earliest of: The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the IRS Office of Appeals, The date you receive notice of the IRS Office of Appeals' decision, or The date of the notice of deficiency. Amend colorado tax return Net worth requirements. Amend colorado tax return   An individual taxpayer may be able to recover litigation or administrative costs if the following requirements are met: For individuals — your net worth does not exceed $2 million as of the filing date of your petition for review. Amend colorado tax return For this purpose, individuals filing a joint return are treated as separate individuals. Amend colorado tax return For estates — your net worth does not exceed $2 million as of the date of the decedent's death. Amend colorado tax return For charities and certain cooperatives — you do not have more than 500 employees as of the filing date of your petition for review. Amend colorado tax return For all other taxpayers — as of the filing date of your petition for review, your net worth does not exceed $7 million, and you must not have more than 500 employees. Amend colorado tax return Qualified offer rule. Amend colorado tax return    You can also receive reasonable costs and fees and be treated as a prevailing party in a civil action or proceeding if: You make a qualified offer to the IRS to settle your case, The IRS does not accept that offer, and The tax liability (not including interest, unless interest is at issue) later determined by the court is equal to or less than the amount of your qualified offer. Amend colorado tax return You must also meet the remaining requirements, including the exhaustion of administrative remedies and the net worth requirement, discussed earlier, to get the benefit of the qualified offer rule. Amend colorado tax return Qualified offer. Amend colorado tax return    This is a written offer made by you during the qualified offer period. Amend colorado tax return It must specify both the offered amount of your liability (not including interest) and that it is a qualified offer. Amend colorado tax return   To be a qualified offer, it must remain open from the date it is made until the earliest of: The date it is rejected, The date the trial begins, or 90 days from the date it is made. Amend colorado tax return Qualified offer period. Amend colorado tax return    This period begins on the day the IRS mails you the first letter of proposed deficiency that allows you to request review by the IRS Office of Appeals. Amend colorado tax return It ends 30 days before your case is first set for trial. Amend colorado tax return Attorney fees. Amend colorado tax return   Attorney fees generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. Amend colorado tax return However, this amount can be higher in certain limited circumstances depending on the level of difficulty of the issues in the case and the local availability of tax expertise. Amend colorado tax return See IRS. Amend colorado tax return gov for more information. Amend colorado tax return    Attorney fees include the fees paid by a taxpayer for the services of anyone who is authorized to practice before the Tax Court or before the IRS. Amend colorado tax return In addition, attorney fees can be awarded in civil actions for unauthorized inspection or disclosure of a taxpayer's return or return information. Amend colorado tax return   Fees can be awarded in excess of the actual amount charged if: You are represented for no fee, or for a nominal fee, as a pro bono service, and The award is paid to your representative or to your representative's employer. Amend colorado tax return Jurisdiction for determination of employment status. Amend colorado tax return    The Tax Court can review IRS employment status determinations (for example, whether individuals hired by you are in fact your employees or independent contractors) and the amount of employment tax under such determinations. Amend colorado tax return Tax Court review can take place only if, in connection with an audit of any person, there is a controversy involving a determination by the IRS that either: One or more individuals performing services for that person are employees of that person, or That person is not entitled to relief under Section 530(a) of the Revenue Act of 1978 (discussed later). Amend colorado tax return   The following rules also apply to a Tax Court review of employment status: A Tax Court petition to review these determinations can be filed only by the person for whom the services are performed, If you receive a Notice of Determination by certified or registered mail, you must file a petition for Tax Court review within 90 days of the date of mailing that notice (150 days if the notice is addressed to you outside the United States), If during the Tax Court proceeding, you begin to treat as an employee an individual whose employment status is at issue, the Tax Court will not consider that change in its decision, Assessment and collection of tax is suspended while the Tax Court review is taking place, Payment of the asserted employment tax deficiency is not required to petition the U. Amend colorado tax return S. Amend colorado tax return Tax Court for a determination of employment status. Amend colorado tax return There can be a de novo review by the Tax Court (a review which does not consider IRS administrative findings), and At your request and with the Tax Court's agreement, small tax case procedures (discussed later) are available to simplify the case resolution process when the amount at issue (including additions to tax and penalties) is $50,000 or less for each tax period involved. Amend colorado tax return   For further information, see Publication 3953, Questions and Answers About Tax Court Proceedings for Determination of Employment Status Under IRC Section 7436. Amend colorado tax return Section 530(a) of the Revenue Act of 1978. Amend colorado tax return   This section relieves an employer of certain employment tax responsibilities for individuals not treated as employees. Amend colorado tax return It also provides relief to taxpayers under audit or involved in administrative or judicial proceedings. Amend colorado tax return Tax Court review of request for relief from joint and several liability on a joint return. Amend colorado tax return    As discussed later, at Relief from joint and several liability on a joint return under Claims for Refund, you can request relief from liability for tax you owe, plus related penalties and interest, that you believe should be paid by your spouse (or former spouse). Amend colorado tax return You also can petition (ask) the Tax Court to review your request for innocent spouse relief or separation of liability if either: The IRS sends you a determination notice denying, in whole or in part, your request, or You do not receive a determination notice from the IRS within 6 months from the date you file Form 8857. Amend colorado tax return   If you receive a determination notice, you must petition the Tax Court to review your request during the 90-day period that begins on the date the IRS mails the notice. Amend colorado tax return See Publication 971 for more information. Amend colorado tax return Note. Amend colorado tax return Your spouse or former spouse may file a written protest and request an Appeals conference to protest your claim of innocent spouse relief or separation of liability. Amend colorado tax return See Rev. Amend colorado tax return Proc. Amend colorado tax return 2003-19, which is on page 371 of the Internal Revenue Bulletin 2003-5 at  www. Amend colorado tax return irs. Amend colorado tax return gov/pub/irs-irbs/irb03-05. Amend colorado tax return pdf. Amend colorado tax return Tax Court You can take your case to the United States Tax Court if you disagree with the IRS over: Income tax, Estate tax, Gift tax, Employment tax involving IRS employment status determinations, or Certain excise taxes of private foundations, public charities, qualified pension and other retirement plans, or real estate investment trusts. Amend colorado tax return For information on Tax Court review of a determination of employment status, see Jurisdiction for determination of employment status, earlier. Amend colorado tax return For information on Tax Court review of an IRS refusal to abate interest, see Tax Court can review failure to abate interest, earlier under Examination of Returns. Amend colorado tax return For information on Tax Court review of Appeals determinations with respect to lien notices and proposed levies, see Publication 1660. Amend colorado tax return You cannot take your case to the Tax Court before the IRS sends you a notice of deficiency. Amend colorado tax return You can only appeal your case if you file a petition within 90 days from the date the notice is mailed to you (150 days if it is addressed to you outside the United States). Amend colorado tax return The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. Amend colorado tax return Withdrawal of notice of deficiency. Amend colorado tax return If you consent, the IRS can withdraw a notice of deficiency. Amend colorado tax return A notice of deficiency may be rescinded if the notice was issued as a result of an administrative error; the taxpayer submits information establishing the actual tax due is less than the amount shown in the notice; the taxpayer specifically requests a conference with the appropriate Appeals office for the purpose of entering into settlement negotiations. Amend colorado tax return However, the notice may be rescinded only if the appropriate Appeals office first decides that the case is susceptible to agreement. Amend colorado tax return See Revenue Procedure 98-54 for a more detailed explanation of the requirements. Amend colorado tax return Once withdrawn, the limits on credits, refunds, and assessments concerning the notice are void, and you and the IRS have the rights and obligations that you had before the notice was issued. Amend colorado tax return The suspension of any time limitation while the notice of deficiency was issued will not change when the notice is withdrawn. Amend colorado tax return After the notice is withdrawn, you cannot file a petition with the Tax Court based on the notice. Amend colorado tax return Also, the IRS can later issue a notice of deficiency in a greater or lesser amount than the amount in the withdrawn deficiency. Amend colorado tax return Generally, the Tax Court hears cases before any tax has been assessed and paid; however, you can pay the tax after the notice of deficiency has been issued and still petition the Tax Court for review. Amend colorado tax return If you do not file your petition on time, the proposed tax will be assessed, a bill will be sent, and you will not be able to take your case to the Tax Court. Amend colorado tax return Under the law, you must pay the tax within 21 days (10 business days if the amount is $100,000 or more). Amend colorado tax return Collection can proceed even if you think that the amount is excessive. Amend colorado tax return Publication 594 explains IRS collection procedures. Amend colorado tax return If you filed your petition on time, the court will schedule your case for trial at a location convenient to you. Amend colorado tax return You can represent yourself before the Tax Court or you can be represented by anyone admitted to practice before that court. Amend colorado tax return Small tax case procedure. Amend colorado tax return   If the amount in your case is $50,000 or less for any 1 tax year or period, you can request that your case be handled under the small tax case procedure. Amend colorado tax return If the Tax Court approves, you can present your case to the Tax Court for a decision that is final and that you cannot appeal. Amend colorado tax return You can get more information regarding the small tax case procedure and other Tax Court matters from the United States Tax Court, 400 Second Street, N. Amend colorado tax return W. Amend colorado tax return , Washington, DC 20217. Amend colorado tax return More information can be found on the Tax Court's website at www. Amend colorado tax return ustaxcourt. Amend colorado tax return gov. Amend colorado tax return Motion to request redetermination of interest. Amend colorado tax return   In certain cases, you can file a motion asking the Tax Court to redetermine the amount of interest on either an underpayment or an overpayment. Amend colorado tax return You can do this only in a situation that meets all of the following requirements: The IRS has assessed a deficiency that was determined by the Tax Court. Amend colorado tax return The assessment included interest. Amend colorado tax return You have paid the entire amount of the deficiency plus the interest claimed by the IRS. Amend colorado tax return The Tax Court has found that you made an overpayment. Amend colorado tax return You must file the motion within one year after the decision of the Tax Court becomes final. Amend colorado tax return District Court and Court of Federal Claims Generally, the District Courts and the Court of Federal Claims hear tax cases only after you have paid the entire tax and penalties, and filed a claim for a credit or refund. Amend colorado tax return The taxpayer may litigate certain types of employment tax cases in either the United States District Court or the United States Court of Federal Claims. Amend colorado tax return Before taxpayers can initiate suit in either of these courts with respect to certain employment taxes, they will have to pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. Amend colorado tax return Once the claim for refund is denied or 6 months elapse without any action by the IRS, the taxpayer may initiate suit. Amend colorado tax return As explained later under Claims for Refund, you can file a claim with the IRS for a credit or refund if you think that the tax you paid is incorrect or excessive. Amend colorado tax return If your claim is totally or partially disallowed by the IRS, you should receive a notice of claim disallowance. Amend colorado tax return If the IRS does not act on your claim within 6 months from the date you filed it, you can then file suit for a refund. Amend colorado tax return You generally must file suit for a credit or refund no later than 2 years after the IRS informs you that your claim has been rejected. Amend colorado tax return However, you can file suit if it has been 6 months since you filed your claim and the IRS has not yet delivered a decision. Amend colorado tax return You can file suit for a credit or refund in your United States District Court or in the United States Court of Federal Claims. Amend colorado tax return However, you cannot appeal to the United States Court of Federal Claims if your claim is for credit or refund of a penalty that relates to promoting an abusive tax shelter or to aiding and abetting the understatement of tax liability on someone else's return. Amend colorado tax return For information about procedures for filing suit in either court, contact the Clerk of your District Court or of the United States Court of Federal Claims. Amend colorado tax return Refund or Credit of Overpayments Before Final Determination Any court with proper jurisdiction, including the Tax Court, can order the IRS to refund any part of a tax deficiency that the IRS collects from you during a period when the IRS is not permitted to assess that deficiency, or to levy or engage in any court proceeding to collect that deficiency. Amend colorado tax return In addition, the court can order a refund of any part of an overpayment determined by the Tax Court that is not at issue on appeal to a higher court. Amend colorado tax return The court can order these refunds before its decision on the case is final. Amend colorado tax return Taxpayers should thoroughly review IRS settlement offers before signing a Tax Court Decision document to ensure that all adjustments are correct, including the inclusion of any tax credits that the taxpayer is allowed to claim. Amend colorado tax return Note. Amend colorado tax return The court may no longer order a refund of an overpayment after the case is final. Amend colorado tax return Generally, the IRS is not permitted to take action on a tax deficiency during: The 90-day (or 150-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court, or The period that the case is under appeal if a bond is provided. Amend colorado tax return Claims for Refund If you believe you have overpaid your tax, you have a limited amount of time in which to file a claim for a credit or refund. Amend colorado tax return You can claim a credit or refund by filing Form 1040X. Amend colorado tax return See Time for Filing a Claim for Refund , later. Amend colorado tax return File your claim by mailing it to the IRS Service Center where you filed your original return. Amend colorado tax return File a separate form for each year or period involved. Amend colorado tax return Include an explanation of each item of income, deduction, or credit on which you are basing your claim. Amend colorado tax return Corporations should file Form 1120X, Amended U. Amend colorado tax return S. Amend colorado tax return Corporation Income Tax Return, or other form appropriate to the type of credit or refund claimed. Amend colorado tax return See Publication 3920 for information on filing claims for tax forgiveness for individuals affected by terrorist attacks. Amend colorado tax return Requesting a copy of your tax return. Amend colorado tax return   You can obtain a copy of the actual return and all attachments you filed with the IRS for an earlier year. Amend colorado tax return This includes a copy of the Form W-2 or Form 1099 filed with your return. Amend colorado tax return Use Form 4506 to make your request. Amend colorado tax return You will be charged a fee, which you must pay when you submit Form 4506. Amend colorado tax return Requesting a copy of your tax account information. Amend colorado tax return   Use Form 4506-T, Request for Transcript of Tax Return, to request free copies of your tax return transcript, tax account transcript, record of account, verification of nonfiling, or Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. Amend colorado tax return The tax return transcript contains most of the line items of a tax return. Amend colorado tax return A tax account transcript contains information on the financial status of the account, such as payments, penalty assessments, and adjustments. Amend colorado tax return A record of account is a combination of line item information and later adjustments to the account. Amend colorado tax return Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript contains data from these information returns. Amend colorado tax return Penalty for erroneous claim for refund. Amend colorado tax return   If you claim an excessive amount of tax refund or credit relating to income tax (other than a claim relating to the earned income credit), you may be liable for a penalty of 20% of the amount that is determined to be excessive. Amend colorado tax return An excessive amount is the amount of the claim for refund or credit that is more than the amount of claim allowable for the tax year. Amend colorado tax return The penalty may be waived if you can show that you had a reasonable basis for making the claim. Amend colorado tax return Time for Filing a Claim for Refund Generally, you must file a claim for a credit or refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. Amend colorado tax return If you do not file a claim within this period, you may no longer be entitled to a credit or a refund. Amend colorado tax return If the due date to file a return or a claim for a credit or refund is a Saturday, Sunday, or legal holiday, it is filed on time if it is filed on the next business day. Amend colorado tax return Returns you filed before the due date are considered filed on the due date. Amend colorado tax return This is true even when the due date is a Saturday, Sunday, or legal holiday. Amend colorado tax return Disaster area claims for refund. Amend colorado tax return   If you live in a Presidentially declared disaster area or are affected by terroristic or military action, the deadline to file a claim for a refund may be postponed. Amend colorado tax return This section discusses the special rules that apply to Presidentially declared disaster area refunds. Amend colorado tax return    A Presidentially declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Disaster Relief and Emergency Assistance Act. Amend colorado tax return Postponed refund deadlines. Amend colorado tax return   The IRS may postpone for up to 1 year the deadlines for filing a claim for refund. Amend colorado tax return The postponement can be used by taxpayers who are affected by a Presidentially declared disaster. Amend colorado tax return The IRS may also postpone deadlines for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Amend colorado tax return For more information, see Publication 547. Amend colorado tax return   If any deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin. Amend colorado tax return A list of the areas eligible for assistance under the Disaster Relief and Emergency Assistance Act is available at the Federal Emergency Management Agency (FEMA) website at www. Amend colorado tax return fema. Amend colorado tax return gov and at the IRS website at www. Amend colorado tax return irs. Amend colorado tax return gov. Amend colorado tax return Nonfilers can get refund of overpayments paid within 3-year period. Amend colorado tax return   The Tax Court can consider taxes paid during the 3-year period preceding the date of a notice of deficiency for determining any refund due to a nonfiler. Amend colorado tax return This means that if you do not file your return, and you receive a notice of deficiency in the third year after the due date (with extensions) of your return and file suit with the Tax Court to contest the notice of deficiency, you may be able to receive a refund of excessive amounts paid within the 3-year period preceding the date of the notice of deficiency. Amend colorado tax return The IRS may postpone for up to 1 year certain tax deadlines, including the time for filing claims for refund, for taxpayers who are affected by a terrorist attack occurring after September 10, 2001. Amend colorado tax return For more information, see Publication 3920. Amend colorado tax return Claim for refund by estates electing the installment method of payment. Amend colorado tax return   In certain cases where an estate has elected to make tax payments through the installment method, the executor can file a suit for refund with a U. Amend colorado tax return S. Amend colorado tax return District Court or the U. Amend colorado tax return S. Amend colorado tax return Court of Federal Claims before all the installment payments have been made. Amend colorado tax return However, all the following must be true before a suit can be filed: The estate consists largely of an interest in a closely-held business. Amend colorado tax return All installment payments due on or before the date the suit is filed have been made. Amend colorado tax return No accelerated installment payments have been made. Amend colorado tax return No Tax Court case is pending with respect to any estate tax liability. Amend colorado tax return If a notice of deficiency was issued to the estate regarding its liability for estate tax, the time for petitioning the Tax Court has passed. Amend colorado tax return No proceeding is pending for a declaratory judgment by the Tax Court on whether the estate is eligible to pay tax in installments. Amend colorado tax return The executor has not included any previously litigated issues in the current suit for refund. Amend colorado tax return The executor does not discontinue making installment payments timely, while the court considers the suit for refund. Amend colorado tax return    If in its final decision on the suit for refund the court redetermines the estate's tax liability, the IRS must refund any part of the estate tax amount that is disallowed. Amend colorado tax return This includes any part of the disallowed amount previously collected by the IRS. Amend colorado tax return Protective claim for refund. Amend colorado tax return   If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. Amend colorado tax return A protective claim can be either a formal claim or an amended return for credit or refund. Amend colorado tax return Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. Amend colorado tax return A protective claim preserves your right to claim a refund when the contingency is resolved. Amend colorado tax return A protective claim does not have to state a particular dollar amount or demand an immediate refund. Amend colorado tax return However, to be valid, a protective claim must: Be in writing and be signed, Include your name, address, social security number or individual taxpayer identification number, and other contact information, Identify and describe the contingencies affecting the claim, Clearly alert the IRS to the essential nature of the claim, and Identify the specific year(s) for which a refund is sought. Amend colorado tax return   Generally, the IRS will delay action on the protective claim until the contingency is resolved. Amend colorado tax return Once the contingency is resolved, the IRS may obtain additional information necessary to process the claim and then either allow or disallow the claim. Amend colorado tax return   Mail your protective claim for refund to the address listed in the instructions for Form 1040X, under Where To File. Amend colorado tax return Exceptions The limits on your claim for refund can be affected by the type of item that forms the basis of your claim. Amend colorado tax return Special refunds. Amend colorado tax return   If you file a claim for refund based on one of the items listed below, the limits discussed earlier under Time for Filing a Claim for Refund may not apply. Amend colorado tax return These special items are: A bad debt, A worthless security, A payment or accrual of foreign tax, A net operating loss carryback, and A carryback of certain tax credits. Amend colorado tax return   The limits discussed earlier also may not apply if you have signed an agreement to extend the period of assessment of tax. Amend colorado tax return For information on special rules on filing claims for an individual affected by a terrorist attack, see Publication 3920. Amend colorado tax return Periods of financial disability. Amend colorado tax return   If you are an individual (not a corporation or other taxpaying entity), the period of limitations on credits and refunds can be suspended during periods when you cannot manage your financial affairs because of physical or mental impairment that is medically determinable and either: Has lasted or can be expected to last continuously for at least 12 months, or Can be expected to result in death. Amend colorado tax return    The period for filing a claim for refund will not be suspended for any time that someone else, such as your spouse or guardian, was authorized to act for you in financial matters. Amend colorado tax return   To claim financial disability, you generally must submit the following statements with your claim for credit or refund: A written statement signed by a physician, qualified to make the determination, that sets forth: The name and a description of your physical or mental impairment, The physician's medical opinion that your physical or mental impairment prevented you from managing your financial affairs, The physician's medical opinion that your physical or mental impairment was or can be expected to result in death, or that it has lasted (or can be expected to last) for a continuous period of not less than 12 months, and To the best of the physician's knowledge, the specific time period during which you were prevented by such physical or mental impairment from managing your financial affairs, and A written statement by the person signing the claim for credit or refund that no person, including your spouse, was authorized to act on your behalf in financial matters during the period described in paragraph (1)(d) of the physician's statement. Amend colorado tax return Alternatively, if a person was authorized to act on your behalf in financial matters during any part of the period described in that paragraph, the beginning and ending dates of the period of time the person was so authorized. Amend colorado tax return    The period of limitations will not be suspended on any claim for refund that (without regard to this provision) was barred as of July 22, 1998. Amend colorado tax return Limit on Amount of Refund If you file your claim within 3 years after filing your return, the credit or refund cannot be more than the part of the tax paid wi