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Can You File State Taxes For Free

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Can You File State Taxes For Free

Can you file state taxes for free Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). Can you file state taxes for free Low Income Taxpayer Clinics (LITCs). Can you file state taxes for free Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. Can you file state taxes for free All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. Can you file state taxes for free The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). Can you file state taxes for free After notice and hearing, the bankruptcy court may extend the period for another 30 days. Can you file state taxes for free Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. Can you file state taxes for free Note. Can you file state taxes for free Individual debtors should use their home address when filing Form 1040 with the IRS. Can you file state taxes for free Returns should not be filed “in care of” the trustee's address. Can you file state taxes for free Ordering tax transcripts and copies of returns. Can you file state taxes for free   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. Can you file state taxes for free The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. Can you file state taxes for free If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. Can you file state taxes for free Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. Can you file state taxes for free Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. Can you file state taxes for free A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. Can you file state taxes for free To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. Can you file state taxes for free It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. Can you file state taxes for free 00 per tax return for copies of the returns. Can you file state taxes for free Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. Can you file state taxes for free If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. Can you file state taxes for free Tax returns and payment of taxes in chapter 11 cases. Can you file state taxes for free   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. Can you file state taxes for free Disclosure of debtor's return information to trustee. Can you file state taxes for free   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. Can you file state taxes for free If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. Can you file state taxes for free    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. Can you file state taxes for free Material interest is generally defined as a financial or monetary interest. Can you file state taxes for free Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Can you file state taxes for free   However, the U. Can you file state taxes for free S. Can you file state taxes for free Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. Can you file state taxes for free Disclosure of bankruptcy estate's return information to debtor. Can you file state taxes for free    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. Can you file state taxes for free Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. Can you file state taxes for free Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Can you file state taxes for free Chapter 13 relief is not available to corporations or partnerships. Can you file state taxes for free The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. Can you file state taxes for free In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. Can you file state taxes for free S. Can you file state taxes for free Individual Income Tax Return. Can you file state taxes for free On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. Can you file state taxes for free Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. Can you file state taxes for free To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. Can you file state taxes for free See Debt Cancellation, later. Can you file state taxes for free Interest on trust accounts in chapter 13 cases. Can you file state taxes for free   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. Can you file state taxes for free This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. Can you file state taxes for free S. Can you file state taxes for free Trustee system. Can you file state taxes for free The interest is also not taxable to the trustee as income. Can you file state taxes for free Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. Can you file state taxes for free The bankruptcy estate in a chapter 7 case is represented by a trustee. Can you file state taxes for free The trustee is appointed to administer the estate and liquidate any nonexempt assets. Can you file state taxes for free In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. Can you file state taxes for free However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. Can you file state taxes for free During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. Can you file state taxes for free The bankruptcy trustee files a Form 1041 for the bankruptcy estate. Can you file state taxes for free However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). Can you file state taxes for free Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. Can you file state taxes for free Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). Can you file state taxes for free For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Can you file state taxes for free Debtor's Election To End Tax Year – Form 1040 Short tax years. Can you file state taxes for free   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. Can you file state taxes for free If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. Can you file state taxes for free The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. Can you file state taxes for free   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Can you file state taxes for free Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. Can you file state taxes for free    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. Can you file state taxes for free Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. Can you file state taxes for free Note. Can you file state taxes for free The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. Can you file state taxes for free Making the Election - Filing Requirements First short tax year. Can you file state taxes for free   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. Can you file state taxes for free The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. Can you file state taxes for free Second short tax year. Can you file state taxes for free   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. Can you file state taxes for free   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. Can you file state taxes for free To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. Can you file state taxes for free Example. Can you file state taxes for free Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. Can you file state taxes for free If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. Can you file state taxes for free Jane's second short year runs from May 8, 2012, through December 31, 2012. Can you file state taxes for free To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. Can you file state taxes for free To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. Can you file state taxes for free The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. Can you file state taxes for free S. Can you file state taxes for free Individual Tax Return. Can you file state taxes for free The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. Can you file state taxes for free The debtor must file Form 4868 by the due date of the return for the first short tax year. Can you file state taxes for free The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. Can you file state taxes for free Election by debtor's spouse. Can you file state taxes for free   If the debtor is married, the debtor's spouse may join in the election to end the tax year. Can you file state taxes for free If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. Can you file state taxes for free The debtor must elect by the due date for filing the return for the first short tax year. Can you file state taxes for free Once the election is made, it cannot be revoked for the first short tax year. Can you file state taxes for free However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. Can you file state taxes for free Later bankruptcy of spouse. Can you file state taxes for free    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. Can you file state taxes for free   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. Can you file state taxes for free If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. Can you file state taxes for free However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. Can you file state taxes for free The debtor and the spouse are precluded from this election because they have different tax years. Can you file state taxes for free This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. Can you file state taxes for free Example 1. Can you file state taxes for free Paul and Mary Harris are calendar-year taxpayers. Can you file state taxes for free Paul's voluntary chapter 7 bankruptcy case begins on March 4. Can you file state taxes for free If Paul does not make an election, his tax year does not end on March 3. Can you file state taxes for free If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. Can you file state taxes for free Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. Can you file state taxes for free They must make the election by July 15, the due date for filing the joint return. Can you file state taxes for free Example 2. Can you file state taxes for free Fred and Ethel Barnes are calendar-year taxpayers. Can you file state taxes for free Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. Can you file state taxes for free Ethel could elect to end her tax year on October 31. Can you file state taxes for free If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. Can you file state taxes for free Her first tax year is January 1–October 31, and her second year is November 1–December 31. Can you file state taxes for free If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. Can you file state taxes for free If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. Can you file state taxes for free Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. Can you file state taxes for free Example 3. Can you file state taxes for free Jack and Karen Thomas are calendar-year taxpayers. Can you file state taxes for free Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. Can you file state taxes for free Karen elected to close her tax year on April 9 and Jack joins in Karen's election. Can you file state taxes for free Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. Can you file state taxes for free The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. Can you file state taxes for free Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). Can you file state taxes for free If Karen does join in, she would have the same 3 short tax years as Jack. Can you file state taxes for free Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. Can you file state taxes for free Annualizing taxable income. Can you file state taxes for free   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. Can you file state taxes for free See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. Can you file state taxes for free Dismissal of bankruptcy case. Can you file state taxes for free   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. Can you file state taxes for free It is as if no bankruptcy estate was created for tax purposes. Can you file state taxes for free In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. Can you file state taxes for free Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. Can you file state taxes for free Attach a statement to the amended returns explaining why the debtor is filing an amended return. Can you file state taxes for free Taxes and the Bankruptcy Estate Property of the bankruptcy estate. Can you file state taxes for free   At the commencement of a bankruptcy case a bankruptcy estate is created. Can you file state taxes for free Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. Can you file state taxes for free This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. Can you file state taxes for free However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. Can you file state taxes for free Note. Can you file state taxes for free Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. Can you file state taxes for free Excluded property is never included in the estate. Can you file state taxes for free Transfer of assets between debtor and bankruptcy estate. Can you file state taxes for free   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. Can you file state taxes for free The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. Can you file state taxes for free For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. Can you file state taxes for free The estate assumes the same basis, holding period, and character of the transferred assets. Can you file state taxes for free Also, the estate generally accounts for the transferred assets in the same manner as debtor. Can you file state taxes for free   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. Can you file state taxes for free The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. Can you file state taxes for free Abandoned property. Can you file state taxes for free    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. Can you file state taxes for free If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. Can you file state taxes for free Separate taxable entity. Can you file state taxes for free   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. Can you file state taxes for free The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. Can you file state taxes for free S. Can you file state taxes for free Income Tax Return for Estates and Trusts, and paying its taxes. Can you file state taxes for free The debtor remains responsible for filing his or her own returns on Form 1040, U. Can you file state taxes for free S. Can you file state taxes for free Individual Income Tax Return, and paying taxes on income that does not belong to the estate. Can you file state taxes for free Employer identification number. Can you file state taxes for free   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Can you file state taxes for free The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Can you file state taxes for free See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Can you file state taxes for free    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Can you file state taxes for free Income, deductions, and credits – Form 1040. Can you file state taxes for free   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). Can you file state taxes for free Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. Can you file state taxes for free The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. Can you file state taxes for free See Debt Cancellation, below. Can you file state taxes for free Note. Can you file state taxes for free The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. Can you file state taxes for free Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. Can you file state taxes for free However, other exclusions, such as the insolvency exclusion, may apply. Can you file state taxes for free Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. Can you file state taxes for free    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. Can you file state taxes for free Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. Can you file state taxes for free   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. Can you file state taxes for free Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. Can you file state taxes for free Income of the estate in individual chapter 11 cases. Can you file state taxes for free    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. Can you file state taxes for free Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. Can you file state taxes for free S. Can you file state taxes for free C. Can you file state taxes for free section 1115). Can you file state taxes for free Note. Can you file state taxes for free A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. Can you file state taxes for free Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). Can you file state taxes for free Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. Can you file state taxes for free See Administrative expenses, below. Can you file state taxes for free Conversion or dismissal of chapter 11 cases. Can you file state taxes for free   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. Can you file state taxes for free If the chapter 11 case is converted to a chapter 7 case, 11 U. Can you file state taxes for free S. Can you file state taxes for free C. Can you file state taxes for free section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. Can you file state taxes for free Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. Can you file state taxes for free If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. Can you file state taxes for free Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. Can you file state taxes for free Note. Can you file state taxes for free Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). Can you file state taxes for free Administrative expenses. Can you file state taxes for free   Allowable expenses include administrative expenses. Can you file state taxes for free    Administrative expenses can only be deducted by the estate, never by the debtor. Can you file state taxes for free   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. Can you file state taxes for free These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. Can you file state taxes for free See IRC section 67(e). Can you file state taxes for free Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. Can you file state taxes for free Note. Can you file state taxes for free The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. Can you file state taxes for free See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. Can you file state taxes for free Administrative expense loss. Can you file state taxes for free   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. Can you file state taxes for free The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. Can you file state taxes for free The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. Can you file state taxes for free For a discussion of NOLs, see Publication 536. Can you file state taxes for free Attribute carryovers. Can you file state taxes for free   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. Can you file state taxes for free These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. Can you file state taxes for free The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. Can you file state taxes for free   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. Can you file state taxes for free See Debt Cancellation, later. Can you file state taxes for free   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. Can you file state taxes for free The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. Can you file state taxes for free Note. Can you file state taxes for free The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. Can you file state taxes for free See Administrative expense loss, above. Can you file state taxes for free Passive and at-risk activities. Can you file state taxes for free   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. Can you file state taxes for free Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. Can you file state taxes for free These transfers include the return of exempt property and abandonment of estate property to the debtor. Can you file state taxes for free Carrybacks from the debtor's activities. Can you file state taxes for free   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. Can you file state taxes for free Carrybacks from the bankruptcy estate. Can you file state taxes for free   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. Can you file state taxes for free The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. Can you file state taxes for free Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. Can you file state taxes for free    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. Can you file state taxes for free The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. Can you file state taxes for free These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. Can you file state taxes for free The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. Can you file state taxes for free The same method must be used to allocate the income and the withheld tax. Can you file state taxes for free Example. Can you file state taxes for free If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. Can you file state taxes for free Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. Can you file state taxes for free See IRC section 31(a). Can you file state taxes for free   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. Can you file state taxes for free In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. Can you file state taxes for free    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. Can you file state taxes for free The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. Can you file state taxes for free Note. Can you file state taxes for free The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). Can you file state taxes for free   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. Can you file state taxes for free Self-employment taxes in individual chapter 11 cases. Can you file state taxes for free   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. Can you file state taxes for free Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. Can you file state taxes for free   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. Can you file state taxes for free Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. Can you file state taxes for free This schedule includes self-employment income earned post-petition and the attributable deductions. Can you file state taxes for free The debtor must pay any self-employment tax imposed by IRC section 1401. Can you file state taxes for free Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Can you file state taxes for free   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. Can you file state taxes for free However, section 1115 of the Bankruptcy Code (11 U. Can you file state taxes for free S. Can you file state taxes for free C. Can you file state taxes for free section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. Can you file state taxes for free See Notice 2006-83. Can you file state taxes for free   The reporting and withholding obligations of a debtor's employer also do not change. Can you file state taxes for free An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. Can you file state taxes for free Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. Can you file state taxes for free   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. Can you file state taxes for free See IRC section 6109(a)(2). Can you file state taxes for free As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). Can you file state taxes for free   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. Can you file state taxes for free See Notice 2006-83. Can you file state taxes for free An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. Can you file state taxes for free   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. Can you file state taxes for free However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. Can you file state taxes for free See Employment Tax Regulations section 31. Can you file state taxes for free 3402(f)(2)-1. Can you file state taxes for free Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. Can you file state taxes for free See IRC section 6654(a). Can you file state taxes for free Notice required in converted and dismissed cases. Can you file state taxes for free   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. Can you file state taxes for free The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. Can you file state taxes for free This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. Can you file state taxes for free   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. Can you file state taxes for free Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. Can you file state taxes for free However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. Can you file state taxes for free After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. Can you file state taxes for free Employment taxes. Can you file state taxes for free   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Can you file state taxes for free See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. Can you file state taxes for free   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Can you file state taxes for free For a further discussion of employment taxes, see Employment Taxes, later. Can you file state taxes for free Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . Can you file state taxes for free The bankruptcy court case number is . Can you file state taxes for free Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. Can you file state taxes for free   Year Taxpayer   Estate 1. Can you file state taxes for free Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. Can you file state taxes for free Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. Can you file state taxes for free Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. Can you file state taxes for free Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. Can you file state taxes for free   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. Can you file state taxes for free This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. Can you file state taxes for free   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). Can you file state taxes for free   These amounts are generally adjusted annually. Can you file state taxes for free See the present year Form 1041 Instructions at www. Can you file state taxes for free irs. Can you file state taxes for free gov/form1041 for the current dollar amounts. Can you file state taxes for free Accounting period. Can you file state taxes for free   A bankruptcy estate may have a fiscal year. Can you file state taxes for free However, this period cannot be longer than 12 months. Can you file state taxes for free Change of accounting period. Can you file state taxes for free   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. Can you file state taxes for free This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. Can you file state taxes for free The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. Can you file state taxes for free Employer identification number. Can you file state taxes for free   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Can you file state taxes for free The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Can you file state taxes for free    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Can you file state taxes for free   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. Can you file state taxes for free irs. Can you file state taxes for free gov/businesses/small. Can you file state taxes for free The EIN is issued immediately once the application information is validated. Can you file state taxes for free By telephone at 1-800-829-4933 from 7:00 a. Can you file state taxes for free m. Can you file state taxes for free to 7:00 p. Can you file state taxes for free m. Can you file state taxes for free in the trustee's or debtor-in-possession's local time zone. Can you file state taxes for free Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. Can you file state taxes for free   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. Can you file state taxes for free For more details, see Pub. Can you file state taxes for free 583, Starting a Business and Keeping Records. Can you file state taxes for free   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. Can you file state taxes for free Figuring tax due. Can you file state taxes for free   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. Can you file state taxes for free However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. Can you file state taxes for free The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. Can you file state taxes for free The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. Can you file state taxes for free Tax rate schedule. Can you file state taxes for free The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. Can you file state taxes for free When to file. Can you file state taxes for free   Calendar year bankruptcy estates must file Form 1041 by April 15th. Can you file state taxes for free Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. Can you file state taxes for free For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. Can you file state taxes for free If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Can you file state taxes for free Note. Can you file state taxes for free The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Can you file state taxes for free Transmittal for Form 1040. Can you file state taxes for free   Form 1041 is used as a transmittal for Form 1040. Can you file state taxes for free If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. Can you file state taxes for free   Prepare the bankruptcy estate's return by completing Form 1040. Can you file state taxes for free In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. Can you file state taxes for free ” Then, attach Form 1040 to the Form 1041 transmittal. Can you file state taxes for free Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. Can you file state taxes for free An example of a bankruptcy estate's tax return is prepared below. Can you file state taxes for free Note. Can you file state taxes for free The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. Can you file state taxes for free Payment of Tax Due Payment methods. Can you file state taxes for free   Payment of tax due may be made by check or money order or by credit or debit card. Can you file state taxes for free For information on how to make payments electronically by credit or debit card, go to irs. Can you file state taxes for free gov/e-pay. Can you file state taxes for free      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. Can you file state taxes for free To enroll in EFTPS, go to eftps. Can you file state taxes for free gov or call 1-800-555-4477. Can you file state taxes for free For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Can you file state taxes for free Payment voucher – Form 1041-V. Can you file state taxes for free   Form 1041-V accompanies payments made by check or money order for Form 1041. Can you file state taxes for free The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. Can you file state taxes for free Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. Can you file state taxes for free We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. Can you file state taxes for free Estimated tax – Form 1041-ES. Can you file state taxes for free   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. Can you file state taxes for free See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. Can you file state taxes for free Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Can you file state taxes for free Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. Can you file state taxes for free If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. Can you file state taxes for free   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. Can you file state taxes for free Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. Can you file state taxes for free The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Can you file state taxes for free If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Can you file state taxes for free , with their individual income tax returns. Can you file state taxes for free Tax Return Example – Form 1041 This publication is not revised annually. Can you file state taxes for free Future changes to the forms and their instructions may not be reflected in this example. Can you file state taxes for free Note. Can you file state taxes for free The following return was prepared for tax year 2011. Can you file state taxes for free In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). Can you file state taxes for free Facts and circumstances. Can you file state taxes for free   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. Can you file state taxes for free Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. Can you file state taxes for free   The estate received the following assets from Mr. Can you file state taxes for free Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. Can you file state taxes for free   Also, the estate received a $251,500 capital loss carryover. Can you file state taxes for free   Mr. Can you file state taxes for free Smith's bankruptcy case was closed on December 31, 2011. Can you file state taxes for free During 2011, Mr. Can you file state taxes for free Smith was relieved of $70,000 of debt by the bankruptcy court. Can you file state taxes for free The estate chose a calendar year as its tax year. Can you file state taxes for free Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. Can you file state taxes for free Schedule B (Form 1040). Can you file state taxes for free    The certificate of deposit earned $5,500 of interest during 2011. Can you file state taxes for free Joan reports this interest on Schedule B. Can you file state taxes for free She completes this schedule and enters the result on Form 1040. Can you file state taxes for free Form 4562. Can you file state taxes for free   Joan enters the depreciation allowed on Form 4562. Can you file state taxes for free She completes the form and enters the result on Schedule E. Can you file state taxes for free Schedule E (Form 1040). Can you file state taxes for free   The commercial real estate was rented through the date of sale. Can you file state taxes for free Joan reports the income and expenses on Schedule E. Can you file state taxes for free She enters the net income on Form 1040. Can you file state taxes for free Form 4797. Can you file state taxes for free   The commercial real estate was sold on July 1, 2011, for $280,000. Can you file state taxes for free The property was purchased in 2001 at a cost of $250,000. Can you file state taxes for free The total depreciation allowable as of the date of sale was $120,000. Can you file state taxes for free Additionally, $25,000 of selling expenses were incurred. Can you file state taxes for free Joan reports the gain or loss from the sale on Form 4797. Can you file state taxes for free She completes the form and enters the gain on Schedule D (Form 1040). Can you file state taxes for free   Mr. Can you file state taxes for free Smith's former residence was sold on September 30, 2011. Can you file state taxes for free The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. Can you file state taxes for free This sale is excluded from gross income under IRC section 121. Can you file state taxes for free Note. Can you file state taxes for free Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). Can you file state taxes for free Bankruptcy estates succeed to this exclusion at the commencement of the case. Can you file state taxes for free See Regulation section 1. Can you file state taxes for free 1398-3. Can you file state taxes for free Schedule D (Form 1040). Can you file state taxes for free   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). Can you file state taxes for free She enters the results on Form 1040. Can you file state taxes for free Form 1040, page 1. Can you file state taxes for free   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. Can you file state taxes for free Schedule A (Form 1040). Can you file state taxes for free   During 2011, the estate paid mortgage interest and real property tax on Mr. Can you file state taxes for free Smith's former residence. Can you file state taxes for free It also paid income tax to the state. Can you file state taxes for free Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. Can you file state taxes for free Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. Can you file state taxes for free She completes the Schedule A and enters the result on page 2 of Form 1040. Can you file state taxes for free Form 1040, page 2. Can you file state taxes for free   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. Can you file state taxes for free She then enters the estate's estimated tax payments and figures the amount the estate still owes. Can you file state taxes for free Form 982. Can you file state taxes for free   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. Can you file state taxes for free Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. Can you file state taxes for free See Debt Cancellation, later. Can you file state taxes for free After the bankruptcy case ends, Mr. Can you file state taxes for free Smith will assume the estate's tax attributes. Can you file state taxes for free Mr. Can you file state taxes for free Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). Can you file state taxes for free Note. Can you file state taxes for free If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. Can you file state taxes for free Form 1041. Can you file state taxes for free   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. Can you file state taxes for free She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. Can you file state taxes for free This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Schedule A This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Schedule B This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Schedule D This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Schedule E This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 2119 This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 4562 This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. Can you file state taxes for free Please click the link to view the image. Can you file state taxes for free Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. Can you file state taxes for free Otherwise, you do not have any carryovers. Can you file state taxes for free 1. Can you file state taxes for free Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. Can you file state taxes for free If a loss, enclose the amount in parentheses 1. Can you file state taxes for free 19,880   2. Can you file state taxes for free Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. Can you file state taxes for free 1,500   3. Can you file state taxes for free Combine lines 1 and 2. Can you file state taxes for free If zero or less, enter -0- 3. Can you file state taxes for free 21,380   4. Can you file state taxes for free Enter the smaller of line 2 or line 3 4. Can you file state taxes for free 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. Can you file state taxes for free       5. Can you file state taxes for free Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. Can you file state taxes for free 0   6. Can you file state taxes for free Enter any gain from your 2010 Schedule D, line 15. Can you file state taxes for free If a loss, enter -0- 6. Can you file state taxes for free         7. Can you file state taxes for free Add lines 4 and 6 7. Can you file state taxes for free 1,500   8. Can you file state taxes for free Short-term capital loss carryover for 2011. Can you file state taxes for free Subtract line 7 from line 5. Can you file state taxes for free If zero or less, enter -0-. Can you file state taxes for free If more than zero, also enter this amount on Schedule D, line 6 8. Can you file state taxes for free 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. Can you file state taxes for free       9. Can you file state taxes for free Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. Can you file state taxes for free 251,500   10. Can you file state taxes for free Enter any gain from your 2010 Schedule D, line 7. Can you file state taxes for free If a loss, enter -0- 10. Can you file state taxes for free 0       11. Can you file state taxes for free Subtract line 5 from line 4. Can you file state taxes for free If zero or less, enter -0- 11. Can you file state taxes for free 1,500       12. Can you file state taxes for free Add lines 10 and 11 12. Can you file state taxes for free 1,500   13. Can you file state taxes for free Long-term capital loss carryover for 2011. Can you file state taxes for free Subtract line 12 from line 9. Can you file state taxes for free If zero or less, enter -0-. Can you file state taxes for free If more than zero, also enter this amount on Schedule D, line 14 13. Can you file state taxes for free 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. Can you file state taxes for free The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. Can you file state taxes for free In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. Can you file state taxes for free The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. Can you file state taxes for free Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. Can you file state taxes for free However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. Can you file state taxes for free A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. Can you file state taxes for free However, It may or may not be included in the individual partners' income. Can you file state taxes for free See Partnerships, below under Debt Cancellation. Can you file state taxes for free Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. Can you file state taxes for free A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. Can you file state taxes for free The following discussion only highlights bankruptcy tax rules applying to corporations. Can you file state taxes for free The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. Can you file state taxes for free Therefore, you may wish to seek the help of a professional tax advisor. Can you file state taxes for free See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. Can you file state taxes for free Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. Can you file state taxes for free However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. Can you file state taxes for free A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. Can you file state taxes for free In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. Can you file state taxes for free In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. Can you file state taxes for free Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. Can you file state taxes for free In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. Can you file state taxes for free IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. Can you file state taxes for free IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. Can you file state taxes for free In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. Can you file state taxes for free No loss is recognized in this situation. Can you file state taxes for free Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. Can you file state taxes for free To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. Can you file state taxes for free The exemption request must be submitted to the local IRS Insolvency Office handling the case. Can you file state taxes for free The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. Can you file state taxes for free The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. Can you file state taxes for free ” The statement must be signed by the trustee, receiver or assignee. Can you file state taxes for free The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). Can you file state taxes for free The IRS will act on your request within 90 days. Can you file state taxes for free Disclosure of return information to trustee. Can you file state taxes for free   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. Can you file state taxes for free However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. Can you file state taxes for free Material interest is generally defined as a financial or monetary interest. Can you file state taxes for free Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Can you file state taxes for free Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. Can you file state taxes for free Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. Can you file state taxes for free QSFs are required to file an annual income tax return, Form 1120-SF, U. Can you file state taxes for free S. Can you file state taxes for free Income Tax Return for Settlement Funds. Can you file state taxes for free More information about QSFs may be found in Treasury Regulation sections 1. Can you file state taxes for free 468B-1 through -5. Can you file state taxes for free Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. Can you file state taxes for free After a return is filed, the IRS will either accept the return as filed or select the return for examination. Can you file state taxes for free Under examination the IRS may redetermine the tax liability shown on the return. Can you file state taxes for free If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. Can you file state taxes for free See Court Jurisdiction over Tax Matters, later. Can you file state taxes for free Prompt Determination Requests Pursuant to Rev. Can you file state taxes for free Proc. Can you file state taxes for free 2006-24, 2006-22 I. Can you file state taxes for free R. Can you file state taxes for free B. Can you file state taxes for free 943, www. Can you file state taxes for free irs. Can you file state taxes for free gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. Can you file state taxes for free irs. Can you file state taxes for free gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. Can you file state taxes for free Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). Can you file state taxes for free Making the request for determination. Can you file state taxes for free   As detailed in Rev. Can you file state taxes for free Proc. Can you file state taxes for free 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. Can you file state taxes for free O. Can you file state taxes for free Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). Can you file state taxes for free   The request must be submitted in duplicate and must be executed under penalties of perjury. Can you file state taxes for free In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. Can you file state taxes for free The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. Can you file state taxes for free The name and location of the office where the return was filed. Can you file state taxes for free The name of the debtor. Can you file state taxes for free Debtor's social security number, TIN, or EIN. Can you file state taxes for free Type of bankruptcy estate. Can you file state taxes for free Bankruptcy case number. Can you file state taxes for free Court where the bankruptcy case is pending. Can you file state taxes for free   The copy of the return(s) submitted with the request must be an exact copy of a valid return. Can you file state taxes for free A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. Can you file state taxes for free    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. Can you file state taxes for free A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. Can you file state taxes for free Examination of return. Can you file state taxes for free   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. Can you file state taxes for free If the return is selected for examination, it will be examined as soon as possible. Can you file state taxes for free The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. Can you file state taxes for free   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. Can you file state taxes for free   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. Can you file state taxes for free   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. Can you file state taxes for free Note. Can you file state taxes for free An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. Can you file state taxes for free   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei
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U.S. Federal Government

Learn how the U.S. federal government is organized and search for departments and agencies by name or by branch.


Contact Federal Government Departments and Agencies

  • A-Z Index - If you know the name of the federal government department or agency you're looking for, get contact information through our A-Z index. 

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How the U.S. Government Is Organized

The Constitution of the United States divides the federal government into three branches to ensure a central government in which no individual or group gains too much control:

  1. Legislative – Makes laws (Congress)
  2. Executive – Carries out laws (President, Vice President, Cabinet)
  3. Judicial – Evaluates laws (Supreme Court and Other Courts)

Each branch of government can change acts of the other branches as follows:

  • The president can veto laws passed by Congress.
  • Congress confirms or rejects the president's appointments and can remove the president from office in exceptional circumstances.
  • The justices of the Supreme Court, who can overturn unconstitutional laws, are appointed by the president and confirmed by the Senate.

The U.S. federal government seeks to act in the best interests of its citizens through this system of checks and balances.

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Legislative Branch

The legislative branch enacts legislation, confirms or rejects presidential appointments, and has the authority to declare war.

This branch includes Congress (the Senate and House of Representatives) and several agencies that provide support services to Congress. American citizens have the right to vote for senators and representatives through free, confidential ballots.

  • Senate - There are two elected senators per state, totaling 100 senators. A senate term is six years and there's no limit to the number of terms an individual can serve.
  • House of Representatives - There are 435 elected representatives, which are divided among the 50 states in proportion to their total population. There are additional non-voting delegates who represent the District of Columbia and the territories. A representative serves a two-year term, and there's no limit to the number of terms an individual can serve.

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Executive Branch

The executive branch carries out and enforces laws. It includes the president, vice president, the Cabinet, executive departments, independent agencies, and other boards, commissions, and committees.

American citizens have the right to vote for the president and vice president through free, confidential ballots.

Key roles of the executive branch include:

  • President - The president leads the country. He/she is the head of state, leader of the federal government, and commander-in-chief of the United States Armed Forces. The president serves a four-year term and can be elected no more than two times.
  • Vice President - The vice president supports the president. If the president is unable to serve, the vice president becomes president. He/she can serve an unlimited number of four-year terms.
  • The Cabinet - Cabinet members serve as advisors to the president. They include the vice president and the heads of executive departments. Cabinet members are nominated by the president and must be approved by the Senate (with at least 51 votes).

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Judicial Branch

The judicial branch interprets the meaning of laws, applies laws to individual cases, and decides if laws violate the Constitution.

The judicial branch is comprised of the Supreme Court and other federal courts.

  • Supreme Court - The Supreme Court is the highest court in the United States. The justices of the Supreme Court are nominated by the president and must be approved by the Senate (with at least 51 votes). Congress decides the number of justices. Currently, there are nine. There is no fixed term for justices. They serve until their death, retirement, or removal in exceptional circumstances.
  • Other Federal Courts - The Constitution grants Congress the authority to establish other federal courts.

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The Can You File State Taxes For Free

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