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Ez Tax Form

Ez tax form 5. Ez tax form   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. Ez tax form Short-term lease. Ez tax form Retail space. Ez tax form Qualified long-term real property. Ez tax form Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. Ez tax form If there is a connection between any income you receive and your business, the income is business income. Ez tax form A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Ez tax form You can have business income even if you are not involved in the activity on a regular full-time basis. Ez tax form Income from work you do on the side in addition to your regular job can be business income. Ez tax form You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. Ez tax form But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. Ez tax form For information on selling business assets, see chapter 3. Ez tax form Nonemployee compensation. Ez tax form Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. Ez tax form This includes amounts reported as nonemployee compensation in box 7 of the form. Ez tax form You can find more information in the instructions on the back of the Form 1099-MISC you received. Ez tax form Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. Ez tax form In most cases, your business income will be in the form of cash, checks, and credit card charges. Ez tax form But business income can be in other forms, such as property or services. Ez tax form These and other types of income are explained next. Ez tax form If you are a U. Ez tax form S. Ez tax form citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. Ez tax form S. Ez tax form law. Ez tax form If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. Ez tax form For details, see Publication 54, Tax Guide for U. Ez tax form S. Ez tax form Citizens and Resident Aliens Abroad. Ez tax form Bartering for Property or Services Bartering is an exchange of property or services. Ez tax form You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. Ez tax form If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. Ez tax form Example 1. Ez tax form You are a self-employed lawyer. Ez tax form You perform legal services for a client, a small corporation. Ez tax form In payment for your services, you receive shares of stock in the corporation. Ez tax form You must include the fair market value of the shares in income. Ez tax form Example 2. Ez tax form You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. Ez tax form You must include the fair rental value of the apartment in your gross receipts. Ez tax form Your landlord must include the fair market value of the work of art in his or her rental income. Ez tax form Example 3. Ez tax form You are a self-employed accountant. Ez tax form Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. Ez tax form Members get in touch with other members directly and bargain for the value of the services to be performed. Ez tax form In return for accounting services you provided for the house painter's business, the house painter painted your home. Ez tax form You must include in gross receipts the fair market value of the services you received from the house painter. Ez tax form The house painter must include the fair market value of your accounting services in his or her gross receipts. Ez tax form Example 4. Ez tax form You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. Ez tax form As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. Ez tax form You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. Ez tax form The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. Ez tax form It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. Ez tax form See Publication 15 (Circular E), Employer's Tax Guide. Ez tax form Example 5. Ez tax form You operate a plumbing business and use the cash method of accounting. Ez tax form You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Ez tax form Each member has access to a directory that lists the members of the club and the services available. Ez tax form Members contact each other directly and request services to be performed. Ez tax form You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. Ez tax form You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. Ez tax form Information returns. Ez tax form   If you are involved in a bartering transaction, you may have to file either of the following forms. Ez tax form Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Ez tax form Form 1099-MISC, Miscellaneous Income. Ez tax form For information about these forms, see the General Instructions for Certain Information Returns. Ez tax form Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. Ez tax form , who provides services (maid services, etc. Ez tax form ) for guests, report the rental income and expenses on Schedule C or C-EZ. Ez tax form If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. Ez tax form For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Ez tax form Real estate dealer. Ez tax form   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. Ez tax form Rent you receive from real estate held for sale to customers is subject to SE tax. Ez tax form However, rent you receive from real estate held for speculation or investment is not subject to SE tax. Ez tax form Trailer park owner. Ez tax form   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. Ez tax form    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Ez tax form Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. Ez tax form   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. Ez tax form   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. Ez tax form Hotels, boarding houses, and apartments. Ez tax form   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. Ez tax form   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. Ez tax form An example of a service that is not normally provided for the convenience of the occupants is maid service. Ez tax form However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. Ez tax form Prepaid rent. Ez tax form   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. Ez tax form This is true no matter what accounting method or period you use. Ez tax form Lease bonus. Ez tax form   A bonus you receive from a lessee for granting a lease is an addition to the rent. Ez tax form Include it in your gross receipts in the year received. Ez tax form Lease cancellation payments. Ez tax form   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. Ez tax form Payments to third parties. Ez tax form   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. Ez tax form A common example of this kind of income is a lessee's payment of your property taxes on leased real property. Ez tax form Settlement payments. Ez tax form   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. Ez tax form Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. Ez tax form ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. Ez tax form Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. Ez tax form If you receive any of those payments, include them in your gross receipts as explained in that discussion. Ez tax form Interest and Dividend Income Interest and dividends may be considered business income. Ez tax form Interest. Ez tax form   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. Ez tax form Interest received on loans is business income if you are in the business of lending money. Ez tax form Uncollectible loans. Ez tax form   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. Ez tax form If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. Ez tax form See Bad Debts in chapter 8. Ez tax form Unstated interest. Ez tax form   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. Ez tax form See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Ez tax form Dividends. Ez tax form   Generally, dividends are business income to dealers in securities. Ez tax form For most sole proprietors and statutory employees, however, dividends are nonbusiness income. Ez tax form If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. Ez tax form   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. Ez tax form To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. Ez tax form Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. Ez tax form General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. Ez tax form Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. Ez tax form If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. Ez tax form Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Ez tax form Price reduced after purchase. Ez tax form   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. Ez tax form Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. Ez tax form Deductible debt. Ez tax form   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. Ez tax form Example. Ez tax form You get accounting services for your business on credit. Ez tax form Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. Ez tax form Your accountant forgives part of the amount you owe for the accounting services. Ez tax form How you treat the canceled debt depends on your method of accounting. Ez tax form Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Ez tax form Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Ez tax form   For information on the cash and accrual methods of accounting, see chapter 2. Ez tax form Exclusions Do not include canceled debt in income in the following situations. Ez tax form However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Ez tax form For more information, see Form 982. Ez tax form The cancellation takes place in a bankruptcy case under title 11 of the U. Ez tax form S. Ez tax form Code (relating to bankruptcy). Ez tax form See Publication 908, Bankruptcy Tax Guide. Ez tax form The cancellation takes place when you are insolvent. Ez tax form You can exclude the canceled debt to the extent you are insolvent. Ez tax form See Publication 908. Ez tax form The canceled debt is a qualified farm debt owed to a qualified person. Ez tax form See chapter 3 in Publication 225, Farmer's Tax Guide. Ez tax form The canceled debt is a qualified real property business debt. Ez tax form This situation is explained later. Ez tax form The canceled debt is qualified principal residence indebtedness which is discharged after 2006. Ez tax form See Form 982. Ez tax form If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. Ez tax form If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. Ez tax form Debt. Ez tax form   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. Ez tax form Qualified real property business debt. Ez tax form   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. Ez tax form If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. Ez tax form Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. Ez tax form However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. Ez tax form Cancellation of qualified real property business debt. Ez tax form   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. Ez tax form It was incurred or assumed in connection with real property used in a trade or business. Ez tax form It was secured by such real property. Ez tax form It was incurred or assumed at either of the following times. Ez tax form Before January 1, 1993. Ez tax form After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. Ez tax form It is debt to which you choose to apply these rules. Ez tax form   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. Ez tax form   You cannot exclude more than either of the following amounts. Ez tax form The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. Ez tax form The total adjusted bases of depreciable real property held by you immediately before the cancellation. Ez tax form These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. Ez tax form Do not take into account depreciable real property acquired in contemplation of the cancellation. Ez tax form Election. Ez tax form   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. Ez tax form You must file your return by the due date (including extensions). Ez tax form If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Ez tax form For more information, see When To File in the form instructions. Ez tax form Other Income The following discussion explains how to treat other types of business income you may receive. Ez tax form Restricted property. Ez tax form   Restricted property is property that has certain restrictions that affect its value. Ez tax form If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. Ez tax form However, you can choose to be taxed in the year you receive the property. Ez tax form For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. Ez tax form Gains and losses. Ez tax form   Do not report on Schedule C or C-EZ a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Ez tax form Instead, you must report these gains and losses on other forms. Ez tax form For more information, see chapter 3. Ez tax form Promissory notes. Ez tax form   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. Ez tax form In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. Ez tax form Lost income payments. Ez tax form   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. Ez tax form Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. Ez tax form Damages. Ez tax form   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. Ez tax form Patent infringement. Ez tax form Breach of contract or fiduciary duty. Ez tax form Antitrust injury. Ez tax form Economic injury. Ez tax form   You may be entitled to a deduction against the income if it compensates you for actual economic injury. Ez tax form Your deduction is the smaller of the following amounts. Ez tax form The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. Ez tax form Your loss from the injury that you have not yet deducted. Ez tax form Punitive damages. Ez tax form   You must also include punitive damages in income. Ez tax form Kickbacks. Ez tax form   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. Ez tax form However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. Ez tax form Recovery of items previously deducted. Ez tax form   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. Ez tax form However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. Ez tax form If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. Ez tax form Example. Ez tax form Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. Ez tax form He also had 2 personal exemptions for a total of $7,800. Ez tax form He would not pay income tax even if he did not deduct the bad debt. Ez tax form Therefore, he will not report as income any part of the $300 he may recover in any future year. Ez tax form Exception for depreciation. Ez tax form   This rule does not apply to depreciation. Ez tax form You recover depreciation using the rules explained next. Ez tax form Recapture of depreciation. Ez tax form   In the following situations, you have to recapture the depreciation deduction. Ez tax form This means you include in income part or all of the depreciation you deducted in previous years. Ez tax form Listed property. Ez tax form   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. Ez tax form You do this by including in income on Schedule C part of the depreciation you deducted in previous years. Ez tax form Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. Ez tax form For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. Ez tax form That chapter explains how to determine whether property is used more than 50% in your business. Ez tax form Section 179 property. Ez tax form   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. Ez tax form You do this by including in income on Schedule C part of the deduction you took. Ez tax form Use Part IV of Form 4797 to figure the amount to include on Schedule C. Ez tax form See chapter 2 in Publication 946 to find out when you recapture the deduction. Ez tax form Sale or exchange of depreciable property. Ez tax form   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. Ez tax form You figure the income due to depreciation recapture in Part III of Form 4797. Ez tax form For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. Ez tax form Items That Are Not Income In some cases the property or money you receive is not income. Ez tax form Appreciation. Ez tax form   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. Ez tax form Consignments. Ez tax form   Consignments of merchandise to others to sell for you are not sales. Ez tax form The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. Ez tax form Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Ez tax form Merchandise you have shipped out on consignment is included in your inventory until it is sold. Ez tax form   Do not include merchandise you receive on consignment in your inventory. Ez tax form Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. Ez tax form Construction allowances. Ez tax form   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. Ez tax form Under a short-term lease of retail space. Ez tax form For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. Ez tax form Amount you can exclude. Ez tax form   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Ez tax form Short-term lease. Ez tax form   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. Ez tax form The following rules apply in determining whether the lease is for 15 years or less. Ez tax form Take into account options to renew when figuring whether the lease is for 15 years or less. Ez tax form But do not take into account any option to renew at fair market value determined at the time of renewal. Ez tax form Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. Ez tax form Retail space. Ez tax form   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. Ez tax form Qualified long-term real property. Ez tax form   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. Ez tax form Exchange of like-kind property. Ez tax form   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. Ez tax form This means that the gain is not taxable and the loss is not deductible. Ez tax form A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. Ez tax form For more information, see Form 8824. Ez tax form Leasehold improvements. Ez tax form   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. Ez tax form However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. Ez tax form Loans. Ez tax form   Money borrowed through a bona fide loan is not income. Ez tax form Sales tax. Ez tax form   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. Ez tax form Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). Ez tax form Direct seller. Ez tax form   You must report all income you receive as a direct seller on Schedule C or C-EZ. Ez tax form This includes any of the following. Ez tax form Income from sales—payments you receive from customers for products they buy from you. Ez tax form Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. Ez tax form Prizes, awards, and gifts you receive from your selling business. Ez tax form You must report this income regardless of whether it is reported to you on an information return. Ez tax form   You are a direct seller if you meet all the following conditions. Ez tax form You are engaged in one of the following trades or businesses. Ez tax form Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. Ez tax form Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). Ez tax form Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. Ez tax form Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. Ez tax form Executor or administrator. Ez tax form   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. Ez tax form A nonprofessional fiduciary (personal representative) and both of the following apply. Ez tax form The estate includes an active trade or business in which you actively participate. Ez tax form Your fees are related to the operation of that trade or business. Ez tax form A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. Ez tax form    If the fees do not meet the above requirements, report them on line 21 of Form 1040. Ez tax form Fishing crew member. Ez tax form    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . Ez tax form Insurance agent, former. Ez tax form   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. Ez tax form You received payments after your agreement to perform services for the company ended. Ez tax form You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. Ez tax form You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. Ez tax form The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. Ez tax form The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). Ez tax form Insurance agent, retired. Ez tax form   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. Ez tax form Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. Ez tax form   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. Ez tax form Newspaper carrier or distributor. Ez tax form   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Ez tax form You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). Ez tax form Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. Ez tax form You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Ez tax form   This rule applies whether or not you hire others to help you make deliveries. Ez tax form It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. Ez tax form Newspaper or magazine vendor. Ez tax form   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Ez tax form You sell newspapers or magazines to ultimate consumers. Ez tax form You sell them at a fixed price. Ez tax form Your earnings are based on the difference between the sales price and your cost of goods sold. Ez tax form   This rule applies whether or not you are guaranteed a minimum amount of earnings. Ez tax form It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. Ez tax form Notary public. Ez tax form   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. Ez tax form These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). Ez tax form Public official. Ez tax form   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. Ez tax form This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. Ez tax form Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. Ez tax form   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. Ez tax form Real estate agent or direct seller. Ez tax form   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. Ez tax form Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. Ez tax form You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Ez tax form Securities dealer. Ez tax form   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. Ez tax form For more information, see sections 1256 and 1402(i). Ez tax form Securities trader. Ez tax form   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. Ez tax form As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. Ez tax form However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. Ez tax form For more information about securities traders, see Publication 550, Investment Income and Expenses. Ez tax form Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. Ez tax form This section discusses some of the more common differences that may affect business transactions. Ez tax form Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). Ez tax form If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. Ez tax form Dealers in real estate are not allowed to use inventories. Ez tax form For more information on inventories, see chapter 2. Ez tax form Income paid to a third party. Ez tax form   All income you earn is taxable to you. Ez tax form You cannot avoid tax by having the income paid to a third party. Ez tax form Example. Ez tax form You rent out your property and the rental agreement directs the lessee to pay the rent to your son. Ez tax form The amount paid to your son is gross income to you. Ez tax form Cash discounts. Ez tax form   These are amounts the seller permits you to deduct from the invoice price for prompt payment. Ez tax form For income tax purposes, you can use either of the following two methods to account for cash discounts. Ez tax form Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). Ez tax form Credit the cash discount to a discount income account. Ez tax form You must use the chosen method every year for all your purchase discounts. Ez tax form   If you use the second method, the credit balance in the account at the end of your tax year is business income. Ez tax form Under this method, you do not reduce the cost of goods sold by the cash discounts you received. Ez tax form When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. Ez tax form Trade discounts. Ez tax form   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Ez tax form Do not enter these discounts on your books of account. Ez tax form Instead, use only the net amount as the cost of the merchandise purchased. Ez tax form For more information, see Trade discounts in chapter 6. Ez tax form Payment placed in escrow. Ez tax form   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. Ez tax form However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. Ez tax form Sales returns and allowances. Ez tax form   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. Ez tax form Advance payments. Ez tax form   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. Ez tax form Insurance proceeds. Ez tax form   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. Ez tax form You cannot deduct the reimbursed part of a casualty or theft loss. Ez tax form   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. 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Ez tax form Publication 969 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Ez tax form Tax questions. Ez tax form What's New Federal tax benefits for same-sex married couples. Ez tax form   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Ez tax form For more information, see Publication 501. Ez tax form Health flexible spending arrangements (FSAs). Ez tax form  The following rules apply to health FSAs for plan years beginning after December 31, 2012. Ez tax form Salary reduction contributions to your health FSA cannot be more than $2,500 a year (indexed for inflation). Ez tax form Your employer may choose to change your cafeteria plan to allow you to carry over up to $500 of unused amounts remaining at the end of the plan year in a health FSA to be paid or reimbursed for qualified medical expenses incurred during the following plan year. Ez tax form For more information, see Balance in an FSA under Flexible Spending Arrangements (FSAs), later. Ez tax form Reminders Future Developments. Ez tax form  For the latest information about developments related to Publication 969, such as legislation enacted after it was published, go to www. Ez tax form IRS. Ez tax form gov/pub969. Ez tax form Photographs of missing children. Ez tax form  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Ez tax form Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Ez tax form You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Ez tax form Introduction Various programs are designed to give individuals tax advantages to offset health care costs. Ez tax form This publication explains the following programs. Ez tax form Health savings accounts (HSAs). Ez tax form Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Ez tax form Health flexible spending arrangements (FSAs). Ez tax form Health reimbursement arrangements (HRAs). Ez tax form An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. Ez tax form Contributions, other than employer contributions, are deductible on the eligible individual's return whether or not the individual itemizes deductions. Ez tax form Employer contributions are not included in income. Ez tax form Distributions from an HSA that are used to pay qualified medical expenses are not taxed. Ez tax form An Archer MSA may receive contributions from an eligible individual and his or her employer, but not both in the same year. Ez tax form Contributions by the individual are deductible whether or not the individual itemizes deductions. Ez tax form Employer contributions are not included in income. Ez tax form Distributions from an Archer MSA that are used to pay qualified medical expenses are not taxed. Ez tax form A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is enrolled in Medicare. Ez tax form Contributions can only be made by Medicare. Ez tax form The contributions are not included in your income. Ez tax form Distributions from a Medicare Advantage MSA that are used to pay qualified medical expenses are not taxed. Ez tax form A health FSA may receive contributions from an eligible individual. Ez tax form Employers may also contribute. Ez tax form Contributions are not includible in income. Ez tax form Reimbursements from an FSA that are used to pay qualified medical expenses are not taxed. Ez tax form An HRA must receive contributions from the employer only. Ez tax form Employees may not contribute. Ez tax form Contributions are not includible in income. Ez tax form Reimbursements from an HRA that are used to pay qualified medical expenses are not taxed. Ez tax form Comments and suggestions. Ez tax form   We welcome your comments about this publication and your suggestions for future editions. Ez tax form   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Ez tax form NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Ez tax form Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Ez tax form   You can send your comments from www. Ez tax form irs. Ez tax form gov/formspubs. Ez tax form Click on “More Information” and then on “Comment on Tax Forms and Publications. Ez tax form ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Ez tax form Ordering forms and publications. Ez tax form   Visit www. Ez tax form irs. Ez tax form gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Ez tax form Internal Revenue Service 1201 N. Ez tax form Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Ez tax form   If you have a tax question, check the information available on IRS. Ez tax form gov or call 1-800-829-1040. Ez tax form We cannot answer tax questions sent to either of the above addresses. Ez tax form Prev  Up  Next   Home   More Online Publications