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Federal Ez Tax Form 2012

Federal ez tax form 2012 Publication 947 - Main Content Table of Contents Practice Before the IRSWhat Is Practice Before the IRS? Who Can Practice Before the IRS? Who Cannot Practice Before the IRS? How Does an Individual Become Enrolled? What Are the Rules of Practice? Authorizing a RepresentativeWhat Is a Power of Attorney? When Is a Power of Attorney Required? When Is a Power of Attorney Not Required? How Do I Fill Out Form 2848? What Happens to the Power of Attorney When Filed? How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Federal ez tax form 2012 Practice Before the IRS The Office of Professional Responsibility and the Return Preparer Office generally are responsible for administering and enforcing the regulations governing practice before the IRS. Federal ez tax form 2012 The Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. Federal ez tax form 2012 The Return Preparer Office is responsible for matters related to the authority to practice, including acting on applications for enrollment and administering competency testing and continuing education. Federal ez tax form 2012 What Is Practice Before the IRS? Practice before the IRS covers all matters relating to any of the following. Federal ez tax form 2012 Communicating with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS. Federal ez tax form 2012 Representing a taxpayer at conferences, hearings, or meetings with the IRS. Federal ez tax form 2012 Preparing and filing documents, including tax returns, with the IRS for a taxpayer. Federal ez tax form 2012 Providing a client with written advice which has a potential for tax avoidance or evasion. Federal ez tax form 2012 Furnishing information at the request of the IRS or appearing as a witness for the taxpayer is not practice before the IRS. Federal ez tax form 2012 Who Can Practice Before the IRS? The following individuals can practice before the IRS. Federal ez tax form 2012 However, any individual who is recognized to practice (a recognized representative) must be designated as the taxpayer's representative and file a written declaration with the IRS stating that he or she is authorized and qualified to represent a particular taxpayer. Federal ez tax form 2012 Form 2848 can be used for this purpose. Federal ez tax form 2012 Attorneys. Federal ez tax form 2012   Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Federal ez tax form 2012 Certified public accountants (CPAs). Federal ez tax form 2012   Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any state, possession, territory, commonwealth, or the District of Columbia may practice before the IRS. Federal ez tax form 2012 Enrolled agents. Federal ez tax form 2012   Any enrolled agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Federal ez tax form 2012 Enrolled retirement plan agents. Federal ez tax form 2012   Any enrolled retirement plan agent in active status who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Federal ez tax form 2012 The practice of enrolled retirement plan agents is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Federal ez tax form 2012 Enrolled actuaries. Federal ez tax form 2012   Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries who is not currently under suspension or disbarment from practice before the IRS may practice before the IRS. Federal ez tax form 2012 The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans. Federal ez tax form 2012 Student. Federal ez tax form 2012    Under certain circumstances, a student who is supervised by a practitioner may request permission to represent another person before the IRS. Federal ez tax form 2012 For more information, see Authorization for special appearances, later. Federal ez tax form 2012 Registered tax return preparers and unenrolled return preparers. Federal ez tax form 2012   A registered tax return preparer is an individual who has passed an IRS competency test and is authorized to prepare and sign tax returns as the preparer. Federal ez tax form 2012 An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return. Federal ez tax form 2012   Registered tax return preparers and unenrolled return preparers may only represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the Internal Revenue Service (including the Taxpayer Advocate Service) during an examination of the taxable year or period covered by the tax return they prepared and signed. Federal ez tax form 2012 Registered tax return preparers and unenrolled return preparers cannot represent taxpayers, regardless of the circumstances requiring representation, before appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service or the Department of Treasury. Federal ez tax form 2012 Registered tax return preparers and unenrolled return preparers cannot execute closing agreements, extend the statutory period for tax assessments or collection of tax, execute waivers, execute claims for refund, or sign any document on behalf of a taxpayer. Federal ez tax form 2012   If the unenrolled return preparer does not meet the requirements for limited representation, you may file Form 8821 to allow the preparer to inspect your tax information and receive copies of notices sent to you by the IRS. Federal ez tax form 2012 See Form 8821. Federal ez tax form 2012 Practice denied. Federal ez tax form 2012   Any individual engaged in limited practice before the IRS who is involved in disreputable conduct is subject to disciplinary action. Federal ez tax form 2012 Disreputable conduct includes, but is not limited to, the list of items under Incompetence and Disreputable Conduct shown later under What Are the Rules of Practice. Federal ez tax form 2012 Other individuals who may serve as representatives. Federal ez tax form 2012   Because of their special relationship with a taxpayer, the following individuals can represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent the taxpayer. Federal ez tax form 2012 An individual. Federal ez tax form 2012 An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority. Federal ez tax form 2012 A family member. Federal ez tax form 2012 An individual can represent members of his or her immediate family. Federal ez tax form 2012 Immediate family includes a spouse, child, parent, brother, or sister of the individual. Federal ez tax form 2012 An officer. Federal ez tax form 2012 A bona fide officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group can represent the corporation, association, or organized group. Federal ez tax form 2012 An officer of a governmental unit, agency, or authority, in the course of his or her official duties, can represent the organization before the IRS. Federal ez tax form 2012 A partner. Federal ez tax form 2012 A general partner may represent the partnership before the IRS. Federal ez tax form 2012 An employee. Federal ez tax form 2012 A regular full-time employee can represent his or her employer. Federal ez tax form 2012 An employer can be, but is not limited to, an individual, partnership, corporation (including a parent, subsidiary, or other affiliated corporation), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority. Federal ez tax form 2012 A fiduciary. Federal ez tax form 2012 A fiduciary (trustee, executor, personal representative, administrator, receiver, or guardian) stands in the position of a taxpayer and acts as the taxpayer, not as a representative. Federal ez tax form 2012 See Fiduciary under When Is a Power of Attorney Not Required, later. Federal ez tax form 2012 Representation Outside the United States Any individual may represent an individual or entity, who is outside the United States, before personnel of the IRS when such representation occurs outside the United States. Federal ez tax form 2012 See section 10. Federal ez tax form 2012 7(c)(1)(vii) of Circular 230. Federal ez tax form 2012 Authorization for Special Appearances The Commissioner of Internal Revenue, or delegate, can authorize an individual who is not otherwise eligible to practice before the IRS to represent another person for a particular matter. Federal ez tax form 2012 The prospective representative must request this authorization in writing from the Office of Professional Responsibility. Federal ez tax form 2012 However, it is granted only when extremely compelling circumstances exist. Federal ez tax form 2012 If granted, the Commissioner, or delegate, will issue a letter that details the conditions related to the appearance and the particular tax matter for which the authorization is granted. Federal ez tax form 2012 The authorization letter should not be confused with a letter from an IRS center advising an individual that he or she has been assigned a Centralized Authorization File (CAF) number. Federal ez tax form 2012 The issuance of a CAF number does not indicate that an individual is either recognized or authorized to practice before the IRS. Federal ez tax form 2012 It merely confirms that a centralized file for authorizations has been established for the individual under that number. Federal ez tax form 2012 Students in LITCs and the STCP. Federal ez tax form 2012   A student who works in a Low Income Taxpayer Clinic (LITC) or Student Tax Clinic Program (STCP) who is supervised by a practitioner may request permission to represent another person before the IRS. Federal ez tax form 2012 Authorization requests must be made to the Office of Professional Responsibility. Federal ez tax form 2012 If granted, a letter authorizing the student's special appearance and detailing any conditions related to the appearance will be issued. Federal ez tax form 2012 Students receiving an authorization letter generally can represent taxpayers before any IRS function or office subject to any conditions in the authorization letter. Federal ez tax form 2012 If you intend to have a student represent you, review the authorization letter and ask your student, your student's supervisor, or the Office of Professional Responsibility if you have questions about the terms of the authorization. Federal ez tax form 2012 Who Cannot Practice Before the IRS? In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. Federal ez tax form 2012 If an individual loses eligibility to practice, the IRS will not recognize a power of attorney that names the individual as a representative. Federal ez tax form 2012 Corporations, associations, partnerships, and other persons that are not individuals. Federal ez tax form 2012   These organizations (or persons) are not eligible to practice before the IRS. Federal ez tax form 2012 Loss of Eligibility Generally, individuals lose their eligibility to practice before the IRS in the following ways. Federal ez tax form 2012 Not meeting the requirements for renewal of enrollment (such as continuing professional education). Federal ez tax form 2012 Requesting to be placed in inactive retirement status. Federal ez tax form 2012 Being suspended or disbarred by the Office of Professional Responsibility for violating the regulations governing practice before the IRS. Federal ez tax form 2012 Failure to meet requirements. Federal ez tax form 2012   Individuals who fail to comply with the requirements for eligibility for renewal of enrollment will be notified by the IRS. Federal ez tax form 2012 The notice will explain the reason for noncompliance and provide the individual with an opportunity to furnish information for reconsideration. Federal ez tax form 2012 The individual has 60 days from the date of the notice to respond. Federal ez tax form 2012 Inactive roster. Federal ez tax form 2012   An individual will be placed on the roster of inactive individuals for a period of three years, if he or she: Fails to respond timely to the notice of noncompliance with the renewal requirements, Fails to file timely the application for renewal, or Does not satisfy the requirements of eligibility for renewal. Federal ez tax form 2012 The individual must file an application for renewal and satisfy all requirements for renewal after being placed in inactive status. Federal ez tax form 2012 Otherwise, at the conclusion of the next renewal cycle, he or she will be removed from the roster and the enrollment or registration terminated. Federal ez tax form 2012 Inactive retirement status. Federal ez tax form 2012   Individuals who request to be placed in an inactive retirement status will be ineligible to practice before the IRS. Federal ez tax form 2012 They must continue to adhere to all renewal requirements. Federal ez tax form 2012 They can be reinstated to an active enrollment status by filing an application for renewal and providing evidence that they have completed the required continuing professional education hours for the enrollment cycle or registration year. Federal ez tax form 2012 Suspension and disbarment. Federal ez tax form 2012   Individuals authorized to practice before the IRS are subject to disciplinary proceedings and may be suspended or disbarred for violating any regulation governing practice before the IRS. Federal ez tax form 2012 This includes engaging in acts of disreputable conduct. Federal ez tax form 2012 For more information, see Incompetence and Disreputable Conduct under What are the Rules of Practice, later. Federal ez tax form 2012   Practitioners who are suspended in a disciplinary proceeding are not allowed to practice before the IRS during the period of suspension. Federal ez tax form 2012 See What Is Practice Before the IRS, earlier. Federal ez tax form 2012   Practitioners who are disbarred in a disciplinary proceeding are not allowed to practice before the IRS. Federal ez tax form 2012 However, a practitioner can seek reinstatement from the Office of Professional Responsibility five years after disbarment. Federal ez tax form 2012   If the practitioner seeks reinstatement, he or she may not practice before the IRS until the Office of Professional Responsibility authorizes reinstatement. Federal ez tax form 2012 The Office of Professional Responsibility may reinstate the practitioner if it is determined that: The practitioner's future conduct is not likely to be in violation of the regulations, and Granting the reinstatement would not be contrary to the public interest. Federal ez tax form 2012 How Does an Individual Become Enrolled? The Return Preparer Office can grant enrollment to practice before the IRS to an applicant who demonstrates special competence in tax matters by passing a written examination administered by the IRS. Federal ez tax form 2012 Enrollment also can be granted to an applicant who qualifies because of past service and technical experience in the IRS. Federal ez tax form 2012 In either case, certain application forms, discussed next, must be filed. Federal ez tax form 2012 Additionally, an applicant must not have engaged in any conduct that would justify suspension or disbarment from practice before the IRS. Federal ez tax form 2012 See Incompetence and Disreputable Conduct, later. Federal ez tax form 2012 Form 2587. Federal ez tax form 2012   Applicants can apply to take the special enrollment examination by filing Form 2587, Application for Special Enrollment Examination. Federal ez tax form 2012 Form 2587 can be filed online, by mail, or by fax. Federal ez tax form 2012 For more information, see instructions and fees listed on the form. Federal ez tax form 2012 To get Form 2587, see How To Get Tax Help, later. Federal ez tax form 2012 Form 23 and Form 23-EP. Federal ez tax form 2012   Individuals who have passed the examination or are applying on the basis of past service and technical experience with the IRS can apply for enrollment by filing Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, or Form 23-EP, Application for Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent. Federal ez tax form 2012 The application must include a check or money order in the amount of the fee shown on Form 23 or Form 23-EP. Federal ez tax form 2012 Alternatively, payment may be made electronically pursuant to instructions on the forms. Federal ez tax form 2012 To get Form 23 or Form 23-EP, see How To Get Tax Help, later. Federal ez tax form 2012 Form 5434. Federal ez tax form 2012   An individual may apply as an enrolled actuary on the basis of past employment with the IRS and technical experience by filing Form 5434, Application for Enrollment, with the Joint Board for the Enrollment of Actuaries. Federal ez tax form 2012 The application must include a check or money order in the amount of the fee shown on Form 5434. Federal ez tax form 2012 To get Form 5434, see How To Get Tax Help, later. Federal ez tax form 2012 Period of enrollment. Federal ez tax form 2012   An enrollment card will be issued to each individual whose enrollment application is approved. Federal ez tax form 2012 The individual is enrolled until the expiration date shown on the enrollment card or certificate. Federal ez tax form 2012 To continue practicing beyond the expiration date, the individual must request renewal of the enrollment by filing Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, or Form 8554-EP, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA). Federal ez tax form 2012 What Are the Rules of Practice? The rules governing practice before the IRS are published in the Code of Federal Regulations at 31 C. Federal ez tax form 2012 F. Federal ez tax form 2012 R. Federal ez tax form 2012 part 10 and reprinted in Treasury Department Circular No. Federal ez tax form 2012 230 (Circular 230). Federal ez tax form 2012 An attorney, CPA, enrolled agent, enrolled retirement plan agent, registered tax return preparer, or enrolled actuary authorized to practice before the IRS (referred to hereafter as a practitioner) has the duty to perform certain acts and is restricted from performing other acts. Federal ez tax form 2012 In addition, a practitioner cannot engage in disreputable conduct (discussed later). Federal ez tax form 2012 Any practitioner who does not comply with the rules of practice or engages in disreputable conduct is subject to disciplinary action. Federal ez tax form 2012 Also, unenrolled preparers must comply with the rules of practice and conduct to exercise the privilege of limited practice before the IRS. Federal ez tax form 2012 See Publication 470 for a discussion of the special rules for limited practice by unenrolled preparers. Federal ez tax form 2012 Duties Practitioners must promptly submit records or information requested by officers or employees of the IRS, except when the practitioner believes on reasonable belief and good faith that the information is privileged. Federal ez tax form 2012 Communications with respect to tax advice between a federally authorized tax practitioner and a taxpayer generally are confidential to the same extent that communication would be privileged if it were between a taxpayer and an attorney if the advice relates to: Noncriminal tax matters before the IRS, or Noncriminal tax proceedings brought in federal court by or against the United States. Federal ez tax form 2012 Communications regarding corporate tax shelters. Federal ez tax form 2012   This protection of tax advice communications does not apply to any written communications between a federally authorized tax practitioner and any person, including a director, shareholder, officer, employee, agent, or representative of a corporation if the communication involves the promotion of the direct or indirect participation of the corporation in any tax shelter. Federal ez tax form 2012 Duty to advise. Federal ez tax form 2012   A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return, document, affidavit, or other required paper, has the responsibility to advise the client promptly of the noncompliance, error, or omission, and the consequences of the noncompliance, error, or omission. Federal ez tax form 2012 Due diligence. Federal ez tax form 2012   A practitioner must exercise due diligence when performing the following duties. Federal ez tax form 2012 Preparing or assisting in the preparing, approving, and filing of returns, documents, affidavits, and other papers relating to IRS matters. Federal ez tax form 2012 Determining the correctness of oral or written representations made by him or her to the Department of the Treasury. Federal ez tax form 2012 Determining the correctness of oral or written representations made by him or her to clients with reference to any matter administered by the IRS. Federal ez tax form 2012 Restrictions Practitioners are restricted from engaging in certain practices. Federal ez tax form 2012 The following paragraphs discuss some of these restricted practices. Federal ez tax form 2012 Delays. Federal ez tax form 2012   A practitioner must not unreasonably delay the prompt disposition of any matter before the IRS. Federal ez tax form 2012 Assistance from disbarred or suspended persons and former IRS employees. Federal ez tax form 2012   A practitioner must not knowingly, directly or indirectly, do the following. Federal ez tax form 2012 Accept assistance from, or assist, any person who is under disbarment or suspension from practice before the IRS if the assistance relates to matters considered practice before the IRS. Federal ez tax form 2012 Accept assistance from any former government employee where provisions of Circular 230 or any federal law would be violated. Federal ez tax form 2012 Performance as a notary. Federal ez tax form 2012   A practitioner who is a notary public and is employed as counsel, attorney, or agent in a matter before the IRS, or has a material interest in the matter, cannot engage in any notary activities related to that matter. Federal ez tax form 2012 Negotiations of taxpayer refund checks. Federal ez tax form 2012   Practitioners must not endorse or otherwise negotiate (cash) any refund check (including directing or accepting payment by any means, electronic or otherwise, in an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to the taxpayer. Federal ez tax form 2012 Incompetence and Disreputable Conduct Any practitioner or unenrolled return preparer may be disbarred or suspended from practice before the IRS, or censured, for incompetence or disreputable conduct. Federal ez tax form 2012 The following list contains examples of conduct that is considered disreputable. Federal ez tax form 2012 Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust. Federal ez tax form 2012 Knowingly giving false or misleading information in connection with federal tax matters, or participating in such activity. Federal ez tax form 2012 Soliciting employment by prohibited means as discussed in section 10. Federal ez tax form 2012 30 of Circular 230. Federal ez tax form 2012 Willfully failing to file a federal tax return, evading or attempting to evade any federal tax or payment, or participating in such actions. Federal ez tax form 2012 Misappropriating, or failing to properly and promptly remit, funds received from clients for payment of taxes or other obligations due the United States. Federal ez tax form 2012 Directly or indirectly attempting to influence the official action of IRS employees by the use of threats, false accusations, duress, or coercion, or by offering gifts, favors, or any special inducements. Federal ez tax form 2012 Being disbarred or suspended from practice as an attorney, CPA, public accountant, or actuary, by the District of Columbia or any state, possession, territory, commonwealth, or any federal court, or any federal agency, body, or board. Federal ez tax form 2012 Knowingly aiding and abetting another person to practice before the IRS during a period of suspension, disbarment, or ineligibility of that other person. Federal ez tax form 2012 Using abusive language, making false accusations and statements knowing them to be false, circulating or publishing malicious or libelous matter, or engaging in any contemptuous conduct in connection with practice before the IRS. Federal ez tax form 2012 Giving a false opinion knowingly, recklessly, or through gross incompetence; or following a pattern of providing incompetent opinions in questions arising under the federal tax laws. Federal ez tax form 2012 Censure, Disbarments, and Suspensions The Office of Professional Responsibility may censure or institute proceedings to censure, suspend or disbar any attorney, CPA, or enrolled agent who has violated Circular 230. Federal ez tax form 2012 A practitioner will be given the opportunity to demonstrate compliance with the rules before any disciplinary action is taken. Federal ez tax form 2012 Authorizing a Representative You may either represent yourself, or you may authorize an individual to represent you before the IRS. Federal ez tax form 2012 If you chose to have someone represent you, your representative must be a person eligible to practice before the IRS. Federal ez tax form 2012 See Who Can Practice Before the IRS, earlier. Federal ez tax form 2012 What Is a Power of Attorney? A power of attorney is your written authorization for an individual to act on your behalf. Federal ez tax form 2012 If the authorization is not limited, the individual generally can perform all acts that you can perform. Federal ez tax form 2012 The authority granted to a registered tax return preparer or an unenrolled preparer is limited. Federal ez tax form 2012 For information on the limits regarding registered tax return preparers, see Circular 230 §10. Federal ez tax form 2012 3(f). Federal ez tax form 2012 For information on the limits regarding unenrolled preparers, see Publication 470. Federal ez tax form 2012 Acts performed. Federal ez tax form 2012   Any representative, other than a registered tax return preparer or an unenrolled return preparer, can usually perform the following acts. Federal ez tax form 2012 Represent you before any office of the IRS. Federal ez tax form 2012 Sign an offer or a waiver of restriction on assessment or collection of a tax deficiency, or a waiver of notice of disallowance of claim for credit or refund. Federal ez tax form 2012 Sign a consent to extend the statutory time period for assessment or collection of a tax. Federal ez tax form 2012 Sign a closing agreement. Federal ez tax form 2012 Signing your return. Federal ez tax form 2012   The representative named under a power of attorney is not permitted to sign your income tax return unless: The signature is permitted under the Internal Revenue Code and the related regulations (see Regulations section 1. Federal ez tax form 2012 6012-1(a)(5)). Federal ez tax form 2012 You specifically authorize this in your power of attorney. Federal ez tax form 2012 For example, the regulation permits a representative to sign your return if you are unable to sign the return due to: Disease or injury. Federal ez tax form 2012 Continuous absence from the United States (including Puerto Rico) for a period of at least 60 days prior to the date required by law for filing the return. Federal ez tax form 2012 Other good cause if specific permission is requested of and granted by the IRS. Federal ez tax form 2012 When a return is signed by a representative, it must be accompanied by a power of attorney (or copy) authorizing the representative to sign the return. Federal ez tax form 2012 For more information, see the Form 2848 instructions. Federal ez tax form 2012 Limitation on substitution or delegation. Federal ez tax form 2012   A recognized representative can substitute or delegate authority under the power of attorney to another recognized representative only if the act is specifically authorized by you on the power of attorney. Federal ez tax form 2012   After a substitution has been made, only the newly recognized representative will be recognized as the taxpayer's representative. Federal ez tax form 2012 If a delegation of power has been made, both the original and the delegated representative will be recognized by the IRS to represent you. Federal ez tax form 2012 Disclosure of returns to a third party. Federal ez tax form 2012   Your representative cannot execute consents that will allow the IRS to disclose tax return or return information to a third party unless you specifically delegate this authority to your representative on line 5 of Form 2848. Federal ez tax form 2012 Incapacity or incompetency. Federal ez tax form 2012   A power of attorney is generally terminated if you become incapacitated or incompetent. Federal ez tax form 2012   The power of attorney can continue, however, in the case of your incapacity or incompetency if you authorize this on line 5 “Other” of the Form 2848 and if your non-IRS durable power of attorney meets all the requirements for acceptance by the IRS. Federal ez tax form 2012 See Non-IRS powers of attorney, later. Federal ez tax form 2012 When Is a Power of Attorney Required? Submit a power of attorney when you want to authorize an individual to represent you before the IRS, whether or not the representative performs any of the other acts cited earlier under What Is a Power of Attorney. Federal ez tax form 2012 A power of attorney is most often required when you want to authorize another individual to perform at least one of the following acts on your behalf. Federal ez tax form 2012 Represent you at a meeting with the IRS. Federal ez tax form 2012 Prepare and file a written response to the IRS. Federal ez tax form 2012 Form Required Use Form 2848 to appoint a recognized representative to act on your behalf before the IRS. Federal ez tax form 2012 Individuals recognized to practice before the IRS are listed under Part II, Declaration of Representative, of Form 2848. Federal ez tax form 2012 Your representative must complete that part of the form. Federal ez tax form 2012 Non-IRS powers of attorney. Federal ez tax form 2012   The IRS will accept a non-IRS power of attorney, but a completed Form 2848 must be attached in order for the power of attorney to be entered on the Centralized Authorization File (CAF) system. Federal ez tax form 2012 For more information, see Processing a non-IRS power of attorney, later. Federal ez tax form 2012   If you want to use a power of attorney document other than Form 2848, it must contain the following information. Federal ez tax form 2012 Your name and mailing address. Federal ez tax form 2012 Your social security number and/or employer identification number. Federal ez tax form 2012 Your employee plan number, if applicable. Federal ez tax form 2012 The name and mailing address of your representative(s). Federal ez tax form 2012 The types of tax involved. Federal ez tax form 2012 The federal tax form number. Federal ez tax form 2012 The specific year(s) or period(s) involved. Federal ez tax form 2012 For estate tax matters, the decedent's date of death. Federal ez tax form 2012 A clear expression of your intention concerning the scope of authority granted to your representative(s). Federal ez tax form 2012 Your signature and date. Federal ez tax form 2012 You also must attach to the non-IRS power of attorney a signed and dated statement made by your representative. Federal ez tax form 2012 This statement, which is referred to as the Declaration of Representative, is contained in Part II of Form 2848. Federal ez tax form 2012 The statement should read: I am not currently under suspension or disbarment from practice before the Internal Revenue Service or other practice of my profession by any other authority, I am aware of the regulations contained in Circular 230, I am authorized to represent the taxpayer(s) identified in the power of attorney, and I am an individual described in 26 CFR 601. Federal ez tax form 2012 502(b). Federal ez tax form 2012 Required information missing. Federal ez tax form 2012   The IRS will not accept your non-IRS power of attorney if it does not contain all the information listed above. Federal ez tax form 2012 You can sign and submit a completed Form 2848 or a new non-IRS power of attorney that contains all the information. Federal ez tax form 2012 If you cannot sign an acceptable replacement document, your attorney-in-fact may be able to perfect (make acceptable to the IRS) your non-IRS power of attorney by using the procedure described next. Federal ez tax form 2012 Procedure for perfecting a non-IRS power of attorney. Federal ez tax form 2012   Under the following conditions, the attorney-in-fact named in your non-IRS power of attorney can sign a Form 2848 on your behalf. Federal ez tax form 2012 The original non-IRS power of attorney grants authority to handle federal tax matters (for example, general authority to perform any acts). Federal ez tax form 2012 The attorney-in-fact attaches a statement (signed under penalty of perjury) to the Form 2848 stating that the original non-IRS power of attorney is valid under the laws of the governing jurisdiction. Federal ez tax form 2012 Example. Federal ez tax form 2012 John Elm, a taxpayer, signs a non-IRS durable power of attorney that names his neighbor and CPA, Ed Larch, as his attorney-in-fact. Federal ez tax form 2012 The power of attorney grants Ed the authority to perform any and all acts on John's behalf. Federal ez tax form 2012 However, it does not list specific tax-related information such as types of tax or tax form numbers. Federal ez tax form 2012 Shortly after John signs the power of attorney, he is declared incompetent. Federal ez tax form 2012 Later, a federal tax matter arises concerning a prior year return filed by John. Federal ez tax form 2012 Ed attempts to represent John before the IRS but is rejected because the durable power of attorney does not contain required information. Federal ez tax form 2012 If Ed attaches a statement (signed under the penalty of perjury) that the durable power of attorney is valid under the laws of the governing jurisdiction, he can sign a completed Form 2848 and submit it on John's behalf. Federal ez tax form 2012 If Ed can practice before the IRS (see Who Can Practice Before the IRS, earlier), he can name himself as representative on Form 2848. Federal ez tax form 2012 Otherwise, he must name another individual who can practice before the IRS. Federal ez tax form 2012 Processing a non-IRS power of attorney. Federal ez tax form 2012   The IRS has a centralized computer database system called the CAF system. Federal ez tax form 2012 This system contains information on the authority of taxpayer representatives. Federal ez tax form 2012 Generally, when you submit a power of attorney document to the IRS, it is processed for inclusion on the CAF system. Federal ez tax form 2012 Entry of your power of attorney on the CAF system enables IRS personnel, who do not have a copy of your power of attorney, to verify the authority of your representative by accessing the CAF. Federal ez tax form 2012 It also enables the IRS to automatically send copies of notices and other IRS communications to your representative if you specify that your representative should receive those communications. Federal ez tax form 2012   You can have your non-IRS power of attorney entered on the CAF system by attaching it to a completed Form 2848 and submitting it to the IRS. Federal ez tax form 2012 Your signature is not required; however, your attorney-in-fact must sign the Declaration of Representative (see Part II of Form 2848). Federal ez tax form 2012 Preparation of Form — Helpful Hints The preparation of Form 2848 is illustrated by an example, later under How Do I Fill Out Form 2848. Federal ez tax form 2012 However, the following will also assist you in preparing the form. Federal ez tax form 2012 Line-by-line hints. Federal ez tax form 2012   The following hints are summaries of some of the line-by-line instructions for Form 2848. Federal ez tax form 2012 Line 1—Taxpayer information. Federal ez tax form 2012   If a joint return is involved, the husband and wife each file a separate Form 2848 if they both want to be represented. Federal ez tax form 2012 If only one spouse wants to be represented in the matter, that spouse files a Form 2848. Federal ez tax form 2012 Line 2—Representative(s). Federal ez tax form 2012   Only individuals may be named as representatives. Federal ez tax form 2012 If your representative has not been assigned a CAF number, enter “None” on that line and the IRS will issue one to your representative. Federal ez tax form 2012 If the representative's address or phone number has changed since the CAF number was issued, you should check the appropriate box. Federal ez tax form 2012 Enter your representative's fax number if available. Federal ez tax form 2012   If you want to name more than three representatives, attach additional Form(s) 2848. Federal ez tax form 2012 The IRS can send copies of notices and communications to two of your representatives. Federal ez tax form 2012 You must, however, check the boxes on line 2 of the Form 2848 if you want the IRS to routinely send copies of notices and communications to your representatives. Federal ez tax form 2012 If you do not check the boxes, your representatives will not routinely receive copies of notices and communications. Federal ez tax form 2012 Line 3—Tax matters. Federal ez tax form 2012   You may list any tax years or periods that have already ended as of the date you sign the power of attorney. Federal ez tax form 2012 However, you may include on a power of attorney only future tax periods that end no later than 3 years after the date the power of attorney is received by the IRS. Federal ez tax form 2012 The 3 future periods are determined starting after December 31 of the year the power of attorney is received by the IRS. Federal ez tax form 2012 However, avoid general references such as “all years” or “all taxes. Federal ez tax form 2012 ” Any Form 2848 with general references will be returned. Federal ez tax form 2012 Line 4—Specific use not recorded on Centralized Authorization File (CAF). Federal ez tax form 2012   Certain matters cannot be recorded on the CAF system. Federal ez tax form 2012 Examples of such matters include, but are not limited to, the following. Federal ez tax form 2012 Requests for a private letter ruling or technical advice. Federal ez tax form 2012 Applications for an employer identification number (EIN). Federal ez tax form 2012 Claims filed on Form 843, Claim for Refund and Request for Abatement. Federal ez tax form 2012 Corporate dissolutions. Federal ez tax form 2012 Requests for change of accounting method. Federal ez tax form 2012 Requests for change of accounting period. Federal ez tax form 2012 Applications for recognition of exemption under sections 501(c)(3), 501(a), or 521 (Forms 1023, 1034, or 1028). Federal ez tax form 2012 Request for a determination of the qualified status of an employee benefit plan (Forms 5300, 5307, or 5310). Federal ez tax form 2012 Application for Award for Original Information under section 7623. Federal ez tax form 2012 Voluntary submissions under the Employee Plans Compliance Resolution System (EPCRS). Federal ez tax form 2012 Freedom of Information Act requests. Federal ez tax form 2012 If the tax matter described on line 3 of Form 2848 concerns one of these matters specifically, check the box on line 4. Federal ez tax form 2012 If this box is checked, the representative should mail or fax the power of attorney to the IRS office handling the matter. Federal ez tax form 2012 Otherwise, the representative should bring a copy of the power of attorney to each meeting with the IRS. Federal ez tax form 2012 Where To File a Power of Attorney Generally, you can mail or fax a paper Form 2848 directly to the IRS. Federal ez tax form 2012 To determine where you should file Form 2848, see Where To File in the instructions for Form 2848. Federal ez tax form 2012 If Form 2848 is for a specific use, mail or fax it to the office handling that matter. Federal ez tax form 2012 For more information on specific use, see the Instructions for Form 2848, line 4. Federal ez tax form 2012 FAX copies. Federal ez tax form 2012   The IRS will accept a copy of a power of attorney that is submitted by facsimile transmission (fax). Federal ez tax form 2012 If you choose to file a power of attorney by fax, be sure the appropriate IRS office is equipped to accept this type of transmission. Federal ez tax form 2012 Your representative may be able to file Form 2848 electronically via the IRS website. Federal ez tax form 2012 For more information, your representative can go to www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov and under the Tax Professionals tab, click on e-services–Online Tools for Tax Professionals. Federal ez tax form 2012 If you complete Form 2848 for electronic signature authorization, do not file Form 2848 with the IRS. Federal ez tax form 2012 Instead, give it to your representative, who will retain the document. Federal ez tax form 2012 Updating a power of attorney. Federal ez tax form 2012   Submit any update or modification to an existing power of attorney in writing. Federal ez tax form 2012 Your signature (or the signature of the individual(s) authorized to sign on your behalf) is required. Federal ez tax form 2012 Do this by sending the updated Form 2848 or non-IRS power of attorney to the IRS office(s) where you previously sent the original(s), including the center where the related return was, or will be filed. Federal ez tax form 2012   A recognized representative may substitute or delegate authority if you specifically authorize your representative to substitute or delegate representation in the original power of attorney. Federal ez tax form 2012 To make a substitution or delegation, the representative must file the following items with the IRS office(s) where the power of attorney was filed. Federal ez tax form 2012 A written notice of substitution or delegation signed by the recognized representative. Federal ez tax form 2012 A written declaration of representative made by the new representative. Federal ez tax form 2012 A copy of the power of attorney that specifically authorizes the substitution or delegation. Federal ez tax form 2012 Retention/Revocation of Prior Power(s) of Attorney A newly filed power of attorney concerning the same matter will revoke a previously filed power of attorney. Federal ez tax form 2012 However, the new power of attorney will not revoke the prior power of attorney if it specifically states it does not revoke such prior power of attorney and either of the following are attached to the new power of attorney. Federal ez tax form 2012 A copy of the unrevoked prior power of attorney, or A statement signed by the taxpayer listing the name and address of each representative authorized under the prior unrevoked power of attorney. Federal ez tax form 2012 Note. Federal ez tax form 2012 The filing of Form 2848 will not revoke any  Form 8821 that is in effect. Federal ez tax form 2012 Revocation of Power of Attorney/Withdrawal of Representative If you want to revoke an existing power of attorney and do not want to name a new representative, or if a representative wants to withdraw from representation, mail or fax a copy of the previously executed power of attorney to the IRS, or if the power of attorney is for a specific matter, to the IRS office handling the matter. Federal ez tax form 2012 If the taxpayer is revoking the power of attorney, the taxpayer must write “REVOKE” across the top of the first page with a current signature and date below this annotation. Federal ez tax form 2012 If the representative is withdrawing from the representation, the representative must write “WITHDRAW” across the top of the first page with a current signature and date below this annotation. Federal ez tax form 2012 If you do not have a copy of the power of attorney you want to revoke or withdraw, send a statement to the IRS. Federal ez tax form 2012 The statement of revocation or withdrawal must indicate that the authority of the power of attorney is revoked or withdrawn, list the matters and periods, and must be signed and dated by the taxpayer or representative as applicable. Federal ez tax form 2012 If the taxpayer is revoking, list the name and address of each recognized representative whose authority is revoked. Federal ez tax form 2012 When the taxpayer is completely revoking authority, the form should state “remove all years/periods” instead of listing the specific tax matter, years, or periods. Federal ez tax form 2012 If the representative is withdrawing, list the name, TIN, and address (if known) of the taxpayer. Federal ez tax form 2012 To revoke a specific use power of attorney, send the power of attorney or statement of revocation to the IRS office handling your case, using the above instructions. Federal ez tax form 2012 A power of attorney held by a student will be recorded on the CAF system for 130 days from the receipt date. Federal ez tax form 2012 If you are authorizing a student to represent you after that time, you will need to submit a current and valid Form 2848. Federal ez tax form 2012 When Is a Power of Attorney Not Required? A power of attorney is not required when the third party is not dealing with the IRS as your representative. Federal ez tax form 2012 The following situations do not require a power of attorney. Federal ez tax form 2012 Providing information to the IRS. Federal ez tax form 2012 Authorizing the disclosure of tax return information through Form 8821, Tax Information Authorization, or other written or oral disclosure consent. Federal ez tax form 2012 Allowing the IRS to discuss return information with a third party via the checkbox provided on a tax return or other document. Federal ez tax form 2012 Allowing a tax matters partner or person (TMP) to perform acts for the partnership. Federal ez tax form 2012 Allowing the IRS to discuss return information with a fiduciary. Federal ez tax form 2012 How Do I Fill Out Form 2848? The following example illustrates how to complete Form 2848. Federal ez tax form 2012 The two completed forms for this example are shown on the next pages. Federal ez tax form 2012 Example. Federal ez tax form 2012 Stan and Mary Doe have been notified that their joint tax returns (Forms 1040) for 2009, 2010, and 2011 are being examined. Federal ez tax form 2012 They have decided to appoint Jim Smith, an enrolled agent, to represent them in this matter and any future matters concerning these returns. Federal ez tax form 2012 Jim, who has prepared returns at the same location for years, already has a Centralized Authorization File (CAF) number assigned to him. Federal ez tax form 2012 Mary does not want Jim to sign any agreements on her behalf, but Stan is willing to have Jim do so. Federal ez tax form 2012 They want copies of all notices and written communications sent to Jim. Federal ez tax form 2012 This is the first time Stan and Mary have given power of attorney to anyone. Federal ez tax form 2012 They should each complete a Form 2848 as follows. Federal ez tax form 2012 Line 1—Taxpayer information. Federal ez tax form 2012   Stan and Mary must each file a separate Form 2848. Federal ez tax form 2012 On his separate Form 2848, Stan enters his name, street address, and social security number in the spaces provided. Federal ez tax form 2012 Mary does likewise on her separate Form 2848. Federal ez tax form 2012 Line 2—Representative(s). Federal ez tax form 2012   On their separate Forms 2848, Stan and Mary each enters the name and current address of their chosen representative, Jim Smith. Federal ez tax form 2012 Both Stan and Mary want Jim Smith to receive notices and communications concerning the matters identified in line 3, so on their separate Forms 2848, Stan and Mary each checks the box in the first column of line 2. Federal ez tax form 2012 They also enter Mr. Federal ez tax form 2012 Smith's CAF number, his telephone number, and his fax number. Federal ez tax form 2012 Mr. Federal ez tax form 2012 Smith's address, telephone number, and fax number have not changed since the IRS issued his CAF number, so Stan and Mary do not check the boxes in the second column. Federal ez tax form 2012 Line 3—Tax Matters. Federal ez tax form 2012   On their separate Forms 2848, Stan and Mary each enters “income” for the type of tax, “1040” for the form number, and “2009, 2010, and 2011” for the tax years. Federal ez tax form 2012 Line 4—Specific use not recorded on Centralized Authorization File (CAF). Federal ez tax form 2012   On their separate Forms 2848, Stan and Mary make no entry on this line because they do not want to restrict the use of their powers of attorney to a specific use that is not recorded on the CAF. Federal ez tax form 2012 See Preparation of Form — Helpful Hints, earlier. Federal ez tax form 2012 Line 5—Acts authorized. Federal ez tax form 2012   Mary wants to sign any agreement that reflects changes to her and Stan's joint 2009, 2010, and 2011 income tax liability, so she writes “Taxpayer must sign any agreement form” on line 5 of her Form 2848. Federal ez tax form 2012 Stan does not wish to restrict the authority of Jim Smith in this regard, so he leaves line 5 of his Form 2848 blank. Federal ez tax form 2012 If either Mary or Stan had chosen, they could have listed other restrictions on line 5 of their separate Forms 2848. Federal ez tax form 2012 Line 6—Retention/revocation of prior power(s) of attorney. Federal ez tax form 2012   Stan and Mary are each filing their first powers of attorney, so they make no entry on this line. Federal ez tax form 2012 However, if they had filed prior powers of attorney, the filing of this current power would revoke any earlier ones for the same tax matter(s) unless they checked the box on line 6 and attached a copy of the prior power of attorney that they wanted to remain in effect. Federal ez tax form 2012   If Mary later decides that she can handle the examination on her own, she can revoke her power of attorney even though Stan does not revoke his power of attorney. Federal ez tax form 2012 (See Revocation of Power of Attorney/Withdrawal of Representative, earlier, for the special rules that apply. Federal ez tax form 2012 ) Line 7—Signature of taxpayer. Federal ez tax form 2012   Stan and Mary each signs and dates his or her Form 2848. Federal ez tax form 2012 If a taxpayer does not sign, the IRS cannot accept the form. Federal ez tax form 2012 Part II—Declaration of Representative. Federal ez tax form 2012   Jim Smith must complete this part of Form 2848. Federal ez tax form 2012 If he does not sign this part, the IRS cannot accept the form. Federal ez tax form 2012 What Happens to the Power of Attorney When Filed? A power of attorney will be recognized after it is received, reviewed, and determined by the IRS to contain the required information. Federal ez tax form 2012 However, until a power of attorney is entered on the CAF system, IRS personnel may be unaware of the authority of the person you have named to represent you. Federal ez tax form 2012 Therefore, during this interim period, IRS personnel may request that you or your representative bring a copy to any meeting with the IRS. Federal ez tax form 2012 This image is too large to be displayed in the current screen. Federal ez tax form 2012 Please click the link to view the image. Federal ez tax form 2012 Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Federal ez tax form 2012 Please click the link to view the image. Federal ez tax form 2012 Filled-in Form 2848 - Page 2 This image is too large to be displayed in the current screen. Federal ez tax form 2012 Please click the link to view the image. Federal ez tax form 2012 Filled-in Form 2848 - Page 1 This image is too large to be displayed in the current screen. Federal ez tax form 2012 Please click the link to view the image. Federal ez tax form 2012 Filled-in Form 2848 - Page 2 Processing and Handling How the power of attorney is processed and handled depends on whether it is a complete or incomplete document. Federal ez tax form 2012 Incomplete document. Federal ez tax form 2012   If Form 2848 is incomplete, the IRS will attempt to secure the missing information either by writing or telephoning you or your representative. Federal ez tax form 2012 For example, if your signature or signature date is missing, the IRS will contact you. Federal ez tax form 2012 If information concerning your representative is missing and information sufficient to make a contact (such as an address and/or a telephone number) is on the document, the IRS will try to contact your representative. Federal ez tax form 2012   In either case, the power of attorney is not considered valid until all required information is entered on the document. Federal ez tax form 2012 The individual(s) named as representative(s) will not be recognized to practice before the IRS, on your behalf, until the document is complete and accepted by the IRS. Federal ez tax form 2012 Complete document. Federal ez tax form 2012   If the power of attorney is complete and valid, the IRS will take action to recognize the representative. Federal ez tax form 2012 In most instances, this includes processing the document on the CAF system. Federal ez tax form 2012 Recording the data on the CAF system enables the IRS to direct copies of mailings to authorized representatives and to readily recognize the scope of authority granted. Federal ez tax form 2012 Documents not processed on CAF. Federal ez tax form 2012   Specific-use powers of attorney are not processed on the CAF system (see Preparation of Form – Helpful Hints, earlier). Federal ez tax form 2012 For example, a power of attorney that is a one-time or specific-issue grant of authority is not processed on the CAF system. Federal ez tax form 2012 These documents remain with the related case files. Federal ez tax form 2012 In this situation, you should check the box on line 4 of Form 2848. Federal ez tax form 2012 In these situations, the representative should bring a copy of the power of attorney to each meeting with the IRS. Federal ez tax form 2012 Dealing With the Representative After a valid power of attorney is filed, the IRS will recognize your representative. Federal ez tax form 2012 However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, nonprivileged information, the IRS can contact you directly. Federal ez tax form 2012 For example, in most instances in which a power of attorney is recognized, the IRS will contact the representative to set up appointments and to provide lists of required items. Federal ez tax form 2012 However, if the representative is unavailable, does not respond to repeated requests, and does not provide required items (other than items considered privileged), the IRS can bypass your representative and contact you directly. Federal ez tax form 2012 If a representative engages in conduct described above, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action. Federal ez tax form 2012 Notices and other correspondence. Federal ez tax form 2012   If you have a recognized representative, you and the representative will routinely receive notices and other correspondence from the IRS (either the original or a copy) if you checked the box in the left column of line 2 of Form 2848. Federal ez tax form 2012 If the power of attorney is processed on the CAF system, the IRS will send your representative(s) a duplicate of all computer-generated correspondence that is sent to you. Federal ez tax form 2012 This includes notices and letters produced either at the Martinsburg Computing Center, or other IRS centers. Federal ez tax form 2012 The IRS employee handling the case is responsible for ensuring that the original and any requested copies of each manually-generated correspondence are sent to you and your representative(s) in accordance with your authorization. Federal ez tax form 2012 How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Federal ez tax form 2012 By selecting the method that is best for you, you will have quick and easy access to tax help. Federal ez tax form 2012 Free help with your return. Federal ez tax form 2012   Free help in preparing your return is available nationwide from IRS-certified volunteers. Federal ez tax form 2012 The Volunteer Income Tax Assistance (VITA) program is designed to help low and moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Federal ez tax form 2012 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Federal ez tax form 2012 To find the nearest VITA or TCE site, visit IRS. Federal ez tax form 2012 gov or call 1-800-906-9887 or 1-800-829-1040. Federal ez tax form 2012   As part of the TCE program, AARP offers the Tax-Aide counseling program. Federal ez tax form 2012 To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Federal ez tax form 2012 aarp. Federal ez tax form 2012 org/money/taxaide. Federal ez tax form 2012   For more information on these programs, go to IRS. Federal ez tax form 2012 gov and enter keyword “VITA” in the upper right-hand corner. Federal ez tax form 2012 Internet. Federal ez tax form 2012 You can access the IRS website at IRS. Federal ez tax form 2012 gov 24 hours a day, 7 days a week to: E-file your return. Federal ez tax form 2012 Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Federal ez tax form 2012 Check the status of your refund. Federal ez tax form 2012 Go to IRS. Federal ez tax form 2012 gov and click on Where's My Refund. Federal ez tax form 2012 Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Federal ez tax form 2012 If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Federal ez tax form 2012 Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Federal ez tax form 2012 Download forms, including talking tax forms, instructions, and publications. Federal ez tax form 2012 Order IRS products online. Federal ez tax form 2012 Research your tax questions online. Federal ez tax form 2012 Search publications online by topic or keyword. Federal ez tax form 2012 Use the online Internal Revenue Code, regulations, or other official guidance. Federal ez tax form 2012 View Internal Revenue Bulletins (IRBs) published in the last few years. Federal ez tax form 2012 Figure your withholding allowances using the withholding calculator online at www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/individuals. Federal ez tax form 2012 Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/individuals. Federal ez tax form 2012 Sign up to receive local and national tax news by email. Federal ez tax form 2012 Get information on starting and operating a small business. Federal ez tax form 2012 Phone. Federal ez tax form 2012 Many services are available by phone. Federal ez tax form 2012   Ordering forms, instructions, and publications. Federal ez tax form 2012 Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Federal ez tax form 2012 You should receive your order within 10 days. Federal ez tax form 2012 Asking tax questions. Federal ez tax form 2012 Call the IRS with your tax questions at 1-800-829-1040. Federal ez tax form 2012 Solving problems. Federal ez tax form 2012 You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Federal ez tax form 2012 An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Federal ez tax form 2012 Call your local Taxpayer Assistance Center for an appointment. Federal ez tax form 2012 To find the number, go to www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Federal ez tax form 2012 TTY/TDD equipment. Federal ez tax form 2012 If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Federal ez tax form 2012 TeleTax topics. Federal ez tax form 2012 Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Federal ez tax form 2012 Refund information. Federal ez tax form 2012 To check the status of your refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Federal ez tax form 2012 Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Federal ez tax form 2012 If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Federal ez tax form 2012 Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Federal ez tax form 2012 If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Federal ez tax form 2012 Other refund information. Federal ez tax form 2012 To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Federal ez tax form 2012 Evaluating the quality of our telephone services. Federal ez tax form 2012 To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Federal ez tax form 2012 One method is for a second IRS representative to listen in on or record random telephone calls. Federal ez tax form 2012 Another is to ask some callers to complete a short survey at the end of the call. Federal ez tax form 2012 Walk-in. Federal ez tax form 2012 Many products and services are available on a walk-in basis. Federal ez tax form 2012   Products. Federal ez tax form 2012 You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Federal ez tax form 2012 Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Federal ez tax form 2012 Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Federal ez tax form 2012 Services. Federal ez tax form 2012 You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Federal ez tax form 2012 An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Federal ez tax form 2012 If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Federal ez tax form 2012 No appointment is necessary—just walk in. Federal ez tax form 2012 If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Federal ez tax form 2012 A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Federal ez tax form 2012 If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Federal ez tax form 2012 All other issues will be handled without an appointment. Federal ez tax form 2012 To find the number of your local office, go to  www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Federal ez tax form 2012 Mail. Federal ez tax form 2012 You can send your order for forms, instructions, and publications to the address below. Federal ez tax form 2012 You should receive a response within 10 days after your request is received. Federal ez tax form 2012  Internal Revenue Service 1201 N. Federal ez tax form 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Federal ez tax form 2012   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Federal ez tax form 2012 Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Federal ez tax form 2012 We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Federal ez tax form 2012 Remember, the worst thing you can do is nothing at all. Federal ez tax form 2012   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Federal ez tax form 2012 You face (or your business is facing) an immediate threat of adverse action. Federal ez tax form 2012 You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Federal ez tax form 2012   If you qualify for our help, we’ll do everything we can to get your problem resolved. Federal ez tax form 2012 You will be assigned to one advocate who will be with you at every turn. Federal ez tax form 2012 We have offices in every state, the District of Columbia, and Puerto Rico. Federal ez tax form 2012 Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Federal ez tax form 2012 And our services are always free. Federal ez tax form 2012   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Federal ez tax form 2012 Our tax toolkit at www. Federal ez tax form 2012 TaxpayerAdvocate. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov can help you understand these rights. Federal ez tax form 2012   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/advocate. Federal ez tax form 2012 You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Federal ez tax form 2012   TAS also handles large-scale or systemic problems that affect many taxpayers. Federal ez tax form 2012 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/advocate. Federal ez tax form 2012 Low Income Taxpayer Clinics (LITCs). Federal ez tax form 2012   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Federal ez tax form 2012 Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Federal ez tax form 2012 These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Federal ez tax form 2012 Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Federal ez tax form 2012 For more information and to find a clinic near you, see the LITC page on www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Federal ez tax form 2012 This publication is also available by calling 1-800-829-3676 or at your local IRS office. Federal ez tax form 2012 Free tax services. Federal ez tax form 2012   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Federal ez tax form 2012 Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Federal ez tax form 2012 The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Federal ez tax form 2012 The majority of the information and services listed in this publication are available to you free of charge. Federal ez tax form 2012 If there is a fee associated with a resource or service, it is listed in the publication. Federal ez tax form 2012   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Federal ez tax form 2012 DVD for tax products. Federal ez tax form 2012 You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Federal ez tax form 2012 Prior-year forms, instructions, and publications. Federal ez tax form 2012 Tax Map: an electronic research tool and finding aid. Federal ez tax form 2012 Tax law frequently asked questions. Federal ez tax form 2012 Tax Topics from the IRS telephone response system. Federal ez tax form 2012 Internal Revenue Code—Title 26 of the U. Federal ez tax form 2012 S. Federal ez tax form 2012 Code. Federal ez tax form 2012 Links to other Internet based Tax Research Materials. Federal ez tax form 2012 Fill-in, print, and save features for most tax forms. Federal ez tax form 2012 Internal Revenue Bulletins. Federal ez tax form 2012 Toll-free and email technical support. Federal ez tax form 2012 Two releases during the year. Federal ez tax form 2012  – The first release will ship the beginning of January. Federal ez tax form 2012  – The final release will ship the beginning of March. Federal ez tax form 2012 Purchase the DVD from National Technical Information Service (NTIS) at www. Federal ez tax form 2012 irs. Federal ez tax form 2012 gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Federal ez tax form 2012 Prev  Up  Next   Home   More Online Publications
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The Federal Ez Tax Form 2012

Federal ez tax form 2012 5. Federal ez tax form 2012   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. Federal ez tax form 2012 Short-term lease. Federal ez tax form 2012 Retail space. Federal ez tax form 2012 Qualified long-term real property. Federal ez tax form 2012 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. Federal ez tax form 2012 If there is a connection between any income you receive and your business, the income is business income. Federal ez tax form 2012 A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Federal ez tax form 2012 You can have business income even if you are not involved in the activity on a regular full-time basis. Federal ez tax form 2012 Income from work you do on the side in addition to your regular job can be business income. Federal ez tax form 2012 You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. Federal ez tax form 2012 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. Federal ez tax form 2012 For information on selling business assets, see chapter 3. Federal ez tax form 2012 Nonemployee compensation. Federal ez tax form 2012 Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. Federal ez tax form 2012 This includes amounts reported as nonemployee compensation in box 7 of the form. Federal ez tax form 2012 You can find more information in the instructions on the back of the Form 1099-MISC you received. Federal ez tax form 2012 Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. Federal ez tax form 2012 In most cases, your business income will be in the form of cash, checks, and credit card charges. Federal ez tax form 2012 But business income can be in other forms, such as property or services. Federal ez tax form 2012 These and other types of income are explained next. Federal ez tax form 2012 If you are a U. Federal ez tax form 2012 S. Federal ez tax form 2012 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. Federal ez tax form 2012 S. Federal ez tax form 2012 law. Federal ez tax form 2012 If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. Federal ez tax form 2012 For details, see Publication 54, Tax Guide for U. Federal ez tax form 2012 S. Federal ez tax form 2012 Citizens and Resident Aliens Abroad. Federal ez tax form 2012 Bartering for Property or Services Bartering is an exchange of property or services. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 Example 1. Federal ez tax form 2012 You are a self-employed lawyer. Federal ez tax form 2012 You perform legal services for a client, a small corporation. Federal ez tax form 2012 In payment for your services, you receive shares of stock in the corporation. Federal ez tax form 2012 You must include the fair market value of the shares in income. Federal ez tax form 2012 Example 2. Federal ez tax form 2012 You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. Federal ez tax form 2012 You must include the fair rental value of the apartment in your gross receipts. Federal ez tax form 2012 Your landlord must include the fair market value of the work of art in his or her rental income. Federal ez tax form 2012 Example 3. Federal ez tax form 2012 You are a self-employed accountant. Federal ez tax form 2012 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. Federal ez tax form 2012 Members get in touch with other members directly and bargain for the value of the services to be performed. Federal ez tax form 2012 In return for accounting services you provided for the house painter's business, the house painter painted your home. Federal ez tax form 2012 You must include in gross receipts the fair market value of the services you received from the house painter. Federal ez tax form 2012 The house painter must include the fair market value of your accounting services in his or her gross receipts. Federal ez tax form 2012 Example 4. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. Federal ez tax form 2012 See Publication 15 (Circular E), Employer's Tax Guide. Federal ez tax form 2012 Example 5. Federal ez tax form 2012 You operate a plumbing business and use the cash method of accounting. Federal ez tax form 2012 You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Federal ez tax form 2012 Each member has access to a directory that lists the members of the club and the services available. Federal ez tax form 2012 Members contact each other directly and request services to be performed. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 Information returns. Federal ez tax form 2012   If you are involved in a bartering transaction, you may have to file either of the following forms. Federal ez tax form 2012 Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Federal ez tax form 2012 Form 1099-MISC, Miscellaneous Income. Federal ez tax form 2012 For information about these forms, see the General Instructions for Certain Information Returns. Federal ez tax form 2012 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. Federal ez tax form 2012 , who provides services (maid services, etc. Federal ez tax form 2012 ) for guests, report the rental income and expenses on Schedule C or C-EZ. Federal ez tax form 2012 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. Federal ez tax form 2012 For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Federal ez tax form 2012 Real estate dealer. Federal ez tax form 2012   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. Federal ez tax form 2012 Rent you receive from real estate held for sale to customers is subject to SE tax. Federal ez tax form 2012 However, rent you receive from real estate held for speculation or investment is not subject to SE tax. Federal ez tax form 2012 Trailer park owner. Federal ez tax form 2012   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. Federal ez tax form 2012    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. Federal ez tax form 2012 Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. Federal ez tax form 2012   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. Federal ez tax form 2012   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. Federal ez tax form 2012 Hotels, boarding houses, and apartments. Federal ez tax form 2012   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. Federal ez tax form 2012   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. Federal ez tax form 2012 An example of a service that is not normally provided for the convenience of the occupants is maid service. Federal ez tax form 2012 However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. Federal ez tax form 2012 Prepaid rent. Federal ez tax form 2012   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. Federal ez tax form 2012 This is true no matter what accounting method or period you use. Federal ez tax form 2012 Lease bonus. Federal ez tax form 2012   A bonus you receive from a lessee for granting a lease is an addition to the rent. Federal ez tax form 2012 Include it in your gross receipts in the year received. Federal ez tax form 2012 Lease cancellation payments. Federal ez tax form 2012   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. Federal ez tax form 2012 Payments to third parties. Federal ez tax form 2012   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. Federal ez tax form 2012 A common example of this kind of income is a lessee's payment of your property taxes on leased real property. Federal ez tax form 2012 Settlement payments. Federal ez tax form 2012   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. Federal ez tax form 2012 Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. Federal ez tax form 2012 ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. Federal ez tax form 2012 Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. Federal ez tax form 2012 If you receive any of those payments, include them in your gross receipts as explained in that discussion. Federal ez tax form 2012 Interest and Dividend Income Interest and dividends may be considered business income. Federal ez tax form 2012 Interest. Federal ez tax form 2012   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. Federal ez tax form 2012 Interest received on loans is business income if you are in the business of lending money. Federal ez tax form 2012 Uncollectible loans. Federal ez tax form 2012   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. Federal ez tax form 2012 If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. Federal ez tax form 2012 See Bad Debts in chapter 8. Federal ez tax form 2012 Unstated interest. Federal ez tax form 2012   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. Federal ez tax form 2012 See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Federal ez tax form 2012 Dividends. Federal ez tax form 2012   Generally, dividends are business income to dealers in securities. Federal ez tax form 2012 For most sole proprietors and statutory employees, however, dividends are nonbusiness income. Federal ez tax form 2012 If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. Federal ez tax form 2012   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. Federal ez tax form 2012 To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. Federal ez tax form 2012 Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. Federal ez tax form 2012 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. Federal ez tax form 2012 Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. Federal ez tax form 2012 If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. Federal ez tax form 2012 Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Federal ez tax form 2012 Price reduced after purchase. Federal ez tax form 2012   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. Federal ez tax form 2012 Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. Federal ez tax form 2012 Deductible debt. Federal ez tax form 2012   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. Federal ez tax form 2012 Example. Federal ez tax form 2012 You get accounting services for your business on credit. Federal ez tax form 2012 Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. Federal ez tax form 2012 Your accountant forgives part of the amount you owe for the accounting services. Federal ez tax form 2012 How you treat the canceled debt depends on your method of accounting. Federal ez tax form 2012 Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Federal ez tax form 2012 Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Federal ez tax form 2012   For information on the cash and accrual methods of accounting, see chapter 2. Federal ez tax form 2012 Exclusions Do not include canceled debt in income in the following situations. Federal ez tax form 2012 However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Federal ez tax form 2012 For more information, see Form 982. Federal ez tax form 2012 The cancellation takes place in a bankruptcy case under title 11 of the U. Federal ez tax form 2012 S. Federal ez tax form 2012 Code (relating to bankruptcy). Federal ez tax form 2012 See Publication 908, Bankruptcy Tax Guide. Federal ez tax form 2012 The cancellation takes place when you are insolvent. Federal ez tax form 2012 You can exclude the canceled debt to the extent you are insolvent. Federal ez tax form 2012 See Publication 908. Federal ez tax form 2012 The canceled debt is a qualified farm debt owed to a qualified person. Federal ez tax form 2012 See chapter 3 in Publication 225, Farmer's Tax Guide. Federal ez tax form 2012 The canceled debt is a qualified real property business debt. Federal ez tax form 2012 This situation is explained later. Federal ez tax form 2012 The canceled debt is qualified principal residence indebtedness which is discharged after 2006. Federal ez tax form 2012 See Form 982. Federal ez tax form 2012 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. Federal ez tax form 2012 If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. Federal ez tax form 2012 Debt. Federal ez tax form 2012   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. Federal ez tax form 2012 Qualified real property business debt. Federal ez tax form 2012   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. Federal ez tax form 2012 If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. Federal ez tax form 2012 Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. Federal ez tax form 2012 However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. Federal ez tax form 2012 Cancellation of qualified real property business debt. Federal ez tax form 2012   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. Federal ez tax form 2012 It was incurred or assumed in connection with real property used in a trade or business. Federal ez tax form 2012 It was secured by such real property. Federal ez tax form 2012 It was incurred or assumed at either of the following times. Federal ez tax form 2012 Before January 1, 1993. Federal ez tax form 2012 After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. Federal ez tax form 2012 It is debt to which you choose to apply these rules. Federal ez tax form 2012   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. Federal ez tax form 2012   You cannot exclude more than either of the following amounts. Federal ez tax form 2012 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. Federal ez tax form 2012 The total adjusted bases of depreciable real property held by you immediately before the cancellation. Federal ez tax form 2012 These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. Federal ez tax form 2012 Do not take into account depreciable real property acquired in contemplation of the cancellation. Federal ez tax form 2012 Election. Federal ez tax form 2012   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. Federal ez tax form 2012 You must file your return by the due date (including extensions). Federal ez tax form 2012 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). Federal ez tax form 2012 For more information, see When To File in the form instructions. Federal ez tax form 2012 Other Income The following discussion explains how to treat other types of business income you may receive. Federal ez tax form 2012 Restricted property. Federal ez tax form 2012   Restricted property is property that has certain restrictions that affect its value. Federal ez tax form 2012 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. Federal ez tax form 2012 However, you can choose to be taxed in the year you receive the property. Federal ez tax form 2012 For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. Federal ez tax form 2012 Gains and losses. Federal ez tax form 2012   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. Federal ez tax form 2012 Instead, you must report these gains and losses on other forms. Federal ez tax form 2012 For more information, see chapter 3. Federal ez tax form 2012 Promissory notes. Federal ez tax form 2012   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. Federal ez tax form 2012 In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. Federal ez tax form 2012 Lost income payments. Federal ez tax form 2012   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. Federal ez tax form 2012 Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. Federal ez tax form 2012 Damages. Federal ez tax form 2012   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. Federal ez tax form 2012 Patent infringement. Federal ez tax form 2012 Breach of contract or fiduciary duty. Federal ez tax form 2012 Antitrust injury. Federal ez tax form 2012 Economic injury. Federal ez tax form 2012   You may be entitled to a deduction against the income if it compensates you for actual economic injury. Federal ez tax form 2012 Your deduction is the smaller of the following amounts. Federal ez tax form 2012 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. Federal ez tax form 2012 Your loss from the injury that you have not yet deducted. Federal ez tax form 2012 Punitive damages. Federal ez tax form 2012   You must also include punitive damages in income. Federal ez tax form 2012 Kickbacks. Federal ez tax form 2012   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. Federal ez tax form 2012 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. Federal ez tax form 2012 Recovery of items previously deducted. Federal ez tax form 2012   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. Federal ez tax form 2012 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. Federal ez tax form 2012 If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. Federal ez tax form 2012 Example. Federal ez tax form 2012 Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. Federal ez tax form 2012 He also had 2 personal exemptions for a total of $7,800. Federal ez tax form 2012 He would not pay income tax even if he did not deduct the bad debt. Federal ez tax form 2012 Therefore, he will not report as income any part of the $300 he may recover in any future year. Federal ez tax form 2012 Exception for depreciation. Federal ez tax form 2012   This rule does not apply to depreciation. Federal ez tax form 2012 You recover depreciation using the rules explained next. Federal ez tax form 2012 Recapture of depreciation. Federal ez tax form 2012   In the following situations, you have to recapture the depreciation deduction. Federal ez tax form 2012 This means you include in income part or all of the depreciation you deducted in previous years. Federal ez tax form 2012 Listed property. Federal ez tax form 2012   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. Federal ez tax form 2012 You do this by including in income on Schedule C part of the depreciation you deducted in previous years. Federal ez tax form 2012 Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. Federal ez tax form 2012 For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. Federal ez tax form 2012 That chapter explains how to determine whether property is used more than 50% in your business. Federal ez tax form 2012 Section 179 property. Federal ez tax form 2012   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. Federal ez tax form 2012 You do this by including in income on Schedule C part of the deduction you took. Federal ez tax form 2012 Use Part IV of Form 4797 to figure the amount to include on Schedule C. Federal ez tax form 2012 See chapter 2 in Publication 946 to find out when you recapture the deduction. Federal ez tax form 2012 Sale or exchange of depreciable property. Federal ez tax form 2012   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. Federal ez tax form 2012 You figure the income due to depreciation recapture in Part III of Form 4797. Federal ez tax form 2012 For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. Federal ez tax form 2012 Items That Are Not Income In some cases the property or money you receive is not income. Federal ez tax form 2012 Appreciation. Federal ez tax form 2012   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. Federal ez tax form 2012 Consignments. Federal ez tax form 2012   Consignments of merchandise to others to sell for you are not sales. Federal ez tax form 2012 The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. Federal ez tax form 2012 Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Federal ez tax form 2012 Merchandise you have shipped out on consignment is included in your inventory until it is sold. Federal ez tax form 2012   Do not include merchandise you receive on consignment in your inventory. Federal ez tax form 2012 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. Federal ez tax form 2012 Construction allowances. Federal ez tax form 2012   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. Federal ez tax form 2012 Under a short-term lease of retail space. Federal ez tax form 2012 For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. Federal ez tax form 2012 Amount you can exclude. Federal ez tax form 2012   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Federal ez tax form 2012 Short-term lease. Federal ez tax form 2012   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. Federal ez tax form 2012 The following rules apply in determining whether the lease is for 15 years or less. Federal ez tax form 2012 Take into account options to renew when figuring whether the lease is for 15 years or less. Federal ez tax form 2012 But do not take into account any option to renew at fair market value determined at the time of renewal. Federal ez tax form 2012 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. Federal ez tax form 2012 Retail space. Federal ez tax form 2012   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. Federal ez tax form 2012 Qualified long-term real property. Federal ez tax form 2012   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. Federal ez tax form 2012 Exchange of like-kind property. Federal ez tax form 2012   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. Federal ez tax form 2012 This means that the gain is not taxable and the loss is not deductible. Federal ez tax form 2012 A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. Federal ez tax form 2012 For more information, see Form 8824. Federal ez tax form 2012 Leasehold improvements. Federal ez tax form 2012   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. Federal ez tax form 2012 However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. Federal ez tax form 2012 Loans. Federal ez tax form 2012   Money borrowed through a bona fide loan is not income. Federal ez tax form 2012 Sales tax. Federal ez tax form 2012   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. Federal ez tax form 2012 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). Federal ez tax form 2012 Direct seller. Federal ez tax form 2012   You must report all income you receive as a direct seller on Schedule C or C-EZ. Federal ez tax form 2012 This includes any of the following. Federal ez tax form 2012 Income from sales—payments you receive from customers for products they buy from you. Federal ez tax form 2012 Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. Federal ez tax form 2012 Prizes, awards, and gifts you receive from your selling business. Federal ez tax form 2012 You must report this income regardless of whether it is reported to you on an information return. Federal ez tax form 2012   You are a direct seller if you meet all the following conditions. Federal ez tax form 2012 You are engaged in one of the following trades or businesses. Federal ez tax form 2012 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. Federal ez tax form 2012 Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 Executor or administrator. Federal ez tax form 2012   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. Federal ez tax form 2012 A nonprofessional fiduciary (personal representative) and both of the following apply. Federal ez tax form 2012 The estate includes an active trade or business in which you actively participate. Federal ez tax form 2012 Your fees are related to the operation of that trade or business. Federal ez tax form 2012 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. Federal ez tax form 2012    If the fees do not meet the above requirements, report them on line 21 of Form 1040. Federal ez tax form 2012 Fishing crew member. Federal ez tax form 2012    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 . Federal ez tax form 2012 Insurance agent, former. Federal ez tax form 2012   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. Federal ez tax form 2012 You received payments after your agreement to perform services for the company ended. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012 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). Federal ez tax form 2012 Insurance agent, retired. Federal ez tax form 2012   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. Federal ez tax form 2012 Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. Federal ez tax form 2012   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. Federal ez tax form 2012 Newspaper carrier or distributor. Federal ez tax form 2012   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Federal ez tax form 2012 You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). Federal ez tax form 2012 Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. Federal ez tax form 2012 You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Federal ez tax form 2012   This rule applies whether or not you hire others to help you make deliveries. Federal ez tax form 2012 It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. Federal ez tax form 2012 Newspaper or magazine vendor. Federal ez tax form 2012   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. Federal ez tax form 2012 You sell newspapers or magazines to ultimate consumers. Federal ez tax form 2012 You sell them at a fixed price. Federal ez tax form 2012 Your earnings are based on the difference between the sales price and your cost of goods sold. Federal ez tax form 2012   This rule applies whether or not you are guaranteed a minimum amount of earnings. Federal ez tax form 2012 It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. Federal ez tax form 2012 Notary public. Federal ez tax form 2012   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. Federal ez tax form 2012 These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). Federal ez tax form 2012 Public official. Federal ez tax form 2012   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. Federal ez tax form 2012 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. Federal ez tax form 2012 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. Federal ez tax form 2012   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. Federal ez tax form 2012 Real estate agent or direct seller. Federal ez tax form 2012   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. Federal ez tax form 2012 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. Federal ez tax form 2012 You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Federal ez tax form 2012 Securities dealer. Federal ez tax form 2012   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. Federal ez tax form 2012 For more information, see sections 1256 and 1402(i). Federal ez tax form 2012 Securities trader. Federal ez tax form 2012   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. Federal ez tax form 2012 As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. Federal ez tax form 2012 However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. Federal ez tax form 2012 For more information about securities traders, see Publication 550, Investment Income and Expenses. Federal ez tax form 2012 Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. Federal ez tax form 2012 This section discusses some of the more common differences that may affect business transactions. Federal ez tax form 2012 Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). Federal ez tax form 2012 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. Federal ez tax form 2012 Dealers in real estate are not allowed to use inventories. Federal ez tax form 2012 For more information on inventories, see chapter 2. Federal ez tax form 2012 Income paid to a third party. Federal ez tax form 2012   All income you earn is taxable to you. Federal ez tax form 2012 You cannot avoid tax by having the income paid to a third party. Federal ez tax form 2012 Example. Federal ez tax form 2012 You rent out your property and the rental agreement directs the lessee to pay the rent to your son. Federal ez tax form 2012 The amount paid to your son is gross income to you. Federal ez tax form 2012 Cash discounts. Federal ez tax form 2012   These are amounts the seller permits you to deduct from the invoice price for prompt payment. Federal ez tax form 2012 For income tax purposes, you can use either of the following two methods to account for cash discounts. Federal ez tax form 2012 Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). Federal ez tax form 2012 Credit the cash discount to a discount income account. Federal ez tax form 2012 You must use the chosen method every year for all your purchase discounts. Federal ez tax form 2012   If you use the second method, the credit balance in the account at the end of your tax year is business income. Federal ez tax form 2012 Under this method, you do not reduce the cost of goods sold by the cash discounts you received. Federal ez tax form 2012 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. Federal ez tax form 2012 Trade discounts. Federal ez tax form 2012   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Federal ez tax form 2012 Do not enter these discounts on your books of account. Federal ez tax form 2012 Instead, use only the net amount as the cost of the merchandise purchased. Federal ez tax form 2012 For more information, see Trade discounts in chapter 6. Federal ez tax form 2012 Payment placed in escrow. Federal ez tax form 2012   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. Federal ez tax form 2012 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. Federal ez tax form 2012 Sales returns and allowances. Federal ez tax form 2012   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. Federal ez tax form 2012 Advance payments. Federal ez tax form 2012   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. Federal ez tax form 2012 Insurance proceeds. Federal ez tax form 2012   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. Federal ez tax form 2012 You cannot deduct the reimbursed part of a casualty or theft loss. Federal ez tax form 2012   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. Federal ez tax form 2012 Prev  Up  Next   Home   More Online Publications