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File My 2012 Taxes Online Free

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File my 2012 taxes online free 4. File my 2012 taxes online free   Other Section 501(c) Organizations Table of Contents Introduction 501(c)(4) - Civic Leagues and Social Welfare OrganizationsSpecific Organizations 501(c)(5) - Labor, Agricultural and Horticultural OrganizationsLabor Organizations Agricultural and Horticultural Organizations 501(c)(6) - Business Leagues, etc. File my 2012 taxes online free Line of business. File my 2012 taxes online free Examples. File my 2012 taxes online free Improvement of business conditions. File my 2012 taxes online free Exception for local legislation. File my 2012 taxes online free De minimis exception. File my 2012 taxes online free Grass roots lobbying. File my 2012 taxes online free 501(c)(7) - Social and Recreation ClubsLimited membership. File my 2012 taxes online free Support. File my 2012 taxes online free Facilities open to public. File my 2012 taxes online free Gross receipts from nonmembership sources. File my 2012 taxes online free Gross receipts. File my 2012 taxes online free Nontraditional activities. File my 2012 taxes online free 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal SocietiesFraternal Beneficiary Societies (501(c)(8)) Domestic Fraternal Societies (501(c)(10)) 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' AssociationsLocal Employees' Associations (501(c)(4)) Voluntary Employees' Beneficiary Associations (501(c)(9)) Supplemental Unemployment Benefit Trusts (501(c)(17)) 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like OrganizationsMembership. File my 2012 taxes online free Losses and expenses. File my 2012 taxes online free Distributions of proceeds. File my 2012 taxes online free The 85% Requirement Local Life Insurance Associations Mutual or Cooperative Associations 501(c)(13) - Cemetery CompaniesBuying cemetery property. File my 2012 taxes online free Perpetual care organization. File my 2012 taxes online free Care of individual plots. File my 2012 taxes online free 501(c)(14) - Credit Unions and Other Mutual Financial OrganizationsState-Chartered Credit Unions Other Mutual Financial Organizations 501(c)(19) - Veterans' Organizations 501(c)(20) - Group Legal Services Plan Organizations 501(c)(21) - Black Lung Benefit TrustsExcise taxes. File my 2012 taxes online free 501(c)(2) - Title-Holding Corporations for Single Parent CorporationsExpenses. File my 2012 taxes online free Waiver of payment of income. File my 2012 taxes online free 501(c)(25) - Title-Holding Corporations or Trusts for Multiple Parent CorporationsUnrelated Business Income 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations 501(c)(27) - Qualified State-Sponsored Workers' Compensation Organizations 501(c)(29) - CO-OP Health Insurance Issuers New Guidance for IRC 501(c)(29) Qualified Nonprofit Health Insurance Issuers General Requirements for Exemption under 501(c)(29) and Annual Filing Requirement Additional Guidance for Prospective 501(c)(29) Organizations Introduction This chapter contains specific information for certain organizations described in section 501(c), other than those organizations that are described in section 501(c)(3). File my 2012 taxes online free Section 501(c)(3) organizations are covered in chapter 3 of this publication. File my 2012 taxes online free The Table of Contents at the beginning of this publication, as well as the Organization Reference Chart, may help you locate at a glance the type of organization discussed in this chapter. File my 2012 taxes online free 501(c)(4) - Civic Leagues and Social Welfare Organizations If your organization is not organized for profit and will be operated primarily to promote social welfare to benefit the community, you should file Form 1024 to apply for recognition of exemption from federal income tax under section 501(c)(4). File my 2012 taxes online free The discussion that follows describes the information you must provide when applying. File my 2012 taxes online free For application procedures, see chapter 1. File my 2012 taxes online free To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted primarily to charitable, educational, or recreational purposes. File my 2012 taxes online free In addition, no part of the organization's net earnings can inure to the benefit of any private shareholder or individual. File my 2012 taxes online free If the organization provides an excess benefit to certain persons, an excise tax may be imposed. File my 2012 taxes online free See Excise tax on excess benefit transactions , under Excess Benefit Transactions in chapter 5 for more information about this tax. File my 2012 taxes online free Examples. File my 2012 taxes online free   Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies. File my 2012 taxes online free Nonprofit operation. File my 2012 taxes online free   You must submit evidence that your organization is organized and will be operated on a nonprofit basis. File my 2012 taxes online free However, such evidence, including the fact that your organization is organized under a state law relating to nonprofit corporations, will not in itself establish a social welfare purpose. File my 2012 taxes online free Social welfare. File my 2012 taxes online free   To establish that your organization is organized primarily to promote social welfare, you should submit evidence with your application showing that your organization will operate primarily to further (in some way) the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). File my 2012 taxes online free   An organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community. File my 2012 taxes online free It therefore does not qualify as a section 501(c)(4) organization. File my 2012 taxes online free Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, since its activities benefit the member-tenants and not all tenants in the community. File my 2012 taxes online free However, an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization. File my 2012 taxes online free Political activity. File my 2012 taxes online free   Promoting social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. File my 2012 taxes online free However, if you submit proof that your organization is organized primarily to promote social welfare, it can obtain exemption even if it participates legally in some political activity on behalf of or in opposition to candidates for public office. File my 2012 taxes online free See the discussion in chapter 2 under Political Organization Income Tax Return . File my 2012 taxes online free Social or recreational activity. File my 2012 taxes online free   If social activities will be the primary purpose of your organization, you should not file an application for exemption as a social welfare organization but should file for exemption as a social club described in section 501(c)(7). File my 2012 taxes online free Retirement benefit program. File my 2012 taxes online free   An organization established by its members that has as its primary activity providing supplemental retirement benefits to its members or death benefits to their beneficiaries does not qualify as an exempt social welfare organization. File my 2012 taxes online free It may qualify under another paragraph of section 501(c) depending on all the facts. File my 2012 taxes online free   However, a nonprofit association that is established, maintained, and funded by a local government to provide the only retirement benefits to a class of employees may qualify as a social welfare organization under section 501(c)(4). File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Donations to volunteer fire companies are deductible on the donor's federal income tax return, but only if made for exclusively public purposes. File my 2012 taxes online free Contributions to civic leagues or other section 501(c)(4) organizations generally are not deductible as charitable contributions for federal income tax purposes. File my 2012 taxes online free They may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer's business. File my 2012 taxes online free However, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. File my 2012 taxes online free for more information. File my 2012 taxes online free For more information on social welfare organizations, see Life Cycle of a Social Welfare Organization at IRS. File my 2012 taxes online free gov. File my 2012 taxes online free Specific Organizations The following information should be contained in the application form and accompanying statements of certain types of civic leagues or social welfare organizations. File my 2012 taxes online free Volunteer fire companies. File my 2012 taxes online free   If your organization wishes to obtain exemption as a volunteer fire company or similar organization, you should submit evidence that its members are actively engaged in fire fighting and similar disaster assistance, whether it actually owns the fire fighting equipment, and whether it provides any assistance for its members, such as death and medical benefits in case of injury to them. File my 2012 taxes online free   If your organization does not have an independent social purpose, such as providing recreational facilities for members, it may be exempt under section 501(c)(3). File my 2012 taxes online free In this event, your organization should file Form 1023. File my 2012 taxes online free Homeowners' associations. File my 2012 taxes online free   A membership organization formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development should show that it is operated for the benefit of all the residents of the community. File my 2012 taxes online free The term community generally refers to a geographical unit recognizable as a governmental subdivision, unit, or district thereof. File my 2012 taxes online free Whether a particular association meets the requirement of benefiting a community depends on the facts and circumstances of each case. File my 2012 taxes online free Even if an area represented by an association is not a community, the association can still qualify for exemption if its activities benefit a community. File my 2012 taxes online free   The association should submit evidence that areas such as roadways and park land that it owns and maintains are open to the general public and not just its own members. File my 2012 taxes online free It also must show that it does not engage in exterior maintenance of private homes. File my 2012 taxes online free   A homeowners' association that is not exempt under section 501(c)(4) and that is a condominium management association, a residential real estate management association, or a timeshare association generally can elect under the provisions of section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income. File my 2012 taxes online free Other organizations. File my 2012 taxes online free   Other nonprofit organizations that qualify as social welfare organizations include: An organization operating an airport that is on land owned by a local government, which supervises the airport's operation, and that serves the general public in an area with no other airport, A community association that works to improve public services, housing, and residential parking; publishes a free community newspaper; sponsors a community sports league, holiday programs, and meetings; and contracts with a private security service to patrol the community, A community association devoted to preserving the community's traditions, architecture, and appearance by representing it before the local legislature and administrative agencies in zoning, traffic, and parking matters, An organization that tries to encourage industrial development and relieve unemployment in an area by making loans to businesses so they will relocate to the area, and An organization that holds an annual festival of regional customs and traditions. File my 2012 taxes online free 501(c)(5) - Labor, Agricultural and Horticultural Organizations If you are a member of an organization that wants to obtain recognition of exemption from federal income tax as a labor, agricultural, or horticultural organization, you should submit an application on Form 1024. File my 2012 taxes online free You must indicate in your application for exemption and accompanying statements that no part of the organization's net earnings will inure to the benefit of any member. File my 2012 taxes online free In addition, you should follow the procedure for obtaining recognition of exempt status described in chapter 1. File my 2012 taxes online free Submit any additional information that may be required, as described in this section. File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Contributions to labor, agricultural, and horticultural organizations are not deductible as charitable contributions on the donor's federal income tax return. File my 2012 taxes online free However, such payments may be deductible as business expenses if they are ordinary and necessary in the conduct of the taxpayer's trade or business. File my 2012 taxes online free For more information about certain limits affecting the deductibility of these business expenses, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. File my 2012 taxes online free Labor Organizations A labor organization is an association of workers who have combined to protect and promote the interests of the members by bargaining collectively with their employers to secure better working conditions. File my 2012 taxes online free To show that your organization has the purpose of a labor organization, you should include in the articles of organization or accompanying statements (submitted with your exemption application) information establishing that the organization is organized to better the conditions of workers, improve the grade of their products, and develop a higher degree of efficiency in their respective occupations. File my 2012 taxes online free In addition, no net earnings of the organization can inure to the benefit of any member. File my 2012 taxes online free Composition of membership. File my 2012 taxes online free   While a labor organization generally is composed of employees or representatives of the employees (in the form of collective bargaining agents) and similar employee groups, evidence that an organization's membership consists mainly of workers does not in itself indicate an exempt purpose. File my 2012 taxes online free You must show in your application that your organization has the purposes described in the preceding paragraph. File my 2012 taxes online free These purposes can be accomplished by a single labor organization acting alone or by several organizations acting together through a separate organization. File my 2012 taxes online free Benefits to members. File my 2012 taxes online free   The payment by a labor organization of death, sick, accident, and similar benefits to its individual members with funds contributed by its members, if made under a plan to better the conditions of the members, does not preclude exemption as a labor organization. File my 2012 taxes online free However, an organization does not qualify for exemption as a labor organization if it has no authority to represent members in job-related matters, even if it provides weekly income to its members in the event of a lawful strike by the members' union, in return for an annual payment by the member. File my 2012 taxes online free   For more information on labor organizations, see Life Cycle of a Labor Organization at IRS. File my 2012 taxes online free gov. File my 2012 taxes online free Agricultural and Horticultural Organizations Agricultural and horticultural organizations are connected with raising livestock, forestry, cultivating land, raising and harvesting crops or aquatic resources, cultivating useful or ornamental plants, and similar pursuits. File my 2012 taxes online free For the purpose of these provisions, aquatic resources include only animal or vegetable life, but not mineral resources. File my 2012 taxes online free The term harvesting, in this case, includes fishing and related pursuits. File my 2012 taxes online free Agricultural organizations can be quasi-public in character and are often designed to encourage the development of better agricultural and horticultural products through a system of awards, using income from entry fees, gate receipts, and donations to meet the necessary expenses of upkeep and operation. File my 2012 taxes online free When the activities are directed toward the improvement of marketing or other business conditions in one or more lines of business, rather than the improvement of production techniques or the betterment of the conditions of persons engaged in agriculture, the organization must qualify for exemption as a business league, board of trade, or other organization, as discussed next in the section on 501(c)(6) organizations. File my 2012 taxes online free The primary purpose of exempt agricultural and horticultural organizations must be to better the conditions of those engaged in agriculture or horticulture, develop more efficiency in agriculture or horticulture, or improve the products. File my 2012 taxes online free The following list contains some examples of activities that show an agricultural or horticultural purpose. File my 2012 taxes online free Promoting various cooperative agricultural, horticultural, and civic activities among rural residents by a state, farm, or home bureau. File my 2012 taxes online free Exhibiting livestock, farm products, and other characteristic features of agriculture and horticulture. File my 2012 taxes online free Testing soil for members and nonmembers of the farm bureau on a cost basis, the results of the tests and other recommendations being furnished to the community members to educate them in soil treatment. File my 2012 taxes online free Guarding the purity of a specific breed of livestock. File my 2012 taxes online free Encouraging improvements in the production of fish on privately owned fish farms. File my 2012 taxes online free Negotiating with processors for the price to be paid to members for their crops. File my 2012 taxes online free For more information on agricultural or horticultural organizations, see Life Cycle of an Agricultural or Horticultural Organization at IRS. File my 2012 taxes online free gov. File my 2012 taxes online free 501(c)(6) - Business Leagues, etc. File my 2012 taxes online free If your association wants to apply for recognition of exemption from federal income tax as a nonprofit business league, chamber of commerce, real estate board, or board of trade, it should file Form 1024. File my 2012 taxes online free For a discussion of the procedure to follow, see chapter 1. File my 2012 taxes online free Your organization must indicate in its application form and attached statements that no part of its net earnings will inure to the benefit of any private shareholder or individual and that it is not organized for profit or organized to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only sufficient income to be self-sustaining). File my 2012 taxes online free In addition, your organization must be primarily engaged in activities or functions that are the basis for its exemption. File my 2012 taxes online free It must be primarily supported by membership dues and other income from activities substantially related to its exempt purpose. File my 2012 taxes online free A business league, in general, is an association of persons having some common business interest, the purpose of which is to promote that common interest and not to engage in a regular business of a kind ordinarily carried on for profit. File my 2012 taxes online free Trade associations and professional associations are considered business leagues. File my 2012 taxes online free Chamber of commerce. File my 2012 taxes online free   A chamber of commerce usually is composed of the merchants and traders of a city. File my 2012 taxes online free Board of trade. File my 2012 taxes online free   A board of trade often consists of persons engaged in similar lines of business. File my 2012 taxes online free For example, a nonprofit organization formed to regulate the sale of a specified agricultural commodity to assure equal treatment of producers, warehouse workers, and buyers is a board of trade. File my 2012 taxes online free   Chambers of commerce and boards of trade usually promote the common economic interests of all the commercial enterprises in a given trade community. File my 2012 taxes online free Real estate board. File my 2012 taxes online free   A real estate board consists of members interested in improving the business conditions in the real estate field. File my 2012 taxes online free It is not organized for profit and no part of the net earnings inures to the benefit of any private shareholder or individual. File my 2012 taxes online free Professional football leagues. File my 2012 taxes online free   The Internal Revenue Code specifically defines professional football leagues as exempt organizations under section 501(c)(6). File my 2012 taxes online free They are exempt whether or not they administer a pension fund for football players. File my 2012 taxes online free General purpose. File my 2012 taxes online free   You must indicate in the material submitted with your application that your organization will be devoted to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons. File my 2012 taxes online free It must be shown that the conditions of a particular trade or the interests of the community will be advanced. File my 2012 taxes online free Merely indicating the name of the organization or the object of the local statute under which it is created is not enough to demonstrate the required general purpose. File my 2012 taxes online free Line of business. File my 2012 taxes online free   This term generally refers either to an entire industry or to all components of an industry within a geographic area. File my 2012 taxes online free It does not include a group composed of businesses that market a particular brand within an industry. File my 2012 taxes online free Common business interest. File my 2012 taxes online free   A common business interest of all members of the organization must be established by the application documents. File my 2012 taxes online free Examples. File my 2012 taxes online free   Activities that would tend to illustrate a common business interest are: Promotion of higher business standards and better business methods and encouragement of uniformity and cooperation by a retail merchants association, Education of the public in the use of credit, Establishment of uniform casualty rates and compilation of statistical information by an insurance rating bureau operated by casualty insurance companies, Establishment and maintenance of the integrity of a local commercial market, Operation of a trade publication primarily intended to benefit an entire industry, and Encouragement of the use of goods and services of an entire industry (such as a lawyer referral service whose main purpose is to introduce individuals to the use of the legal profession in the hope that they will enter into lawyer-client relationships on a paying basis as a result). File my 2012 taxes online free Improvement of business conditions. File my 2012 taxes online free   Generally, this must be shown to be the purpose of the organization. File my 2012 taxes online free This is not established by evidence of particular services that provide a convenience or economy to individual members in their businesses, such as advertising that carries the name of members, interest-free loans, assigning exclusive franchise areas, operation of a real estate multiple listing system, or operation of a credit reporting agency. File my 2012 taxes online free Stock or commodity exchange. File my 2012 taxes online free   A stock or commodity exchange is not a business league, chamber of commerce, real estate board, or board of trade and is not exempt under section 501(c)(6). File my 2012 taxes online free Legislative activity. File my 2012 taxes online free   An organization that is exempt under section 501(c)(6) can work for the enactment of laws to advance the common business interests of the organization's members. File my 2012 taxes online free Deduction not allowed for dues used for political or legislative activities. File my 2012 taxes online free   A taxpayer cannot deduct the part of dues or other payments to a business league, trade association, labor union, or similar organization that is reported to the taxpayer by the organization as having been used for any of the following activities. File my 2012 taxes online free Influencing legislation. File my 2012 taxes online free Participating or intervening in a political campaign for, or against, any candidate for public office. File my 2012 taxes online free Trying to influence the general public, or part of the general public, with respect to elections, legislative matters, or referendums (also known as grass roots lobbying). File my 2012 taxes online free Communicating directly with certain executive branch officials to try to influence their official actions or positions. File my 2012 taxes online free See Dues Used for Lobbying or Political Activities under Required Disclosures in chapter 2 for more information. File my 2012 taxes online free Exception for local legislation. File my 2012 taxes online free   Members can deduct dues (or assessments) to an organization that are for expenses of: Appearing before, submitting statements to, or sending communications to members of a local council or similar governing body with respect to legislation or proposed legislation of direct interest to the member, or Communicating information between the member and the organization with respect to local legislation or proposed legislation of direct interest to the organization or the member. File my 2012 taxes online free Legislation or proposed legislation is of direct interest to a taxpayer if it will, or can reasonably be expected to, affect the taxpayer's trade or business. File my 2012 taxes online free De minimis exception. File my 2012 taxes online free   In-house expenditures of $2,000 or less for the year for activities (1) – (4) listed earlier will not prevent a deduction for dues if the dues meet all other tests to be deductible as a business expense. File my 2012 taxes online free Grass roots lobbying. File my 2012 taxes online free   A tax-exempt trade association, labor union, or similar organization is considered to be engaging in grass roots lobbying if it contacts prospective members or calls upon its own members to contact their employees and customers for the purpose of urging such persons to communicate with their elected state or Congressional representatives to support the promotion, defeat, or repeal of legislation that is of direct interest to the organization. File my 2012 taxes online free Any dues or assessments directly related to such activities are not deductible by the taxpayer, since the individuals being contacted, who are not members of the organization, are a segment of the general public. File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Contributions to organizations described in this section are not deductible as charitable contributions on the donor's federal income tax return. File my 2012 taxes online free They may be deductible as trade or business expenses if ordinary and necessary in the conduct of the taxpayer's business. File my 2012 taxes online free   For more information on business leagues, see Life Cycle of a Business League (Trade Association) on IRS. File my 2012 taxes online free gov. File my 2012 taxes online free 501(c)(7) - Social and Recreation Clubs If your club is organized for pleasure, recreation, and other similar nonprofitable purposes and substantially all of its activities are for these purposes, it should file Form 1024 to apply for recognition of exemption from federal income tax. File my 2012 taxes online free In applying for recognition of exemption, you should submit the information described in this section. File my 2012 taxes online free Also see chapter 1 for the procedures to follow. File my 2012 taxes online free Typical organizations that should file for recognition of exemption as social clubs include: College alumni associations that are not described in chapter 3 under Alumni association , College fraternities or sororities operating chapter houses for students, Country clubs, Amateur hunting, fishing, tennis, swimming, and other sport clubs, Dinner clubs that provide a meeting place, library, and dining room for members, Hobby clubs, Garden clubs, and Variety clubs. File my 2012 taxes online free Discrimination prohibited. File my 2012 taxes online free   Your organization will not be recognized as tax exempt if its charter, bylaws, or other governing instrument, or any written policy statement provides for discrimination against any person on the basis of race, color, or religion. File my 2012 taxes online free   However, a club that in good faith limits its membership to the members of a particular religion to further the teachings or principles of that religion and not to exclude individuals of a particular race or color will not be considered as discriminating on the basis of religion. File my 2012 taxes online free Also, the restriction on religious discrimination does not apply to a club that is an auxiliary of a fraternal beneficiary society (discussed later) if that society is described in section 501(c)(8) and exempt from tax under section 501(a) and limits its membership to the members of a particular religion. File my 2012 taxes online free Private benefit prohibited. File my 2012 taxes online free   No part of the organization's net earnings can inure to the benefit of any person having a personal and private interest in the activities of the organization. File my 2012 taxes online free For purposes of this requirement, it is not necessary that net earnings be actually distributed. File my 2012 taxes online free Even undistributed earnings can benefit members. File my 2012 taxes online free Examples of this include a decrease in membership dues or an increase in the services the club provides to its members without a corresponding increase in dues or other fees paid for club support. File my 2012 taxes online free However, fixed-fee payments to members who bring new members into the club are not an inurement of the club's net earnings, if the payments are reasonable compensation for performance of a necessary administrative service. File my 2012 taxes online free Purposes. File my 2012 taxes online free   To show that your organization possesses the characteristics of a club within the meaning of the exemption law, you should submit evidence with your application that personal contact, commingling, and fellowship exist among members. File my 2012 taxes online free You must show that members are bound together by a common objective of pleasure, recreation, and other nonprofitable purposes. File my 2012 taxes online free   Fellowship need not be present between each member and every other member of a club if it is a material part in the life of the organization. File my 2012 taxes online free A statewide or nationwide organization that is made up of individual members, but is divided into local groups, satisfies this requirement if fellowship is a material part of the life of each local group. File my 2012 taxes online free   The term other nonprofitable purposes means other purposes similar to pleasure and recreation. File my 2012 taxes online free For example, a club that, in addition to its social activities, has a plan for the payment of sick and death benefits is not operating exclusively for pleasure, recreation, and other nonprofitable purposes. File my 2012 taxes online free Limited membership. File my 2012 taxes online free   The membership in a social club must be limited. File my 2012 taxes online free To show that your organization has a purpose that would characterize it as a club, you should submit evidence with your application that there are limits on admission to membership consistent with the character of the club. File my 2012 taxes online free   A social club that issues corporate membership is dealing with the general public in the form of the corporation's employees. File my 2012 taxes online free Corporate members of a club are not the kind of members contemplated by the law. File my 2012 taxes online free Gross receipts from these members would be a factor in determining whether the club qualifies as a social club. File my 2012 taxes online free See Gross receipts from nonmembership sources , later. File my 2012 taxes online free Bona fide individual memberships paid for by a corporation would not have an effect on the gross receipts source. File my 2012 taxes online free   The fact that a social club may have an associate (nonvoting) class of membership will not be, in and of itself, a cause for nonrecognition of exemption. File my 2012 taxes online free However, if one membership class pays substantially lower dues and fees than another membership class, although both classes enjoy the same rights and privileges in using the club facilities, there may be an inurement of income to the benefited class, resulting in a denial of the club's exemption. File my 2012 taxes online free Support. File my 2012 taxes online free   In general, your club should be supported solely by membership fees, dues, and assessments. File my 2012 taxes online free However, if otherwise entitled to exemption, your club will not be disqualified because it raises revenue from members through the use of club facilities or in connection with club activities. File my 2012 taxes online free Business activities. File my 2012 taxes online free   If your club will engage in business, such as selling real estate, timber, or other products or services, it generally will be denied exemption. File my 2012 taxes online free However, evidence submitted with your application form that your organization will provide meals, refreshments, or services related to its exempt purposes only to its own members or their dependents or guests will not cause denial of exemption. File my 2012 taxes online free Facilities open to public. File my 2012 taxes online free   Evidence that your club's facilities will be open to the general public (persons other than members or their dependents or guests) may cause denial of exemption. File my 2012 taxes online free This does not mean, however, that any dealing with outsiders will automatically deprive a club of exemption. File my 2012 taxes online free Gross receipts from nonmembership sources. File my 2012 taxes online free   A section 501(c)(7) organization can receive up to 35% of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. File my 2012 taxes online free Income from nontraditional business activity with members is not exempt function income, and thus is included as income from sources outside of the membership. File my 2012 taxes online free Of the 35% gross receipts listed above, up to 15% of the gross receipts can be derived from the use of the club's facilities or services by the general public. File my 2012 taxes online free If an organization has outside income that is more than these limits, all the facts and circumstances will be taken into account in determining whether the organization qualifies for exempt status. File my 2012 taxes online free Gross receipts. File my 2012 taxes online free   Gross receipts, for this purpose, are receipts from the normal and usual (traditionally conducted) activities of the club. File my 2012 taxes online free These receipts include charges, admissions, membership fees, dues, assessments, investment income, and normal recurring capital gains on investments. File my 2012 taxes online free Receipts do not include initiation fees and capital contributions. File my 2012 taxes online free Unusual amounts of income, such as from the sale of a clubhouse or similar facility, are not included in gross receipts or in figuring the percentage limits. File my 2012 taxes online free Nontraditional activities. File my 2012 taxes online free   Activities conducted by a social club need to further its exempt purposes. File my 2012 taxes online free Traditional business activities are those that further a social club's exempt purposes. File my 2012 taxes online free Nontraditional business activities do not further the exempt purposes of a social club even if conducted solely on a membership basis. File my 2012 taxes online free Nontraditional business activities are prohibited (subject to an insubstantial, trivial, and nonrecurrent test) for businesses conducted with both members and nonmembers. File my 2012 taxes online free Examples of nontraditional business activities include sale of package liquor, take-out food, and long-term room rental. File my 2012 taxes online free Fraternity foundations. File my 2012 taxes online free   If your organization is a foundation formed for the exclusive purpose of acquiring and leasing a chapter house to a local fraternity chapter or sorority chapter maintained at an educational institution and does not engage in any social or recreational activities, it may be a title holding corporation (discussed later under section 501(c)(2) organizations and under section 501(c)(25) organizations) rather than a social club. File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Donations to exempt social and recreation clubs are not deductible as charitable contributions on the donor's federal income tax return. File my 2012 taxes online free 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal Societies This section describes the information to be provided upon application for recognition of exemption by two types of fraternal societies: beneficiary and domestic. File my 2012 taxes online free The major distinction is that fraternal beneficiary societies provide for the payment of life, sick, accident, or other benefits to their members or their dependents, while domestic fraternal societies do not provide these benefits but rather devote their earnings to fraternal, religious, charitable, etc. File my 2012 taxes online free , purposes. File my 2012 taxes online free The procedures to follow in applying for recognition of exemption are described in chapter 1. File my 2012 taxes online free If your organization is controlled by a central organization, you should check with your controlling organization to determine whether your unit has been included in a group exemption letter or can be added. File my 2012 taxes online free If so, your organization need not apply for individual recognition of exemption. File my 2012 taxes online free For more information, see Group Exemption Letter in chapter 1 of this publication. File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Donations by an individual to a domestic fraternal beneficiary society or a domestic fraternal society operating under the lodge system are deductible as charitable contributions only if used exclusively for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. File my 2012 taxes online free Fraternal Beneficiary Societies (501(c)(8)) A fraternal beneficiary society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. File my 2012 taxes online free The application and accompanying statements should establish that the organization: Is a fraternal organization, Operates under the lodge system or for the exclusive benefit of the members of a fraternal organization itself operating under the lodge system, and Provides for the payment of life, sick, accident, or other benefits to the members of the society, order, or association or their dependents. File my 2012 taxes online free Lodge system. File my 2012 taxes online free   Operating under the lodge system means carrying on activities under a form of organization that comprises local branches, chartered by a parent organization and largely self-governing, called lodges, chapters, or the like. File my 2012 taxes online free Payment of benefits. File my 2012 taxes online free   It is not essential that every member be covered by the society's program of sick, accident, or death benefits. File my 2012 taxes online free An organization can qualify for exemption if most of its members are eligible for benefits, and the benefits are paid from contributions or dues paid by those members. File my 2012 taxes online free   The benefits must be limited to members and their dependents. File my 2012 taxes online free If members will have the ability to confer benefits to other than themselves and their dependents, exemption will not be recognized. File my 2012 taxes online free Whole-life insurance. File my 2012 taxes online free   Whole-life insurance constitutes a life benefit under section 501(c)(8) even though the policy may contain investment features such as a cash surrender value or a policy loan. File my 2012 taxes online free Reinsurance pool. File my 2012 taxes online free   Payments by a fraternal beneficiary society into a state-sponsored reinsurance pool that protects participating insurers against excessive losses on major medical health and accident insurance will not preclude exemption as a fraternal beneficiary society. File my 2012 taxes online free Domestic Fraternal Societies (501(c)(10)) A domestic fraternal society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. File my 2012 taxes online free The application and accompanying statements should establish that the organization: Is a domestic fraternal organization organized in the U. File my 2012 taxes online free S. File my 2012 taxes online free , Operates under the lodge system, Devotes its net earnings exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes, and Does not provide for the payment of life, sick, accident, or other benefits to its members. File my 2012 taxes online free The organization can arrange with insurance companies to provide optional insurance to its members without jeopardizing its exempt status. File my 2012 taxes online free 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' Associations This section describes the information to be provided upon application for recognition of exemption by the following types of employees' associations: A voluntary employees' beneficiary association (including federal employees' associations) organized to pay life, sick, accident, and similar benefits to members or their dependents, or designated beneficiaries, if no part of the net earnings of the association inures to the benefit of any private shareholder or individual, and A supplemental unemployment benefit trust whose primary purpose is providing for payment of supplemental unemployment benefits. File my 2012 taxes online free Both the application form to file and the information to provide are discussed later under the section that describes your employee association. File my 2012 taxes online free Chapter 1 describes the procedures to follow in applying for exemption. File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Donations to these organizations are not deductible as charitable contributions on the donor's federal income tax return. File my 2012 taxes online free Local Employees' Associations (501(c)(4)) A local association of employees whose membership is limited to employees of a designated person or persons in a particular municipality, and whose income will be devoted exclusively to charitable, educational, or recreational purposes. File my 2012 taxes online free A local employees' association must apply for recognition of exemption by filing Form 1024. File my 2012 taxes online free The organization must submit evidence that: It is of a purely local character, Its membership is limited to employees of a designated person or persons in a particular locality, and Its net earnings will be devoted exclusively to charitable, educational, or recreational purposes. File my 2012 taxes online free A local association of employees that has established a system of paying retirement or death benefits, or both, to its members will not qualify for exemption since the payment of these benefits is not considered as being for charitable, educational, or recreational purposes. File my 2012 taxes online free Similarly, a local association of employees that is operated primarily as a cooperative buying service for its members in order to obtain discount prices on merchandise, services, and activities does not qualify for exemption. File my 2012 taxes online free Voluntary Employees' Beneficiary Associations (501(c)(9)) An application for recognition of exemption as a voluntary employees' beneficiary association must be filed on Form 1024. File my 2012 taxes online free The material submitted with the application must show that your organization: Is a voluntary association of employees, Will provide for payment of life, sick, accident, or other benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose, and Will not allow any of its net earnings to inure to the benefit of any private individual or shareholder except in the form of scheduled benefit payments. File my 2012 taxes online free To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. File my 2012 taxes online free Note. File my 2012 taxes online free Under section 4976, the reversion of funds from a section 501(c)(9) organization to the employer who created the beneficiary association may subject the employer to a 100% penalty excise tax on the amount of the reversion. File my 2012 taxes online free Notice requirement. File my 2012 taxes online free   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. File my 2012 taxes online free The organization gives notice by filing Form 1024. File my 2012 taxes online free If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before notice is given. File my 2012 taxes online free An extension of time for filing the notice can be granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . File my 2012 taxes online free Membership. File my 2012 taxes online free   Membership of a section 501(c)(9) organization must consist of individuals who are employees and have an employment-related common bond. File my 2012 taxes online free This common bond can be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. File my 2012 taxes online free   The membership of an association can include some individuals who are not employees, provided they have an employment-related bond with the employee-members. File my 2012 taxes online free For example, the owner of a business whose employees are members of the association can be a member. File my 2012 taxes online free An association will be considered composed of employees if 90% of its total membership on one day of each quarter of its tax year consists of employees. File my 2012 taxes online free Employees. File my 2012 taxes online free   Employees include individuals who became entitled to membership because they are or were employees. File my 2012 taxes online free For example, an individual will qualify as an employee even though the individual is on a leave of absence or has been terminated due to retirement, disability, or layoff. File my 2012 taxes online free   Generally, membership is voluntary if an affirmative act is required on the part of an employee to become a member. File my 2012 taxes online free Conversely, membership is involuntary if the designation as a member is due to employee status. File my 2012 taxes online free However, an association will be considered voluntary if employees are required to be members of the organization as a condition of their employment and they do not incur a detriment (such as a payroll deduction) as a result of their membership. File my 2012 taxes online free An employer has not imposed involuntary membership on the employee if membership is required as the result of a collective bargaining agreement or as an incident of membership in a labor organization. File my 2012 taxes online free Payment of benefits. File my 2012 taxes online free   The information submitted with your application must show that your organization will pay life, sick, accident, supplemental unemployment, or other similar benefits. File my 2012 taxes online free The benefits can be provided directly by your association or indirectly by your association through the payments of premiums to an insurance company (or fees to a medical clinic). File my 2012 taxes online free Benefits can be in the form of medical, clinical, or hospital services, transportation furnished for medical care, or money payments. File my 2012 taxes online free Nondiscrimination requirements. File my 2012 taxes online free   An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. File my 2012 taxes online free However, if the organization is part of a plan that is a collective bargaining agreement that was the subject of good faith bargaining between employee organizations and employers, the plan need not meet these requirements for the organization to qualify as tax exempt. File my 2012 taxes online free   A plan meets the nondiscrimination requirements only if both of the following statements are true. File my 2012 taxes online free Each class of benefits under the plan is provided under a classification of employees that is set forth in the plan and does not discriminate in favor of employees who are highly compensated individuals. File my 2012 taxes online free The benefits provided under each class of benefits do not discriminate in favor of highly compensated individuals. File my 2012 taxes online free A life insurance, disability, severance pay, or supplemental unemployment compensation benefit does not discriminate in favor of highly compensated individuals merely because the benefits available bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of employees covered by the plan. File my 2012 taxes online free   For purposes of determining whether a plan meets the nondiscrimination requirements, the employer can elect to exclude all disability or severance payments payable to individuals who are in pay status as of January 1, 1985. File my 2012 taxes online free This will not apply to any increase in such payment by any plan amendment adopted after June 22, 1984. File my 2012 taxes online free   If a plan provides a benefit for which there is a nondiscrimination provision provided under Chapter 1 of the Internal Revenue Code as a condition of that benefit being excluded from gross income, these nondiscrimination requirements do not apply. File my 2012 taxes online free The benefit will be considered nondiscriminatory only if it meets the nondiscrimination provision of the applicable Code section. File my 2012 taxes online free For example, benefits provided under a medical reimbursement plan would meet the nondiscrimination requirements for an association, if the benefits meet the nondiscrimination requirements of section 105(h)(3) and 105(h)(4). File my 2012 taxes online free Excluded employees. File my 2012 taxes online free   Certain employees who are not covered by a plan can be excluded from consideration in applying these requirements. File my 2012 taxes online free These include employees: Who have not completed 3 years of service, Who have not attained age 21, Who are seasonal or less than half-time employees, Who are not in the plan and who are included in a unit of employees covered by a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining, or Who are nonresident aliens and who receive no earned income from the employer that has United States source income. File my 2012 taxes online free Highly compensated individual. File my 2012 taxes online free   A highly compensated individual is one who: Owned 5 percent or more of the employer at any time during the current year or the preceding year, Received more than $115,000 in compensation from the employer for the preceding year (the amount is annualized for inflation. File my 2012 taxes online free Go to IRS. File my 2012 taxes online free gov, and search “Pension Plan Limitation” for the year), and Was among the top 20% of employees by compensation for the preceding year. File my 2012 taxes online free However, the employer can choose not to have (3) apply. File my 2012 taxes online free Aggregation rules. File my 2012 taxes online free   The employer can choose to treat two or more plans as one plan for purposes of meeting the nondiscrimination requirements. File my 2012 taxes online free Employees of controlled groups of corporations, trades, or businesses under common control, or members of an affiliated service group, are treated as employees of a single employer. File my 2012 taxes online free Leased employees are treated as employees of the recipient. File my 2012 taxes online free One employee. File my 2012 taxes online free   A trust created to provide benefits to one employee will not qualify as a voluntary employees' beneficiary association under section 501(c)(9). File my 2012 taxes online free Supplemental Unemployment Benefit Trusts (501(c)(17)) A trust or trusts forming part of a written plan (established and maintained by an employer, his or her employees, or both) providing solely for the payment of supplemental unemployment compensation benefits must file the application for recognition of exemption on Form 1024. File my 2012 taxes online free The trust must be a valid, existing trust under local law and must be evidenced by an executed document. File my 2012 taxes online free A conformed copy of the plan of which the trust is a part should be attached to the application. File my 2012 taxes online free To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. File my 2012 taxes online free Note. File my 2012 taxes online free Under section 4976, the reversion of funds from a section 501(c)(17) organization to the employer who created the supplemental unemployment benefit trust may subject the employer to a 100% penalty excise tax on the amount of the reversion. File my 2012 taxes online free Notice requirement. File my 2012 taxes online free   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. File my 2012 taxes online free The organization gives notice by filing Form 1024. File my 2012 taxes online free If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before such notice is given. File my 2012 taxes online free An extension of time for filing the notice is granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . File my 2012 taxes online free Types of payments. File my 2012 taxes online free   You must show that the supplemental unemployment compensation benefits will be benefits paid to an employee because of the employee's involuntary separation from employment (whether or not the separation is temporary) resulting directly from a reduction-in-force, discontinuance of a plant or operation, or other similar conditions. File my 2012 taxes online free In addition, sickness and accident benefits (but not vacation, retirement, or death benefits) may be included in the plan if these are subordinate to the unemployment compensation benefits. File my 2012 taxes online free Diversion of funds. File my 2012 taxes online free   It must be impossible under the plan (at any time before the satisfaction of all liabilities with respect to employees under the plan) to use or to divert any of the corpus or income of the trust to any purpose other than the payment of supplemental unemployment compensation benefits (or sickness or accident benefits to the extent just explained). File my 2012 taxes online free Discrimination in benefits. File my 2012 taxes online free   Neither the terms of the plan nor the actual payment of benefits can be discriminatory in favor of the company's officers, stockholders, supervisors, or highly paid employees. File my 2012 taxes online free However, a plan is not discriminatory merely because benefits bear a uniform relationship to compensation or the rate of compensation. File my 2012 taxes online free Prohibited transactions and exemption. File my 2012 taxes online free   If your organization is a supplemental unemployment benefit trust and has received a denial of exemption because it engaged in a prohibited transaction, as defined by section 503(b), it can file a claim for exemption in any tax year following the tax year in which the notice of denial was issued. File my 2012 taxes online free It must file the claim on Form 1024. File my 2012 taxes online free The organization must include a written declaration that it will not knowingly again engage in a prohibited transaction. File my 2012 taxes online free An authorized principal officer of your organization must make this declaration under the penalties of perjury. File my 2012 taxes online free   If your organization has satisfied all requirements as a supplemental unemployment benefit trust described in section 501(c)(17), it will be notified in writing that it has been recognized as exempt. File my 2012 taxes online free However, the organization will be exempt only for those tax years after the tax year in which the claim for exemption (Form 1024) is filed. File my 2012 taxes online free Tax year in this case means the established annual accounting period of the organization or, if the organization has not established an annual accounting period, the calendar year. File my 2012 taxes online free For more information about the requirements for reestablishing an exemption previously denied, contact the IRS. File my 2012 taxes online free 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations Each of the following organizations apply for recognition of exemption from federal income tax by filing Form 1024. File my 2012 taxes online free Benevolent life insurance associations of a purely local character and like organizations. File my 2012 taxes online free Mutual ditch or irrigation companies and like organizations. File my 2012 taxes online free Mutual or cooperative telephone companies and like organizations. File my 2012 taxes online free A like organization is an organization that performs a service comparable to that performed by any one of the above organizations. File my 2012 taxes online free The information to be provided upon application by each of these organizations is described in this section. File my 2012 taxes online free For information as to the procedures to follow in applying for exemption, see chapter 1. File my 2012 taxes online free General requirements. File my 2012 taxes online free   These organizations must use their income solely to cover losses and expenses, with any excess being returned to members or retained to cover future losses and expenses. File my 2012 taxes online free They must collect at least 85% of their income from members for the sole purpose of meeting losses and expenses. File my 2012 taxes online free Mutual character. File my 2012 taxes online free   These organizations, other than benevolent life insurance associations, must be organized and operated on a mutual or cooperative basis. File my 2012 taxes online free They are associations of persons or organizations, or both, banded together to provide themselves a mutually desirable service approximately at cost and on a mutual basis. File my 2012 taxes online free To maintain the mutual characteristic of democratic ownership and control, they must be so organized and operated that their members have the right to choose the management, to receive services at cost, to receive a return of any excess of payments over losses and expenses, and to share in any assets upon dissolution. File my 2012 taxes online free   The rights and interests of members in the annual savings of the organization must be determined in proportion to their business with the organization. File my 2012 taxes online free Upon dissolution, gains from the sale of appreciated assets must be distributed to all persons who were members during the period the assets were owned by the organization in proportion to the amount of business done during that period. File my 2012 taxes online free The bylaws must not provide for forfeiture of a member's rights and interest upon withdrawal or termination. File my 2012 taxes online free Membership. File my 2012 taxes online free   Membership of a mutual organization consists of those who join the organization to obtain its services, and have a voice in its management. File my 2012 taxes online free In a stock company, the stockholders are members. File my 2012 taxes online free However, a mutual life insurance organization cannot have policyholders other than its members. File my 2012 taxes online free Losses and expenses. File my 2012 taxes online free   In furnishing services substantially at cost, an organization must use its income solely for paying losses and expenses. File my 2012 taxes online free Any excess income not retained in reasonable reserves for future losses and expenses belongs to members in proportion to their patronage or business done with the organization. File my 2012 taxes online free If such patronage refunds are retained in reasonable amounts for purposes of expanding and improving facilities, retiring capital indebtedness, acquiring other assets, and unexpected expenses, the organization must maintain records sufficient to reflect the equity of each member in the assets acquired with the funds. File my 2012 taxes online free Distributions of proceeds. File my 2012 taxes online free   The cooperative may distribute the unexpended balance of collections or assessments remaining on hand at the end of the year to members or patrons prorated on the basis of their patronage or business done with the cooperative. File my 2012 taxes online free Such distribution represents a refund in the costs of services rendered to the member. File my 2012 taxes online free The 85% Requirement All of the organizations listed above must submit evidence with their application that they receive 85% or more of their gross income from their members for the sole purpose of meeting losses and expenses. File my 2012 taxes online free Nevertheless, certain items of income are excluded from the computation of the 85% requirement if the organization is a mutual or cooperative telephone or electric company. File my 2012 taxes online free Mutual or cooperative telephone company. File my 2012 taxes online free   A mutual or cooperative telephone company will exclude from the computation of the 85% requirement any income received or accrued from: A nonmember telephone company for the performance of communication services involving the completion of long distance calls to, from, or between members of the mutual or cooperative telephone company, Qualified pole rentals, The sale of display listings in a directory furnished to its members, or The prepayment of a loan created in 1987, 1988, or 1989, under section 306A, 306B, or 311 of the Rural Electrification Act of 1936. File my 2012 taxes online free Mutual or cooperative electric company. File my 2012 taxes online free   A mutual or cooperative electric company will exclude from the computation of the 85% requirement any income received or accrued from: Qualified pole rentals, Any provision or sale of electric energy transmission services or ancillary service if the services are provided on a nondiscriminatory open access basis under an open access transmission tariff approved or accepted by the Federal Energy Regulatory Commission (FERC) or under an independent transmission provider agreement approved or accepted by FERC (other than income received or accrued directly or indirectly from a member), The provision or sale of electric energy distribution services or ancillary services if the services are provided on a nondiscriminatory open-access basis to distribute electric energy not owned by the mutual or electric cooperative company: To end-users who are served by distribution facilities not owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), or Generated by a generation facility not owned or leased by the company or any of its members and which is directly connected to distribution facilities owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), Any nuclear decommissioning transaction, or Any asset exchange or conversion transaction. File my 2012 taxes online free   An electric cooperative's sale of excess fuel at cost in the year of purchase is not income for purposes of determining compliance with the 85% requirement. File my 2012 taxes online free Qualified pole rental. File my 2012 taxes online free   The term qualified pole rental means any rental of a pole (or other structure used to support wires) if the pole (or other structure) is used: By the telephone or electric company to support one or more wires that are used by the company in providing telephone or electric services to its members, and Pursuant to the rental to support one or more wires (in addition to wires described in (1)) for use in connection with the transmission by wire of electricity or of telephone or other communications. File my 2012 taxes online free   The term rental, for this purpose, includes any sale of the right to use the pole (or other structure). File my 2012 taxes online free The 85% requirement is applied on the basis of an annual accounting period. File my 2012 taxes online free Failure of an organization to meet the requirement in a particular year precludes exemption for that year, but has no effect upon exemption for years in which the 85% requirement is met. File my 2012 taxes online free Gain from the sale or conversion of the organization's property is not considered an amount received from members in determining whether the organization's income consists of amounts collected from members. File my 2012 taxes online free Because the 85% income test is based on gross income, capital losses cannot be used to reduce capital gains for purposes of this test. File my 2012 taxes online free Example. File my 2012 taxes online free   The books of an organization reflect the following for the calendar year. File my 2012 taxes online free Collections from members $2,400 Short-term capital gains 600 Short-term capital losses 400 Other income None Gross income ($2,400 + $600 =$3000) 100% Collected from members ($2,400) 80%   Since amounts collected from members do not constitute at least 85% of gross income, the organization is not entitled to exemption from federal income tax for the year. File my 2012 taxes online free   Voluntary contributions in the nature of gifts are not taken into account for purposes of the 85% computation. File my 2012 taxes online free   Other tax-exempt income besides gifts is considered as income received from other than members in applying the 85% test. File my 2012 taxes online free   If the 85% test is not met, your organization, if classifiable under this section, will not qualify for exemption as any other type of organization described in this publication. File my 2012 taxes online free Tax treatment of donations. File my 2012 taxes online free   Donations to an organization described in this section are not deductible as charitable contributions on the donor's federal income tax return. File my 2012 taxes online free Local Life Insurance Associations A benevolent life insurance association or an organization seeking recognition of exemption on grounds of similarity to a benevolent life insurance association must submit evidence upon applying for recognition of exemption that it will be of a purely local character, that its excess funds will be refunded to members or retained in reasonable reserves to meet future losses and expenses, and that it meets the 85% income requirement. File my 2012 taxes online free If an organization issues policies for stipulated cash premiums, or if it requires advance deposits to cover the cost of the insurance and maintains investments from which more than 15% of its income is derived, it will not be entitled to exemption. File my 2012 taxes online free To establish that your organization is of a purely local character, it should show that its activities will be confined to a particular community, place, or district irrespective of political subdivisions. File my 2012 taxes online free If the activities of an organization are limited only by the borders of a state, it cannot be purely local in character. File my 2012 taxes online free A benevolent life insurance association that does not terminate membership when a member moves from the local area in which the association operates will qualify for exemption if it meets the other requirements. File my 2012 taxes online free A copy of each type of policy issued by your organization should be included with the application for recognition of exemption. File my 2012 taxes online free Organizations similar to local benevolent life insurance companies. File my 2012 taxes online free   These organizations include those that in addition to paying death benefits also provide for the payment of sick, accident, or health benefits. File my 2012 taxes online free However, an organization that pays only sick, accident, or health benefits, but not life insurance benefits, is not an organization similar to a benevolent life insurance association and should not apply for recognition of exemption as described in this section. File my 2012 taxes online free Burial and funeral benefit insurance organization. File my 2012 taxes online free   This type of organization can apply for recognition of exemption as an organization similar to a benevolent life insurance company if it establishes that the benefits are paid in cash and if it is not engaged directly in the manufacture of funeral supplies or the performance of funeral services. File my 2012 taxes online free An organization that provides its benefits in the form of supplies and service is not a life insurance company. File my 2012 taxes online free Such an organization can seek recognition of exemption from federal income tax, however, as a mutual insurance company other than life. File my 2012 taxes online free Mutual or Cooperative Associations Mutual ditch or irrigation companies, mutual or cooperative telephone companies, and like organizations need not establish that they are of a purely local character. File my 2012 taxes online free They can serve noncontiguous areas. File my 2012 taxes online free Like organization. File my 2012 taxes online free   A like organization is a cooperative or mutual organization that performs a service similar to mutual ditch, irrigation, telephone, or electric companies. File my 2012 taxes online free Examples include the following: cooperatives that provide protection of river banks to prevent erosion, water and sewer services, cable television, satellite, television, cellular phone services, two-way radio service, or natural gas services. File my 2012 taxes online free 501(c)(13) - Cemetery Companies If your organization wishes to obtain recognition of exemption from federal income tax as a cemetery company or a corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, it must file an application on Form 1024. File my 2012 taxes online free For the procedure to follow to file an application, see Application, Approval, and Appeal Procedures in chapter 1. File my 2012 taxes online free A nonprofit mutual cemetery company that seeks recognition of exemption should submit evidence with its application that it is owned and operated exclusively for the benefit of its lot owners who hold lots for bona fide burial purposes and not for purposes of resale. File my 2012 taxes online free A mutual cemetery company that also engages in charitable activities, such as the burial of paupers, will be regarded as operating within this standard. File my 2012 taxes online free The fact that a mutual cemetery company limits its membership to a particular class of individuals, such as members of a family, will not affect its status as mutual so long as all the other requirements of section 501(c)(13) are met. File my 2012 taxes online free If your organization is a nonprofit corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, you should show that it is not permitted by its charter to engage in any business not necessarily incident to that purpose. File my 2012 taxes online free Operating a mortuary is not permitted. File my 2012 taxes online free However, selling monuments, markers, vaults, and flowers solely for use in the cemetery is permitted if the profits from these sales are used to maintain the cemetery as a whole. File my 2012 taxes online free How income can be used. File my 2012 taxes online free   You should show that your organization's earnings are or will be used only in one or more of the following ways. File my 2012 taxes online free To pay the ordinary and necessary expenses of operating, maintaining, and improving the cemetery or crematorium. File my 2012 taxes online free To buy cemetery property. File my 2012 taxes online free To create a fund that will provide a source of income for the perpetual care of the cemetery or a reasonable reserve for any ordinary or necessary purpose. File my 2012 taxes online free No part of the net earnings of your organization can inure to the benefit of any private shareholder or individual. File my 2012 taxes online free Ordinary and necessary expenses in connection with the operation, management, maintenance, and improvement of the cemetery are permitted, as are reasonable fees for the services of a manager. File my 2012 taxes online free Buying cemetery property. File my 2012 taxes online free   Payments can be made to amortize debt incurred to buy land, but cannot be in the nature of profit distributions. File my 2012 taxes online free You must show the method used to finance the purchase of the cemetery property and that the purchase price of the land at the time of its sale to the cemetery was not unreasonable. File my 2012 taxes online free   Except for holders of preferred stock (discussed later), no person can have any interest in the net earnings of a tax-exempt cemetery company or crematorium. File my 2012 taxes online free Therefore, if property is transferred to the organization in exchange for an interest in the organization's net earnings, the organization will not
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File my 2012 taxes online free 21. File my 2012 taxes online free   Medical and Dental Expenses Table of Contents What's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. File my 2012 taxes online free How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons What's New Medical and dental expenses. File my 2012 taxes online free  Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (AGI) (7. File my 2012 taxes online free 5% if either you or your spouse is age 65 or older). File my 2012 taxes online free Standard mileage rate. File my 2012 taxes online free  The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 24 cents per mile. File my 2012 taxes online free See Transportation under What Medical Expenses Are Includible. File my 2012 taxes online free Introduction This chapter will help you determine the following. File my 2012 taxes online free What medical expenses are. File my 2012 taxes online free What expenses you can include this year. File my 2012 taxes online free How much of the expenses you can deduct. File my 2012 taxes online free Whose medical expenses you can include. File my 2012 taxes online free What medical expenses are includible. File my 2012 taxes online free How to treat reimbursements. File my 2012 taxes online free How to report the deduction on your tax return. File my 2012 taxes online free How to report impairment-related work expenses. File my 2012 taxes online free How to report health insurance costs if you are self-employed. File my 2012 taxes online free Useful Items - You may want to see: Publications 502 Medical and Dental Expenses 969 Health Savings Accounts and Other Tax-Favored Health Plans Form (and Instructions) Schedule A (Form 1040) Itemized Deductions What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. File my 2012 taxes online free These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. File my 2012 taxes online free They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. File my 2012 taxes online free Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. File my 2012 taxes online free They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. File my 2012 taxes online free Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. File my 2012 taxes online free Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. File my 2012 taxes online free What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. File my 2012 taxes online free If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. File my 2012 taxes online free If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. File my 2012 taxes online free If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. File my 2012 taxes online free Separate returns. File my 2012 taxes online free   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. File my 2012 taxes online free Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. File my 2012 taxes online free Community property states. File my 2012 taxes online free   If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. File my 2012 taxes online free Each of you should include half the expenses. File my 2012 taxes online free If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. File my 2012 taxes online free If you live in a community property state, and are not filing a joint return, see Publication 555, Community Property. File my 2012 taxes online free How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI (7. File my 2012 taxes online free 5% of your AGI if either you or your spouse is age 65 or older)(Form 1040, line 38). File my 2012 taxes online free Example. File my 2012 taxes online free You are unmarried and under age 65 and your AGI is $40,000, 10% of which is $4,000. File my 2012 taxes online free You paid medical expenses of $2,500. File my 2012 taxes online free You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. File my 2012 taxes online free Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. File my 2012 taxes online free There are different rules for decedents and for individuals who are the subject of multiple support agreements. File my 2012 taxes online free See Support claimed under a multiple support agreement , later. File my 2012 taxes online free Yourself You can include medical expenses you paid for yourself. File my 2012 taxes online free Spouse You can include medical expenses you paid for your spouse. File my 2012 taxes online free To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. File my 2012 taxes online free Example 1. File my 2012 taxes online free Mary received medical treatment before she married Bill. File my 2012 taxes online free Bill paid for the treatment after they married. File my 2012 taxes online free Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. File my 2012 taxes online free If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. File my 2012 taxes online free Mary would include the amounts she paid during the year in her separate return. File my 2012 taxes online free If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. File my 2012 taxes online free Example 2. File my 2012 taxes online free This year, John paid medical expenses for his wife Louise, who died last year. File my 2012 taxes online free John married Belle this year and they file a joint return. File my 2012 taxes online free Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. File my 2012 taxes online free Dependent You can include medical expenses you paid for your dependent. File my 2012 taxes online free For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. File my 2012 taxes online free A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. File my 2012 taxes online free The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. File my 2012 taxes online free S. File my 2012 taxes online free citizen or national, or a resident of the United States, Canada, or Mexico. File my 2012 taxes online free If your qualifying child was adopted, see Exception for adopted child , next. File my 2012 taxes online free You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. File my 2012 taxes online free Exception for adopted child. File my 2012 taxes online free   If you are a U. File my 2012 taxes online free S. File my 2012 taxes online free citizen or U. File my 2012 taxes online free S. File my 2012 taxes online free national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. File my 2012 taxes online free S. File my 2012 taxes online free citizen or national or a resident of the United States, Canada, or Mexico. File my 2012 taxes online free Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, or, if he or she did, it was only to claim a refund. File my 2012 taxes online free Adopted child. File my 2012 taxes online free   A legally adopted child is treated as your own child. File my 2012 taxes online free This includes a child lawfully placed with you for legal adoption. File my 2012 taxes online free   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. File my 2012 taxes online free   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. File my 2012 taxes online free   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. File my 2012 taxes online free    You may be able to take an adoption credit for other expenses related to an adoption. File my 2012 taxes online free See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. File my 2012 taxes online free Child of divorced or separated parents. File my 2012 taxes online free   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. File my 2012 taxes online free Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. File my 2012 taxes online free This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). File my 2012 taxes online free Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of either of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2013, and For whom you provided over half of the support in 2013. File my 2012 taxes online free But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next. File my 2012 taxes online free Support claimed under a multiple support agreement. File my 2012 taxes online free   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. File my 2012 taxes online free A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. File my 2012 taxes online free   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. File my 2012 taxes online free However, you can include the entire unreimbursed amount you paid for medical expenses. File my 2012 taxes online free Example. File my 2012 taxes online free You and your three brothers each provide one-fourth of your mother's total support. File my 2012 taxes online free Under a multiple support agreement, you treat your mother as your dependent. File my 2012 taxes online free You paid all of her medical expenses. File my 2012 taxes online free Your brothers reimbursed you for three-fourths of these expenses. File my 2012 taxes online free In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. File my 2012 taxes online free Your brothers cannot include any part of the expenses. File my 2012 taxes online free However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. File my 2012 taxes online free Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. File my 2012 taxes online free This includes expenses for the decedent's spouse and dependents as well as for the decedent. File my 2012 taxes online free The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. File my 2012 taxes online free The expenses must be paid within the 1-year period beginning with the day after the date of death. File my 2012 taxes online free If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. File my 2012 taxes online free Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. File my 2012 taxes online free Amended returns and claims for refund are discussed in chapter 1. File my 2012 taxes online free What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. File my 2012 taxes online free The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. File my 2012 taxes online free What Medical Expenses Are Includible? Use Table 21-1, later, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040). File my 2012 taxes online free This table does not include all possible medical expenses. File my 2012 taxes online free To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. File my 2012 taxes online free Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. File my 2012 taxes online free Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). File my 2012 taxes online free See Qualified Long-Term Care Insurance Contracts in Publication 502. File my 2012 taxes online free If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. File my 2012 taxes online free The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. File my 2012 taxes online free Note. File my 2012 taxes online free When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. File my 2012 taxes online free Also, do not include insurance premiums attributable to a nondependent child under age 27 if your premiums increased as a result of adding this child to your policy. File my 2012 taxes online free Employer-sponsored health insurance plan. File my 2012 taxes online free   Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. File my 2012 taxes online free Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2. File my 2012 taxes online free Example. File my 2012 taxes online free You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. File my 2012 taxes online free Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. File my 2012 taxes online free Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. File my 2012 taxes online free Long-term care services. File my 2012 taxes online free   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. File my 2012 taxes online free This amount will be reported as wages in box 1 of your Form W-2. File my 2012 taxes online free Health reimbursement arrangement (HRA). File my 2012 taxes online free   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. File my 2012 taxes online free This is because an HRA is funded solely by the employer. File my 2012 taxes online free Retired public safety officers. File my 2012 taxes online free   If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. File my 2012 taxes online free This applies only to distributions that would otherwise be included in income. File my 2012 taxes online free Medicare A. File my 2012 taxes online free   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. File my 2012 taxes online free The payroll tax paid for Medicare A is not a medical expense. File my 2012 taxes online free   If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. File my 2012 taxes online free In this situation you can include the premiums you paid for Medicare A as a medical expense. File my 2012 taxes online free Medicare B. File my 2012 taxes online free   Medicare B is supplemental medical insurance. File my 2012 taxes online free Premiums you pay for Medicare B are a medical expense. File my 2012 taxes online free Check the information you received from the Social Security Administration to find out your premium. File my 2012 taxes online free Medicare D. File my 2012 taxes online free    Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. File my 2012 taxes online free You can include as a medical expense premiums you pay for Medicare D. File my 2012 taxes online free Prepaid insurance premiums. File my 2012 taxes online free   Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). File my 2012 taxes online free Unused sick leave used to pay premiums. File my 2012 taxes online free   You must include in gross income cash payments you receive at the time of retirement for unused sick leave. File my 2012 taxes online free You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. File my 2012 taxes online free You can include this cost of continuing participation in the health plan as a medical expense. File my 2012 taxes online free   If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. File my 2012 taxes online free You cannot include this cost of continuing participation in that health plan as a medical expense. File my 2012 taxes online free Table 21-1. File my 2012 taxes online free Medical and Dental Expenses Checklist. File my 2012 taxes online free See Publication 502 for more information about these and other expenses. File my 2012 taxes online free You can include: You cannot include: Bandages Birth control pills prescribed by your doctor Body scan Braille books Breast pump and supplies Capital expenses for equipment or improvements to your home needed for medical care (see the worksheet in Publication 502) Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Fertility enhancement, certain procedures Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. File my 2012 taxes online free ) Lead-based paint removal Legal abortion Legal operation to prevent having children such as a vasectomy or tubal ligation Long-term care contracts, qualified Meals and lodging provided by a hospital during medical treatment Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Medical and hospital insurance premiums Nursing services Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Physical examination Pregnancy test kit Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Wages for nursing services, below) Special items (artificial limbs, false teeth, eye-glasses, contact lenses, hearing aids, crutches, wheelchair, etc. File my 2012 taxes online free ) Special education for mentally or physically disabled persons Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services Weight-loss, certain expenses for obesity Baby sitting and childcare Bottled water Contributions to Archer MSAs (see Publication 969) Diaper service Expenses for your general health (even if following your doctor's advice) such as— —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pre-tax basis) Funeral, burial, or cremation expenses Health savings account payments for medical expenses Illegal operation, treatment, or medicine Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. File my 2012 taxes online free Maternity clothes Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases Nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. File my 2012 taxes online free , unless recommended by a medical practitioner as a treatment for a specific medical condition diagnosed by a physician Surgery for purely cosmetic reasons Toothpaste, toiletries, cosmetics, etc. File my 2012 taxes online free Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. File my 2012 taxes online free See Nursing home , later. File my 2012 taxes online free You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. File my 2012 taxes online free You can include the cost of such lodging while away from home if all of the following requirements are met. File my 2012 taxes online free The lodging is primarily for and essential to medical care. File my 2012 taxes online free The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. File my 2012 taxes online free The lodging is not lavish or extravagant under the circumstances. File my 2012 taxes online free There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. File my 2012 taxes online free The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. File my 2012 taxes online free You can include lodging for a person traveling with the person receiving the medical care. File my 2012 taxes online free For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. File my 2012 taxes online free Meals are not included. File my 2012 taxes online free Nursing home. File my 2012 taxes online free   You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. File my 2012 taxes online free This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. File my 2012 taxes online free   Do not include the cost of meals and lodging if the reason for being in the home is personal. File my 2012 taxes online free You can, however, include in medical expenses the part of the cost that is for medical or nursing care. File my 2012 taxes online free Transportation Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. File my 2012 taxes online free You can include: Bus, taxi, train, or plane fares, or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. File my 2012 taxes online free Car expenses. File my 2012 taxes online free   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. File my 2012 taxes online free You cannot include depreciation, insurance, general repair, or maintenance expenses. File my 2012 taxes online free   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents per mile. File my 2012 taxes online free    You can also include parking fees and tolls. File my 2012 taxes online free You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. File my 2012 taxes online free Example. File my 2012 taxes online free In 2013, Bill Jones drove 2,800 miles for medical reasons. File my 2012 taxes online free He spent $500 for gas, $30 for oil, and $100 for tolls and parking. File my 2012 taxes online free He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. File my 2012 taxes online free He figures the actual expenses first. File my 2012 taxes online free He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. File my 2012 taxes online free He then figures the standard mileage amount. File my 2012 taxes online free He multiplies 2,800 miles by 24 cents a mile for a total of $672. File my 2012 taxes online free He then adds the $100 tolls and parking for a total of $772. File my 2012 taxes online free Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. File my 2012 taxes online free Transportation expenses you cannot include. File my 2012 taxes online free   You cannot include in medical expenses the cost of transportation in the following situations. File my 2012 taxes online free Going to and from work, even if your condition requires an unusual means of transportation. File my 2012 taxes online free Travel for purely personal reasons to another city for an operation or other medical care. File my 2012 taxes online free Travel that is merely for the general improvement of one's health. File my 2012 taxes online free The costs of operating a specially equipped car for other than medical reasons. File my 2012 taxes online free Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. File my 2012 taxes online free (See chapter 32 and Publication 503, Child and Dependent Care Expenses. File my 2012 taxes online free ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. File my 2012 taxes online free How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement. File my 2012 taxes online free Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. File my 2012 taxes online free This includes payments from Medicare. File my 2012 taxes online free Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. File my 2012 taxes online free Example. File my 2012 taxes online free You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. File my 2012 taxes online free The insurance you receive for the hospital and doctors' bills is more than their charges. File my 2012 taxes online free In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. File my 2012 taxes online free Health reimbursement arrangement (HRA). File my 2012 taxes online free   A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. File my 2012 taxes online free An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income. File my 2012 taxes online free Other reimbursements. File my 2012 taxes online free   Generally, you do not reduce medical expenses by payments you receive for: Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc. File my 2012 taxes online free ) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or Loss of earnings. File my 2012 taxes online free   You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. File my 2012 taxes online free See How Do You Figure and Report the Deduction on Your Tax Return , later. File my 2012 taxes online free   For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries , later. File my 2012 taxes online free You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year. File my 2012 taxes online free Excess reimbursement. File my 2012 taxes online free   If you are reimbursed more than your medical expenses, you may have to include the excess in income. File my 2012 taxes online free You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable. File my 2012 taxes online free Premiums paid by you. File my 2012 taxes online free   If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. File my 2012 taxes online free Generally, you do not include the excess reimbursement in your gross income. File my 2012 taxes online free Premiums paid by you and your employer. File my 2012 taxes online free   If both you and your employer contribute to your medical insurance plan and your employer's contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer's contribution. File my 2012 taxes online free   See Publication 502 to figure the amount of the excess reimbursement you must include in gross income. File my 2012 taxes online free Reimbursement in a later year. File my 2012 taxes online free   If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses. File my 2012 taxes online free   However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. File my 2012 taxes online free For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12. File my 2012 taxes online free Figure 21-A. File my 2012 taxes online free Is Your Excess Medical Reimbursement Taxable? Please click here for the text description of the image. File my 2012 taxes online free Figure 21-A. File my 2012 taxes online free Is Your Excess Medical Reimbursement Taxable? Medical expenses not deducted. File my 2012 taxes online free   If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7. File my 2012 taxes online free 5% of your AGI if either you or your spouse was age 65 or older), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. File my 2012 taxes online free However, if the reimbursement is more than the expense, see Excess reimbursement , earlier. File my 2012 taxes online free Example. File my 2012 taxes online free For 2013, you were unmarried and under age 65 and you had medical expenses of $500. File my 2012 taxes online free You cannot deduct the $500 because it is less than 10% of your AGI. File my 2012 taxes online free If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income. File my 2012 taxes online free Damages for Personal Injuries If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. File my 2012 taxes online free If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. File my 2012 taxes online free See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements, earlier. File my 2012 taxes online free Future medical expenses. File my 2012 taxes online free   If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. File my 2012 taxes online free If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used. File my 2012 taxes online free How Do You Figure and Report the Deduction on Your Tax Return? Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return. File my 2012 taxes online free What Tax Form Do You Use? You figure your medical expense deduction on Schedule A (Form 1040). File my 2012 taxes online free You cannot claim medical expenses on Form 1040A or Form 1040EZ. File my 2012 taxes online free If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 20. File my 2012 taxes online free Enter the amount you paid for medical and dental expenses on Schedule A (Form 1040). File my 2012 taxes online free This should be your expenses that were not reimbursed by insurance or any other sources. File my 2012 taxes online free Generally, you can deduct only the amount of your medical and dental expenses that is more than 10% of your AGI (7. File my 2012 taxes online free 5% if either you or your spouse was age 65 or older) shown on line 38, Form 1040. File my 2012 taxes online free Impairment-Related Work Expenses If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. File my 2012 taxes online free If you take a business deduction for impairment-related work expenses, do not take a medical deduction for the same expenses. File my 2012 taxes online free You have a disability if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. File my 2012 taxes online free Impairment-related expenses defined. File my 2012 taxes online free   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. File my 2012 taxes online free Where to report. File my 2012 taxes online free   If you are self-employed, deduct the business expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. File my 2012 taxes online free   If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. File my 2012 taxes online free Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. File my 2012 taxes online free Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). File my 2012 taxes online free Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses. File my 2012 taxes online free Example. File my 2012 taxes online free You are blind. File my 2012 taxes online free You must use a reader to do your work. File my 2012 taxes online free You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. File my 2012 taxes online free The reader's services are only for your work. File my 2012 taxes online free You can deduct your expenses for the reader as business expenses. File my 2012 taxes online free Health Insurance Costs for Self-Employed Persons If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and, your children who were under age 27 at the end of 2013. File my 2012 taxes online free For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. File my 2012 taxes online free The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business. File my 2012 taxes online free You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or, an employer of your dependent or your child under age 27 at the end of 2013. File my 2012 taxes online free You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer. File my 2012 taxes online free If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions to figure the amount you can deduct. File my 2012 taxes online free But if any of the following applies, do not use that worksheet. File my 2012 taxes online free You had more than one source of income subject to self-employment tax. File my 2012 taxes online free You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. File my 2012 taxes online free You are using amounts paid for qualified long-term care insurance to figure the deduction. File my 2012 taxes online free If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction. File my 2012 taxes online free Note. File my 2012 taxes online free When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. File my 2012 taxes online free If you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, from the total insurance premiums you paid. File my 2012 taxes online free Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer. File my 2012 taxes online free Where to report. File my 2012 taxes online free    You take this deduction on Form 1040. File my 2012 taxes online free If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit (7. File my 2012 taxes online free 5% if either you or your spouse was age 65 or older). File my 2012 taxes online free See Self-Employed Health Insurance Deduction in chapter 6 of Publication 535, Business Expenses, and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information. File my 2012 taxes online free Prev  Up  Next   Home   More Online Publications