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Filing 1040 Ez Online

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Filing 1040 Ez Online

Filing 1040 ez online Index Symbols "Hours of service" limits, Individuals subject to hours of service limits. Filing 1040 ez online Form 2106, Hours of service limits. Filing 1040 ez online 50% limit on meals, 50% limit on meals. Filing 1040 ez online A Accountable plans, Accountable Plans, Per diem allowance more than federal rate. Filing 1040 ez online Accounting to employer, Accountable Plans Adequate accounting, Adequate Accounting Independent contractors, Adequate accounting. Filing 1040 ez online Adequate records, What Are Adequate Records? Advertising Car display, Advertising display on car. Filing 1040 ez online Expenses, 3 - Advertising expenses. Filing 1040 ez online Signs, display racks, or other promotional material to be used on recipient's business premises, Exceptions. Filing 1040 ez online Airline clubs, Club dues and membership fees. Filing 1040 ez online Allocating costs, Separating costs. Filing 1040 ez online , Separating costs. Filing 1040 ez online , Allocating between business and nonbusiness. Filing 1040 ez online , Allocating total cost. Filing 1040 ez online Allowance (see Reimbursements) Armed forces Assigned overseas, Members of the Armed Forces. Filing 1040 ez online Assistance (see Tax help) Associated entertainment, Associated Test Athletic clubs, Club dues and membership fees. Filing 1040 ez online B Basis of car, Basis. Filing 1040 ez online (see also Depreciation of car) Bona fide business purpose, Bona fide business purpose. Filing 1040 ez online Box seats at entertainment events, Skyboxes and other private luxury boxes. Filing 1040 ez online Business travel, Trip Primarily for Business Outside U. Filing 1040 ez online S. Filing 1040 ez online , Travel Entirely for Business or Considered Entirely for Business Business use of car, Business and personal use. Filing 1040 ez online More-than-50%-use test. Filing 1040 ez online , More-than-50%-use test. Filing 1040 ez online Qualified business use, Qualified business use. Filing 1040 ez online C Canceled checks As evidence of business expenses, Canceled check. Filing 1040 ez online Car expenses, Car Expenses, Reporting inclusion amounts. Filing 1040 ez online Actual expenses, Actual Car Expenses Allowances for, Per Diem and Car Allowances, Allowance more than the federal rate. Filing 1040 ez online Business and personal use, Business and personal use. Filing 1040 ez online Combining expenses, Car expenses. Filing 1040 ez online Disposition of car, Disposition of a Car Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). Filing 1040 ez online Form 2106, Car expenses. Filing 1040 ez online Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. Filing 1040 ez online Mileage rate (see Standard mileage rate) Taxes paid on car, Taxes paid on your car. Filing 1040 ez online Traffic tickets, Fines and collateral. Filing 1040 ez online Car pools, Car pools. Filing 1040 ez online Car rentals, Reporting inclusion amounts. Filing 1040 ez online Form 2106, Car rentals. Filing 1040 ez online Car, defined, Car defined. Filing 1040 ez online Car, truck, or van rentals, Leasing a Car, Reporting inclusion amounts. Filing 1040 ez online Casualty and theft losses Cars, Casualty and theft losses. Filing 1040 ez online Depreciation, Casualty or theft. Filing 1040 ez online Charitable organizations Benefit events for, Exception for events that benefit charitable organizations. Filing 1040 ez online Sports events to benefit, 5 - Charitable sports event. Filing 1040 ez online Club dues, Club dues and membership fees. Filing 1040 ez online Commuting expenses, Commuting expenses. Filing 1040 ez online Conventions, Conventions, Meetings at conventions. Filing 1040 ez online Country clubs, Club dues and membership fees. Filing 1040 ez online Cruise ships, Cruise Ships D Daily business mileage and expense log (Table 6-2), Table 5-2. Filing 1040 ez online Daily Business Mileage and Expense Log Name: Depreciation of car, Depreciation and section 179 deductions. Filing 1040 ez online (see also Section 179 deductions) Adjustment for using standard mileage rate, Depreciation adjustment when you used the standard mileage rate. Filing 1040 ez online Basis, Basis. Filing 1040 ez online Sales taxes, Sales taxes. Filing 1040 ez online Unrecovered basis, How to treat unrecovered basis. Filing 1040 ez online Casualty or theft, effect, Casualty or theft. Filing 1040 ez online Deduction, Depreciation and section 179 deductions. Filing 1040 ez online , Depreciation deduction for the year of disposition. Filing 1040 ez online Excess depreciation, Excess depreciation. Filing 1040 ez online Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). Filing 1040 ez online Trade-in, effect, Car trade-in. Filing 1040 ez online , Trade-in. Filing 1040 ez online Trucks and vans, Trucks and vans. Filing 1040 ez online Depreciation of Car Section 179 deduction, Section 179 deduction. Filing 1040 ez online Directly-related entertainment, Directly-Related Test Disabled employees Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Documentary evidence, Documentary evidence. Filing 1040 ez online E Employer-provided vehicles, Employer-provided vehicle. Filing 1040 ez online Reporting requirements, Vehicle Provided by Your Employer Entertainment expenses, Entertainment, Individuals subject to hours of service limits. Filing 1040 ez online , Gift or entertainment. Filing 1040 ez online 50% limit, Directly before or after business discussion. Filing 1040 ez online Determination of applicability (Figure A), 50% Limit Associated test, Associated Test Deductible, What Entertainment Expenses Are Deductible?, Expenses for spouses. Filing 1040 ez online Summary (Table 2-1), Exception for events that benefit charitable organizations. Filing 1040 ez online Directly-related test, Directly-Related Test Entertainment, defined, Entertainment. Filing 1040 ez online Form 2106, Meal and entertainment expenses. Filing 1040 ez online Tickets (see Tickets) Entertainment facilities Expenses for use of, Entertainment facilities. Filing 1040 ez online Estimates of expenses, How To Prove Expenses Exceptions to the 50% Limit, Exceptions to the 50% Limit Excess reimbursements (see Reimbursements) Extravagant expenses, Lavish or extravagant. Filing 1040 ez online , Lavish or extravagant expenses. Filing 1040 ez online F Fair market value of car, Fair market value. Filing 1040 ez online Farmers Form 1040, Schedule F, Self-employed. Filing 1040 ez online Federal crime investigations or prosecutions Federal employees engaged in, Exception for federal crime investigations or prosecutions. Filing 1040 ez online Federal rate for per diem, Standard Meal Allowance, The federal rate. Filing 1040 ez online Fee-basis officials, Officials Paid on a Fee Basis Fees you pay, Parking fees. Filing 1040 ez online Fixed and variable rate (FAVR) allowance, Fixed and variable rate (FAVR). Filing 1040 ez online Form 1040, Schedule C, Self-employed. Filing 1040 ez online Form 1040, Schedule F, Self-employed. Filing 1040 ez online Form 2106, How to choose. Filing 1040 ez online , Employees. Filing 1040 ez online , Full value included in your income. Filing 1040 ez online , Reporting your expenses under a nonaccountable plan. Filing 1040 ez online , Completing Forms 2106 and 2106-EZ Form 2106-EZ, Form 2106-EZ. Filing 1040 ez online Form 4562, Self-employed. Filing 1040 ez online Form 4797, Excess depreciation. Filing 1040 ez online Form W-2 Employer-provided vehicles, Value reported on Form W-2. Filing 1040 ez online Reimbursement of personal expenses, Reimbursement for personal expenses. Filing 1040 ez online Statutory employees, Statutory employees. Filing 1040 ez online Free tax services, Free help with your tax return. Filing 1040 ez online G Gifts, Gift or entertainment. Filing 1040 ez online , Gifts $25 limit, $25 limit. Filing 1040 ez online Combining for recordkeeping purposes, Gift expenses. Filing 1040 ez online Reporting requirements, Gifts. Filing 1040 ez online Golf clubs, Club dues and membership fees. Filing 1040 ez online H Hauling tools, Hauling tools or instruments. Filing 1040 ez online Help (see Tax help) High-low method Introduction, High-low method. Filing 1040 ez online Transition rules, High-low method. Filing 1040 ez online High-low rate method, High-low rate. Filing 1040 ez online Home office, Office in the home. Filing 1040 ez online Hotel clubs, Club dues and membership fees. Filing 1040 ez online I Impairment-related work expenses, Impairment-Related Work Expenses of Disabled Employees Incidental expenses Defined, Incidental expenses. Filing 1040 ez online Gifts, Incidental costs. Filing 1040 ez online No meals, incidentals only, Incidental-expenses-only method. Filing 1040 ez online Income-producing property, Income-producing property. Filing 1040 ez online Incomplete records, What If I Have Incomplete Records? Indefinite job assignment, Temporary assignment vs. Filing 1040 ez online indefinite assignment. Filing 1040 ez online Independent contractors, Rules for Independent Contractors and Clients Interest on car loans, Interest on car loans. Filing 1040 ez online Itinerants, Tax Home L Lavish or extravagant expenses, Lavish or extravagant. Filing 1040 ez online , Lavish or extravagant expenses. Filing 1040 ez online Leasing a car, truck, or van, Leasing a Car, Reporting inclusion amounts. Filing 1040 ez online Luxury private boxes at entertainment events, Skyboxes and other private luxury boxes. Filing 1040 ez online Luxury water travel, Luxury Water Travel M MACRS (Modified Accelerated Cost Recovery System), Modified Accelerated Cost Recovery System (MACRS). Filing 1040 ez online 2011 chart (Table 4-1), Table 4-1. Filing 1040 ez online 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Filing 1040 ez online ) Main place of business or work, Main place of business or work. Filing 1040 ez online Married taxpayers Performing artists, Special rules for married persons. Filing 1040 ez online Meal expenses, Meals 50% limit, 50% Limit Determination of applicability (Figure A), 50% Limit Exceptions, Exceptions to the 50% Limit Actual cost method, Actual Cost Form 2106, Meal and entertainment expenses. Filing 1040 ez online Major cities with higher allowances, Amount of standard meal allowance. Filing 1040 ez online Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance. Filing 1040 ez online , The standard meal allowance. Filing 1040 ez online Meals, entertainment-related, A meal as a form of entertainment. Filing 1040 ez online Mileage rate (see Standard mileage rate) Military (see Armed forces) Missing children, photographs of, Reminder Modified Accelerated Cost Recovery System (MACRS), Modified Accelerated Cost Recovery System (MACRS). Filing 1040 ez online 2011 chart (Table 4-1), Table 4-1. Filing 1040 ez online 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Filing 1040 ez online ) N Nonaccountable plans, Nonaccountable Plans O Office in the home, Office in the home. Filing 1040 ez online Officials paid on fee basis, Officials Paid on a Fee Basis Overseas travel Conventions, Conventions Held Outside the North American Area Meal allowance, Standard meal allowance for areas outside the continental United States. Filing 1040 ez online Part of trip outside U. Filing 1040 ez online S. Filing 1040 ez online , Part of Trip Outside the United States P Parking fees, Parking fees. Filing 1040 ez online , Parking fees and tolls. Filing 1040 ez online Per diem allowances, Per Diem and Car Allowances, Allowance more than the federal rate. Filing 1040 ez online Defined, Reimbursement, allowance, or advance. Filing 1040 ez online Federal rate for, The federal rate. Filing 1040 ez online Per diem rates High-cost localities, High-low method. Filing 1040 ez online High-low method, High-low method. Filing 1040 ez online Regular federal method, Regular federal per diem rate method. Filing 1040 ez online Standard rate for unlisted localities, High-low method. Filing 1040 ez online , Regular federal per diem rate method. Filing 1040 ez online Transition rules, High-low method. Filing 1040 ez online , Federal per diem rate method. Filing 1040 ez online Performing artists, Expenses of Certain Performing Artists Personal property taxes, Personal property taxes. Filing 1040 ez online , Taxes paid on your car. Filing 1040 ez online Personal trips, Trip Primarily for Personal Reasons Outside U. Filing 1040 ez online S. Filing 1040 ez online , Travel Primarily for Personal Reasons Placed in service, cars, Placed in service. Filing 1040 ez online Probationary work period, Probationary work period. Filing 1040 ez online Proving business purpose, Proving business purpose. Filing 1040 ez online Public transportation Outside of U. Filing 1040 ez online S. Filing 1040 ez online travel, Public transportation. Filing 1040 ez online Publications (see Tax help) R Recordkeeping requirements, Recordkeeping, Examples of Records Adequate records, What Are Adequate Records? Daily business mileage and expense log (Table 6-2), Table 5-2. Filing 1040 ez online Daily Business Mileage and Expense Log Name: Destroyed records, Destroyed records. Filing 1040 ez online How to prove expenses (Table 5-1), Table 5-1. Filing 1040 ez online How To Prove Certain Business Expenses Incomplete records, What If I Have Incomplete Records? Reimbursed expenses, Reimbursed for expenses. Filing 1040 ez online Sampling to prove expenses, Sampling. Filing 1040 ez online Separating and combining expenses, Separating and Combining Expenses, If your return is examined. Filing 1040 ez online Three-year period of retention, How Long To Keep Records and Receipts Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Regular federal method Introduction, Regular federal per diem rate method. Filing 1040 ez online Transition rules, Federal per diem rate method. Filing 1040 ez online Reimbursements, Less than full value included in your income. Filing 1040 ez online , Contractor does not adequately account. Filing 1040 ez online Accountable plans, Accountable Plans Excess, Returning Excess Reimbursements, Nonaccountable Plans Form 2106, Reimbursements. Filing 1040 ez online Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Reimbursement of nondeductible expenses. Filing 1040 ez online Personal expenses, Reimbursement for personal expenses. Filing 1040 ez online Recordkeeping, Reimbursed for expenses. Filing 1040 ez online Reporting (Table 6-1), Table 6-1. Filing 1040 ez online Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements Unclaimed, Where To Report Reporting requirements, How To Report Per diem or car allowance, Reporting your expenses with a per diem or car allowance. Filing 1040 ez online Reimbursements, Reimbursements, Contractor does not adequately account. Filing 1040 ez online Reservists Transportation expenses, Armed Forces reservists. Filing 1040 ez online Traveling more than 100 miles from home, Armed Forces Reservists Traveling More Than 100 Miles From Home Returning excess reimbursements, Returning Excess Reimbursements Rural mail carriers, Rural mail carriers. Filing 1040 ez online S Section 179 deduction Amended return, How to choose. Filing 1040 ez online Deduction, Section 179 Deduction Limits, Limits. Filing 1040 ez online Self-employed persons, 2 - Self-employed. Filing 1040 ez online Reporting requirements, Self-employed. Filing 1040 ez online Skyboxes, Skyboxes and other private luxury boxes. Filing 1040 ez online Spouse, expenses for, Travel expenses for another individual. Filing 1040 ez online , Expenses for spouses. Filing 1040 ez online Standard meal allowance, Standard Meal Allowance, Who can use the standard meal allowance. Filing 1040 ez online , The standard meal allowance. Filing 1040 ez online Standard mileage rate, What's New, Standard Mileage Rate, The standard mileage rate. Filing 1040 ez online Depreciation adjustment for using, Depreciation adjustment when you used the standard mileage rate. Filing 1040 ez online Form 2106, Standard mileage rate. Filing 1040 ez online Statutory employees, Statutory employees. Filing 1040 ez online T Tables and figures 50% limit determination (Figure A), 50% Limit Daily business mileage and expense log (Table 6-2), Table 5-2. Filing 1040 ez online Daily Business Mileage and Expense Log Name: Entertainment expenses, determination of deductibility (Table 2-1), Table 2-1. Filing 1040 ez online When Are Entertainment Expenses Deductible? Maximum depreciation deduction for cars table, Maximum Depreciation Deduction for Cars Modified Accelerated Cost Recovery System (MACRS) 2011 chart (Table 4-1), Table 4-1. Filing 1040 ez online 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Filing 1040 ez online ) Proving expenses (Table 5-1), Table 5-1. Filing 1040 ez online How To Prove Certain Business Expenses Reporting reimbursements (Table 6-1), Table 6-1. Filing 1040 ez online Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements Transportation expenses, determination of deductibility (Figure B), Gift or entertainment. Filing 1040 ez online , Illustration of transportation expenses. Filing 1040 ez online Travel expenses, determination of deductibility (Table 1-1), Table 1-1. Filing 1040 ez online Travel Expenses You Can Deduct Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Tax help, How To Get Tax Help Tax home, determination of, Tax Home Temporary job assignments, Temporary Assignment or Job Temporary work location, Temporary work location. Filing 1040 ez online Tickets, Entertainment tickets. Filing 1040 ez online , Gift or entertainment. Filing 1040 ez online Season or series tickets, Season or series tickets. Filing 1040 ez online Traffic violations, Fines and collateral. Filing 1040 ez online Tools Hauling tools, Hauling tools or instruments. Filing 1040 ez online Trade association meetings, Trade association meetings. Filing 1040 ez online Trade-in of car, Car trade-in. Filing 1040 ez online , Trade-in. Filing 1040 ez online Traffic tickets, Fines and collateral. Filing 1040 ez online Transients, Tax Home Transition rules, Transition Rules Example High-low method, High-low method. Filing 1040 ez online High-low method, High-low method. Filing 1040 ez online Regular federal method, Federal per diem rate method. Filing 1040 ez online Transportation expenses, Transportation, Depreciation deduction for the year of disposition. Filing 1040 ez online Car expenses, Car Expenses, Reporting inclusion amounts. Filing 1040 ez online Deductible (Figure B), Gift or entertainment. Filing 1040 ez online , Illustration of transportation expenses. Filing 1040 ez online five or more cars, Five or more cars. Filing 1040 ez online Form 2106, Transportation expenses. Filing 1040 ez online Transportation workers, Special rate for transportation workers. Filing 1040 ez online , Individuals subject to hours of service limits. Filing 1040 ez online Travel advance, Reimbursement, allowance, or advance. Filing 1040 ez online , Travel advance. Filing 1040 ez online (see also Reimbursements) Travel expenses, Travel, Cruise Ships Another individual accompanying taxpayer, Travel expenses for another individual. Filing 1040 ez online Away from home, Traveling Away From Home, Tax Home Deductible, What Travel Expenses Are Deductible?, Cruise Ships Summary of (Table 1-1), Table 1-1. Filing 1040 ez online Travel Expenses You Can Deduct Defined, Travel expenses defined. Filing 1040 ez online Going home on days off, Going home on days off. Filing 1040 ez online In U. Filing 1040 ez online S. Filing 1040 ez online , Travel in the United States Lodging, Standard Meal Allowance Luxury water travel, Luxury Water Travel Outside U. Filing 1040 ez online S. Filing 1040 ez online , Travel Outside the United States Travel to family home, Tax Home Different From Family Home Trucks and vans Depreciation, Trucks and vans. Filing 1040 ez online Transportation workers, Individuals subject to hours of service limits. Filing 1040 ez online Transportation workers' expenses, Special rate for transportation workers. Filing 1040 ez online Two places of work, Two places of work. Filing 1040 ez online U Unclaimed reimbursements, Where To Report Unions Trips from union hall to place of work, Union members' trips from a union hall. Filing 1040 ez online Unrecovered basis of car, How to treat unrecovered basis. Filing 1040 ez online V Volunteers, Volunteers. Filing 1040 ez online W Weekly travel expense and entertainment record (Table 6-3), THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM Prev  Up     Home   More Online Publications
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The Filing 1040 Ez Online

Filing 1040 ez online Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. Filing 1040 ez online Proc. Filing 1040 ez online 2013-16 Table of Contents SECTION 1. Filing 1040 ez online PURPOSE SECTION 2. Filing 1040 ez online BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. Filing 1040 ez online BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. Filing 1040 ez online FEDERAL INCOME TAX TREATMENT SECTION 5. Filing 1040 ez online INFORMATION-REPORTING OBLIGATIONS SECTION 6. Filing 1040 ez online HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. Filing 1040 ez online PENALTY RELIEF FOR 2012 SECTION 8. Filing 1040 ez online SCOPE AND EFFECTIVE DATE SECTION 9. Filing 1040 ez online DRAFTING INFORMATION SECTION 1. Filing 1040 ez online PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). Filing 1040 ez online Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). Filing 1040 ez online In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. Filing 1040 ez online Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Filing 1040 ez online The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. Filing 1040 ez online SECTION 2. Filing 1040 ez online BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . Filing 1040 ez online 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Filing 1040 ez online A description of the program can be found at www. Filing 1040 ez online makinghomeaffordable. Filing 1040 ez online gov. Filing 1040 ez online . Filing 1040 ez online 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. Filing 1040 ez online These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. Filing 1040 ez online . Filing 1040 ez online 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. Filing 1040 ez online The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. Filing 1040 ez online However, as noted in section 2. Filing 1040 ez online 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. Filing 1040 ez online (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. Filing 1040 ez online ”) . Filing 1040 ez online 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. Filing 1040 ez online . Filing 1040 ez online 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. Filing 1040 ez online The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. Filing 1040 ez online (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. Filing 1040 ez online ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). Filing 1040 ez online Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. Filing 1040 ez online Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. Filing 1040 ez online . Filing 1040 ez online 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. Filing 1040 ez online (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. Filing 1040 ez online ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. Filing 1040 ez online . Filing 1040 ez online 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). Filing 1040 ez online If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. Filing 1040 ez online These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. Filing 1040 ez online The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. Filing 1040 ez online The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. Filing 1040 ez online For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. Filing 1040 ez online ” . Filing 1040 ez online 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). Filing 1040 ez online . Filing 1040 ez online 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. Filing 1040 ez online 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. Filing 1040 ez online . Filing 1040 ez online 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. Filing 1040 ez online SECTION 3. Filing 1040 ez online BACKGROUND—APPLICABLE PROVISIONS OF LAW . Filing 1040 ez online 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. Filing 1040 ez online See § 61(a)(12). Filing 1040 ez online . Filing 1040 ez online 02 Under § 1. Filing 1040 ez online 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. Filing 1040 ez online In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. Filing 1040 ez online However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. Filing 1040 ez online See § 1. Filing 1040 ez online 1001-3(c)(6). Filing 1040 ez online . Filing 1040 ez online 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. Filing 1040 ez online 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. Filing 1040 ez online If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. Filing 1040 ez online See also § 1. Filing 1040 ez online 61-12(c). Filing 1040 ez online . Filing 1040 ez online 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. Filing 1040 ez online If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. Filing 1040 ez online See, e. Filing 1040 ez online g. Filing 1040 ez online , §§ 1. Filing 1040 ez online 1272-1(c)(5) and 1. Filing 1040 ez online 1274-2(d). Filing 1040 ez online . Filing 1040 ez online 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. Filing 1040 ez online Section 108(a)(1)(E) and 108(a)(1)(B). Filing 1040 ez online (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. Filing 1040 ez online ) . Filing 1040 ez online 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. Filing 1040 ez online . Filing 1040 ez online 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. Filing 1040 ez online See §§ 108(h) and 163(h)(3)(B)(i). Filing 1040 ez online . Filing 1040 ez online 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). Filing 1040 ez online Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. Filing 1040 ez online . Filing 1040 ez online 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. Filing 1040 ez online . Filing 1040 ez online 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. Filing 1040 ez online Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. Filing 1040 ez online . Filing 1040 ez online 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. Filing 1040 ez online See § 108(h)(1). Filing 1040 ez online If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). Filing 1040 ez online See § 108(b). Filing 1040 ez online For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Filing 1040 ez online . Filing 1040 ez online 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Filing 1040 ez online See Form 982 instructions and Publication 4681. Filing 1040 ez online This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. Filing 1040 ez online . Filing 1040 ez online 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. Filing 1040 ez online See Notice 2003-18, 2003-1 C. Filing 1040 ez online B. Filing 1040 ez online 699, and Rev. Filing 1040 ez online Rul. Filing 1040 ez online 79-356, 1979-2 C. Filing 1040 ez online B. Filing 1040 ez online 28. Filing 1040 ez online However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). Filing 1040 ez online See Rev. Filing 1040 ez online Rul. Filing 1040 ez online 2005-46, 2005-2 C. Filing 1040 ez online B. Filing 1040 ez online 120, and Rev. Filing 1040 ez online Rul. Filing 1040 ez online 75-246, 1975-1 C. Filing 1040 ez online B. Filing 1040 ez online 24. Filing 1040 ez online . Filing 1040 ez online 14 Under § 451 and § 1. Filing 1040 ez online 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. Filing 1040 ez online . Filing 1040 ez online 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. Filing 1040 ez online See § 6041(a) and (d) and § 1. Filing 1040 ez online 6041-1(a)(1) and (b). Filing 1040 ez online . Filing 1040 ez online 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. Filing 1040 ez online See § 6050P(a)-(c) and §§ 1. Filing 1040 ez online 6050P-1(a) and 1. Filing 1040 ez online 6050P-2(a) and (d). Filing 1040 ez online . Filing 1040 ez online 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. Filing 1040 ez online These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. Filing 1040 ez online Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. Filing 1040 ez online ” . Filing 1040 ez online 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. Filing 1040 ez online These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. Filing 1040 ez online Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. Filing 1040 ez online SECTION 4. Filing 1040 ez online FEDERAL INCOME TAX TREATMENT . Filing 1040 ez online 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. Filing 1040 ez online See § 1. Filing 1040 ez online 1001-3. Filing 1040 ez online At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. Filing 1040 ez online See also § 61(a)(12) and § 1. Filing 1040 ez online 61-12(c). Filing 1040 ez online . Filing 1040 ez online 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. Filing 1040 ez online Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. Filing 1040 ez online Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. Filing 1040 ez online . Filing 1040 ez online 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. Filing 1040 ez online Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. Filing 1040 ez online . Filing 1040 ez online 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. Filing 1040 ez online Therefore, for purposes of § 1. Filing 1040 ez online 1001-3, the date of the modification is the date of the permanent modification. Filing 1040 ez online . Filing 1040 ez online 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. Filing 1040 ez online 01 of this revenue procedure for the taxable year in which the permanent modification occurs. Filing 1040 ez online Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. Filing 1040 ez online The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. Filing 1040 ez online . Filing 1040 ez online 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. Filing 1040 ez online . Filing 1040 ez online 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. Filing 1040 ez online This is consistent with Rev. Filing 1040 ez online Rul. Filing 1040 ez online 2009-19, 2009-28 I. Filing 1040 ez online R. Filing 1040 ez online B. Filing 1040 ez online 111, which addressed the treatment of Pay-for-Performance Success Payments. Filing 1040 ez online . Filing 1040 ez online 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. Filing 1040 ez online If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. Filing 1040 ez online . Filing 1040 ez online 09 As described in section 2. Filing 1040 ez online 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. Filing 1040 ez online To the extent that the HAMP-PRA borrower is described in section 4. Filing 1040 ez online 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. Filing 1040 ez online To the extent that the HAMP-PRA borrower is described in section 4. Filing 1040 ez online 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. Filing 1040 ez online SECTION 5. Filing 1040 ez online INFORMATION-REPORTING OBLIGATIONS . Filing 1040 ez online 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. Filing 1040 ez online A copy of this form is required to be furnished to the borrower. Filing 1040 ez online . Filing 1040 ez online 02 As stated in sections 4. Filing 1040 ez online 01 and 4. Filing 1040 ez online 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. Filing 1040 ez online . Filing 1040 ez online 03 An investor is an applicable entity that is required under § 1. Filing 1040 ez online 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. Filing 1040 ez online Under § 1. Filing 1040 ez online 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. Filing 1040 ez online Identifiable events determine when Forms 1099-C have to be issued. Filing 1040 ez online Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. Filing 1040 ez online This rule under § 1. Filing 1040 ez online 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. Filing 1040 ez online . Filing 1040 ez online 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. Filing 1040 ez online That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). Filing 1040 ez online . Filing 1040 ez online 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Filing 1040 ez online 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. Filing 1040 ez online Under § 6041, these payments are not subject to information reporting. Filing 1040 ez online See Notice 2011-14, 2011-11 I. Filing 1040 ez online R. Filing 1040 ez online B. Filing 1040 ez online 544, 546. Filing 1040 ez online . Filing 1040 ez online 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Filing 1040 ez online 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. Filing 1040 ez online The payment is subject to the information reporting requirements of § 6041, as described in section 3. Filing 1040 ez online 15 of this revenue procedure. Filing 1040 ez online Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. Filing 1040 ez online SECTION 6. Filing 1040 ez online HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . Filing 1040 ez online 01 In general. Filing 1040 ez online The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). Filing 1040 ez online As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. Filing 1040 ez online Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. Filing 1040 ez online A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. Filing 1040 ez online 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. Filing 1040 ez online Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. Filing 1040 ez online 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. Filing 1040 ez online . Filing 1040 ez online 02 HAMP-PRA borrower options. Filing 1040 ez online A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. Filing 1040 ez online 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. Filing 1040 ez online If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. Filing 1040 ez online 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. Filing 1040 ez online . Filing 1040 ez online 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. Filing 1040 ez online (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. Filing 1040 ez online (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. Filing 1040 ez online 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. Filing 1040 ez online 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. Filing 1040 ez online This section 6. Filing 1040 ez online 03(2) applies only if the change to reporting the discharge using the method described in section 6. Filing 1040 ez online 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. Filing 1040 ez online To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. Filing 1040 ez online (3) Example. Filing 1040 ez online The following example illustrates the application of section 6. Filing 1040 ez online 03(2) of this revenue procedure. Filing 1040 ez online In 2010, B’s basis in B’s principal residence was $330,000. Filing 1040 ez online In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. Filing 1040 ez online B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). Filing 1040 ez online The trial period plan effective date also fell in 2010. Filing 1040 ez online B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. Filing 1040 ez online 02(2) of this revenue procedure. Filing 1040 ez online That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. Filing 1040 ez online The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. Filing 1040 ez online For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. Filing 1040 ez online 02(1) of this revenue procedure. Filing 1040 ez online Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. Filing 1040 ez online 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). Filing 1040 ez online (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. Filing 1040 ez online 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. Filing 1040 ez online 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. Filing 1040 ez online Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. Filing 1040 ez online 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. Filing 1040 ez online Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. Filing 1040 ez online (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. Filing 1040 ez online 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. Filing 1040 ez online The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. Filing 1040 ez online (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. Filing 1040 ez online The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). Filing 1040 ez online The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. Filing 1040 ez online . Filing 1040 ez online 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. Filing 1040 ez online (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. Filing 1040 ez online Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. Filing 1040 ez online Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. Filing 1040 ez online If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. Filing 1040 ez online (2) A HAMP-PRA borrower who has been using the method described in section 6. Filing 1040 ez online 02(1) of this revenue procedure may change to the method described in section 6. Filing 1040 ez online 02(2) but must comply with the consistency and open-year requirements described in section 6. Filing 1040 ez online 01 of this revenue procedure. Filing 1040 ez online SECTION 7. Filing 1040 ez online PENALTY RELIEF FOR 2012 . Filing 1040 ez online 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. Filing 1040 ez online 03 through 5. Filing 1040 ez online 04 and section 8. Filing 1040 ez online 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. Filing 1040 ez online 01 through 4. Filing 1040 ez online 04 of this revenue procedure) that is required to be reported for 2012. Filing 1040 ez online (2) Not later than March 28, 2013, a statement is sent to the Service. Filing 1040 ez online It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. Filing 1040 ez online 01(1) of this revenue procedure. Filing 1040 ez online The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . Filing 1040 ez online 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. Filing 1040 ez online 06 and 8. Filing 1040 ez online 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. Filing 1040 ez online . Filing 1040 ez online 03 Section 8. Filing 1040 ez online 03 and 8. Filing 1040 ez online 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. Filing 1040 ez online SECTION 8. Filing 1040 ez online SCOPE AND EFFECTIVE DATE . Filing 1040 ez online 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. Filing 1040 ez online . Filing 1040 ez online 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. Filing 1040 ez online . Filing 1040 ez online 03 Because of the effective date in section 8. Filing 1040 ez online 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. Filing 1040 ez online 03 through 5. Filing 1040 ez online 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. Filing 1040 ez online 03 through 5. Filing 1040 ez online 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. Filing 1040 ez online . Filing 1040 ez online 04 Because of the effective date in section 8. Filing 1040 ez online 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. Filing 1040 ez online 06 of this revenue procedure. Filing 1040 ez online SECTION 9. Filing 1040 ez online DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. Filing 1040 ez online Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. Filing 1040 ez online Pflanz and Sheldon A. Filing 1040 ez online Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. Filing 1040 ez online Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). Filing 1040 ez online For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). Filing 1040 ez online Prev  Up  Next   Home   More Internal Revenue Bulletins