File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Free Federal And State Taxes

2012 Income Tax Forms 1040ezFile Only State Taxes Free2010 Form 1040Taxact 2006 Free DownloadStudent Tax FormsE File Federal Taxes 2012Tax Cut Hr BlockFile 2012 Income TaxHow To File State Taxes OnlyHow To File A 1040ez Tax Form1040ez Form 2013Free Tax Filing 20121040x Online FreeFile 2012 TaxesEfile Taxes1040ez EfileForm 1040 XState Tax Return Free E-fileWww Irs Gov Free File1040ez Fillable FormHow To File 2010 TaxesWww Irs Gov Amended ReturnFree Federal And State Tax PreparationNeed To File 2012 Taxes LateUnemployment Tax FilingHow To File An Amendment On TaxesE File Taxes FreePreparing Form 1040xIrs 1040ez Form 2011Www Myfreetaxes Com Sandiego1040ez Instructions 2011Tax Exemptions For StudentsH&r Block At Home Deluxe State 2012 DownloadHow To File My 2012 Tax ReturnHow To Amend A Tax ReturnIrs Tax Form 2011Ez FormsFree TaxFree State Tax UsaIrs 2012 Tax Forms

Free Federal And State Taxes

Free federal and state taxes 1. Free federal and state taxes   Filing Information Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Filing RequirementsWhen To File and Pay Foreign Currency Does My Return Have To Be On Paper? Where To File Nonresident Alien Spouse Treated as a ResidentSocial Security Number (SSN) How To Make the Choice Suspending the Choice Ending the Choice Estimated Tax Other Forms You May Have To File Topics - This chapter discusses: Whether you have to file a return, When to file your return and pay any tax due, How to treat foreign currency, How to file electronically, Where to file your return, When you can treat your nonresident alien spouse as a resident, and When you may have to make estimated tax payments. Free federal and state taxes Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide 501 Exemptions, Standard Deduction, and Filing Information 505 Tax Withholding and Estimated Tax 519 U. Free federal and state taxes S. Free federal and state taxes Tax Guide for Aliens 970 Tax Benefits for Education Form (and Instructions) 1040-ES Estimated Tax for Individuals 1040X Amended U. Free federal and state taxes S. Free federal and state taxes Individual Income Tax Return 2350 Application for Extension of Time To File U. Free federal and state taxes S. Free federal and state taxes Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 4868 Application for Automatic Extension of Time To File U. Free federal and state taxes S. Free federal and state taxes Individual Income Tax Return 8822 Change of Address See chapter 7 for information about getting these publications and forms. Free federal and state taxes Filing Requirements If you are a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. Free federal and state taxes Your income, filing status, and age generally determine whether you must file an income tax return. Free federal and state taxes Generally, you must file a return for 2013 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table. Free federal and state taxes Filing Status*   Amount Single $10,000 65 or older $11,500 Head of household $12,850 65 or older $14,350 Qualifying widow(er) $16,100 65 or older $17,300 Married filing jointly $20,000 Not living with spouse at end of year $3,900 One spouse 65 or older $21,200 Both spouses 65 or older $22,400 Married filing separately $3,900 *If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return. Free federal and state taxes Gross income. Free federal and state taxes   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. Free federal and state taxes   For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount. Free federal and state taxes If you are self-employed, your gross income includes the amount on Part I, line 7 of Schedule C (Form 1040), Profit or Loss From Business, or line 1 of Schedule C-EZ (Form 1040), Net Profit From Business. Free federal and state taxes Self-employed individuals. Free federal and state taxes   If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. Free federal and state taxes Net earnings from self-employment are defined in Publication 334, Tax Guide for Small Business. Free federal and state taxes 65 or older. Free federal and state taxes   You are considered to be age 65 on the day before your 65th birthday. Free federal and state taxes For example, if your 65th birthday is on January 1, 2014, you are considered 65 for 2013. Free federal and state taxes Residents of U. Free federal and state taxes S. Free federal and state taxes possessions. Free federal and state taxes   If you are (or were) a bona fide resident of a U. Free federal and state taxes S. Free federal and state taxes possession, you may be required to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U. Free federal and state taxes S. Free federal and state taxes Possession. Free federal and state taxes See the instructions for the form for more information. Free federal and state taxes When To File and Pay If you file on a calendar year basis, the due date for filing your return is April 15 of the following year. Free federal and state taxes If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. Free federal and state taxes In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return. Free federal and state taxes When the due date for doing any act for tax purposes—filing a return, paying taxes, etc. Free federal and state taxes — falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Free federal and state taxes A tax return delivered by the U. Free federal and state taxes S. Free federal and state taxes mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. Free federal and state taxes See your Form 1040 or Form 1040A instructions for a list of designated delivery services. Free federal and state taxes Foreign wire transfers. Free federal and state taxes   If you have a U. Free federal and state taxes S. Free federal and state taxes bank account, you can use: EFTPS (Electronic Federal Tax Payment System), or Federal Tax Application (same-day wire transfer). Free federal and state taxes If you do not have a U. Free federal and state taxes S. Free federal and state taxes bank account, ask if your financial institution has a U. Free federal and state taxes S. Free federal and state taxes affiliate that can help you make same-day wire transfers. Free federal and state taxes   For more information, visit www. Free federal and state taxes eftps. Free federal and state taxes gov. Free federal and state taxes Extensions You can get an extension of time to file your return. Free federal and state taxes In some circumstances, you also can get an extension of time to file and pay any tax due. Free federal and state taxes However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Free federal and state taxes This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet tests. Free federal and state taxes If you served in a combat zone or qualified hazardous duty area, see Publication 3 for a discussion of extensions of deadlines. Free federal and state taxes Automatic 2-month extension. Free federal and state taxes   You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien, and on the regular due date of your return: You are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Free federal and state taxes   If you use a calendar year, the regular due date of your return is April 15. Free federal and state taxes Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. Free federal and state taxes Married taxpayers. Free federal and state taxes   If you file a joint return, either you or your spouse can qualify for the automatic extension. Free federal and state taxes If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it. Free federal and state taxes How to get the extension. Free federal and state taxes   To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension. Free federal and state taxes Automatic 6-month extension. Free federal and state taxes   If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). Free federal and state taxes To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). Free federal and state taxes For more information about filing electronically, see E-file options , later. Free federal and state taxes   The form must show your properly estimated tax liability based on the information available to you. Free federal and state taxes    You may not be eligible. Free federal and state taxes You cannot use the automatic 6-month extension of time to file if: You want the IRS to figure your tax, or You are under a court order to file by the regular due date. Free federal and state taxes E-file options. Free federal and state taxes    You can use e-file to get an extension of time to file. Free federal and state taxes You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card. Free federal and state taxes   First, complete Form 4868 to use as a worksheet. Free federal and state taxes If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. Free federal and state taxes    Then, do one of the following. Free federal and state taxes E-file Form 4868. Free federal and state taxes You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. Free federal and state taxes You will need to provide certain information from your tax return for 2012. Free federal and state taxes If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. Free federal and state taxes If you e-file Form 4868, do not also send a paper Form 4868. Free federal and state taxes E-file and pay by credit or debit card. Free federal and state taxes You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. Free federal and state taxes You can do this by phone or over the Internet. Free federal and state taxes If you do this, you do not file Form 4868. Free federal and state taxes For more information, see the instructions for your tax return. Free federal and state taxes When to file. Free federal and state taxes   Generally, you must request the 6-month extension by the regular due date of your return. Free federal and state taxes Previous 2-month extension. Free federal and state taxes   If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 4 months to file your return, for a total of 6 months. Free federal and state taxes The 2-month period and the 6-month period start at the same time. Free federal and state taxes You have to request the additional 4 months by the new due date allowed by the 2-month extension. Free federal and state taxes   The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. Free federal and state taxes You must make an accurate estimate of your tax based on the information available to you. Free federal and state taxes If you find you cannot pay the full amount due with Form 4868, you can still get the extension. Free federal and state taxes You will owe interest on the unpaid amount from the original due date of the return. Free federal and state taxes   You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Free federal and state taxes Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. Free federal and state taxes In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar year taxpayers). Free federal and state taxes Additional extension of time for taxpayers out of the country. Free federal and state taxes   In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Free federal and state taxes   To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Free federal and state taxes Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You will not receive any notification from the Internal Revenue Service unless your request is denied. Free federal and state taxes   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350, discussed next. Free federal and state taxes Extension of time to meet tests. Free federal and state taxes   You generally cannot get an extension of more than 6 months. Free federal and state taxes However, if you are outside the United States and meet certain requirements, you may be able to get a longer extension. Free federal and state taxes   You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. Free federal and state taxes The tests, the exclusions, and the deduction are explained in chapter 4. Free federal and state taxes   You should request an extension if all three of the following apply. Free federal and state taxes You are a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien. Free federal and state taxes You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due. Free federal and state taxes Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies. Free federal and state taxes   If you are granted an extension, it generally will be to 30 days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either the bona fide residence test or the physical presence test. Free federal and state taxes However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension until after the end of the second year. Free federal and state taxes How to get an extension. Free federal and state taxes   To obtain an extension, file Form 2350 either by giving it to a local IRS representative or other IRS employee or by mailing it to the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You must file Form 2350 by the due date for filing your return. Free federal and state taxes Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15. Free federal and state taxes What if tests are not met. Free federal and state taxes   If you obtain an extension and unforeseen events make it impossible for you to meet either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted). Free federal and state taxes    You should make any request for an extension early, so that if it is denied you still can file your return on time. Free federal and state taxes Otherwise, if you file late and additional tax is due, you may be subject to a penalty. Free federal and state taxes Return filed before test is met. Free federal and state taxes   If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U. Free federal and state taxes S. Free federal and state taxes and foreign sources and pay the tax on that income. Free federal and state taxes If you later meet either of the tests, you can claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on Form 1040X. Free federal and state taxes Foreign Currency You must express the amounts you report on your U. Free federal and state taxes S. Free federal and state taxes tax return in U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes How you do this depends on your functional currency. Free federal and state taxes Your functional currency generally is the U. Free federal and state taxes S. Free federal and state taxes dollar unless you are required to use the currency of a foreign country. Free federal and state taxes You must make all federal income tax determinations in your functional currency. Free federal and state taxes The U. Free federal and state taxes S. Free federal and state taxes dollar is the functional currency for all taxpayers except some qualified business units (QBUs). Free federal and state taxes A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. Free federal and state taxes Even if you have a QBU, your functional currency is the dollar if any of the following apply. Free federal and state taxes You conduct the business in U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes The principal place of business is located in the United States. Free federal and state taxes You choose to or are required to use the U. Free federal and state taxes S. Free federal and state taxes dollar as your functional currency. Free federal and state taxes The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted. Free federal and state taxes Make all income tax determinations in your functional currency. Free federal and state taxes If your functional currency is the U. Free federal and state taxes S. Free federal and state taxes dollar, you must immediately translate into U. Free federal and state taxes S. Free federal and state taxes dollars all items of income, expense, etc. Free federal and state taxes (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Free federal and state taxes Use the exchange rate prevailing when you receive, pay, or accrue the item. Free federal and state taxes If there is more than one exchange rate, use the one that most properly reflects your income. Free federal and state taxes You can generally get exchange rates from banks and U. Free federal and state taxes S. Free federal and state taxes Embassies. Free federal and state taxes If your functional currency is not the U. Free federal and state taxes S. Free federal and state taxes dollar, make all income tax determinations in your functional currency. Free federal and state taxes At the end of the year, translate the results, such as income or loss, into U. Free federal and state taxes S. Free federal and state taxes dollars to report on your income tax return. Free federal and state taxes Blocked Income You generally must report your foreign income in terms of U. Free federal and state taxes S. Free federal and state taxes dollars and, with one exception (see Fulbright Grant, later), you must pay taxes due on it in U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes If, because of restrictions in a foreign country, your income is not readily convertible into U. Free federal and state taxes S. Free federal and state taxes dollars or into other money or property that is readily convertible into U. Free federal and state taxes S. Free federal and state taxes dollars, your income is “blocked” or “deferrable” income. Free federal and state taxes You can report this income in one of two ways: Report the income and pay your federal income tax with U. Free federal and state taxes S. Free federal and state taxes dollars that you have in the United States or in some other country, or Postpone the reporting of the income until it becomes unblocked. Free federal and state taxes If you choose to postpone the reporting of the income, you must file an information return with your tax return. Free federal and state taxes For this information return, you should use another Form 1040 labeled “Report of Deferrable Foreign Income, pursuant to Rev. Free federal and state taxes Rul. Free federal and state taxes 74-351. Free federal and state taxes ” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. Free federal and state taxes You also must state that you waive any right to claim that the deferrable income was includible in your income for any earlier year. Free federal and state taxes You must report your income on your information return using the foreign currency in which you received that income. Free federal and state taxes If you have blocked income from more than one foreign country, include a separate information return for each country. Free federal and state taxes Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U. Free federal and state taxes S. Free federal and state taxes dollars or into other money or property that is convertible into U. Free federal and state taxes S. Free federal and state taxes currency. Free federal and state taxes Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable. Free federal and state taxes If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. Free federal and state taxes If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked. Free federal and state taxes If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. Free federal and state taxes To apply for permission, file Form 3115, Application for Change in Accounting Method. Free federal and state taxes You also must request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. Free federal and state taxes See the instructions for Form 3115 for information on changing your accounting method. Free federal and state taxes Fulbright Grant All income must be reported in U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes In most cases, the tax also must be paid in U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U. Free federal and state taxes S. Free federal and state taxes tax that is based on the blocked income. Free federal and state taxes Paying U. Free federal and state taxes S. Free federal and state taxes tax in foreign currency. Free federal and state taxes   To qualify for this method of payment, you must prepare a statement that shows the following information. Free federal and state taxes You were a Fulbright grantee and were paid in nonconvertible foreign currency. Free federal and state taxes The total grant you received during the year and the amount you received in nonconvertible foreign currency. Free federal and state taxes At least 70% of the grant was paid in nonconvertible foreign currency. Free federal and state taxes The statement must be certified by the U. Free federal and state taxes S. Free federal and state taxes educational foundation or commission paying the grant or other person having control of grant payments to you. Free federal and state taxes   You should prepare at least two copies of this statement. Free federal and state taxes Attach one copy to your Form 1040 and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency. Free federal and state taxes Figuring actual tax. Free federal and state taxes   When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. Free federal and state taxes If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula. Free federal and state taxes   Adjusted gross income that is blocked income × Total U. Free federal and state taxes S. Free federal and state taxes tax = Tax on blocked income     Total adjusted  gross income     You must attach all of the following to the return. Free federal and state taxes A copy of the certified statement discussed earlier. Free federal and state taxes A detailed statement showing the allocation of tax attributable to amounts received in foreign currency and the rates of exchange used in determining your tax liability in U. Free federal and state taxes S. Free federal and state taxes dollars. Free federal and state taxes The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency. Free federal and state taxes Figuring estimated tax on nonconvertible foreign currency. Free federal and state taxes   If you are liable for estimated tax (discussed later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula. Free federal and state taxes   Adjusted gross income that is blocked income × Total estimated U. Free federal and state taxes S. Free federal and state taxes tax = Estimated tax on blocked income     Total adjusted  gross income     If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income. Free federal and state taxes Deposit of foreign currency with disbursing officer. Free federal and state taxes   Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located. Free federal and state taxes Estimated tax installments. Free federal and state taxes   You can either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. Free federal and state taxes See Estimated Tax , later. Free federal and state taxes Deposit receipt. Free federal and state taxes   Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. Free federal and state taxes The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U. Free federal and state taxes S. Free federal and state taxes dollars) should be attached to your Form 1040 or payment voucher from Form 1040-ES. Free federal and state taxes Keep the copy for your records. Free federal and state taxes Does My Return Have To Be On Paper? IRS e-file (electronic filing) is the fastest, easiest, and most convenient way to file your income tax return electronically. Free federal and state taxes IRS e-file offers accurate, safe, and fast alternatives to filing on paper. Free federal and state taxes IRS computers quickly and automatically check for errors or other missing information. Free federal and state taxes Even returns with a foreign address can be e-filed! How to e-file. Free federal and state taxes   There are three ways you can e-file. Free federal and state taxes Use your personal computer. Free federal and state taxes Use a volunteer. Free federal and state taxes Many programs offering free tax help can e-file your return. Free federal and state taxes Use a tax professional. Free federal and state taxes Most tax professionals can e-file your return. Free federal and state taxes These methods are explained in detail in the instructions for your tax return. Free federal and state taxes Where To File If any of the following situations apply to you, do not file your return with the service center listed for your home state. Free federal and state taxes You claim the foreign earned income exclusion. Free federal and state taxes You claim the foreign housing exclusion or deduction. Free federal and state taxes You live in a foreign country. Free federal and state taxes Instead, use one of the following special addresses. Free federal and state taxes If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 USA If you are enclosing a check or money order, file your return with: Internal Revenue Service Center P. Free federal and state taxes O. Free federal and state taxes Box 1303 Charlotte, NC 28201-1303 USA If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the appropriate address listed above. Free federal and state taxes However, you should not file with the addresses listed above if you are a bona fide resident of the U. Free federal and state taxes S. Free federal and state taxes Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year. Free federal and state taxes Resident of U. Free federal and state taxes S. Free federal and state taxes Virgin Islands (USVI). Free federal and state taxes   If you are a bona fide resident of the USVI during your entire tax year, you generally are not required to file a U. Free federal and state taxes S. Free federal and state taxes return. Free federal and state taxes However, you must file a return with the USVI. Free federal and state taxes    Send your return to the:     Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Free federal and state taxes Thomas, Virgin Islands 00802 Non-USVI resident with USVI income. Free federal and state taxes   If you are a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. Free federal and state taxes File the original return with the United States and file a signed copy of the U. Free federal and state taxes S. Free federal and state taxes return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue. Free federal and state taxes   You must complete Form 8689, Allocation of Individual Income Tax to the U. Free federal and state taxes S. Free federal and state taxes Virgin Islands, and attach a copy to both your U. Free federal and state taxes S. Free federal and state taxes return and your USVI return. Free federal and state taxes You should file your U. Free federal and state taxes S. Free federal and state taxes return with the address listed under Where To File. Free federal and state taxes   See Publication 570, Tax Guide for Individuals With Income From U. Free federal and state taxes S. Free federal and state taxes Possessions, for information about filing Virgin Islands returns. Free federal and state taxes Resident of Guam. Free federal and state taxes   If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam. Free federal and state taxes    Send your return to the:     Department of Revenue and Taxation Government of Guam P. Free federal and state taxes O. Free federal and state taxes Box 23607 GMF, GU 96921   However, if you have income from sources within Guam and you are a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien, but not a bona fide resident of Guam during the entire tax year, you should file a return with the United States. Free federal and state taxes Send your return to the address listed under Where To File. Free federal and state taxes   See Publication 570 for information about filing Guam returns. Free federal and state taxes Resident of the Commonwealth of the Northern Mariana Islands. Free federal and state taxes   If you are a bona fide resident of the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you should file a return with the Northern Mariana Islands. Free federal and state taxes    Send your return to the:      Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Free federal and state taxes O. Free federal and state taxes Box 5234, CHRB Saipan, MP 96950   However, if you have income from sources within the CNMI and you are a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien, but not a bona fide resident of the CNMI during the entire tax year, you should file a return with the United States. Free federal and state taxes Send your return to the address listed under Where To File. Free federal and state taxes   See Publication 570 for information about filing Northern Mariana Islands returns. Free federal and state taxes Nonresident Alien Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. Free federal and state taxes S. Free federal and state taxes citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U. Free federal and state taxes S. Free federal and state taxes resident. Free federal and state taxes This includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year. Free federal and state taxes If you make this choice, the following two rules apply. Free federal and state taxes You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect. Free federal and state taxes You must file a joint income tax return for the year you make the choice. Free federal and state taxes This means that neither of you can claim under any tax treaty not to be a U. Free federal and state taxes S. Free federal and state taxes resident for a tax year for which the choice is in effect. Free federal and state taxes You can file joint or separate returns in years after the year in which you make the choice. Free federal and state taxes Example 1. Free federal and state taxes Pat Smith, a U. Free federal and state taxes S. Free federal and state taxes citizen, is married to Norman, a nonresident alien. Free federal and state taxes Pat and Norman make the choice to treat Norman as a resident alien by attaching a statement to their joint return. Free federal and state taxes Pat and Norman must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. Free federal and state taxes Although Pat and Norman must file a joint return for the year they make the choice, they can file either joint or separate returns for later years. Free federal and state taxes Example 2. Free federal and state taxes When Bob and Sharon Williams got married, both were nonresident aliens. Free federal and state taxes In June of last year, Bob became a resident alien and remained a resident for the rest of the year. Free federal and state taxes Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return for last year. Free federal and state taxes Bob and Sharon must report their worldwide income for last year and all later years unless the choice is ended or suspended. Free federal and state taxes Bob and Sharon must file a joint return for last year, but they can file either joint or separate returns for later years. Free federal and state taxes If you do not choose to treat your nonresident alien spouse as a U. Free federal and state taxes S. Free federal and state taxes resident, you may be able to use head of household filing status. Free federal and state taxes To use this status, you must pay more than half the cost of maintaining a household for certain dependents or relatives other than your nonresident alien spouse. Free federal and state taxes For more information, see Publication 501. Free federal and state taxes Social Security Number (SSN) If you choose to treat your nonresident alien spouse as a U. Free federal and state taxes S. Free federal and state taxes resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN). Free federal and state taxes To get an SSN for a nonresident alien spouse, apply at an office of the U. Free federal and state taxes S. Free federal and state taxes Social Security Administration (SSA) or U. Free federal and state taxes S. Free federal and state taxes consulate. Free federal and state taxes You must complete Form SS-5, Application for a Social Security Card, available at www. Free federal and state taxes socialsecurity. Free federal and state taxes gov or by calling 1-800-772-1213. Free federal and state taxes You must also provide original or certified copies of documents to verify that spouse's age, identity, and citizenship. Free federal and state taxes If the nonresident alien spouse is not eligible to get an SSN, he or she can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN. Free federal and state taxes How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. Free federal and state taxes It should contain the following: A declaration that one spouse was a nonresident alien and the other spouse a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien on the last day of your tax year and that you choose to be treated as U. Free federal and state taxes S. Free federal and state taxes residents for the entire tax year, and The name, address, and social security number (or individual taxpayer identification number) of each spouse. Free federal and state taxes (If one spouse died, include the name and address of the person making the choice for the deceased spouse. Free federal and state taxes ) You generally make this choice when you file your joint return. Free federal and state taxes However, you also can make the choice by filing a joint amended return on Form 1040X. Free federal and state taxes Attach Form 1040, 1040A, or 1040EZ and print “Amended” across the top of the amended return. Free federal and state taxes If you make the choice with an amended return, you and your spouse also must amend any returns that you may have filed after the year for which you made the choice. Free federal and state taxes You generally must file the amended joint return within 3 years from the date you filed your original U. Free federal and state taxes S. Free federal and state taxes income tax return or 2 years from the date you paid your income tax for that year, whichever is later. Free federal and state taxes Table 1–1. Free federal and state taxes Ending the Choice To Treat Nonresident Alien Spouse as a Resident Revocation   Either spouse can revoke the choice for any tax year. Free federal and state taxes   • The revocation must be made by the due date for filing the tax return for that tax year. Free federal and state taxes   • The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. Free federal and state taxes The statement revoking the choice must include the following:     • The name, address, and social security number (or taxpayer identification number) of each spouse. Free federal and state taxes     • The name and address of any person who is revoking the choice for a deceased spouse. Free federal and state taxes     • A list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. Free federal and state taxes   • If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where the last joint return was filed. Free federal and state taxes Death   The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died. Free federal and state taxes   • If the surviving spouse is a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. Free federal and state taxes   • If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. Free federal and state taxes Divorce or  Legal separation   A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs. Free federal and state taxes Inadequate records   The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. Free federal and state taxes Suspending the Choice The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U. Free federal and state taxes S. Free federal and state taxes citizen or resident alien at any time during the later tax year. Free federal and state taxes Example. Free federal and state taxes Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. Free federal and state taxes They chose to treat Judy as a resident alien and filed a joint 2010 income tax return. Free federal and state taxes On January 10, 2012, Dick became a nonresident alien. Free federal and state taxes Judy had remained a nonresident alien. Free federal and state taxes Because Dick was a resident alien during part of 2012, Dick and Judy can file joint or separate returns for that year. Free federal and state taxes Neither Dick nor Judy was a resident alien at any time during 2013 and their choice is suspended for that year. Free federal and state taxes For 2013, both are treated as nonresident aliens. Free federal and state taxes If Dick becomes a resident alien again in 2014, their choice is no longer suspended and both are treated as resident aliens. Free federal and state taxes Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier) or ended in one of the ways shown in Table 1-1. Free federal and state taxes If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax year. Free federal and state taxes Estimated Tax The requirements for determining who must pay estimated tax are the same for a U. Free federal and state taxes S. Free federal and state taxes citizen or resident abroad as for a taxpayer in the United States. Free federal and state taxes For current instructions on making estimated tax payments, see Form 1040-ES. Free federal and state taxes If you had a tax liability for 2013, you may have to pay estimated tax for 2014. Free federal and state taxes Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 after subtracting your withholding and credits and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Free federal and state taxes (The return must cover all 12 months. Free federal and state taxes ) If less than two-thirds of your gross income for 2013 and 2014 is from farming or fishing and your adjusted gross income for 2013 is more than $150,000 ($75,000 if you are married and file separately), substitute 110% for 100% in (2). Free federal and state taxes See Publication 505 for more information. Free federal and state taxes The first installment of estimated tax is due on April 15, 2014. Free federal and state taxes Foreign earned income exclusion. Free federal and state taxes   When figuring your estimated gross income, subtract amounts you expect to exclude under the foreign earned income exclusion and the foreign housing exclusion. Free federal and state taxes In addition, you can reduce your income by your estimated foreign housing deduction. Free federal and state taxes However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. Free federal and state taxes If the actual amount of the exclusion or deduction is less than you estimate, you may have to pay a penalty for underpayment of estimated tax. Free federal and state taxes   For more information about figuring your estimated tax, see Publication 505. Free federal and state taxes Other Forms You May Have To File FinCEN Form 114 (replaces Form TD F 90-22. Free federal and state taxes 1). Free federal and state taxes   Beginning October 1, 2013, Form 114, Report of Foreign Bank and Financial Accounts (FBAR), must be filed instead of Form TD F 90-22. Free federal and state taxes 1. Free federal and state taxes Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). Free federal and state taxes See the filing instructions at www. Free federal and state taxes bsaefiling. Free federal and state taxes fincen. Free federal and state taxes treas. Free federal and state taxes gov/main. Free federal and state taxes html. Free federal and state taxes   You must file Form 114 if you had any financial interest in, or signature or other authority over a bank, securities, or other financial account in a foreign country. Free federal and state taxes You do not need to file the report if the assets are with a U. Free federal and state taxes S. Free federal and state taxes military banking facility operated by a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year. Free federal and state taxes   More information about the filing of Form 114 can be found in the instructions for the form. Free federal and state taxes FinCEN Form 105. Free federal and state taxes   You must file Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or cause to be physically transported, mailed, or shipped into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. Free federal and state taxes Certain recipients of currency or monetary instruments also must file Form 105. Free federal and state taxes   More information about the filing of Form 105 can be found in the instructions on the back of the form. Free federal and state taxes Form 8938. Free federal and state taxes   You must file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold ”). Free federal and state taxes The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Free federal and state taxes Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Free federal and state taxes S. Free federal and state taxes person. Free federal and state taxes   You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Free federal and state taxes   More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Free federal and state taxes Prev  Up  Next   Home   More Online Publications
Español

Contests and Challenges

Share your ideas and solve problems together with your government. Enter a contest and win a prize!

Dialogs

Contests

The Free Federal And State Taxes

Free federal and state taxes 3. Free federal and state taxes   Unrelated Trade or Business Table of Contents Selling of products of exempt functions. Free federal and state taxes Dual use of assets or facilities. Free federal and state taxes Exploitation of exempt functions. Free federal and state taxes ExamplesExceptions. Free federal and state taxes Excluded Trade or Business ActivitiesQualified sponsorship payment. Free federal and state taxes Advertising. Free federal and state taxes Exception for contingent payments. Free federal and state taxes Exception for periodicals. Free federal and state taxes Exception for conventions and trade shows. Free federal and state taxes Legal definition. Free federal and state taxes Legal where played. Free federal and state taxes No for-profit games where played. Free federal and state taxes Unrelated business income. Free federal and state taxes   Unrelated business income is the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity. Free federal and state taxes   Certain trade or business activities are not treated as an unrelated trade or business. Free federal and state taxes See Excluded Trade or Business Activities, later. Free federal and state taxes Trade or business. Free federal and state taxes   The term “trade or business” generally includes any activity conducted for the production of income from selling goods or performing services. Free federal and state taxes An activity does not lose its identity as a trade or business merely because it is conducted within a larger group of similar activities that may or may not be related to the exempt purposes of the organization. Free federal and state taxes   For example, the regular sale of pharmaceutical supplies to the general public by a hospital pharmacy does not lose its identity as a trade or business, even though the pharmacy also furnishes supplies to the hospital and patients of the hospital in accordance with its exempt purpose. Free federal and state taxes Similarly, soliciting, selling, and publishing commercial advertising is a trade or business even though the advertising is published in an exempt organization's periodical that contains editorial matter related to the organization's exempt purpose. Free federal and state taxes Regularly conducted. Free federal and state taxes   Business activities of an exempt organization ordinarily are considered regularly conducted if they show a frequency and continuity, and are pursued in a manner similar to comparable commercial activities of nonexempt organizations. Free federal and state taxes   For example, a hospital auxiliary's operation of a sandwich stand for 2 weeks at a state fair would not be the regular conduct of a trade or business. Free federal and state taxes The stand would not compete with similar facilities that a nonexempt organization would ordinarily operate year-round. Free federal and state taxes However, operating a commercial parking lot every Saturday, year-round, would be the regular conduct of a trade or business. Free federal and state taxes Not substantially related. Free federal and state taxes    A business activity is not substantially related to an organization's exempt purpose if it does not contribute importantly to accomplishing that purpose (other than through the production of funds). Free federal and state taxes Whether an activity contributes importantly depends in each case on the facts involved. Free federal and state taxes   In determining whether activities contribute importantly to the accomplishment of an exempt purpose, the size and extent of the activities involved must be considered in relation to the nature and extent of the exempt function that they intend to serve. Free federal and state taxes For example, to the extent an activity is conducted on a scale larger than is reasonably necessary to perform an exempt purpose, it does not contribute importantly to the accomplishment of the exempt purpose. Free federal and state taxes The part of the activity that is more than needed to accomplish the exempt purpose is an unrelated trade or business. Free federal and state taxes   Also in determining whether activities contribute importantly to the accomplishment of an exempt purpose, the following principles apply. Free federal and state taxes Selling of products of exempt functions. Free federal and state taxes   Ordinarily, selling products that result from the performance of exempt functions is not an unrelated trade or business if the product is sold in substantially the same state it is in when the exempt functions are completed. Free federal and state taxes Thus, for an exempt organization engaged in rehabilitating handicapped persons (its exempt function), selling articles made by these persons as part of their rehabilitation training is not an unrelated trade or business. Free federal and state taxes   However, if a completed product resulting from an exempt function is used or exploited in further business activity beyond what is reasonably appropriate or necessary to dispose of it as is, the activity is an unrelated trade or business. Free federal and state taxes For example, if an exempt organization maintains an experimental dairy herd for scientific purposes, the sale of milk and cream produced in the ordinary course of operation of the project is not an unrelated trade or business. Free federal and state taxes But if the organization uses the milk and cream in the further manufacture of food items such as ice cream, pastries, etc. Free federal and state taxes , the sale of these products is an unrelated trade or business unless the manufacturing activities themselves contribute importantly to the accomplishment of an exempt purpose of the organization. Free federal and state taxes Dual use of assets or facilities. Free federal and state taxes   If an asset or facility necessary to the conduct of exempt functions is also used in commercial activities, its use for exempt functions does not, by itself, make the commercial activities a related trade or business. Free federal and state taxes The test, as discussed earlier, is whether the activities contribute importantly to the accomplishment of exempt purposes. Free federal and state taxes   For example, a museum has a theater auditorium designed for showing educational films in connection with its program of public education in the arts and sciences. Free federal and state taxes The theater is a principal feature of the museum and operates continuously while the museum is open to the public. Free federal and state taxes If the organization also operates the theater as a motion picture theater for the public when the museum is closed, the activity is an unrelated trade or business. Free federal and state taxes   For information on allocating expenses for the dual use of assets or facilities, see Deductions in chapter 4. Free federal and state taxes Exploitation of exempt functions. Free federal and state taxes   Exempt activities sometimes create goodwill or other intangibles that can be exploited in a commercial way. Free federal and state taxes When an organization exploits such an intangible in commercial activities, the fact that the income depends in part upon an exempt function of the organization does not make the commercial activities a related trade or business. Free federal and state taxes Unless the commercial exploitation contributes importantly to the accomplishment of the exempt purpose, the commercial activities are an unrelated trade or business. Free federal and state taxes   For the treatment of expenses attributable to the exploitation of exempt activities, see Deductions in chapter 4. Free federal and state taxes Examples The following are examples of activities that were determined to be (or not to be) unrelated trades or businesses using the definitions and principles just discussed. Free federal and state taxes Sales commissions. Free federal and state taxes   An agricultural organization, whose exempt purposes are to promote better conditions for cattle breeders and to improve the breed generally, engages in an unrelated trade or business when it regularly sells cattle for its members on a commission basis. Free federal and state taxes Artists' facilities. Free federal and state taxes   An organization whose exempt purpose is to stimulate and foster public interest in the fine arts by promoting art exhibits, sponsoring cultural events, and furnishing information about fine arts leases studio apartments to artist tenants and operates a dining hall primarily for these tenants. Free federal and state taxes These two activities do not contribute importantly to accomplishing the organization's exempt purpose. Free federal and state taxes Therefore, they are unrelated trades or businesses. Free federal and state taxes Membership list sales. Free federal and state taxes   An exempt educational organization regularly sells membership mailing lists to business firms. Free federal and state taxes This activity does not contribute importantly to the accomplishment of the organization's exempt purpose and therefore is an unrelated trade or business. Free federal and state taxes Also see Exchange or rental of member lists under Excluded Trade or Business Activities, later. Free federal and state taxes Hospital facilities. Free federal and state taxes   An exempt hospital leases its adjacent office building and furnishes certain office services to a hospital-based medical group for a fee. Free federal and state taxes The group provides all diagnostic and therapeutic procedures to the hospital's patients and operates the hospital's emergency room on a 24-hour basis. Free federal and state taxes The leasing activity is substantially related to the hospital's exempt purpose and is not an unrelated trade or business. Free federal and state taxes   The hospital also operates a gift shop patronized by patients, visitors making purchases for patients, and employees; a cafeteria and coffee shop primarily for employees and medical staff; and a parking lot for patients and visitors only. Free federal and state taxes These activities are also substantially related to the hospital's exempt purpose and do not constitute unrelated trades or businesses. Free federal and state taxes Book publishing. Free federal and state taxes   An exempt organization engages primarily in activities that further its exempt purposes. Free federal and state taxes It also owns the publication rights to a book that does not relate to any of its exempt purposes. Free federal and state taxes The organization exploits the book in a commercial manner by arranging for printing, distribution, publicity, and advertising in connection with the sale of the book. Free federal and state taxes These activities constitute a trade or business regularly conducted. Free federal and state taxes Because exploiting the book is unrelated to the organization's exempt purposes (except for the use of the book's profits), the income is unrelated business income. Free federal and state taxes   However, if the organization transfers publication rights to a commercial publisher in return for royalties, the royalty income received will not be unrelated business income. Free federal and state taxes See Royalties under Exclusions in chapter 4. Free federal and state taxes School handicraft shop. Free federal and state taxes   An exempt vocational school operates a handicraft shop that sells articles made by students in their regular courses of instruction. Free federal and state taxes The students are paid a percentage of the sales price. Free federal and state taxes In addition, the shop sells products made by local residents who make articles at home according to the shop's specifications. Free federal and state taxes The shop manager periodically inspects the articles during their manufacture to ensure that they meet desired standards of style and quality. Free federal and state taxes Although many local participants are former students of the school, any qualified person may participate in the program. Free federal and state taxes The sale of articles made by students does not constitute an unrelated trade or business, but the sale of products made by local residents is an unrelated trade or business and is subject to unrelated business income tax. Free federal and state taxes School facilities. Free federal and state taxes   An exempt school has tennis courts and dressing rooms that it uses during the regular school year in its educational program. Free federal and state taxes During the summer, the school operates a tennis club open to the general public. Free federal and state taxes Employees of the school run the club, including collecting membership fees and scheduling court time. Free federal and state taxes   Another exempt school leases the same type of facilities to an unrelated individual who runs a tennis club for the summer. Free federal and state taxes The lease is for a fixed fee that does not depend on the income or profits derived from the leased property. Free federal and state taxes   In both situations, the exempt purpose is the advancement of education. Free federal and state taxes Furnishing tennis facilities in the manner described does not further that exempt purpose. Free federal and state taxes These activities are unrelated trades or businesses. Free federal and state taxes However, in the second situation the income derived from the leasing of the property is excluded from unrelated business taxable income as rent from real property. Free federal and state taxes See Rents under Exclusions in chapter 4. Free federal and state taxes Services provided with lease. Free federal and state taxes   An exempt university leases its football stadium during several months of the year to a professional football team for a fixed fee. Free federal and state taxes Under the lease agreement, the university furnishes heat, light, and water and is responsible for all ground maintenance. Free federal and state taxes It also provides dressing room, linen, and stadium security services for the professional team. Free federal and state taxes   Leasing of the stadium is an unrelated trade or business. Free federal and state taxes In addition, the substantial services furnished for the convenience of the lessee go beyond those usually provided with the rental of space for occupancy only. Free federal and state taxes Therefore, the income from this lease is rent from real property and unrelated business taxable income. Free federal and state taxes Broadcasting rights. Free federal and state taxes   An exempt collegiate athletic conference conducts an annual competitive athletic game between its conference champion and another collegiate team. Free federal and state taxes Income is derived from admission charges and the sale of exclusive broadcasting rights to a national radio and television network. Free federal and state taxes An athletic program is considered an integral part of the educational process of a university. Free federal and state taxes   The educational purposes served by intercollegiate athletics are identical whether conducted directly by individual universities or by their regional athletic conference. Free federal and state taxes Also, the educational purposes served by exhibiting a game before an audience that is physically present and exhibiting the game on television or radio before a much larger audience are substantially similar. Free federal and state taxes Therefore, the sale of the broadcasting rights contributes importantly to the accomplishment of the organization's exempt purpose and is not an unrelated trade or business. Free federal and state taxes   In a similar situation, an exempt organization was created as a national governing body for amateur athletes to foster interest in amateur sports and to encourage widespread public participation. Free federal and state taxes The organization receives income each year from the sale of exclusive broadcasting rights to an independent producer, who contracts with a commercial network to broadcast many of the athletic events sponsored, supervised, and regulated by the organization. Free federal and state taxes   The broadcasting of these events promotes the various amateur sports, fosters widespread public interest in the benefits of the organization's nationwide amateur program, and encourages public participation. Free federal and state taxes The sale of the rights and the broadcasting of the events contribute importantly to the organization's exempt purpose. Free federal and state taxes Therefore, the sale of the exclusive broadcasting rights is not an unrelated trade or business. Free federal and state taxes Yearbook advertising. Free federal and state taxes   An exempt organization receives income from the sale of advertising in its annual yearbook. Free federal and state taxes The organization hires an independent commercial firm, under a contract covering a full calendar year, to conduct an intensive advertising solicitation campaign in the organization's name. Free federal and state taxes This firm is paid a percentage of the gross advertising receipts for selling the advertising, collecting from advertisers, and printing the yearbook. Free federal and state taxes This advertising activity is an unrelated trade or business. Free federal and state taxes Pet boarding and grooming services. Free federal and state taxes   An exempt organization, organized and operated for the prevention of cruelty to animals, receives unrelated business income from providing pet boarding and grooming services for the general public. Free federal and state taxes These activities do not contribute importantly to its purpose of preventing cruelty to animals. Free federal and state taxes Museum eating facilities. Free federal and state taxes   An exempt art museum operates a dining room, a cafeteria, and a snack bar for use by the museum staff, employees, and visitors. Free federal and state taxes Eating facilities in the museum help to attract visitors and allow them to spend more time viewing the museum's exhibits without having to seek outside restaurants at mealtime. Free federal and state taxes The eating facilities also allow the museum staff and employees to remain in the museum throughout the day. Free federal and state taxes Thus, the museum's operation of the eating facilities contributes importantly to the accomplishment of its exempt purposes and is not unrelated trade or business. Free federal and state taxes Halfway house workshop. Free federal and state taxes   A halfway house organized to provide room, board, therapy, and counseling for persons discharged from alcoholic treatment centers also operates a furniture shop to provide full-time employment for its residents. Free federal and state taxes The profits are applied to the operating costs of the halfway house. Free federal and state taxes The income from this venture is not unrelated trade or business income because the furniture shop contributes importantly to the organization's purpose of aiding its residents' transition from treatment to a normal and productive life. Free federal and state taxes Travel tour programs. Free federal and state taxes   Travel tour activities that are a trade or business are an unrelated trade or business if the activities are not substantially related to the purpose for which tax exemption was granted to the organization. Free federal and state taxes Example 1. Free federal and state taxes A tax-exempt university alumni association provides a travel tour program for its members and their families. Free federal and state taxes The organization works with various travel agencies and schedules approximately ten tours a year to various places around the world. Free federal and state taxes It mails out promotional material and accepts reservations for fees paid by the travel agencies on a per-person basis. Free federal and state taxes The organization provides an employee for each tour as a tour leader. Free federal and state taxes There is no formal educational program conducted with these tours, and they do not differ from regular commercially operated tours. Free federal and state taxes By providing travel tours to its members, the organization is engaging in a regularly conducted trade or business. Free federal and state taxes Even if the tours it offers support the university, financially and otherwise, and encourage alumni to do the same, they do not contribute importantly to the organization's exempt purpose of promoting education. Free federal and state taxes Therefore, the sale of the travel tours is an unrelated trade or business. Free federal and state taxes Example 2. Free federal and state taxes A tax-exempt organization formed for the purpose of educating individuals about the geography and the culture of the United States provides study tours to national parks and other locations within the United States. Free federal and state taxes These tours are conducted by teachers and others certified by the state board of education. Free federal and state taxes The tours are primarily designed for students enrolled in degree programs at state educational institutions but are open to all who agree to participate in the required study program associated with the tour taken. Free federal and state taxes A tour's study program consists of instruction on subjects related to the location being visited on the tour. Free federal and state taxes Each tour group brings along a library of material related to the subjects being studied on the tour. Free federal and state taxes During the tour, 5 or 6 hours per day are devoted to organized study, preparation of reports, lectures, instruction, and recitation by the students. Free federal and state taxes Examinations are given at the end of each tour. Free federal and state taxes The state board of education awards academic credit for tour participation. Free federal and state taxes Because these tours are substantially related to the organization's exempt purpose, they are not an unrelated trade or business. Free federal and state taxes Insurance programs. Free federal and state taxes   An organization that acts as a group insurance policyholder for its members and collects a fee for performing administrative services is normally carrying on an unrelated trade or business. Free federal and state taxes Exceptions. Free federal and state taxes   Organizations whose exempt activities may include the provision of insurance benefits, such as fraternal beneficiary societies, voluntary employees beneficiary associations, and labor organizations, are generally exceptions to this rule. Free federal and state taxes Magazine publishing. Free federal and state taxes   An association of credit unions with tax-exempt status as a business league publishes a consumer-oriented magazine four times a year and makes it available to member credit unions for purchase. Free federal and state taxes   By selling a magazine to its members as a promotional device, the organization furnishes its members with a regular commercial service they can use in their own operations. Free federal and state taxes This service does not promote the improvement of business conditions of one or more lines of business, which is the exempt purpose of a business league. Free federal and state taxes   Since the activity does not contribute importantly to the organization's exempt function, it is an unrelated trade or business. Free federal and state taxes Directory of members. Free federal and state taxes   A business league publishes an annual directory that contains a list of all its members, their addresses, and their area of expertise. Free federal and state taxes Each member has the same amount of space in the directory, and its format does not emphasize the relative importance or reputation of any member. Free federal and state taxes The directory contains no commercial advertisement and is sold only to the organization's members. Free federal and state taxes   The directory facilitates communication among the members and encourages the exchange of ideas and expertise. Free federal and state taxes Because the directory lists the members in a similar noncommercial format without advertising and is not distributed to the public, its sale does not confer private commercial benefits on the members. Free federal and state taxes The sale of the directory does contribute importantly to the organization's exempt purpose and is not an unrelated trade or business. Free federal and state taxes This directory differs from the publication discussed next because of its noncommercial characteristics. Free federal and state taxes Sales of advertising space. Free federal and state taxes   A national association of law enforcement officials publishes a monthly journal that contains articles and other editorial material of professional interest to its members. Free federal and state taxes The journal is distributed without charge, mainly to the organization's members. Free federal and state taxes   The organization sells advertising space in the journal either for conventional advertising or to merely identify the purchaser without a commercial message. Free federal and state taxes Some of the noncommercial advertising identifies the purchaser in a separate space, and some consists of listings of 60 or more purchasers per page. Free federal and state taxes A business firm identified in a separate space is further identified in an Index of Advertisers. Free federal and state taxes   The organization solicits advertising by personal contacts. Free federal and state taxes Advertising from large firms is solicited by contacting their chief executive officer or community relations officer rather than their advertising manager. Free federal and state taxes The organization also solicits advertising in form letters appealing for corporate and personal contributions. Free federal and state taxes   An exempt organization's sale of advertising placed for the purchaser's commercial benefit is a commercial activity. Free federal and state taxes Goodwill derived by the purchaser from being identified as a patron of the organization is usually considered a form of commercial benefit. Free federal and state taxes Therefore, advertising in an exempt organization's publication is generally presumed to be placed for the purchaser's commercial benefit, even if it has no commercial message. Free federal and state taxes However, this presumption is not conclusive if the purchaser's patronage would be difficult to justify commercially in view of the facts and circumstances. Free federal and state taxes In that case, other factors should also be considered in determining whether a commercial benefit can be expected. Free federal and state taxes Those other factors include: The normal manner in which the publication is circulated; The territorial scope of the circulation; The extent to which its readers, promoters, or the like could reasonably be expected to further, either directly or indirectly, the commercial interest of the advertisers; The eligibility of the publishing organization to receive tax-deductible contributions; and The commercial or noncommercial methods used to solicit the advertisers. Free federal and state taxes   In this situation, the purchaser of a separate advertising space without a commercial message can nevertheless expect a commercial benefit from the goodwill derived from being identified in that manner as a patron of the organization. Free federal and state taxes However, the purchaser of a listing cannot expect more than an inconsequential benefit. Free federal and state taxes Therefore, the sale of separate spaces, but not the listings, is an unrelated trade or business. Free federal and state taxes Publishing legal notices. Free federal and state taxes   A bar association publishes a legal journal containing opinions of the county court, articles of professional interest to lawyers, advertisements for products and services used by the legal profession, and legal notices. Free federal and state taxes The legal notices are published to satisfy state laws requiring publication of notices in connection with legal proceedings, such as the administration of estates and actions to quiet title to real property. Free federal and state taxes The state designated the bar association's journal as the place to publish the required notices. Free federal and state taxes   The publication of ordinary commercial advertising does not advance the exempt purposes of the association even when published in a periodical that contains material related to exempt purposes. Free federal and state taxes Although the advertising is directed specifically to members of the legal profession, it is still commercial in nature and does not contribute importantly to the exempt purposes of the association. Free federal and state taxes Therefore, the advertising income is unrelated trade or business income. Free federal and state taxes   On the other hand, the publication of legal notices is distinguishable from ordinary commercial advertising in that its purpose is to inform the general public of significant legal events rather than to stimulate demand for the products or services of an advertiser. Free federal and state taxes This promotes the common interests of the legal profession and contributes importantly to the association's exempt purposes. Free federal and state taxes Therefore, the publishing of legal notices does not constitute an unrelated trade or business. Free federal and state taxes Museum greeting card sales. Free federal and state taxes    An art museum that exhibits modern art sells greeting cards that display printed reproductions of selected works from other art collections. Free federal and state taxes Each card is imprinted with the name of the artist, the title or subject matter of the work, the date or period of its creation, if known, and the museum's name. Free federal and state taxes The cards contain appropriate greetings and are personalized on request. Free federal and state taxes   The organization sells the cards in the shop it operates in the museum and sells them at quantity discounts to retail stores. Free federal and state taxes It also sells them by mail order through a catalog that is advertised in magazines and other publications throughout the year. Free federal and state taxes As a result, a large number of cards are sold at a significant profit. Free federal and state taxes   The museum is exempt as an educational organization on the basis of its ownership, maintenance, and exhibition for public viewing of works of art. Free federal and state taxes The sale of greeting cards with printed reproductions of artworks contributes importantly to the achievement of the museum's exempt educational purposes by enhancing public awareness, interest, and appreciation of art. Free federal and state taxes The cards may encourage more people to visit the museum itself to share in its educational programs. Free federal and state taxes The fact that the cards are promoted and sold in a commercial manner at a profit and in competition with commercial greeting card publishers does not alter the fact that the activity is related to the museum's exempt purpose. Free federal and state taxes Therefore, these sales activities are not an unrelated trade or business. Free federal and state taxes Museum shop. Free federal and state taxes   An art museum maintained and operated for the exhibition of American folk art operates a shop in the museum that sells: Reproductions of works in the museum's own collection and reproductions of artistic works from the collections of other art museums (prints suitable for framing, postcards, greeting cards, and slides); Metal, wood, and ceramic copies of American folk art objects from its own collection and similar copies of art objects from other collections of artworks; Instructional literature and scientific books and souvenir items concerning the history and development of art and, in particular, of American folk art; and Scientific books and souvenir items of the city in which the museum is located. Free federal and state taxes   The shop also rents originals or reproductions of paintings contained in its collection. Free federal and state taxes All of its reproductions are imprinted with the name of the artist, the title or subject matter of the work from which it is reproduced, and the museum's name. Free federal and state taxes   Each line of merchandise must be considered separately to determine if sales are related to the exempt purpose. Free federal and state taxes   The sale and rental of reproductions and copies of works from the museum's own collection and reproductions of artistic works not owned by the museum contribute importantly to the achievement of the museum's exempt educational purpose by making works of art familiar to a broader segment of the public, thereby enhancing the public's understanding and appreciation of art. Free federal and state taxes The same is true for the sale of literature relating to art. Free federal and state taxes Therefore, these sales activities are not an unrelated trade or business. Free federal and state taxes   On the other hand, the sale of scientific books and souvenir items of the city where the museum is located has no causal relationship to art or to artistic endeavor and, therefore, does not contribute importantly to the accomplishment of the museum's exempt educational purposes. Free federal and state taxes The fact that selling some of these items could, under different circumstances, be held related to the exempt educational purpose of some other exempt educational organization does not change this conclusion. Free federal and state taxes Additionally, the sale of these items does not lose its identity as a trade or business merely because the museum also sells articles which do contribute importantly to the accomplishment of its exempt function. Free federal and state taxes Therefore, these sales are an unrelated trade or business. Free federal and state taxes Business league's parking and bus services. Free federal and state taxes   A business league, whose purpose is to retain and stimulate trade in a downtown area that has inadequate parking facilities, operates a fringe parking lot and shuttle bus service. Free federal and state taxes It also operates, as an insubstantial part of its activities, a park and shop plan. Free federal and state taxes   The fringe parking lot and shuttle bus service operate in a manner that does not favor any individual or group of downtown merchants. Free federal and state taxes The merchants cannot offer free or discount parking or bus fares to their customers. Free federal and state taxes   The park and shop plan allows customers of particular merchants to park free at certain parking lots in the area. Free federal and state taxes Merchants participating in this plan buy parking stamps, which they distribute to their customers to use to pay for parking. Free federal and state taxes   Operating the fringe parking lot and shuttle bus service provides easy and convenient access to the downtown area and, therefore, stimulates and improves business conditions in the downtown area generally. Free federal and state taxes That activity contributes importantly to the organization's accomplishing its exempt purpose and is not an unrelated trade or business. Free federal and state taxes   The park and shop plan encourages customers to use a limited number of participating member merchants in order to obtain free parking. Free federal and state taxes This provides a particular service to individual members of the organization and does not further its exempt purpose. Free federal and state taxes Therefore, operating the park and shop plan is an unrelated trade or business. Free federal and state taxes Youth residence. Free federal and state taxes   An exempt organization, whose purpose is to provide for the welfare of young people, rents rooms primarily to people under age 25. Free federal and state taxes The residence units are operated on, and as a part of, the premises in which the organization carries on the social, recreational, and guidance programs for which it was recognized as exempt. Free federal and state taxes The facilities are under the management and supervision of trained career professionals who provide residents with personal counseling, physical education programs, and group recreational activities. Free federal and state taxes The rentals are not an unrelated trade or business because renting the rooms is substantially related to the organization's exempt purpose. Free federal and state taxes Health club program. Free federal and state taxes   An exempt charitable organization's purpose is to provide for the welfare of young people. Free federal and state taxes The organization conducts charitable activities and maintains facilities that will contribute to the physical, social, mental, and spiritual health of young people at minimum or no cost to them. Free federal and state taxes Nominal annual dues are charged for membership in the organization and use of the facilities. Free federal and state taxes   In addition, the organization organized a health club program that its members could join for an annual fee in addition to the annual dues. Free federal and state taxes The annual fee is comparable to fees charged by similar local commercial health clubs and is sufficiently high to restrict participation in the program to a limited number of members of the community. Free federal and state taxes   The health club program is in addition to the general physical fitness program of the organization. Free federal and state taxes Operating this program does not contribute importantly to the organization's accomplishing its exempt purpose and, therefore, is an unrelated trade or business. Free federal and state taxes Miniature golf course. Free federal and state taxes   An exempt youth welfare organization operates a miniature golf course that is open to the general public. Free federal and state taxes The course, which is managed by salaried employees, is substantially similar to commercial courses. Free federal and state taxes The admission fees charged are comparable to fees of commercial facilities and are designed to return a profit. Free federal and state taxes   The operation of the miniature golf course in a commercial manner does not contribute importantly to the accomplishment of the organization's exempt purpose and, therefore, is an unrelated trade or business. Free federal and state taxes Sales of hearing aids. Free federal and state taxes   A tax-exempt hospital, whose primary activity is rehabilitation, sells hearing aids to patients. Free federal and state taxes This activity is an essential part of the hospital's program to test and evaluate patients with hearing deficiencies and contributes importantly to its exempt purpose. Free federal and state taxes It is not an unrelated trade or business. Free federal and state taxes Nonpatient laboratory testing. Free federal and state taxes   Nonpatient laboratory testing performed by a tax-exempt teaching hospital on specimens needed for the conduct of its teaching activities is not an unrelated trade or business. Free federal and state taxes However, laboratory testing performed by a tax-exempt non-teaching hospital on referred specimens from private office patients of staff physicians is an unrelated trade or business if these services are otherwise available in the community. Free federal and state taxes Selling endorsements. Free federal and state taxes   An exempt scientific organization enjoys an excellent reputation in the field of biological research. Free federal and state taxes It exploits this reputation regularly by selling endorsements of laboratory equipment to manufacturers. Free federal and state taxes Endorsing laboratory equipment does not contribute importantly to the accomplishment of any purpose for which exemption is granted to the organization. Free federal and state taxes Accordingly, the sale of endorsements is an unrelated trade or business. Free federal and state taxes Sponsoring entertainment events. Free federal and state taxes   An exempt university has a regular faculty and a regularly enrolled student body. Free federal and state taxes During the school year, the university sponsors the appearance of professional theater companies and symphony orchestras that present drama and musical performances for the students and faculty members. Free federal and state taxes Members of the general public also are admitted. Free federal and state taxes The university advertises these performances and supervises advance ticket sales at various places, including such university facilities as the cafeteria and the university bookstore. Free federal and state taxes Although the presentation of the performances makes use of an intangible generated by the university's exempt educational functions—the presence of the student body and faculty—such drama and music events contribute importantly to the overall educational and cultural functions of the university. Free federal and state taxes Therefore, the activity is not an unrelated trade or business. Free federal and state taxes Excluded Trade or Business Activities The following activities are specifically excluded from the definition of unrelated trade or business. Free federal and state taxes Volunteer workforce. Free federal and state taxes   Any trade or business in which substantially all the work is performed for the organization without compensation is not an unrelated trade or business. Free federal and state taxes Example 1. Free federal and state taxes A retail store operated by an exempt orphanage where unpaid volunteers perform substantially all the work in carrying on the business is not an unrelated trade or business. Free federal and state taxes Example 2. Free federal and state taxes A volunteer fire company conducts weekly public dances. Free federal and state taxes Holding public dances and charging admission on a regular basis may, given the facts and circumstances of a particular case, be considered an unrelated trade or business. Free federal and state taxes However, because the work at the dances is performed by unpaid volunteers, the activity is not an unrelated trade or business. Free federal and state taxes Convenience of members. Free federal and state taxes   A trade or business conducted by a 501(c)(3) organization or by a governmental college or university primarily for the convenience of its members, students, patients, officers, or employees is not an unrelated trade or business. Free federal and state taxes For example, a laundry operated by a college for the purpose of laundering dormitory linens and students' clothing is not an unrelated trade or business. Free federal and state taxes Qualified sponsorship activities. Free federal and state taxes   Soliciting and receiving qualified sponsorship payments is not an unrelated trade or business, and the payments are not subject to unrelated business income tax. Free federal and state taxes Qualified sponsorship payment. Free federal and state taxes   This is any payment made by a person engaged in a trade or business for which the person will receive no substantial benefit other than the use or acknowledgment of the business name, logo, or product lines in connection with the organization's activities. Free federal and state taxes “Use or acknowledgment” does not include advertising the sponsor's products or services. Free federal and state taxes The organization's activities include all its activities, whether or not related to its exempt purposes. Free federal and state taxes   For example, if, in return for receiving a sponsorship payment, an organization promises to use the sponsor's name or logo in acknowledging the sponsor's support for an educational or fundraising event, the payment is a qualified sponsorship payment and is not subject to the unrelated business income tax. Free federal and state taxes   Providing facilities, services, or other privileges (for example, complimentary tickets, pro-am playing spots in golf tournaments, or receptions for major donors) to a sponsor or the sponsor's designees in connection with a sponsorship payment does not affect whether the payment is a qualified sponsorship payment. Free federal and state taxes Instead, providing these goods or services is treated as a separate transaction in determining whether the organization has unrelated business income from the event. Free federal and state taxes Generally, if the services or facilities are not a substantial benefit or if providing them is a related business activity, the payments will not be subject to the unrelated business income tax. Free federal and state taxes   Similarly, the sponsor's receipt of a license to use an intangible asset (for example, a trademark, logo, or designation) of the organization is treated as separate from the qualified sponsorship transaction in determining whether the organization has unrelated business taxable income. Free federal and state taxes   If part of a payment would be a qualified sponsorship payment if paid separately, that part is treated as a separate payment. Free federal and state taxes For example, if a sponsorship payment entitles the sponsor to both product advertising and the use or acknowledgment of the sponsor's name or logo by the organization, then the unrelated business income tax does not apply to the part of the payment that is more than the fair market value of the product advertising. Free federal and state taxes Advertising. Free federal and state taxes   A payment is not a qualified sponsorship payment if, in return, the organization advertises the sponsor's products or services. Free federal and state taxes For information on the treatment of payments for advertising, see Exploitation of Exempt Activity—Advertising Sales in chapter 4. Free federal and state taxes   Advertising includes: Messages containing qualitative or comparative language, price information, or other indications of savings or value; Endorsements; and Inducements to purchase, sell, or use the products or services. Free federal and state taxes   The use of promotional logos or slogans that are an established part of the sponsor's identity is not, by itself, advertising. Free federal and state taxes In addition, mere distribution or display of a sponsor's product by the organization to the public at a sponsored event, whether for free or for remuneration, is considered use or acknowledgment of the product rather than advertising. Free federal and state taxes Exception for contingent payments. Free federal and state taxes   A payment is not a qualified sponsorship payment if its amount is contingent, by contract or otherwise, upon the level of attendance at one or more events, broadcast ratings, or other factors indicating the degree of public exposure to one or more events. Free federal and state taxes However, the fact that a sponsorship payment is contingent upon an event actually taking place or being broadcast does not, by itself, affect whether a payment qualifies. Free federal and state taxes Exception for periodicals. Free federal and state taxes   A payment is not a qualified sponsorship payment if it entitles the payer to the use or acknowledgment of the business name, logo, or product lines in the organization's periodical. Free federal and state taxes For this purpose, a periodical is any regularly scheduled and printed material (for example, a monthly journal) published by or on behalf of the organization. Free federal and state taxes It does not include material that is related to and primarily distributed in connection with a specific event conducted by the organization (for example, a program or brochure distributed at a sponsored event). Free federal and state taxes   The treatment of payments that entitle the payer to the depiction of the payer's name, logo, or products lines in an organization's periodical is determined under the rules that apply to advertising activities. Free federal and state taxes See Sales of advertising space under Examples, earlier in this chapter. Free federal and state taxes Also see Exploitation of Exempt Activity—Advertising Sales in chapter 4. Free federal and state taxes Exception for conventions and trade shows. Free federal and state taxes   A payment is not a qualified sponsorship payment if it is made in connection with any qualified convention or trade show activity. Free federal and state taxes The exclusion of qualified convention or trade show activities from the definition of unrelated trade or business is explained later under Convention or trade show activity. Free federal and state taxes Selling donated merchandise. Free federal and state taxes   A trade or business that consists of selling merchandise, substantially all of which the organization received as gifts or contributions, is not an unrelated trade or business. Free federal and state taxes For example, a thrift shop operated by a tax-exempt organization that sells donated clothes and books to the general public, with the proceeds going to the exempt organization, is not an unrelated trade or business. Free federal and state taxes Employee association sales. Free federal and state taxes   The sale of certain items by a local association of employees described in section 501(c)(4), organized before May 17, 1969, is not an unrelated trade or business if the items are sold for the convenience of the association's members at their usual place of employment. Free federal and state taxes This exclusion applies only to the sale of work-related clothes and equipment and items normally sold through vending machines, food dispensing facilities, or by snack bars. Free federal and state taxes Bingo games. Free federal and state taxes   Certain bingo games are not included in the term “unrelated trade or business. Free federal and state taxes ” To qualify for this exclusion, the bingo game must meet the following requirements. Free federal and state taxes It meets the legal definition of bingo. Free federal and state taxes It is legal where it is played. Free federal and state taxes It is played in a jurisdiction where bingo games are not regularly conducted by for-profit organizations. Free federal and state taxes Legal definition. Free federal and state taxes   For a game to meet the legal definition of bingo, wagers must be placed, winners must be determined, and prizes or other property must be distributed in the presence of all persons placing wagers in that game. Free federal and state taxes   A wagering game that does not meet the legal definition of bingo does not qualify for the exclusion, regardless of its name. Free federal and state taxes For example, “instant bingo,” in which a player buys a pre-packaged bingo card with pull-tabs that the player removes to determine if he or she is a winner, does not qualify. Free federal and state taxes Legal where played. Free federal and state taxes   This exclusion applies only if bingo is legal under the laws of the jurisdiction where it is conducted. Free federal and state taxes The fact that a jurisdiction's law that prohibits bingo is rarely enforced or is widely disregarded does not make the conduct of bingo legal for this purpose. Free federal and state taxes No for-profit games where played. Free federal and state taxes   This exclusion applies only if for-profit organizations cannot regularly conduct bingo games in any part of the same jurisdiction. Free federal and state taxes Jurisdiction is normally the entire state; however, in certain situations, local jurisdiction will control. Free federal and state taxes Example. Free federal and state taxes Tax-exempt organizations X and Y are organized under the laws of state N, which has a law that permits exempt organizations to conduct bingo games. Free federal and state taxes In addition, for-profit organizations are permitted to conduct bingo games in city S, a resort community located in county R. Free federal and state taxes Several for-profit organizations conduct nightly games. Free federal and state taxes Y conducts weekly bingo games in city S, while X conducts weekly games in county R. Free federal and state taxes Since state law confines the for-profit organizations to city S, local jurisdiction controls. Free federal and state taxes Y's bingo games conducted in city S are an unrelated trade or business. Free federal and state taxes However, X's bingo games conducted in county R outside of city S are not an unrelated trade or business. Free federal and state taxes Gambling activities other than bingo. Free federal and state taxes   Any game of chance conducted by an exempt organization in North Dakota is not an unrelated trade or business if conducting the game does not violate any state or local law. Free federal and state taxes Pole rentals. Free federal and state taxes   The term unrelated trade or business does not include qualified pole rentals by a mutual or cooperative telephone or electric company described in section 501(c)(12). Free federal and state taxes A qualified pole rental is the 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 the company uses in providing telephone or electric services to its members, and According to the rental, to support one or more wires (in addition to the wires described in 1 ) for use in connection with the transmission by wire of electricity or of telephone or other communications. Free federal and state taxes For this purpose, the term rental includes any sale of the right to use the pole (or other structure). Free federal and state taxes Distribution of low cost articles. Free federal and state taxes   The term unrelated trade or business does not include activities relating to the distribution of low cost articles incidental to soliciting charitable contributions. Free federal and state taxes This applies to organizations described in section 501 that are eligible to receive charitable contributions. Free federal and state taxes   A distribution is considered incidental to the solicitation of a charitable contribution if: The recipient did not request the distribution, The distribution is made without the express consent of the recipient, and The article is accompanied by a request for a charitable contribution to the organization and a statement that the recipient may keep the low cost article regardless of whether a contribution is made. Free federal and state taxes   An article is considered low cost if the cost of an item (or the aggregate costs if more than one item) distributed to a single recipient in a tax year is not more than $5, indexed annually for inflation. Free federal and state taxes The maximum cost of a low cost article is $9. Free federal and state taxes 70 for 2011. Free federal and state taxes The cost of an article is the cost to the organization that distributes the item or on whose behalf it is distributed. Free federal and state taxes Exchange or rental of member lists. Free federal and state taxes   The exchange or rental of member or donor lists between organizations described in section 501 that are eligible to receive charitable contributions is not included in the term unrelated trade or business. Free federal and state taxes Hospital services. Free federal and state taxes   The providing of certain services at or below cost by an exempt hospital to other exempt hospitals that have facilities for 100 or fewer inpatients is not an unrelated trade or business. Free federal and state taxes This exclusion applies only to services described in section 501(e)(1)(A). Free federal and state taxes Public entertainment activity. Free federal and state taxes   An unrelated trade or business does not include a qualified public entertainment activity. Free federal and state taxes A public entertainment activity is one traditionally conducted at a fair or exposition promoting agriculture and education, including any activity whose purpose is designed to attract the public to fairs or expositions or to promote the breeding of animals or the development of products or equipment. Free federal and state taxes   A qualified public entertainment activity is one conducted by a qualifying organization: In conjunction with an international, national, state, regional, or local fair or exposition; In accordance with state law that permits the activity to be operated or conducted solely by such an organization or by an agency, instrumentality, or political subdivision of the state; or In accordance with state law that permits an organization to be granted a license to conduct an activity for not more than 20 days on paying the state a lower percentage of the revenue from the activity than the state charges nonqualifying organizations that hold similar activities. Free federal and state taxes   For these purposes, a qualifying organization is an organization described in section 501(c)(3), 501(c)(4), or 501(c)(5) that regularly conducts an agricultural and educational fair or exposition as one of its substantial exempt purposes. Free federal and state taxes Its conducting qualified public entertainment activities will not affect determination of its exempt status. Free federal and state taxes Convention or trade show activity. Free federal and state taxes   An unrelated trade or business does not include qualified convention or trade show activities conducted at a convention, annual meeting, or trade show. Free federal and state taxes   A qualified convention or trade show activity is any activity of a kind traditionally conducted by a qualifying organization in conjunction with an international, national, state, regional, or local convention, annual meeting, or show if: One of the purposes of the organization in sponsoring the activity is promoting and stimulating interest in, and demand for, the products and services of that industry or educating the persons in attendance regarding new products and services or new rules and regulations affecting the industry; and The show is designed to achieve its purpose through the character of the exhibits and the extent of the industry products that are displayed. Free federal and state taxes   For these purposes, a qualifying organization is one described in section 501(c)(3), 501(c)(4), 501(c)(5), or 501(c)(6). Free federal and state taxes The organization must regularly conduct, as one of its substantial exempt purposes, a qualified convention or trade show activity. Free federal and state taxes   The rental of display space to exhibitors (including exhibitors who are suppliers) at a qualified convention or trade show is not an unrelated trade or business even if the exhibitors who rent the space are permitted to sell or solicit orders. Free federal and state taxes For this purpose, a supplier's exhibit is one in which the exhibitor displays goods or services that are supplied to, rather than by, members of the qualifying organization in the conduct of these members' own trades or businesses. Free federal and state taxes    Certain Internet activities conducted by a trade association described in section 501(c)(6) will be considered qualified convention and trade show activity if conducted on a special supplementary section of the association's website in conjunction with a trade show conducted by the association. Free federal and state taxes The trade show itself must be a qualified convention and trade show activity. Free federal and state taxes The supplementary section of the website must be ancillary to, and serve to augment and enhance, the trade show, as when it makes available the same information available at the trade show and is available only during a time period that coincides with the time period that the trade show is in operation. Free federal and state taxes Conversely, Internet activities that are not conducted in conjunction with a qualified convention and trade show activity and that do not augment and enhance the trade show cannot themselves be qualified convention and trade show activity. Free federal and state taxes Prev  Up  Next   Home   More Online Publications