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Free h&r block software 22. Free h&r block software   Taxes Table of Contents IntroductionIndian tribal government. Free h&r block software Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Free h&r block software Real Estate TaxesReal estate taxes for prior years. Free h&r block software Examples. Free h&r block software Form 1099-S. Free h&r block software Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Free h&r block software It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Free h&r block software This chapter covers the following topics. Free h&r block software Income taxes (federal, state, local, and foreign). Free h&r block software General sales taxes (state and local). Free h&r block software Real estate taxes (state, local, and foreign). Free h&r block software Personal property taxes (state and local). Free h&r block software Taxes and fees you cannot deduct. Free h&r block software Use Table 22-1 as a guide to determine which taxes you can deduct. Free h&r block software The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Free h&r block software Business taxes. Free h&r block software   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Free h&r block software For information on these taxes, see Publication 535, Business Expenses. Free h&r block software State or local taxes. Free h&r block software   These are taxes imposed by the 50 states, U. Free h&r block software S. Free h&r block software possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Free h&r block software Indian tribal government. Free h&r block software   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Free h&r block software Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Free h&r block software General sales taxes. Free h&r block software   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Free h&r block software Foreign taxes. Free h&r block software   These are taxes imposed by a foreign country or any of its political subdivisions. Free h&r block software Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Free h&r block software The tax must be imposed on you. Free h&r block software You must pay the tax during your tax year. Free h&r block software The tax must be imposed on you. Free h&r block software   In general, you can deduct only taxes imposed on you. Free h&r block software   Generally, you can deduct property taxes only if you are an owner of the property. Free h&r block software If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Free h&r block software You must pay the tax during your tax year. Free h&r block software   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Free h&r block software If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Free h&r block software If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Free h&r block software If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Free h&r block software See Publication 538, Accounting Periods and Methods, for details. Free h&r block software    If you use an accrual method of accounting, see Publication 538 for more information. Free h&r block software Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Free h&r block software State and Local Income Taxes You can deduct state and local income taxes. Free h&r block software However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Free h&r block software See General Sales Taxes , later. Free h&r block software Exception. Free h&r block software    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Free h&r block software For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Free h&r block software What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Free h&r block software Withheld taxes. Free h&r block software   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Free h&r block software Your Form(s) W-2 will show these amounts. Free h&r block software Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Free h&r block software Estimated tax payments. Free h&r block software   You can deduct estimated tax payments you made during the year to a state or local government. Free h&r block software However, you must have a reasonable basis for making the estimated tax payments. Free h&r block software Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Free h&r block software For example, you made an estimated state income tax payment. Free h&r block software However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Free h&r block software You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Free h&r block software Refund applied to taxes. Free h&r block software   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Free h&r block software    Do not reduce your deduction by either of the following items. Free h&r block software Any state or local income tax refund (or credit) you expect to receive for 2013. Free h&r block software Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Free h&r block software   However, part or all of this refund (or credit) may be taxable. Free h&r block software See Refund (or credit) of state or local income taxes , later. Free h&r block software Separate federal returns. Free h&r block software   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Free h&r block software Joint state and local returns. Free h&r block software   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Free h&r block software You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Free h&r block software However, you cannot deduct more than the amount you actually paid during the year. Free h&r block software You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Free h&r block software If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Free h&r block software Joint federal return. Free h&r block software   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Free h&r block software Contributions to state benefit funds. Free h&r block software    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Free h&r block software For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Free h&r block software Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Free h&r block software Alaska Unemployment Compensation Fund. Free h&r block software California Nonoccupational Disability Benefit Fund. Free h&r block software New Jersey Nonoccupational Disability Benefit Fund. Free h&r block software New Jersey Unemployment Compensation Fund. Free h&r block software New York Nonoccupational Disability Benefit Fund. Free h&r block software Pennsylvania Unemployment Compensation Fund. Free h&r block software Rhode Island Temporary Disability Benefit Fund. Free h&r block software Washington State Supplemental Workmen's Compensation Fund. Free h&r block software    Employee contributions to private or voluntary disability plans are not deductible. Free h&r block software Refund (or credit) of state or local income taxes. Free h&r block software   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Free h&r block software This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Free h&r block software If you did not itemize your deductions in the previous year, do not include the refund in income. Free h&r block software If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Free h&r block software For a discussion of how much to include, see Recoveries in chapter 12. Free h&r block software Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Free h&r block software S. Free h&r block software possession. Free h&r block software However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Free h&r block software S. Free h&r block software tax under the foreign earned income exclusion or the foreign housing exclusion. Free h&r block software For information on these exclusions, see Publication 54, Tax Guide for U. Free h&r block software S. Free h&r block software Citizens and Resident Aliens Abroad. Free h&r block software For information on the foreign tax credit, see Publication 514. Free h&r block software General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Free h&r block software You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Free h&r block software Actual expenses. Free h&r block software   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Free h&r block software However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Free h&r block software If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Free h&r block software If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Free h&r block software Do not include sales taxes paid on items used in your trade or business. Free h&r block software Motor vehicles. Free h&r block software   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Free h&r block software This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Free h&r block software Optional sales tax tables. Free h&r block software   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Free h&r block software You may also be able to add the state and local general sales taxes paid on certain specified items. Free h&r block software   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Free h&r block software Your income is your adjusted gross income plus any nontaxable items such as the following. Free h&r block software Tax-exempt interest. Free h&r block software Veterans' benefits. Free h&r block software Nontaxable combat pay. Free h&r block software Workers' compensation. Free h&r block software Nontaxable part of social security and railroad retirement benefits. Free h&r block software Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Free h&r block software Public assistance payments. Free h&r block software If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Free h&r block software See the Instructions for Schedule A (Form 1040), line 5, for details. Free h&r block software Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Free h&r block software You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Free h&r block software Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Free h&r block software They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Free h&r block software For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Free h&r block software Tenant-shareholders in a cooperative housing corporation. Free h&r block software   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Free h&r block software The corporation should provide you with a statement showing your share of the taxes. Free h&r block software For more information, see Special Rules for Cooperatives in Publication 530. Free h&r block software Division of real estate taxes between buyers and sellers. Free h&r block software   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Free h&r block software   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Free h&r block software The seller is treated as paying the taxes up to, but not including, the date of sale. Free h&r block software The buyer is treated as paying the taxes beginning with the date of sale. Free h&r block software This applies regardless of the lien dates under local law. Free h&r block software Generally, this information is included on the settlement statement provided at the closing. Free h&r block software    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Free h&r block software This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Free h&r block software However, you must also include the amount of that tax in the selling price of the property. Free h&r block software The buyer must include the same amount in his or her cost of the property. Free h&r block software   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Free h&r block software Worksheet 22-1. Free h&r block software Figuring Your Real Estate Tax Deduction 1. Free h&r block software Enter the total real estate taxes for the real property tax year   2. Free h&r block software Enter the number of days in the real property tax year that you owned the property   3. Free h&r block software Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free h&r block software 4. Free h&r block software Multiply line 1 by line 3. Free h&r block software This is your deduction. Free h&r block software Enter it on Schedule A (Form 1040), line 6   Note. Free h&r block software Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Free h&r block software Your total deduction is the sum of the line 4 amounts for all of the properties. Free h&r block software Real estate taxes for prior years. Free h&r block software   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Free h&r block software Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Free h&r block software The buyer must add them to the cost of the property. Free h&r block software The seller can deduct these taxes paid by the buyer. Free h&r block software However, the seller must include them in the selling price. Free h&r block software Examples. Free h&r block software   The following examples illustrate how real estate taxes are divided between buyer and seller. Free h&r block software Example 1. Free h&r block software Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Free h&r block software The tax on their old home, sold on May 7, was $620. Free h&r block software The tax on their new home, bought on May 3, was $732. Free h&r block software Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Free h&r block software On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Free h&r block software Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Free h&r block software They figure their deduction for taxes on their old home as follows. Free h&r block software Worksheet 22-1. Free h&r block software Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Free h&r block software Enter the total real estate taxes for the real property tax year $620 2. Free h&r block software Enter the number of days in the real property tax year that you owned the property 126 3. Free h&r block software Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free h&r block software 3452 4. Free h&r block software Multiply line 1 by line 3. Free h&r block software This is your deduction. Free h&r block software Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Free h&r block software (The buyers add the $214 to their cost of the home. Free h&r block software ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Free h&r block software They figure their deduction for taxes on their new home as follows. Free h&r block software Worksheet 22-1. Free h&r block software Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Free h&r block software Enter the total real estate taxes for the real property tax year $732 2. Free h&r block software Enter the number of days in the real property tax year that you owned the property 243 3. Free h&r block software Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free h&r block software 6658 4. Free h&r block software Multiply line 1 by line 3. Free h&r block software This is your deduction. Free h&r block software Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Free h&r block software (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Free h&r block software ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Free h&r block software They will enter this amount on Schedule A (Form 1040), line 6. Free h&r block software Example 2. Free h&r block software George and Helen Brown bought a new home on May 3, 2013. Free h&r block software Their real property tax year for the new home is the calendar year. Free h&r block software Real estate taxes for 2012 were assessed in their state on January 1, 2013. Free h&r block software The taxes became due on May 31, 2013, and October 31, 2013. Free h&r block software The Browns agreed to pay all taxes due after the date of purchase. Free h&r block software Real estate taxes for 2012 were $680. Free h&r block software They paid $340 on May 31, 2013, and $340 on October 31, 2013. Free h&r block software These taxes were for the 2012 real property tax year. Free h&r block software The Browns cannot deduct them since they did not own the property until 2013. Free h&r block software Instead, they must add $680 to the cost of their new home. Free h&r block software In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Free h&r block software The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Free h&r block software They will figure their 2014 deduction for taxes as follows. Free h&r block software Worksheet 22-1. Free h&r block software Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Free h&r block software Enter the total real estate taxes for the real property tax year $752 2. Free h&r block software Enter the number of days in the real property tax year that you owned the property 243 3. Free h&r block software Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free h&r block software 6658 4. Free h&r block software Multiply line 1 by line 3. Free h&r block software This is your deduction. Free h&r block software Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Free h&r block software Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Free h&r block software This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Free h&r block software The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Free h&r block software The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Free h&r block software Form 1099-S. Free h&r block software   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Free h&r block software Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Free h&r block software The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Free h&r block software   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Free h&r block software The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Free h&r block software See Refund (or rebate) , later. Free h&r block software Taxes placed in escrow. Free h&r block software   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Free h&r block software You can deduct only the real estate tax that the third party actually paid to the taxing authority. Free h&r block software If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Free h&r block software Tenants by the entirety. Free h&r block software   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Free h&r block software Divorced individuals. Free h&r block software   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Free h&r block software See Taxes and insurance in chapter 18 for more information. Free h&r block software Ministers' and military housing allowances. Free h&r block software   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Free h&r block software Refund (or rebate). Free h&r block software   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Free h&r block software If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Free h&r block software However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Free h&r block software For more information, see Recoveries in chapter 12. Free h&r block software Table 22-1. Free h&r block software Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Free h&r block software Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Free h&r block software     Fines and penalties. Free h&r block software Income Taxes State and local income taxes. Free h&r block software Federal income taxes. Free h&r block software   Foreign income taxes. Free h&r block software     Employee contributions to state funds listed under Contributions to state benefit funds . Free h&r block software Employee contributions to private or voluntary disability plans. Free h&r block software     State and local general sales taxes if you choose to deduct state and local income taxes. Free h&r block software General Sales Taxes State and local general sales taxes, including compensating use taxes. Free h&r block software State and local income taxes if you choose to deduct state and local general sales taxes. Free h&r block software Other Taxes Taxes that are expenses of your trade or business. Free h&r block software Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Free h&r block software   Taxes on property producing rent or royalty income. Free h&r block software Per capita taxes. Free h&r block software   Occupational taxes. Free h&r block software See chapter 28. Free h&r block software     One-half of self-employment tax paid. Free h&r block software   Personal Property Taxes State and local personal property taxes. Free h&r block software Customs duties that are not expenses of your trade or business or of producing income. Free h&r block software Real Estate Taxes State and local real estate taxes. Free h&r block software Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Free h&r block software   Foreign real estate taxes. Free h&r block software Taxes for local benefits (with exceptions). Free h&r block software See Real Estate-Related Items You Cannot Deduct . Free h&r block software   Tenant's share of real estate taxes paid by  cooperative housing corporation. Free h&r block software Trash and garbage pickup fees (with exceptions). Free h&r block software See Real Estate-Related Items You Cannot Deduct . Free h&r block software     Rent increase due to higher real estate taxes. Free h&r block software     Homeowners' association charges. Free h&r block software Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Free h&r block software Taxes for local benefits. Free h&r block software Itemized charges for services (such as trash and garbage pickup fees). Free h&r block software Transfer taxes (or stamp taxes). Free h&r block software Rent increases due to higher real estate taxes. Free h&r block software Homeowners' association charges. Free h&r block software Taxes for local benefits. Free h&r block software   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Free h&r block software These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Free h&r block software You should increase the basis of your property by the amount of the assessment. Free h&r block software   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Free h&r block software If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Free h&r block software If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Free h&r block software    Taxes for local benefits may be included in your real estate tax bill. Free h&r block software If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Free h&r block software You should use the rules above to determine if the local benefit tax is deductible. Free h&r block software Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Free h&r block software Itemized charges for services. Free h&r block software    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Free h&r block software For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Free h&r block software    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Free h&r block software If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Free h&r block software Exception. Free h&r block software   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Free h&r block software Transfer taxes (or stamp taxes). Free h&r block software   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Free h&r block software If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Free h&r block software If paid by the buyer, they are included in the cost basis of the property. Free h&r block software Rent increase due to higher real estate taxes. Free h&r block software   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Free h&r block software Homeowners' association charges. Free h&r block software   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Free h&r block software Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Free h&r block software A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Free h&r block software For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Free h&r block software If the tax is partly based on value and partly based on other criteria, it may qualify in part. Free h&r block software Example. Free h&r block software Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Free h&r block software You paid $32 based on the value ($1,500) and weight (3,400 lbs. Free h&r block software ) of your car. Free h&r block software You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Free h&r block software The remaining $17 ($. Free h&r block software 50 × 34), based on the weight, is not deductible. Free h&r block software Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Free h&r block software Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Free h&r block software See Table 22-1. Free h&r block software Taxes and fees that are generally not deductible include the following items. Free h&r block software Employment taxes. Free h&r block software This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Free h&r block software However, one-half of self-employment tax you pay is deductible. Free h&r block software In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Free h&r block software For more information, see chapters 21 and 32. Free h&r block software Estate, inheritance, legacy, or succession taxes. Free h&r block software However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Free h&r block software In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Free h&r block software For more information, see Publication 559, Survivors, Executors, and Administrators. Free h&r block software Federal income taxes. Free h&r block software This includes income taxes withheld from your pay. Free h&r block software Fines and penalties. Free h&r block software You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Free h&r block software Gift taxes. Free h&r block software License fees. Free h&r block software You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Free h&r block software Per capita taxes. Free h&r block software You cannot deduct state or local per capita taxes. Free h&r block software Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Free h&r block software For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Free h&r block software Where To Deduct You deduct taxes on the following schedules. Free h&r block software State and local income taxes. Free h&r block software    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Free h&r block software Check box a on line 5. Free h&r block software General sales taxes. Free h&r block software   Sales taxes are deducted on Schedule A (Form 1040), line 5. Free h&r block software You must check box b on line 5. Free h&r block software If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Free h&r block software Foreign income taxes. Free h&r block software   Generally, income taxes you pay to a foreign country or U. Free h&r block software S. Free h&r block software possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Free h&r block software S. Free h&r block software income tax on Form 1040, line 47. Free h&r block software To claim the credit, you may have to complete and attach Form 1116. Free h&r block software For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Free h&r block software Real estate taxes and personal property taxes. Free h&r block software    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Free h&r block software Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Free h&r block software Self-employment tax. Free h&r block software    Deduct one-half of your self-employment tax on Form 1040, line 27. Free h&r block software Other taxes. Free h&r block software    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Free h&r block software Prev  Up  Next   Home   More Online Publications
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Procurement Small Business Program Office

Our Purpose:

The Internal Revenue Service (IRS) Small Business Program Office was established to (1) assist small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses, to develop, grow, and ensure their long-term success; (2) continually foster an environment where small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses can compete successfully for a fair share of IRS's procurements on their own merits; and (3) assist large businesses to increase subcontracting opportunities for small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses.

The IRS small business goals for FY 2014 are as follows:

 

IRS FY 2014 SMALL BUSINESS GOALS

Small Business (SB)

35.07%

Small Disadvantaged Business (SDB)

5.0%

Woman-Owned Small Business (WOSB)

5.0%

HUBZone Small Business (HUBZone)

3.0%

Service-Disabled Veteran-Owned Small Business (SDVOSB)

3.0%

Veteran-Owned Small Business (VOSB)

No Goal



 

IRS FY 2014 SUB-CONTRACTING GOALS

Small Business (SB)

35%

Small Disadvantaged Business (SDB)

5.0%

Woman-Owned Small Business (WOSB)

5.0%

HUBZone Small Business (HUBZone)

3.0%

Service-Disabled Veteran-Owned Small Business (SDVOSB)

3.0%


 

Points of Contact:

Please Note: This office does not have the expertise to answer tax questions. Please search the website under the Search Function for answers to tax questions or call the toll-free tax assistance line at 1-800-829-1040 for individual tax questions and 1-800-829-4933 for business tax questions. The IRS has no loan program. The IRS does have a small E-Grants Program for Low Income Taxpayer Clinics and Tax Counseling for Elderly (TCE) services. For further information on financing your business, please visit the Small Business Administrations (SBA's) web site.

 

For Small Business Concerns: Prior to contacting the Small Business Program Office, please review the information contained in this section as well as the Treasury Forecast of Procurement Opportunities to determine if the IRS actually purchases the products/services you are interested in selling to the IRS. Upon completion of the review, please feel free to contact the Small Business Program Office for further assistance in doing business with the IRS.

LaTonya Richardson - Small Business Specialist
Mary McKinzie - Procurement Analyst
Phone: 240-613-8600
Fax:  240-613-8552
Email: IRS Small Business Program

 


Office of Procurement - The Office of Procurement organization is located in Oxon Hill, Maryland, and handles nationwide IRS procurements, requirements for the Martinsburg, WV and Detroit, MI Computing Centers, and all local requirements for the IRS headquarters offices in the Washington, DC metropolitan area. In addition, there are four area procurement offices located in New York, NY, Atlanta, GA, Dallas, TX and Oakland, CA.

Purchase Card Program (Micropurchases) - The Internal Revenue Service currently spends approximately $4 million per month through individual purchase card transactions. Approximately 4,300 IRS field employees use the purchase cards to make purchases up to $3,000. These purchases, made throughout all IRS offices within the United States, cover a myriad of services, supplies, and equipment.

8(a) At-a-Glance Listing - The IRS' 8(a) At-A-Glance Listing contains information on the approximately 500 8(a) firms who are actively marketing the IRS at any given time. The listing contains each 8(a) firm's company name, address, phone number, graduation date, and a brief description of the products and/or services offered. The listing was developed to assist procurement and program personnel in selecting 8(a) firms for IRS contract opportunities. The listing is updated periodically to add new 8(a) firms and to delete graduated 8(a) firms.

HUBZone At-a-Glance Listing- The IRS’ HUBZone At-a-Glance Listing contains information on the HUBZone firms who are actively marketing the IRS. The listing contains each HUBZone firm’s company name, address, phone number, and a brief description of the products and/or services offered. The listing was developed to assist procurement and program personnel in selecting HUBZone firms for IRS contract opportunities. The listing is updated periodically to add new HUBZone firms.

Service Disabled Veteran-Owned Small Business (SDVOSB) At-a-Glance Listing- The IRS’ SDVOSB At-a-Glance Listing contains information on the SDVOSB firms who are actively marketing the IRS. The listing contains each SDVOSB firm’s company name, address, phone number, and a brief description of the products and/or services offered. The listing was developed to assist procurement and program personnel in selecting SDVOSB firms for IRS contract opportunities. The listing is updated periodically to add new SDVOSB firms.

Women Owned Small Business At-a-Glance Listing- The IRS' Women Owned Small Business At-a-Glance Listing contains information on the Women Owned Small Business (WOSB) firms who are actively marketing the IRS.  The listing contains each WOSB firm's company name, address, phone number, and a brief description of the products and/or services offered.  The listing was developed to assist procurement and program personnel in selecting WOSB firms for IRS contract opportunities.  The listing is updated periodically to add new WOSB firms.  

Freedom of Information Act (FOIA)- provides public access to agency records unless protected from disclosure by one of the FOIA’s nine exemptions or three exclusions.

Outreach Information - The Small Business Program Office is available to meet with small, (8a), HUBZone small, small disadvantaged, women-owned small, veteran-owned small, and service disabled veteran-owned small businesses to discuss a company's capabilities provide information on future procurement opportunities, and give advice on procurement questions. Individual appointments are available by phone or in person by calling 240-613-8600 or by sending an e-mail to AWSS.SBRO@IRS.GOV  .

The Small Business Program Office periodically hosts small business outreach events to target 8(a), HUBZone, Service Disabled Veteran Owned and Women Owned Small Businesses. Notice of the events are posted on Federal Business Opportunities when scheduled and are posted on our Internet page under Outreach Events.

Forecast of Procurement Opportunities - The IRS Forecast of Procurement Opportunities is available under the Treasury Web Site. There are two sections to the IRS Forecast: existing contracts, and new opportunities. The existing contracts section contains a list of active IRS contracts including NAICS code, contract description, dollar value, final year of contract, procurement contact and phone number, contract number, and contractor name. The new opportunities section contains a list of future contract opportunities including NAICS code, project description, dollar value (estimated), quarter and fiscal year of release date of the RFP, set-aside information, procurement contact and phone number.

Bidders List Information - In order to receive an award from any Treasury bureau, it is now required that your company register in the System for Award Management (SAM) database. The SAM serves as the primary Government repository for contractor information required for the conduct of business with the Government. 

Links to Other Small Business Sites

Success Stories - In Fiscal Year 2012, the IRS awarded approximately $656 Million Dollars in contracts to small business concerns. There are many success stories regarding small business concerns who provide much needed products and services to the IRS.

 


Questions about the Procurement information on this site, please contact the webmaster.
Contact the Office of Procurement for other Procurement related questions.

Page Last Reviewed or Updated: 04-Feb-2014

The Free H&r Block Software

Free h&r block software 9. Free h&r block software   Figuring Net Profit or Loss Table of Contents Introduction Net Operating Losses (NOLs) Not-for-Profit Activities Introduction After figuring your business income and expenses, you are ready to figure the net profit or net loss from your business. Free h&r block software You do this by subtracting business expenses from business income. Free h&r block software If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040. Free h&r block software If your expenses are more than your income, the difference is a net loss. Free h&r block software You usually can deduct it from gross income on page 1 of Form 1040. Free h&r block software But in some situations your loss is limited. Free h&r block software This chapter briefly explains two of those situations. Free h&r block software Other situations that may limit your loss are explained in the Instructions for Schedule C, line G and line 32. Free h&r block software If you have more than one business, you must figure your net profit or loss for each business on a separate Schedule C. Free h&r block software Net Operating Losses (NOLs) If your deductions for the year are more than your income for the year (line 41 of your Form 1040 is a negative number), you may have a net operating loss (NOL). Free h&r block software You can use an NOL by deducting it from your income in another year or years. Free h&r block software Examples of typical losses that may produce an NOL include, but are not limited to, losses incurred from the following. Free h&r block software Your trade or business. Free h&r block software Your work as an employee (unreimbursed employee business expenses). Free h&r block software A casualty or theft. Free h&r block software Moving expenses. Free h&r block software Rental property. Free h&r block software A loss from operating a business is the most common reason for an NOL. Free h&r block software For details about NOLs, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Free h&r block software It explains how to figure an NOL, when to use it, how to claim an NOL deduction, and how to figure an NOL carryover. Free h&r block software Not-for-Profit Activities If you do not carry on your business to make a profit, there is a limit on the deductions you can take. Free h&r block software You cannot use a loss from the activity to offset other income. Free h&r block software Activities you do as a hobby, or mainly for sport or recreation, come under this limit. Free h&r block software For details about not-for-profit activities, see chapter 1 in Publication 535, Business Expenses. Free h&r block software That chapter explains how to determine whether your activity is carried on to make a profit and how to figure the amount of loss you can deduct. Free h&r block software Prev  Up  Next   Home   More Online Publications