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Free State Tax E File

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Free State Tax E File

Free state tax e file 5. Free state tax e file   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. Free state tax e file Short-term lease. Free state tax e file Retail space. Free state tax e file Qualified long-term real property. Free state tax e file Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. Free state tax e file If there is a connection between any income you receive and your business, the income is business income. Free state tax e file A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Free state tax e file You can have business income even if you are not involved in the activity on a regular full-time basis. Free state tax e file Income from work you do on the side in addition to your regular job can be business income. Free state tax e file You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. Free state tax e file But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. Free state tax e file For information on selling business assets, see chapter 3. Free state tax e file Nonemployee compensation. Free state tax e file Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. Free state tax e file This includes amounts reported as nonemployee compensation in box 7 of the form. Free state tax e file You can find more information in the instructions on the back of the Form 1099-MISC you received. Free state tax e file Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. Free state tax e file In most cases, your business income will be in the form of cash, checks, and credit card charges. Free state tax e file But business income can be in other forms, such as property or services. Free state tax e file These and other types of income are explained next. Free state tax e file If you are a U. Free state tax e file S. Free state tax e file citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. Free state tax e file S. Free state tax e file law. Free state tax e file If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. Free state tax e file For details, see Publication 54, Tax Guide for U. Free state tax e file S. Free state tax e file Citizens and Resident Aliens Abroad. Free state tax e file Bartering for Property or Services Bartering is an exchange of property or services. Free state tax e file You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. Free state tax e file If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. Free state tax e file Example 1. Free state tax e file You are a self-employed lawyer. Free state tax e file You perform legal services for a client, a small corporation. Free state tax e file In payment for your services, you receive shares of stock in the corporation. Free state tax e file You must include the fair market value of the shares in income. Free state tax e file Example 2. Free state tax e file You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. Free state tax e file You must include the fair rental value of the apartment in your gross receipts. Free state tax e file Your landlord must include the fair market value of the work of art in his or her rental income. Free state tax e file Example 3. Free state tax e file You are a self-employed accountant. Free state tax e file Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. Free state tax e file Members get in touch with other members directly and bargain for the value of the services to be performed. Free state tax e file In return for accounting services you provided for the house painter's business, the house painter painted your home. Free state tax e file You must include in gross receipts the fair market value of the services you received from the house painter. Free state tax e file The house painter must include the fair market value of your accounting services in his or her gross receipts. Free state tax e file Example 4. Free state tax e file You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. Free state tax e file As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. Free state tax e file You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. Free state tax e file The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. Free state tax e file It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. Free state tax e file See Publication 15 (Circular E), Employer's Tax Guide. Free state tax e file Example 5. Free state tax e file You operate a plumbing business and use the cash method of accounting. Free state tax e file You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Free state tax e file Each member has access to a directory that lists the members of the club and the services available. Free state tax e file Members contact each other directly and request services to be performed. Free state tax e file You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. Free state tax e file You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. Free state tax e file Information returns. Free state tax e file   If you are involved in a bartering transaction, you may have to file either of the following forms. Free state tax e file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Free state tax e file Form 1099-MISC, Miscellaneous Income. Free state tax e file For information about these forms, see the General Instructions for Certain Information Returns. Free state tax e file Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. Free state tax e file , who provides services (maid services, etc. Free state tax e file ) for guests, report the rental income and expenses on Schedule C or C-EZ. Free state tax e file If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. Free state tax e file For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Free state tax e file Real estate dealer. Free state tax e file   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. Free state tax e file Rent you receive from real estate held for sale to customers is subject to SE tax. Free state tax e file However, rent you receive from real estate held for speculation or investment is not subject to SE tax. Free state tax e file Trailer park owner. Free state tax e file   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. Free state tax e file    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Free state tax e file Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. Free state tax e file   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. Free state tax e file   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. Free state tax e file Hotels, boarding houses, and apartments. Free state tax e file   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. Free state tax e file   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. Free state tax e file An example of a service that is not normally provided for the convenience of the occupants is maid service. Free state tax e file However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. Free state tax e file Prepaid rent. Free state tax e file   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. Free state tax e file This is true no matter what accounting method or period you use. Free state tax e file Lease bonus. Free state tax e file   A bonus you receive from a lessee for granting a lease is an addition to the rent. Free state tax e file Include it in your gross receipts in the year received. Free state tax e file Lease cancellation payments. Free state tax e file   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. Free state tax e file Payments to third parties. Free state tax e file   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. Free state tax e file A common example of this kind of income is a lessee's payment of your property taxes on leased real property. Free state tax e file Settlement payments. Free state tax e file   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. Free state tax e file Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. Free state tax e file ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. Free state tax e file Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. Free state tax e file If you receive any of those payments, include them in your gross receipts as explained in that discussion. Free state tax e file Interest and Dividend Income Interest and dividends may be considered business income. Free state tax e file Interest. Free state tax e file   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. Free state tax e file Interest received on loans is business income if you are in the business of lending money. Free state tax e file Uncollectible loans. Free state tax e file   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. Free state tax e file If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. Free state tax e file See Bad Debts in chapter 8. Free state tax e file Unstated interest. Free state tax e file   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. Free state tax e file See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Free state tax e file Dividends. Free state tax e file   Generally, dividends are business income to dealers in securities. Free state tax e file For most sole proprietors and statutory employees, however, dividends are nonbusiness income. Free state tax e file If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. Free state tax e file   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. Free state tax e file To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. Free state tax e file Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. Free state tax e file General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. Free state tax e file Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. Free state tax e file If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. Free state tax e file Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Free state tax e file Price reduced after purchase. Free state tax e file   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. Free state tax e file Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. Free state tax e file Deductible debt. Free state tax e file   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. Free state tax e file Example. Free state tax e file You get accounting services for your business on credit. Free state tax e file Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. Free state tax e file Your accountant forgives part of the amount you owe for the accounting services. Free state tax e file How you treat the canceled debt depends on your method of accounting. Free state tax e file Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Free state tax e file Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Free state tax e file   For information on the cash and accrual methods of accounting, see chapter 2. Free state tax e file Exclusions Do not include canceled debt in income in the following situations. Free state tax e file However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Free state tax e file For more information, see Form 982. Free state tax e file The cancellation takes place in a bankruptcy case under title 11 of the U. Free state tax e file S. Free state tax e file Code (relating to bankruptcy). Free state tax e file See Publication 908, Bankruptcy Tax Guide. Free state tax e file The cancellation takes place when you are insolvent. Free state tax e file You can exclude the canceled debt to the extent you are insolvent. Free state tax e file See Publication 908. Free state tax e file The canceled debt is a qualified farm debt owed to a qualified person. Free state tax e file See chapter 3 in Publication 225, Farmer's Tax Guide. Free state tax e file The canceled debt is a qualified real property business debt. Free state tax e file This situation is explained later. Free state tax e file The canceled debt is qualified principal residence indebtedness which is discharged after 2006. Free state tax e file See Form 982. Free state tax e file If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. Free state tax e file If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. Free state tax e file Debt. Free state tax e file   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. Free state tax e file Qualified real property business debt. Free state tax e file   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. Free state tax e file If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. Free state tax e file Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. Free state tax e file However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. Free state tax e file Cancellation of qualified real property business debt. Free state tax e file   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. Free state tax e file It was incurred or assumed in connection with real property used in a trade or business. Free state tax e file It was secured by such real property. Free state tax e file It was incurred or assumed at either of the following times. Free state tax e file Before January 1, 1993. Free state tax e file After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. Free state tax e file It is debt to which you choose to apply these rules. Free state tax e file   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. Free state tax e file   You cannot exclude more than either of the following amounts. Free state tax e file The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. Free state tax e file The total adjusted bases of depreciable real property held by you immediately before the cancellation. Free state tax e file These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. Free state tax e file Do not take into account depreciable real property acquired in contemplation of the cancellation. Free state tax e file Election. Free state tax e file   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. Free state tax e file You must file your return by the due date (including extensions). Free state tax e file If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free state tax e file For more information, see When To File in the form instructions. Free state tax e file Other Income The following discussion explains how to treat other types of business income you may receive. Free state tax e file Restricted property. Free state tax e file   Restricted property is property that has certain restrictions that affect its value. Free state tax e file If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. Free state tax e file However, you can choose to be taxed in the year you receive the property. Free state tax e file For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. Free state tax e file Gains and losses. Free state tax e file   Do not report on Schedule C or C-EZ a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Free state tax e file Instead, you must report these gains and losses on other forms. Free state tax e file For more information, see chapter 3. Free state tax e file Promissory notes. Free state tax e file   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. Free state tax e file In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. Free state tax e file Lost income payments. Free state tax e file   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. Free state tax e file Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. Free state tax e file Damages. Free state tax e file   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. Free state tax e file Patent infringement. Free state tax e file Breach of contract or fiduciary duty. Free state tax e file Antitrust injury. Free state tax e file Economic injury. Free state tax e file   You may be entitled to a deduction against the income if it compensates you for actual economic injury. Free state tax e file Your deduction is the smaller of the following amounts. Free state tax e file The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. Free state tax e file Your loss from the injury that you have not yet deducted. Free state tax e file Punitive damages. Free state tax e file   You must also include punitive damages in income. Free state tax e file Kickbacks. Free state tax e file   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. Free state tax e file However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. Free state tax e file Recovery of items previously deducted. Free state tax e file   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. Free state tax e file However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. Free state tax e file If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. Free state tax e file Example. Free state tax e file Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. Free state tax e file He also had 2 personal exemptions for a total of $7,800. Free state tax e file He would not pay income tax even if he did not deduct the bad debt. Free state tax e file Therefore, he will not report as income any part of the $300 he may recover in any future year. Free state tax e file Exception for depreciation. Free state tax e file   This rule does not apply to depreciation. Free state tax e file You recover depreciation using the rules explained next. Free state tax e file Recapture of depreciation. Free state tax e file   In the following situations, you have to recapture the depreciation deduction. Free state tax e file This means you include in income part or all of the depreciation you deducted in previous years. Free state tax e file Listed property. Free state tax e file   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. Free state tax e file You do this by including in income on Schedule C part of the depreciation you deducted in previous years. Free state tax e file Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. Free state tax e file For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. Free state tax e file That chapter explains how to determine whether property is used more than 50% in your business. Free state tax e file Section 179 property. Free state tax e file   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. Free state tax e file You do this by including in income on Schedule C part of the deduction you took. Free state tax e file Use Part IV of Form 4797 to figure the amount to include on Schedule C. Free state tax e file See chapter 2 in Publication 946 to find out when you recapture the deduction. Free state tax e file Sale or exchange of depreciable property. Free state tax e file   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. Free state tax e file You figure the income due to depreciation recapture in Part III of Form 4797. Free state tax e file For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. Free state tax e file Items That Are Not Income In some cases the property or money you receive is not income. Free state tax e file Appreciation. Free state tax e file   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. Free state tax e file Consignments. Free state tax e file   Consignments of merchandise to others to sell for you are not sales. Free state tax e file The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. Free state tax e file Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Free state tax e file Merchandise you have shipped out on consignment is included in your inventory until it is sold. Free state tax e file   Do not include merchandise you receive on consignment in your inventory. Free state tax e file Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. Free state tax e file Construction allowances. Free state tax e file   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. Free state tax e file Under a short-term lease of retail space. Free state tax e file For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. Free state tax e file Amount you can exclude. Free state tax e file   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Free state tax e file Short-term lease. Free state tax e file   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. Free state tax e file The following rules apply in determining whether the lease is for 15 years or less. Free state tax e file Take into account options to renew when figuring whether the lease is for 15 years or less. Free state tax e file But do not take into account any option to renew at fair market value determined at the time of renewal. Free state tax e file Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. Free state tax e file Retail space. Free state tax e file   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. Free state tax e file Qualified long-term real property. Free state tax e file   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. Free state tax e file Exchange of like-kind property. Free state tax e file   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. Free state tax e file This means that the gain is not taxable and the loss is not deductible. Free state tax e file A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. Free state tax e file For more information, see Form 8824. Free state tax e file Leasehold improvements. Free state tax e file   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. Free state tax e file However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. Free state tax e file Loans. Free state tax e file   Money borrowed through a bona fide loan is not income. Free state tax e file Sales tax. Free state tax e file   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. Free state tax e file Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). Free state tax e file Direct seller. Free state tax e file   You must report all income you receive as a direct seller on Schedule C or C-EZ. Free state tax e file This includes any of the following. Free state tax e file Income from sales—payments you receive from customers for products they buy from you. Free state tax e file Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. Free state tax e file Prizes, awards, and gifts you receive from your selling business. Free state tax e file You must report this income regardless of whether it is reported to you on an information return. Free state tax e file   You are a direct seller if you meet all the following conditions. Free state tax e file You are engaged in one of the following trades or businesses. Free state tax e file Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. Free state tax e file Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). Free state tax e file Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. Free state tax e file Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. Free state tax e file Executor or administrator. Free state tax e file   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. Free state tax e file A nonprofessional fiduciary (personal representative) and both of the following apply. Free state tax e file The estate includes an active trade or business in which you actively participate. Free state tax e file Your fees are related to the operation of that trade or business. Free state tax e file A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. Free state tax e file    If the fees do not meet the above requirements, report them on line 21 of Form 1040. Free state tax e file Fishing crew member. Free state tax e file    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . Free state tax e file Insurance agent, former. Free state tax e file   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. Free state tax e file You received payments after your agreement to perform services for the company ended. Free state tax e file You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. Free state tax e file You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. Free state tax e file The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. Free state tax e file The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). Free state tax e file Insurance agent, retired. Free state tax e file   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. Free state tax e file Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. Free state tax e file   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. Free state tax e file Newspaper carrier or distributor. Free state tax e file   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Free state tax e file You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). Free state tax e file Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. Free state tax e file You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Free state tax e file   This rule applies whether or not you hire others to help you make deliveries. Free state tax e file It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. Free state tax e file Newspaper or magazine vendor. Free state tax e file   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Free state tax e file You sell newspapers or magazines to ultimate consumers. Free state tax e file You sell them at a fixed price. Free state tax e file Your earnings are based on the difference between the sales price and your cost of goods sold. Free state tax e file   This rule applies whether or not you are guaranteed a minimum amount of earnings. Free state tax e file It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. Free state tax e file Notary public. Free state tax e file   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. Free state tax e file These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). Free state tax e file Public official. Free state tax e file   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. Free state tax e file This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. Free state tax e file Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. Free state tax e file   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. Free state tax e file Real estate agent or direct seller. Free state tax e file   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. Free state tax e file Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. Free state tax e file You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Free state tax e file Securities dealer. Free state tax e file   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. Free state tax e file For more information, see sections 1256 and 1402(i). Free state tax e file Securities trader. Free state tax e file   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. Free state tax e file As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. Free state tax e file However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. Free state tax e file For more information about securities traders, see Publication 550, Investment Income and Expenses. Free state tax e file Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. Free state tax e file This section discusses some of the more common differences that may affect business transactions. Free state tax e file Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). Free state tax e file If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. Free state tax e file Dealers in real estate are not allowed to use inventories. Free state tax e file For more information on inventories, see chapter 2. Free state tax e file Income paid to a third party. Free state tax e file   All income you earn is taxable to you. Free state tax e file You cannot avoid tax by having the income paid to a third party. Free state tax e file Example. Free state tax e file You rent out your property and the rental agreement directs the lessee to pay the rent to your son. Free state tax e file The amount paid to your son is gross income to you. Free state tax e file Cash discounts. Free state tax e file   These are amounts the seller permits you to deduct from the invoice price for prompt payment. Free state tax e file For income tax purposes, you can use either of the following two methods to account for cash discounts. Free state tax e file Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). Free state tax e file Credit the cash discount to a discount income account. Free state tax e file You must use the chosen method every year for all your purchase discounts. Free state tax e file   If you use the second method, the credit balance in the account at the end of your tax year is business income. Free state tax e file Under this method, you do not reduce the cost of goods sold by the cash discounts you received. Free state tax e file When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. Free state tax e file Trade discounts. Free state tax e file   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Free state tax e file Do not enter these discounts on your books of account. Free state tax e file Instead, use only the net amount as the cost of the merchandise purchased. Free state tax e file For more information, see Trade discounts in chapter 6. Free state tax e file Payment placed in escrow. Free state tax e file   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. Free state tax e file However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. Free state tax e file Sales returns and allowances. Free state tax e file   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. Free state tax e file Advance payments. Free state tax e file   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. Free state tax e file Insurance proceeds. Free state tax e file   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. Free state tax e file You cannot deduct the reimbursed part of a casualty or theft loss. Free state tax e file   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. Free state tax e file Prev  Up  Next   Home   More Online Publications
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How Much Can I Deduct for Each Exemption I Claim?

There are two types of exemptions, personal exemptions and exemptions for dependents. You usually can claim exemptions for yourself, your spouse and each person you can claim as a dependent. 

Information You Will Need:

  • Marital status, relationship to the dependent and the amount of support provided
  • Basic income information such as your adjusted gross income

Estimated Completion Time: 4 minutes. However: 5 minutes of inactivity will end the interview and you will be forced to start over.

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Page Last Reviewed or Updated: 14-Feb-2014

The Free State Tax E File

Free state tax e file 2. Free state tax e file   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. Free state tax e file Providing information. Free state tax e file Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. Free state tax e file Fuel used between airfield and farm. Free state tax e file Fuel not used for farming. Free state tax e file Vehicles not considered highway vehicles. Free state tax e file Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. Free state tax e file This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. Free state tax e file Information on the refund of second tax is included. Free state tax e file This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. Free state tax e file Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. Free state tax e file Exported taxable fuel. Free state tax e file   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. Free state tax e file Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. Free state tax e file Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. Free state tax e file Gasoline and Aviation Gasoline Ultimate Purchasers. Free state tax e file   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Free state tax e file On a farm for farming purposes (credit only). Free state tax e file Off-highway business use. Free state tax e file Export. Free state tax e file In a boat engaged in commercial fishing. Free state tax e file In certain intercity and local buses. Free state tax e file In a school bus. Free state tax e file Exclusive use by a qualified blood collector organization. Free state tax e file In a highway vehicle owned by the United States that is not used on a highway. Free state tax e file Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). Free state tax e file Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). Free state tax e file In an aircraft or vehicle owned by an aircraft museum. Free state tax e file   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. Free state tax e file On a farm for farming purposes (credit only). Free state tax e file Export. Free state tax e file In foreign trade. Free state tax e file Certain helicopter and fixed-wing air ambulance uses. Free state tax e file In commercial aviation (other than foreign trade). Free state tax e file Exclusive use by a qualified blood collector organization. Free state tax e file Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). Free state tax e file Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). Free state tax e file In an aircraft owned by an aircraft museum. Free state tax e file In military aircraft. Free state tax e file Claims by persons who paid the tax to the government. Free state tax e file   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. Free state tax e file See Filing Claims, later. Free state tax e file Sales by registered ultimate vendors. Free state tax e file   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. Free state tax e file A state or local government for its exclusive use (including essential government use by an Indian tribal government). Free state tax e file A nonprofit educational organization for its exclusive use. Free state tax e file   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. Free state tax e file A sample certificate is included as Model Certificate M in the Appendix. Free state tax e file The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. Free state tax e file   The ultimate vendor must be registered by the IRS. Free state tax e file See Registration Requirements, earlier. Free state tax e file Credit card purchases. Free state tax e file   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free state tax e file   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free state tax e file How to make the claim. Free state tax e file   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). Free state tax e file Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. Free state tax e file Ultimate purchasers. Free state tax e file   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Free state tax e file On a farm for farming purposes. Free state tax e file Off-highway business use. Free state tax e file Export. Free state tax e file In a qualified local bus. Free state tax e file In a school bus. Free state tax e file Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). Free state tax e file Exclusive use by a qualified blood collector organization. Free state tax e file In a highway vehicle owned by the United States that is not used on a highway. Free state tax e file Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Free state tax e file Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Free state tax e file In a vehicle owned by an aircraft museum. Free state tax e file As a fuel in a propulsion engine of a diesel-powered train. Free state tax e file Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. Free state tax e file Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Free state tax e file Registered ultimate vendor (state use). Free state tax e file   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Free state tax e file The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. Free state tax e file The ultimate vendor must be registered by the IRS. Free state tax e file See Registration Requirements, earlier. Free state tax e file Registered ultimate vendor (blocked pump). Free state tax e file   This is an ultimate vendor that sells undyed kerosene from a blocked pump. Free state tax e file   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. Free state tax e file Blocked pump. Free state tax e file   A blocked pump is a fuel pump that meets all the following requirements. Free state tax e file It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. Free state tax e file It is at a fixed location. Free state tax e file It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. Free state tax e file ” It meets either of the following conditions. Free state tax e file It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. Free state tax e file It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. Free state tax e file Registered ultimate vendor (certain intercity and local buses). Free state tax e file   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. Free state tax e file   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Free state tax e file A sample waiver is included as Model Waiver N in the Appendix. Free state tax e file The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Free state tax e file Credit Card Purchases. Free state tax e file   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free state tax e file   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free state tax e file Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. Free state tax e file The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. Free state tax e file 198 per gallon is $. Free state tax e file 197 (if exported, the claim rate is $. Free state tax e file 198). Free state tax e file The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. Free state tax e file On a farm for farming purposes. Free state tax e file Off-highway business use. Free state tax e file Export. Free state tax e file In a qualified local bus. Free state tax e file In a school bus. Free state tax e file Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). Free state tax e file Exclusive use by a qualified blood collector organization. Free state tax e file In a highway vehicle owned by the United States that is not used on a highway. Free state tax e file Exclusive use by a nonprofit educational organization. Free state tax e file Exclusive use by a state, political subdivision of a state, or the District of Columbia. Free state tax e file In an aircraft or vehicle owned by an aircraft museum. Free state tax e file Blender claims. Free state tax e file   The claim rate for undyed diesel fuel taxed at $. Free state tax e file 244 and used to produce a diesel-water fuel emulsion is $. Free state tax e file 046 per gallon of diesel fuel so used. Free state tax e file The blender must be registered by the IRS in order to make the claim. Free state tax e file The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. Free state tax e file 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. Free state tax e file Kerosene for Use in Aviation Ultimate purchasers. Free state tax e file   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. Free state tax e file   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. Free state tax e file Generally, the ultimate purchaser is the aircraft operator. Free state tax e file   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. Free state tax e file On a farm for farming purposes. Free state tax e file Certain helicopter and fixed-wing aircraft uses. Free state tax e file Exclusive use by a qualified blood collector organization. Free state tax e file Exclusive use by a nonprofit educational organization. Free state tax e file In an aircraft owned by an aircraft museum. Free state tax e file In military aircraft. Free state tax e file Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. Free state tax e file   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. Free state tax e file At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. Free state tax e file   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. Free state tax e file For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. Free state tax e file 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. Free state tax e file 025 per gallon part of the tax. Free state tax e file The ultimate vendor may make this claim. Free state tax e file The operator may make a claim for the $. Free state tax e file 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. Free state tax e file 175 tax per gallon. Free state tax e file Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. Free state tax e file   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. Free state tax e file A sample waiver is included as Model Waiver L in the Appendix. Free state tax e file The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Free state tax e file   Noncommercial aviation means any use of an aircraft not described as commercial aviation. Free state tax e file For the definition of commercial aviation, see Commercial aviation on page 11. Free state tax e file Kerosene for use in nonexempt, noncommercial aviation. Free state tax e file   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. Free state tax e file The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. Free state tax e file A sample certificate is included as Model Certificate Q in the Appendix. Free state tax e file The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Free state tax e file Kerosene for use in aviation by a state or local government. Free state tax e file   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Free state tax e file The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. Free state tax e file The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. Free state tax e file A sample certificate is included as Model Certificate P in the Appendix. Free state tax e file The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Free state tax e file Credit card purchases. Free state tax e file   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free state tax e file   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free state tax e file Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. Free state tax e file While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. Free state tax e file The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. Free state tax e file On a farm for farming purposes. Free state tax e file Off-highway business use. Free state tax e file In a boat engaged in commercial fishing. Free state tax e file In certain intercity and local buses. Free state tax e file In a school bus. Free state tax e file In a qualified local bus. Free state tax e file Exclusive use by a qualified blood collector organization. Free state tax e file Exclusive use by a nonprofit educational organization. Free state tax e file Exclusive use by a state, political subdivision of a state, or the District of Columbia. Free state tax e file In an aircraft or vehicle owned by an aircraft museum. Free state tax e file Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. Free state tax e file See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. Free state tax e file Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. Free state tax e file This is in addition to all other taxes imposed on the sale or use of the fuel. Free state tax e file The section 4081(e) refund (discussed below) cannot be claimed. Free state tax e file If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. Free state tax e file No credit against any tax is allowed for this tax. Free state tax e file For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. Free state tax e file Conditions to allowance of refund. Free state tax e file   A claim for refund of the tax is allowed only if all the following conditions are met. Free state tax e file A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). Free state tax e file After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). Free state tax e file The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). Free state tax e file The person that paid the first tax has met the reporting requirements, discussed next. Free state tax e file Reporting requirements. Free state tax e file   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. Free state tax e file A model first taxpayer's report is shown in the Appendix as Model Certificate B. Free state tax e file The report must contain all information needed to complete the model. Free state tax e file   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. Free state tax e file Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. Free state tax e file Optional reporting. Free state tax e file   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. Free state tax e file However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. Free state tax e file Providing information. Free state tax e file   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. Free state tax e file If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. Free state tax e file   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. Free state tax e file If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. Free state tax e file A model statement of subsequent seller is shown in the Appendix as Model Certificate A. Free state tax e file The statement must contain all information necessary to complete the model. Free state tax e file   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. Free state tax e file Each buyer must be given a copy of the report. Free state tax e file Refund claim. Free state tax e file   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. Free state tax e file You must make your claim for refund on Form 8849. Free state tax e file Complete Schedule 5 (Form 8849) and attach it to your Form 8849. Free state tax e file Do not include this claim with a claim under another tax provision. Free state tax e file You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. Free state tax e file You must submit the following information with your claim. Free state tax e file A copy of the first taxpayer's report (discussed earlier). Free state tax e file A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. Free state tax e file Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. Free state tax e file If applicable, the type of use number from Table 2-1 is indicated in each heading. Free state tax e file Type of use table. Free state tax e file   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. Free state tax e file For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. Free state tax e file Table 2-1. Free state tax e file Type of Use Table No. Free state tax e file Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. Free state tax e file 1). Free state tax e file   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. Free state tax e file Farm. Free state tax e file   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. Free state tax e file It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. Free state tax e file A fish farm is an area where fish are grown or raised — not merely caught or harvested. Free state tax e file Farming purposes. Free state tax e file   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. Free state tax e file To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. Free state tax e file To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. Free state tax e file To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. Free state tax e file To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Free state tax e file For this use to qualify, you must have produced more than half the commodity so treated during the tax year. Free state tax e file Commodity means a single raw product. Free state tax e file For example, apples and peaches are two separate commodities. Free state tax e file To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. Free state tax e file , is incidental to your farming operations. Free state tax e file Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. Free state tax e file   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. Free state tax e file However, see Custom application of fertilizer and pesticide, next. Free state tax e file   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. Free state tax e file For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. Free state tax e file Custom application of fertilizer and pesticide. Free state tax e file   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. Free state tax e file Generally, the applicator is treated as having used the fuel on a farm for farming purposes. Free state tax e file For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. Free state tax e file For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. Free state tax e file Fuel used between airfield and farm. Free state tax e file   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. Free state tax e file Fuel not used for farming. Free state tax e file   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. Free state tax e file Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. Free state tax e file For personal use, such as mowing the lawn. Free state tax e file In processing, packaging, freezing, or canning operations. Free state tax e file In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. Free state tax e file Off-highway business use (No. Free state tax e file 2). Free state tax e file   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. Free state tax e file The terms “highway vehicle,” “public highway,” and “registered” are defined below. Free state tax e file Do not consider any use in a boat as an off-highway business use. Free state tax e file   Off-highway business use includes fuels used in any of the following ways. Free state tax e file In stationary machines such as generators, compressors, power saws, and similar equipment. Free state tax e file For cleaning purposes. Free state tax e file In forklift trucks, bulldozers, and earthmovers. Free state tax e file   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. Free state tax e file Example. Free state tax e file Caroline owns a landscaping business. Free state tax e file She uses power lawn mowers and chain saws in her business. Free state tax e file The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. Free state tax e file The gasoline used in her personal lawn mower at home does not qualify. Free state tax e file Highway vehicle. Free state tax e file   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Free state tax e file Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Free state tax e file A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Free state tax e file A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Free state tax e file A special kind of cargo, goods, supplies, or materials. Free state tax e file Some off-highway task unrelated to highway transportation, except as discussed next. Free state tax e file Vehicles not considered highway vehicles. Free state tax e file   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. Free state tax e file Specially designed mobile machinery for nontransportation functions. Free state tax e file A self-propelled vehicle is not a highway vehicle if all the following apply. Free state tax e file The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Free state tax e file The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Free state tax e file The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Free state tax e file The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. Free state tax e file Vehicles specially designed for off-highway transportation. Free state tax e file A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. Free state tax e file To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Free state tax e file It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Free state tax e file Nontransportation trailers and semitrailers. Free state tax e file A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Free state tax e file For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Free state tax e file Public highway. Free state tax e file   A public highway includes any road in the United States that is not a private roadway. Free state tax e file This includes federal, state, county, and city roads and streets. Free state tax e file Registered. Free state tax e file   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. Free state tax e file Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. Free state tax e file A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. Free state tax e file Dual use of propulsion motor. Free state tax e file   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. Free state tax e file It does not matter if the special equipment is mounted on the vehicle. Free state tax e file Example. Free state tax e file The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. Free state tax e file The fuel used in the motor to run the mixer is not off-highway business use. Free state tax e file Use in separate motor. Free state tax e file   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. Free state tax e file If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. Free state tax e file You may make a reasonable estimate based on your operating experience and supported by your records. Free state tax e file   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. Free state tax e file Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. Free state tax e file The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. Free state tax e file Example. Free state tax e file Hazel owns a refrigerated truck. Free state tax e file It has a separate motor for the refrigeration unit. Free state tax e file The same tank supplies both motors. Free state tax e file Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. Free state tax e file Therefore, 10% of the fuel is used in an off-highway business use. Free state tax e file Fuel lost or destroyed. Free state tax e file   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. Free state tax e file Export (No. Free state tax e file 3). Free state tax e file   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. Free state tax e file Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. Free state tax e file In a boat engaged in commercial fishing (No. Free state tax e file 4). Free state tax e file   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. Free state tax e file They include boats used in both fresh and salt water fishing. Free state tax e file They do not include boats used for both sport fishing and commercial fishing on the same trip. Free state tax e file In certain intercity and local buses (No. Free state tax e file 5). Free state tax e file   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Free state tax e file The bus must be engaged in one of the following activities. Free state tax e file Scheduled transportation along regular routes. Free state tax e file Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. Free state tax e file Vans and similar vehicles used for van-pooling or taxi service do not qualify. Free state tax e file Available to the general public. Free state tax e file   This means you offer service to more than a limited number of persons or organizations. Free state tax e file If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. Free state tax e file A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. Free state tax e file Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. Free state tax e file In a qualified local bus (No. Free state tax e file 6). Free state tax e file   In a qualified local bus means fuel used in a bus meeting all the following requirements. Free state tax e file It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. Free state tax e file It operates along scheduled, regular routes. Free state tax e file It has a seating capacity of at least 20 adults (excluding the driver). Free state tax e file It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. Free state tax e file Intracity passenger land transportation. Free state tax e file   This is the land transportation of passengers between points located within the same metropolitan area. Free state tax e file It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. Free state tax e file Under contract. Free state tax e file   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. Free state tax e file More than a nominal subsidy. Free state tax e file   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. Free state tax e file A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. Free state tax e file In a school bus (No. Free state tax e file 7). Free state tax e file   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. Free state tax e file A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. Free state tax e file For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. Free state tax e file 8). Free state tax e file   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. Free state tax e file In foreign trade (No. Free state tax e file 9). Free state tax e file   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. Free state tax e file The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. Free state tax e file In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. Free state tax e file Certain helicopter and fixed-wing aircraft uses (No. Free state tax e file 10). Free state tax e file   Includes: Certain helicopter uses. Free state tax e file   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. Free state tax e file Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Free state tax e file Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free state tax e file Providing emergency medical transportation. Free state tax e file   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free state tax e file For item (1), treat each flight segment as a separate flight. Free state tax e file Fixed-wing aircraft uses. Free state tax e file   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. Free state tax e file Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free state tax e file Providing emergency medical transportation. Free state tax e file The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free state tax e file During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free state tax e file Exclusive use by a qualified blood collector organization (No. Free state tax e file 11). Free state tax e file   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. Free state tax e file Qualified blood collector organization. Free state tax e file   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. Free state tax e file In a highway vehicle owned by the United States that is not used on a highway (No. Free state tax e file 12). Free state tax e file   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. Free state tax e file This use applies whether or not the vehicle is registered or required to be registered for highway use. Free state tax e file Exclusive use by a nonprofit educational organization (No. Free state tax e file 13). Free state tax e file   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. Free state tax e file It has a regular faculty and curriculum. Free state tax e file It has a regularly enrolled body of students who attend the place where the instruction normally occurs. Free state tax e file   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. Free state tax e file Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. Free state tax e file 14). Free state tax e file   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. Free state tax e file A state or local government is any state, any political subdivision thereof, or the District of Columbia. Free state tax e file An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. Free state tax e file Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. Free state tax e file In an aircraft or vehicle owned by an aircraft museum (No. Free state tax e file 15). Free state tax e file   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. Free state tax e file It is exempt from income tax as an organization described in section 501(c)(3). Free state tax e file It is operated as a museum under a state (or District of Columbia) charter. Free state tax e file It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. Free state tax e file   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). Free state tax e file In military aircraft (No. Free state tax e file 16). Free state tax e file   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. Free state tax e file In commercial aviation (other than foreign trade). Free state tax e file   See Commercial aviation, earlier, for the definition. Free state tax e file Use in a train. Free state tax e file   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. Free state tax e file This includes use in a locomotive, work train, switching engine, and track maintenance machine. Free state tax e file Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. Free state tax e file The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. Free state tax e file Biodiesel or renewable diesel mixture credit claimant. Free state tax e file   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. Free state tax e file Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). Free state tax e file   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. Free state tax e file The credit is based on the gallons of biodiesel or renewable diesel in the mixture. Free state tax e file Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. Free state tax e file Claim requirements. Free state tax e file   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. Free state tax e file Alternative fuel credit claimant. Free state tax e file   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. Free state tax e file Carbon capture requirement. Free state tax e file   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. Free state tax e file Alternative fuel credit. Free state tax e file   The registered alternative fueler is the person eligible to make the claim. Free state tax e file An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. Free state tax e file An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. Free state tax e file Alternative fuel mixture credit claimant. Free state tax e file   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. Free state tax e file The credit is based on the gallons of alternative fuel in the mixture. Free state tax e file An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). Free state tax e file Registration. Free state tax e file   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. Free state tax e file See Registration Requirements in chapter 1. Free state tax e file Credits for fuel provide incentive for United States production. Free state tax e file   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. Free state tax e file The United States includes any possession of the United States. Free state tax e file Credit for fuels derived from paper or pulp production. Free state tax e file   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. Free state tax e file How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. Free state tax e file Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. Free state tax e file See Notice 2005-4 and the Instructions for Form 720 for more information. Free state tax e file Also see Notice 2013-26 on page 984 of I. Free state tax e file R. Free state tax e file B. Free state tax e file 2013-18 at www. Free state tax e file irs. Free state tax e file gov/pub/irs-irbs/irb13-18. Free state tax e file pdf; and see chapter 2, later. Free state tax e file Coordination with income tax credit. Free state tax e file   Only one credit may be taken for any amount of biodiesel or renewable diesel. Free state tax e file If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. Free state tax e file   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. Free state tax e file Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. Free state tax e file   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. Free state tax e file   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. Free state tax e file Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. Free state tax e file This section also covers recordkeeping requirements and when to include the credit or refund in your income. Free state tax e file Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. Free state tax e file In some cases, you will have to attach additional information. Free state tax e file You need to keep records that support your claim for a credit or refund. Free state tax e file Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. Free state tax e file Ultimate purchaser. Free state tax e file   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Free state tax e file If you are an ultimate purchaser, you must keep the following records. Free state tax e file The number of gallons purchased and used during the period covered by your claim. Free state tax e file The dates of the purchases. Free state tax e file The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. Free state tax e file The nontaxable use for which you used the fuel. Free state tax e file The number of gallons used for each nontaxable use. Free state tax e file It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. Free state tax e file If the fuel is exported, you must have proof of exportation. Free state tax e file   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. Free state tax e file Exceptions. Free state tax e file    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. Free state tax e file However, see Claims by credit card issuers, later, for an exception. Free state tax e file The ultimate purchaser may not claim a credit or refund as follows. Free state tax e file The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. Free state tax e file A new certificate is required each year or when any information in the current certificate expires. Free state tax e file The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. Free state tax e file A new waiver is required each year or when any information in the current waiver expires. Free state tax e file The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. Free state tax e file A new waiver is required each year or when any information in the current waiver expires. Free state tax e file The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. Free state tax e file A new certificate is required each year or when any information in the current certificate expires. Free state tax e file Registered ultimate vendor. Free state tax e file   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Free state tax e file If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. Free state tax e file   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. Free state tax e file You are required to have a valid certificate or waiver in your possession in order to make the claim. Free state tax e file   In addition, you must have a registration number that has not been revoked or suspended. Free state tax e file See Form 637. Free state tax e file State use. Free state tax e file   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. Free state tax e file If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. Free state tax e file The name and taxpayer identification number of each person (government unit) that bought the fuel. Free state tax e file The number of gallons sold to each person. Free state tax e file An unexpired certificate from the buyer. Free state tax e file See Model Certificate P in the Appendix. Free state tax e file The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Free state tax e file Nonprofit educational organization and state use. Free state tax e file   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. Free state tax e file If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. Free state tax e file The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. Free state tax e file The number of gallons sold to each person. Free state tax e file An unexpired certificate from the buyer. Free state tax e file See Model Certificate M in the Appendix. Free state tax e file  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Free state tax e file Blocked pump. Free state tax e file   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. Free state tax e file If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. Free state tax e file The date of each sale. Free state tax e file The name and address of the buyer. Free state tax e file The number of gallons sold to that buyer. Free state tax e file Certain intercity and local bus use. Free state tax e file   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. Free state tax e file You must keep the following information. Free state tax e file The date of each sale. Free state tax e file The name and address of the buyer. Free state tax e file The number of gallons sold to the buyer. Free state tax e file A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Free state tax e file See Model Waiver N in the Appendix. Free state tax e file Kerosene for use in commercial aviation or noncommercial aviation. Free state tax e file   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. Free state tax e file See Kerosene for use in aviation, earlier, for a list of nontaxable uses. Free state tax e file You must keep the following information. Free state tax e file The date of each sale. Free state tax e file The name and address of the buyer. Free state tax e file The number of gallons sold to the buyer. Free state tax e file A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Free state tax e file See Model Waiver L in the Appendix. Free state tax e file Kerosene for use in nonexempt, noncommercial aviation. Free state tax e file   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. Free state tax e file You must keep the following information. Free state tax e file The date of each sale. Free state tax e file The name and address of the buyer. Free state tax e file The number of gallons sold to the buyer. Free state tax e file A copy of the certificate signed by the buyer at the time the credit or payment is claimed. Free state tax e file See Model Certificate Q in the Appendix. Free state tax e file Claims by credit card issuers. Free state tax e file   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. Free state tax e file An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). Free state tax e file   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. Free state tax e file However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Free state tax e file   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. Free state tax e file A state is not allowed to make a claim for these fuels. Free state tax e file However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Free state tax e file   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. Free state tax e file The total number of gallons. Free state tax e file Its registration number. Free state tax e file A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. Free state tax e file A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. Free state tax e file Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. Free state tax e file Taxpayer identification number. Free state tax e file   To file a claim, you must have a taxpayer identification number. Free state tax e file Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. Free state tax e file   If you normally file only a U. Free state tax e file S. Free state tax e file individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. Free state tax e file You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. Free state tax e file To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. Free state tax e file   If you operate a business, use your EIN. Free state tax e file If you do not have an EIN, you may apply for one online. Free state tax e file Go to the IRS website at irs. Free state tax e file gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. Free state tax e file You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Free state tax e file Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. Free state tax e file Complete and attach to Form 8849 the appropriate Form 8849 schedules. Free state tax e file The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. Free state tax e file If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. Free state tax e file See the Instructions for Form 720. Free state tax e file Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. Free state tax e file The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. Free state tax e file The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. Free state tax e file To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. Free state tax e file Only one claim may be made for any particular amount of alternative fuel. Free state tax e file Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. Free state tax e file See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. Free state tax e file A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. Free state tax e file If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. Free state tax e file Credit only. Free state tax e file   You can claim the following taxes only as a credit on Form 4136. Free state tax e file Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. Free state tax e file Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. Free state tax e file Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. Free state tax e file Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). Free state tax e file When to file. Free state tax e file   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). Free state tax e file You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. Free state tax e file Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. Free state tax e file How to claim a credit. Free state tax e file   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. Free state tax e file Individuals. Free state tax e file   You claim the credit on the “Credits from” line of Form 1040. Free state tax e file Also check box b on that line. Free state tax e file If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. Free state tax e file Partnerships. Free state tax e file   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free state tax e file , showing each partner's share of the number of gallons of each fuel sold or used for a non