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Free State Tax Filling

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Free State Tax Filling

Free state tax filling Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. Free state tax filling More information. Free state tax filling Exception—Community Income. Free state tax filling Exception—Qualified joint venture. Free state tax filling More information. Free state tax filling More information. Free state tax filling Identification NumbersEmployer Identification Number (EIN) Payee's Identification Number Tax Year Accounting Method Business TaxesIncome Tax Self-Employment Tax Employment Taxes Excise Taxes Depositing Taxes Information Returns PenaltiesWaiver of penalty. Free state tax filling Business ExpensesBusiness Start-Up Costs Depreciation Business Use of Your Home Car and Truck Expenses RecordkeepingWhy Keep Records? Kinds of Records To Keep How Long To Keep Records Sample Record System How to Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What New Business Owners Need To Know As a new business owner, you need to know your federal tax responsibilities. Free state tax filling Table 1 can help you learn what those responsibilities are. Free state tax filling Ask yourself each question listed in the table, then see the related discussion to find the answer. Free state tax filling In addition to knowing about federal taxes, you need to make some basic business decisions. Free state tax filling Ask yourself: What are my financial resources? What products and services will I sell? How will I market my products and services? How will I develop a strategic business plan? How will I manage my business on a day-to-day basis? How will I recruit employees? The Small Business Administration (SBA) is a federal agency that can help you answer these types of questions. Free state tax filling For information on how to contact the SBA, see How to Get More Information, later. Free state tax filling Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. Free state tax filling When beginning a business, you must decide which form of business to use. Free state tax filling Legal and tax considerations enter into this decision. Free state tax filling Only tax considerations are discussed in this publication. Free state tax filling Your form of business determines which income tax return form you have to file. Free state tax filling See Table 2 to find out which form you have to file. Free state tax filling Sole proprietorships. Free state tax filling   A sole proprietorship is an unincorporated business that is owned by one individual. Free state tax filling It is the simplest form of business organization to start and maintain. Free state tax filling The business has no existence apart from you, the owner. Free state tax filling Its liabilities are your personal liabilities. Free state tax filling You undertake the risks of the business for all assets owned, whether or not used in the business. Free state tax filling You include the income and expenses of the business on your personal tax return. Free state tax filling More information. Free state tax filling   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. Free state tax filling If you are a farmer, see Publication 225, Farmer's Tax Guide. Free state tax filling Partnerships. Free state tax filling   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Free state tax filling Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. Free state tax filling   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. Free state tax filling , from its operations, but it does not pay income tax. Free state tax filling Instead, it “passes through” any profits or losses to its partners. Free state tax filling Each partner includes his or her share of the partnership's items on his or her tax return. Free state tax filling More information. Free state tax filling   For more information on partnerships, see Publication 541, Partnerships. Free state tax filling Husband and wife business. Free state tax filling   If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Free state tax filling Do not use Schedule C or C-EZ. Free state tax filling Instead, file Form 1065, U. Free state tax filling S. Free state tax filling Return of Partnership Income. Free state tax filling For more information, see Publication 541, Partnerships. Free state tax filling Exception—Community Income. Free state tax filling   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Free state tax filling S. Free state tax filling possession, you can treat the business either as a sole proprietorship or a partnership. Free state tax filling The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free state tax filling A change in your reporting position will be treated as a conversion of the entity. Free state tax filling Exception—Qualified joint venture. Free state tax filling   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Free state tax filling Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Free state tax filling For an explanation of "material participation," see the Instructions for Schedule C, line G. Free state tax filling   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Free state tax filling Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. Free state tax filling For more information, see Qualified Joint Venture in the Instructions for Schedule SE. Free state tax filling Corporations. Free state tax filling   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. Free state tax filling A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. Free state tax filling A corporation can also take special deductions. Free state tax filling   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. Free state tax filling However, shareholders cannot deduct any loss of the corporation. Free state tax filling More information. Free state tax filling   For more information on corporations, see Publication 542, Corporations. Free state tax filling S corporations. Free state tax filling   An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. Free state tax filling Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. Free state tax filling On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss. Free state tax filling More information. Free state tax filling   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. Free state tax filling S. Free state tax filling Income Tax Return for an S Corporation. Free state tax filling Limited liability company. Free state tax filling   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Free state tax filling The members of an LLC are not personally liable for its debts. Free state tax filling An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in regulations section 301. Free state tax filling 7701-3. Free state tax filling For more information, see the instructions for Form 8832, Entity Classification Election. Free state tax filling Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. Free state tax filling The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). Free state tax filling An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. Free state tax filling An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. Free state tax filling You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. Free state tax filling You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. Free state tax filling This includes returns or documents filed to report the following information. Free state tax filling Interest, dividends, royalties, etc. Free state tax filling , paid to you. Free state tax filling Any amount paid to you as a dependent care provider. Free state tax filling Certain other amounts paid to you that total $600 or more for the year. Free state tax filling If you do not furnish your identification number as required, you may be subject to penalties. Free state tax filling See Penalties, later. Free state tax filling Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. Free state tax filling If you don't already have an EIN, you need to get one if you: Have employees, Have a qualified retirement plan, Operate your business as a corporation or partnership, or File returns for: Employment taxes, or Excise taxes. Free state tax filling Applying for an EIN. Free state tax filling   You may apply for an EIN: Online—Click on the EIN link at www. Free state tax filling irs. Free state tax filling gov/businesses/small. Free state tax filling The EIN is issued immediately once the application information is validated. Free state tax filling By telephone at 1-800-829-4933. Free state tax filling By mailing or faxing Form SS-4, Application for Employer Identification Number. Free state tax filling When to apply. Free state tax filling   You should apply for an EIN early enough to receive the number by the time you must file a return or statement or make a tax deposit. Free state tax filling If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. Free state tax filling If you apply by telephone or through the IRS website, you can get an EIN immediately. Free state tax filling If you apply by fax, you can get an EIN within 4 business days. Free state tax filling   If you do not receive your EIN by the time a return is due, file your return anyway. Free state tax filling Write “Applied for” and the date you applied for the number in the space for the EIN. Free state tax filling Do not use your social security number as a substitute for an EIN on your tax returns. Free state tax filling More than one EIN. Free state tax filling   You should have only one EIN. Free state tax filling If you have more than one EIN and are not sure which to use, contact the Internal Revenue Service Center where you file your return. Free state tax filling Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Free state tax filling The IRS will tell you which number to use. Free state tax filling More information. Free state tax filling   For more information about EINs, see Publication 1635, Understanding Your EIN. Free state tax filling Payee's Identification Number In the operation of a business, you will probably make certain payments you must report on information returns (discussed later under Information Returns). Free state tax filling The forms used to report these payments must include the payee's identification number. Free state tax filling Employee. Free state tax filling   If you have employees, you must get an SSN from each of them. Free state tax filling Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Free state tax filling If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Free state tax filling This may occur, for example, if the employee's name has changed due to marriage or divorce. Free state tax filling   If your employee does not have an SSN, he or she should file Form SS-5, Application for a Social Security Card, with the SSA. Free state tax filling This form is available at SSA offices or by calling 1-800-772-1213. Free state tax filling It is also available from the SSA website at www. Free state tax filling ssa. Free state tax filling gov. Free state tax filling Other payee. Free state tax filling   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Free state tax filling If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. Free state tax filling   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Free state tax filling This form is available from IRS offices or by calling 1-800-829-3676. Free state tax filling It is also available from the IRS website at IRS. Free state tax filling gov. Free state tax filling    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. Free state tax filling For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Free state tax filling Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. Free state tax filling A tax year is usually 12 consecutive months. Free state tax filling There are two kinds of tax years. Free state tax filling Calendar tax year. Free state tax filling A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Free state tax filling Fiscal tax year. Free state tax filling A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Free state tax filling A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Free state tax filling If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Free state tax filling You must use a calendar tax year if: You keep no books. Free state tax filling You have no annual accounting period. Free state tax filling Your present tax year does not qualify as a fiscal year. Free state tax filling You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. Free state tax filling For more information, see Publication 538, Accounting Periods and Methods. Free state tax filling First-time filer. Free state tax filling   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. Free state tax filling You adopt a tax year by filing your first income tax return using that tax year. Free state tax filling You have not adopted a tax year if you merely did any of the following. Free state tax filling Filed an application for an extension of time to file an income tax return. Free state tax filling Filed an application for an employer identification number. Free state tax filling Paid estimated taxes for that tax year. Free state tax filling Changing your tax year. Free state tax filling   Once you have adopted your tax year, you may have to get IRS approval to change it. Free state tax filling To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. Free state tax filling You may have to pay a fee. Free state tax filling For more information, see Publication 538. Free state tax filling Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. Free state tax filling You choose an accounting method for your business when you file your first income tax return. Free state tax filling There are two basic accounting methods. Free state tax filling Cash method. Free state tax filling Under the cash method, you report income in the tax year you receive it. Free state tax filling You usually deduct or capitalize expenses in the tax year you pay them. Free state tax filling Accrual method. Free state tax filling Under an accrual method, you generally report income in the tax year you earn it, even though you may receive payment in a later year. Free state tax filling You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. Free state tax filling For other methods, see Publication 538. Free state tax filling If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. Free state tax filling Inventories include goods held for sale in the normal course of business. Free state tax filling They also include raw materials and supplies that will physically become a part of merchandise intended for sale. Free state tax filling Inventories are explained in Publication 538. Free state tax filling Certain small business taxpayers can use the cash method of accounting and can also account for inventoriable items as materials and supplies that are not incidental. Free state tax filling For more information, see Publication 538. Free state tax filling You must use the same accounting method to figure your taxable income and to keep your books. Free state tax filling Also, you must use an accounting method that clearly shows your income. Free state tax filling In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. Free state tax filling An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. Free state tax filling More than one business. Free state tax filling   When you own more than one business, you can use a different accounting method for each business if the method you use for each clearly shows your income. Free state tax filling You must keep a complete and separate set of books and records for each business. Free state tax filling Changing your method of accounting. Free state tax filling   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Free state tax filling A change in accounting method not only includes a change in your overall system of accounting, but also a change in the treatment of any material item. Free state tax filling For examples of changes that require approval and information on how to get approval for the change, see Publication 538. Free state tax filling Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. Free state tax filling The following are the four general kinds of business taxes. Free state tax filling Income tax. Free state tax filling Self-employment tax. Free state tax filling Employment taxes. Free state tax filling Excise taxes. Free state tax filling See Table 2 for the forms you file to report these taxes. Free state tax filling You may want to get Publication 509. Free state tax filling It has tax calendars that tell you when to file returns and make tax payments. Free state tax filling Income Tax All businesses except partnerships must file an annual income tax return. Free state tax filling Partnerships file an information return. Free state tax filling Which form you use depends on how your business is organized. Free state tax filling See Table 2 to find out which return you have to file. Free state tax filling The federal income tax is a pay-as-you-go tax. Free state tax filling You must pay the tax as you earn or receive income during the year. Free state tax filling An employee usually has income tax withheld from his or her pay. Free state tax filling If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Free state tax filling If you are not required to make estimated tax payments, you may pay any tax due when you file your return. Free state tax filling Table 2. Free state tax filling Which Forms Must I File? IF you are a. Free state tax filling . Free state tax filling . Free state tax filling   THEN you may be liable for. Free state tax filling . Free state tax filling . Free state tax filling   Use Form. Free state tax filling . Free state tax filling . Free state tax filling Sole proprietor   Income tax   1040 and Schedule C 1 or C-EZ (Schedule F 1 for farm business)     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES     Employment taxes:         • Social security and Medicare   taxes and income tax   withholding   941 or 944 (943 for farm employees)     • Federal unemployment (FUTA)   tax   940     Excise taxes   See Excise Taxes Partnership   Annual return of income   1065     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes Partner in a partnership (individual)   Income tax   1040 and Schedule E 2     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES Corporation or S corporation   Income tax   1120 (corporation) 2  1120S (S corporation) 2     Estimated tax   1120-W (corporation only)     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes S corporation shareholder   Income tax   1040 and Schedule E 2     Estimated tax   1040-ES 1 File a separate schedule for each business. Free state tax filling 2 Various other schedules may be needed. Free state tax filling Estimated tax. Free state tax filling   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Free state tax filling Sole proprietors, partners, and S corporation shareholders. Free state tax filling   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Free state tax filling Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. Free state tax filling For more information, see Publication 505, Tax Withholding and Estimated Tax. Free state tax filling Corporations. Free state tax filling   You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Free state tax filling Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. Free state tax filling You must deposit the payments as explained later under Depositing Taxes. Free state tax filling For more information, see Publication 542. Free state tax filling Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Free state tax filling Your payments of SE tax contribute to your coverage under the social security system. Free state tax filling Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Free state tax filling You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Free state tax filling Your net earnings from self-employment were $400 or more. Free state tax filling You had church employee income of $108. Free state tax filling 28 or more. Free state tax filling Use Schedule SE (Form 1040) to figure your SE tax. Free state tax filling For more information, see Publication 334, Tax Guide for Small Business. Free state tax filling You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. Free state tax filling The Social Security Administration (SSA) time limit for posting self-employment income. Free state tax filling   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Free state tax filling If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Free state tax filling The SSA will not change its records to increase your self-employment income. Free state tax filling Employment Taxes This section briefly discusses the employment taxes you must pay, the forms you must file to report them, and other forms that must be filed when you have employees. Free state tax filling Employment taxes include the following. Free state tax filling Social security and Medicare taxes. Free state tax filling Federal income tax withholding. Free state tax filling Federal unemployment (FUTA) tax. Free state tax filling If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. Free state tax filling If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. Free state tax filling These publications explain your tax responsibilities as an employer. Free state tax filling If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Free state tax filling That publication has information to help you determine whether an individual is an employee or an independent contractor. Free state tax filling If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. Free state tax filling An independent contractor is someone who is self-employed. Free state tax filling Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. Free state tax filling Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. Free state tax filling To figure how much federal income tax to withhold from each wage payment, use the employee's Form W-4 (discussed later under Hiring Employees) and the methods described in Publication 15. Free state tax filling Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Free state tax filling Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Free state tax filling Medicare tax pays for benefits under the hospital insurance part of FICA. Free state tax filling You withhold part of these taxes from your employee's wages and you pay a part yourself. Free state tax filling To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. Free state tax filling Which form do I file?   Report these taxes on Form 941, Employer's QUARTERLY Federal Tax Return, or Form 944, Employer's ANNUAL Federal Tax Return. Free state tax filling (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Free state tax filling ) Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. Free state tax filling You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. Free state tax filling You pay FUTA tax only from your own funds. Free state tax filling Employees do not pay this tax or have it withheld from their pay. Free state tax filling Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Free state tax filling See Publication 15 to find out if you can use this form. Free state tax filling Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. Free state tax filling Form I-9. Free state tax filling   You must verify that each new employee is legally eligible to work in the United States. Free state tax filling Both you and the employee must complete the U. Free state tax filling S. Free state tax filling Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Free state tax filling You can get the form from USCIS offices or from the USCIS website at www. Free state tax filling uscis. Free state tax filling gov. Free state tax filling Call the USCIS at 1-800-375-5283 for more information about your responsibilities. Free state tax filling Form W-4. Free state tax filling   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. Free state tax filling You will use the filing status and withholding allowances shown on this form to figure the amount of income tax to withhold from your employee's wages. Free state tax filling For more information, see Publication 15. Free state tax filling Employees claiming more than 10 withholding allowances. Free state tax filling   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. Free state tax filling See section 16 of Publication 15. Free state tax filling Form W-2 Wage Reporting After the calendar year is over, you must furnish copies of Form W-2, Wage and Tax Statement, to each employee to whom you paid wages during the year. Free state tax filling You must also send copies to the Social Security Administration. Free state tax filling See Information Returns, later, for more information on Form W-2. Free state tax filling Excise Taxes This section describes the excise taxes you may have to pay and the forms you have to file if you do any of the following. Free state tax filling Manufacture or sell certain products. Free state tax filling Operate certain kinds of businesses. Free state tax filling Use various kinds of equipment, facilities, or products. Free state tax filling Receive payment for certain services. Free state tax filling For more information on excise taxes, see Publication 510, Excise Taxes. Free state tax filling Form 720. Free state tax filling   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Free state tax filling Environmental taxes. Free state tax filling Communications and air transportation taxes. Free state tax filling Fuel taxes. Free state tax filling Tax on the first retail sale of heavy trucks, trailers, and tractors. Free state tax filling Manufacturers taxes on the sale or use of a variety of different articles. Free state tax filling Form 2290. Free state tax filling   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. Free state tax filling The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Free state tax filling Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Free state tax filling For more information, see the instructions for Form 2290. Free state tax filling Form 730. Free state tax filling   If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise tax on wagering. Free state tax filling Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. Free state tax filling Form 11-C. Free state tax filling   Use Form 11-C, Occupational Tax and Registration Return for Wagering, to register for any wagering activity and to pay the federal occupational tax on wagering. Free state tax filling Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. Free state tax filling Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). Free state tax filling Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. Free state tax filling Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. Free state tax filling Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Free state tax filling The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Free state tax filling You must give a copy of each information return you are required to file to the recipient or payer. Free state tax filling In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Free state tax filling For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Free state tax filling Form 1099-MISC. Free state tax filling   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. Free state tax filling These payments include the following items. Free state tax filling Payments of $600 or more for services performed for your business by people not treated as your employees, such as subcontractors, attorneys, accountants, or directors. Free state tax filling Rent payments of $600 or more, other than rents paid to real estate agents. Free state tax filling Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Free state tax filling Royalty payments of $10 or more. Free state tax filling Payments to certain crew members by operators of fishing boats. Free state tax filling You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Free state tax filling Form W-2. Free state tax filling   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Free state tax filling For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. Free state tax filling Form 8300. Free state tax filling   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction or two or more related business transactions. Free state tax filling Cash includes U. Free state tax filling S. Free state tax filling and foreign coin and currency. Free state tax filling It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Free state tax filling For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Free state tax filling Penalties The law provides penalties for not filing returns or paying taxes as required. Free state tax filling Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. Free state tax filling Failure to file tax returns. Free state tax filling   If you do not file your tax return by the due date, you may have to pay a penalty. Free state tax filling The penalty is based on the tax not paid by the due date. Free state tax filling See your tax return instructions for more information about this penalty. Free state tax filling Failure to pay tax. Free state tax filling   If you do not pay your taxes by the due date, you will have to pay a penalty for each month, or part of a month, that your taxes are not paid. Free state tax filling For more information, see your tax return instructions. Free state tax filling Failure to withhold, deposit, or pay taxes. Free state tax filling   If you do not withhold income, social security, or Medicare taxes from employees, or if you withhold taxes but do not deposit them or pay them to the IRS, you may be subject to a penalty of the unpaid tax, plus interest. Free state tax filling You may also be subject to penalties if you deposit the taxes late. Free state tax filling For more information, see Publication 15. Free state tax filling Failure to follow information reporting requirements. Free state tax filling   The following penalties apply if you are required to file information returns. Free state tax filling For more information, see the General Instructions for Certain Information Returns. Free state tax filling Failure to file information returns. Free state tax filling A penalty applies if you do not file information returns by the due date, if you do not include all required information, or if you report incorrect information. Free state tax filling Failure to furnish correct payee statements. Free state tax filling A penalty applies if you do not furnish a required statement to a payee by the due date, if you do not include all required information, or if you report incorrect information. Free state tax filling Waiver of penalty. Free state tax filling   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. Free state tax filling   In addition, there is no penalty for failure to include all the required information, or for including incorrect information, on a de minimis number of information returns if you correct the errors by August 1 of the year the returns are due. Free state tax filling (To be considered de minimis, the number of returns cannot exceed the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Free state tax filling ) Failure to supply taxpayer identification number. Free state tax filling   If you do not include your taxpayer identification number (SSN or EIN) or the taxpayer identification number of another person where required on a return, statement, or other document, you may be subject to a penalty of $50 for each failure. Free state tax filling You may also be subject to the $50 penalty if you do not give your taxpayer identification number to another person when it is required on a return, statement, or other document. Free state tax filling Business Expenses You can deduct business expenses on your income tax return. Free state tax filling These are the current operating costs of running your business. Free state tax filling To be deductible, a business expense must be both ordinary and necessary. Free state tax filling An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Free state tax filling A necessary expense is one that is helpful and appropriate for your business, trade, or profession. Free state tax filling An expense does not have to be indispensable to be considered necessary. Free state tax filling The following are brief explanations of some expenses that are of interest to people starting a business. Free state tax filling There are many other expenses that you may be able to deduct. Free state tax filling See your form instructions and Publication 535, Business Expenses. Free state tax filling Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. Free state tax filling Your business start-up costs will depend on the type of business you are starting. Free state tax filling They may include costs for advertising, travel, surveys, and training. Free state tax filling These costs are generally capital expenses. Free state tax filling You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). Free state tax filling You can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs paid or incurred after October 22, 2004. Free state tax filling The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Free state tax filling Any remaining cost must be amortized. Free state tax filling For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. Free state tax filling Depreciation If property you acquire to use in your business has a useful life that extends substantially beyond the year it is placed in service, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Free state tax filling You must spread the cost over more than one tax year and deduct part of it each year. Free state tax filling This method of deducting the cost of business property is called depreciation. Free state tax filling Business property you must depreciate includes the following items. Free state tax filling Office furniture. Free state tax filling Buildings. Free state tax filling Machinery and equipment. Free state tax filling You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Free state tax filling This deduction is known as the “section 179 deduction. Free state tax filling ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. Free state tax filling Depreciation must be taken in the year it is allowable. Free state tax filling Allowable depreciation not taken in a prior year cannot be taken in the current year. Free state tax filling If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. Free state tax filling S. Free state tax filling Individual Income Tax Return, or by changing your accounting method. Free state tax filling For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. Free state tax filling Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. Free state tax filling Even then, your deduction may be limited. Free state tax filling To qualify to claim expenses for business use of your home, you must meet both the following tests. Free state tax filling Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use, later), Regular, For your trade or business, AND The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) you use in connection with your trade or business. Free state tax filling Exclusive use. Free state tax filling   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Free state tax filling The area used for business can be a room or other separately identifiable space. Free state tax filling The space does not need to be marked off by a permanent partition. Free state tax filling   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Free state tax filling Exceptions to exclusive use. Free state tax filling   You do not have to meet the exclusive use test if either of the following applies. Free state tax filling You use part of your home for the storage of inventory or product samples. Free state tax filling You use part of your home as a daycare facility. Free state tax filling For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Free state tax filling Principal place of business. Free state tax filling   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Free state tax filling You use it exclusively and regularly for administrative or management activities of your trade or business. Free state tax filling You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Free state tax filling   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Free state tax filling The relative importance of the activities performed at each location. Free state tax filling If the relative importance factor does not determine your principal place of business, the time spent at each location. Free state tax filling    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Free state tax filling However, for other ways to qualify to deduct home office expenses, see Publication 587. Free state tax filling Which form do I file?   If you file Schedule C (Form 1040), use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Free state tax filling If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. Free state tax filling More information. Free state tax filling   For more information about business use of your home, see Publication 587. Free state tax filling Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. Free state tax filling You generally can deduct either your actual expenses or the standard mileage rate. Free state tax filling Actual expenses. Free state tax filling   If you deduct actual expenses, you can deduct the cost of the following items: Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Free state tax filling You can divide your expenses based on the miles driven for each purpose. Free state tax filling Example. Free state tax filling You are the sole proprietor of a flower shop. Free state tax filling You drove your van 20,000 miles during the year. Free state tax filling 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. Free state tax filling You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Free state tax filling Standard mileage rate. Free state tax filling   Instead of figuring actual expenses, you may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Free state tax filling You can use the standard mileage rate for a vehicle you own or lease. Free state tax filling The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. Free state tax filling It is announced annually by the IRS. Free state tax filling To figure your deduction, multiply your business miles by the standard mileage rate for the year. Free state tax filling    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. Free state tax filling However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. Free state tax filling Choosing the standard mileage rate. Free state tax filling   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Free state tax filling In later years, you can choose to use either the standard mileage rate or actual expenses. Free state tax filling   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Free state tax filling Additional information. Free state tax filling   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Free state tax filling Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. Free state tax filling It also explains how long you must keep your records for federal tax purposes. Free state tax filling A sample recordkeeping system is illustrated at the end of this part. Free state tax filling Why Keep Records? Everyone in business must keep records. Free state tax filling Good records will help you do the following. Free state tax filling Monitor the progress of your business. Free state tax filling   You need good records to monitor the progress of your business. Free state tax filling Records can show whether your business is improving, which items are selling, or what changes you need to make. Free state tax filling Good records can increase the likelihood of business success. Free state tax filling Prepare your financial statements. Free state tax filling   You need good records to prepare accurate financial statements. Free state tax filling These include income (profit and loss) statements and balance sheets. Free state tax filling These statements can help you in dealing with your bank or creditors and help you manage your business. Free state tax filling An income statement shows the income and expenses of the business for a given period of time. Free state tax filling A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Free state tax filling Identify source of receipts. Free state tax filling   You will receive money or property from many sources. Free state tax filling Your records can identify the source of your receipts. Free state tax filling You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. Free state tax filling Keep track of deductible expenses. Free state tax filling   You may forget expenses when you prepare your tax return unless you record them when they occur. Free state tax filling Prepare your tax returns. Free state tax filling   You need good records to prepare your tax returns. Free state tax filling These records must support the income, expenses, and credits you report. Free state tax filling Generally, these are the same records you use to monitor your business and prepare your financial statements. Free state tax filling Support items reported on tax returns. Free state tax filling   You must keep your business records available at all times for inspection by the IRS. Free state tax filling If the IRS examines any of your tax returns, you may be asked to explain the items reported. Free state tax filling A complete set of records will speed up the examination. Free state tax filling Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Free state tax filling You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. Free state tax filling The business you are in affects the type of records you need to keep for federal tax purposes. Free state tax filling You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Free state tax filling See Accounting Method, earlier. Free state tax filling If you are in more than one business, you should keep a complete and separate set of records for each business. Free state tax filling A corporation should keep minutes of board of directors' meetings. Free state tax filling Your recordkeeping system should include a summary of your business transactions. Free state tax filling This summary is ordinarily made in your books (for example, accounting journals and ledgers). Free state tax filling Your books must show your gross income, as well as your deductions and credits. Free state tax filling For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. Free state tax filling In addition, you must keep supporting documents, explained later. Free state tax filling Electronic records. Free state tax filling   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Free state tax filling When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. Free state tax filling An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. Free state tax filling The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Free state tax filling All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Free state tax filling Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Free state tax filling   The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. Free state tax filling You still have the responsibility of retaining any other books and records that are required to be retained. Free state tax filling   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Free state tax filling This test is not considered an examination and the results must be shared with you. Free state tax filling If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Free state tax filling If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax. Free state tax filling For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. Free state tax filling Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. Free state tax filling Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Free state tax filling These documents contain information you need to record in your books. Free state tax filling It is important to keep these documents because they support the entries in your books and on your tax return. Free state tax filling Keep them in an orderly fashion and in a safe place. Free state tax filling For instance, organize them by year and type of income or expense. Free state tax filling Gross receipts. Free state tax filling   Gross receipts are the income you receive from your business. Free state tax filling You should keep supporting documents that show the amounts and sources of your gross receipts. Free state tax filling Documents that show gross receipts include the following. Free state tax filling Cash register tapes. Free state tax filling Bank deposit slips. Free state tax filling Receipt books. Free state tax filling Invoices. Free state tax filling Credit card charge slips. Free state tax filling Forms 1099-MISC. Free state tax filling Purchases. Free state tax filling   Purchases are the items you buy and resell to customers. Free state tax filling If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Free state tax filling Your supporting documents should show the amount paid and that the amount was for purchases. Free state tax filling Documents for purchases include the following. Free state tax filling Canceled checks. Free state tax filling Cash register tape receipts. Free state tax filling Credit card sales slips. Free state tax filling Invoices. Free state tax filling These records will help you determine the value of your inventory at the end of the year. Free state tax filling See Publication 538 for information on methods for valuing inventory. Free state tax filling Expenses. Free state tax filling   Expenses are the costs you incur (other than purchases) to carry on your business. Free state tax filling Your supporting documents should show the amount paid and that the amount was for a business expense. Free state tax filling Documents for expenses include the following. Free state tax filling Canceled checks. Free state tax filling Cash register tapes. Free state tax filling Account statements. Free state tax filling Credit card sales slips. Free state tax filling Invoices. Free state tax filling Petty cash slips for small cash payments. Free state tax filling    A petty cash fund allows you to make small payments without having to write checks for small amounts. Free state tax filling Each time you make a payment from this fund, you should make out a petty cash slip and attach it to your receipt as proof of payment. Free state tax filling Travel, transportation, entertainment, and gift expenses. Free state tax filling   Specific recordkeeping rules apply to these expenses. Free state tax filling For more information, see Publication 463. Free state tax filling Employment taxes. Free state tax filling   There are specific employment tax records you must keep. Free state tax filling For a list, see Publication 15. Free state tax filling Assets. Free state tax filling   Assets are the property, such as machinery and furniture you own and use in your business. Free state tax filling You must keep records to verify certain information about your business assets. Free state tax filling You need records to figure the annual depreciation and the gain or loss when you sell the assets. Free state tax filling Your records should show the following information. Free state tax filling When and how you acquired the asset. Free state tax filling Purchase price. Free state tax filling Cost of any improvements. Free state tax filling Section 179 deduction taken. Free state tax filling Deductions taken for depreciation. Free state tax filling Deductions taken for casualty losses, such as losses resulting from fires or storms. Free state tax filling How you used the asset. Free state tax filling When and how you disposed of the asset. Free state tax filling Selling price. Free state tax filling Expenses of sale. Free state tax filling   The following documents may show this information. Free state tax filling Purchase and sales invoices. Free state tax filling Real estate closing statements. Free state tax filling Canceled checks. Free state tax filling What if I don't have a canceled check?   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. Free state tax filling These include account statements prepared for the financial institution by a third party. Free state tax filling These account statements must be highly legible. Free state tax filling The following table lists acceptable account statements. Free state tax filling  IF payment is by. Free state tax filling . Free state tax filling . Free state tax filling THEN the statement must show the. Free state tax filling . Free state tax filling . Free state tax filling Check Check number. Free state tax filling Amount. Free state tax filling Payee's name. Free state tax filling Date the check amount was posted to the account by the financial institution. Free state tax filling Electronic funds transfer Amount transferred. Free state tax filling Payee's name. Free state tax filling Date the transfer was posted to the account by the financial institution. Free state tax filling Credit card Amount charged. Free state tax filling Payee's name. Free state tax filling Transaction date. Free state tax filling    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Free state tax filling You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Free state tax filling Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. Free state tax filling (Your business transactions are shown on the supporting documents just discussed. Free state tax filling ) Business transactions are ordinarily summarized in books called journals and ledgers. Free state tax filling You can buy them at your local stationery or office supply store. Free state tax filling A journal is a book where you record each business transaction shown on your supporting documents. Free state tax filling You may have to keep separate journals for transactions that occur frequently. Free state tax filling A ledger is a book that contains the totals from all of your journals. Free state tax filling It is organized into different accounts. Free state tax filling Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. Free state tax filling For example, a recordkeeping system for a small business might include the following items. Free state tax filling Business checkbook. Free state tax filling Daily summary of cash receipts. Free state tax filling Monthly summary of cash receipts. Free state tax filling Check disbursements journal. Free state tax filling Depreciation worksheet. Free state tax filling Employee compensation record. Free state tax filling The business checkbook is explained next. Free state tax filling The other items are illustrated later under Sample Record System. Free state tax filling The system you use to record business transactions will be more effective if you follow good recordkeeping practices. Free state tax filling For example, record expenses when they occur, and identify the source of recorded receipts. Free state tax filling Generally, it is best to record transactions on a daily basis. Free state tax filling Business checkbook. Free state tax filling   One of the first things you should do when you start a business is open a business checking account. Free state tax filling You should keep your business account separate from your personal checking account. Free state tax filling   The business checkbook is your basic source of information for recording your business expenses. Free state tax filling You should deposit all daily receipts in your business checking account. Free state tax filling You should check your account for errors by reconciling it. Free state tax filling See Reconciling the checking account, later. Free state tax filling   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. Free state tax filling You should also note on the deposit slip the source of the deposit and keep copies of all slips. Free state tax filling   You should make all payments by check to document business expenses. Free state tax filling Write checks payable to yourself only when making withdrawals from your business for personal use. Free state tax filling Avoid writing checks payable to cash. Free state tax filling If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. Free state tax filling If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. Free state tax filling    Use the business account for business purposes only. Free state tax filling Indicate the source of deposits and the type of expense in the checkbook. Free state tax filling Reconciling the checking account. Free state tax filling   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. Free state tax filling The statement balance may not agree with the balance in your checkbook and books if the statement: Includes bank charges you did not enter in your books and subtract from your checkbook balance, or Does not include deposits made after the statement date or checks that did not clear your account before the statement date. Free state tax filling   By reconciling your checking account, you will: Verify how much money you have in the account, Make sure that your checkbook and books reflect all bank charges and the correct balance in the checking account, and Correct any errors in your bank statement, checkbook, and books. Free state tax filling    You should reconcile your checking account each month. Free state tax filling     Before you reconcile your monthly bank statement, check your own figures. Free state tax filling Begin with the balance shown in your checkbook at the end of the previous month. Free state tax filling To this balance, add the total cash deposited during the month and subtract the total cash disbursements. Free state tax filling   After checking your figures, the result should agree with your checkbook balance at the end of the month. Free state tax filling If the result does not agree, you may have made an error in recording a check or deposit. Free state tax filling You can find the error by doing the following. Free state tax filling Adding the amounts on your check stubs and comparing that total with the total in the “amount of check” column in your check disbursements journal. Free state tax filling If the totals do not agree, check the individual amounts to see if an error was made in your check stub record or in the related entry in your check disbursements journal. Free state tax filling Adding the deposit amounts in your checkbook. Free state tax filling Compare that total with the monthly total in your cash receipt book, if you have one. Free state tax filling If the totals do not agree, check the individual amounts to find any errors. Free state tax filling   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. Free state tax filling   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. Free state tax filling Many banks print a reconciliation worksheet on the back of the statement. Free state tax filling   To reconcile your account, follow these steps. Free state tax filling Compare the deposits listed on the bank statement with the deposits shown in your checkbook. Free state tax filling Note all differences in the dollar amounts. Free state tax filling Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. Free state tax filling Note all differences in the dollar amounts. Free state tax filling Mark the check number in the checkbook as having cleared the bank. Free state tax filling After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. Free state tax filling Prepare a bank reconciliation. Free state tax filling One is illustrated later under Sample Record System. Free state tax filling Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. Free state tax filling At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. Free state tax filling If you still have differences, check the previous steps to find the errors. Free state tax filling   Table 3. Free state tax filling Period of Limitations IF you. Free state tax filling . Free state tax filling . Free state tax filling   THEN the period is. Free state tax filling . Free state tax filling . Free state tax filling 1. Free state tax filling Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. Free state tax filling Do not report income that you should report and it is more than 25% of the gross income shown on the return   6 years 3. Free state tax filling File a fraudulent return   Not limited 4. Free state tax filling Do not file a return   Not limited 5. Free state tax filling File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. Free state tax filling File a claim for a loss from worthless securities or a bad debt deduction   7 years Bookkeeping System You must decide whether to use a single-entry or a double-entry bookkeeping system. Free state tax filling The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. Free state tax filling You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. Free state tax filling Single-entry. Free state tax filling   A single-entry system is based on the income statement (profit or loss statement). Free state tax filling It can be a simple and practical system if you are starting a small business. Free state tax filling The system records the flow of income and expenses through the use of: A daily summary of cash receipts, and Monthly summaries of cash receipts and disbursements. Free state tax filling Double-entry. Free state tax filling   A double-entry bookkeeping system uses journals and ledgers. Free state tax filling Transactions are first entered in a journal and then posted to ledger accounts. Free state tax filling These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). Free state tax filling You close income and expense accounts at the end of each tax year. Free state tax filling You keep asset, liability, and net worth accounts open on a permanent basis. Free state tax filling   In the double-entry system, each account has a left side for debits and a right side for credits. Free state tax filling It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. Free state tax filling   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. Free state tax filling If the amounts do not balance, you have made an error and you must find and correct it. Free state tax filling   An example of a journal entry exhibiting a payment of rent in October is shown next. Free state tax filling General Journal Date Description of Entry Debit  Credit Oct. Free state tax filling 5 Rent expense 780. Free state tax filling 00     Cash   780. Free state tax filling 00                 Computerized System There are computer software packages you can use for recordkeeping. Free state tax filling They can be purchased in many retail stores. Free state tax filling These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. Free state tax filling If you use a computerized system, you must be able to produce sufficient legible records to support and verify entries made on your return and determine your correct tax liability. Free state tax filling To meet this qualification, the machine-sensible records must reconcile with your books and return. Free state tax filling These records must provide enough detail to identify the underlying source documents. Free state tax filling You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. Free state tax filling This documentation must be sufficiently detailed to show all of the following items. Free state tax filling Functions being performed as the data flows through the system. Free state tax filling Controls used to ensure accurate and reliable processing. Free state tax filling Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. Free state tax filling Charts of accounts and detailed account descriptions. Free state tax filling See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. Free state tax filling How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Free state tax filling Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out. Free state tax filling The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax. Free state tax filling Table 3 contains the periods of limitations that apply to income tax returns. Free state tax filling Unless otherwise stated, the years refer to the period after the return was filed. Free state tax filling Returns filed before the due date are treated as filed on the due date. Free state tax filling Keep copies of your filed tax returns. Free state tax filling They help in preparing future tax returns and making computations if you file an amended return. Free state tax filling Employment taxes. Free state tax filling   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. Free state tax filling For more information about recordkeeping for employment taxes, see Publication 15. Free state tax filling Assets. Free state tax filling   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. Free state tax filling You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property. Free state tax filling   Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. Free state tax filling You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. Free state tax filling Records for nontax purposes. Free state tax filling   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. Free state tax filling For example, your insurance company or creditors may require you to keep them longer than the IRS does. Free state tax filling Sample Record System This example illustrates a single-entry system used by Henry Brown, who is the sole proprietor of a small automobile body shop. Free state tax filling Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. Free state tax filling These sample records should not be viewed as a recommendation of how to keep your records. Free state tax filling They are intended only to show how one business keeps its records. Free state tax filling 1. Free state tax filling Daily Summary of Cash Receipts This summary is a record of cash sales for the day. Free state tax filling It accounts for cash at the end of the day over the amount in the Change and Petty Cash Fund at the beginning of the day. Free state tax filling Henry takes the cash sales entry from his cash register tape. Free state tax filling If he had no cash register, he would simply total his cash sale slips and any other cash received that day. Free state tax filling He carries the total receipts shown in this summary for January 3 ($267. Free state tax filling 80), including cash sales ($263. Free state tax filling 60) and sales tax ($4. Free state tax filling 20), to the Monthly Summary of Cash Receipts. Free state tax filling Petty cash fund. Free state tax filling   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. Free state tax filling Each time he makes a payment from this fund, he makes out a petty cash slip and attaches it to his receipt as proof of payment. Free state tax filling He sets up a fixed amount ($50) in his petty cash fund. Free state tax filling The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. Free state tax filling When the totals on the petty cash slips approach the fixed amount, he brings the cash in the fund back to the fixed amount by writing a check to “Petty Cash” for the total of the outstanding slips. Free state tax filling (See the Check Disbursements Journal entry for check number 92. Free state tax filling ) This restores the fund to its fixed amount of $50. Free state tax filling He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. Free state tax filling 2. Free state tax filling Monthly Summary of Cash Receipts This shows the income activity for the month. Free state tax filling Henry carries the total monthly net sales shown in this summary for January ($4,865. Free state tax filling 05) to his Annual Summary. Free state tax filling To figure total monthly net sales, Henry reduces the total monthly receipts by the sales tax imposed on his customers and turned over to the state. Free state tax filling He cannot take a deduction for sales tax turned over to the state because he only collected the tax. Free state tax filling He does not include the tax in his income. Free state tax filling 3. Free state tax filling Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. Free state tax filling All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. Free state tax filling Frequent expenses have their own headings across the sheet. Free state tax filling He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. Free state tax filling Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. Free state tax filling Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. Free state tax filling If he did, he would record them in the journal, even though he could not deduct them as business expenses. Free state tax filling Henry carries the January total of expenses for materials ($1,083. Free state tax filling 50) to the Annual Summary. Free state tax filling Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. Free state tax filling , in the appropriate columns of that summary. Free state tax filling 4. Free state tax filling Employee Compensation Record This record shows the following information. Free state tax filling The number of hours Henry's employee worked in a pay period. Free state tax filling The employee's total pay for the period. Free state tax filling The deductions Henry withheld in figuring the employee's net pay. Free state tax filling The monthly gross payroll. Free state tax filling Henry carries the January gross payroll ($520) to the Annual Summary. Free state tax filling 5. Free state tax filling Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. Free state tax filling He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. Free state tax filling He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. Free state tax filling As in the journal, he keeps each major expense in a separate column. Free state tax filling Henry carries the cash receipts total shown in the annual summary ($47,440. Free state tax filling 9
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The Free State Tax Filling

Free state tax filling Publication 3920 - Main Contents Table of Contents Tax ForgivenessYears Eligible for Tax Forgiveness Amount of Tax Forgiven Refund of Taxes Paid How To Claim Tax Forgiveness Payments to SurvivorsSeptember 11th Victim Compensation Fund of 2001 Qualified Disaster Relief Payments Disability Payments Death Benefits Canceled Debt Payments to Survivors of Public Safety Officers Postponed Tax DeadlinesCovered area. Free state tax filling Disaster Area Losses Estate Tax Reduction Structured Settlement Factoring Transactions Illustrated Worksheets B and C Additional Worksheets How To Get Tax Help Tax Forgiveness The IRS will forgive the federal income tax liabilities of decedents who died as a result of the Oklahoma City attack, September 11 attacks, and anthrax attacks. Free state tax filling Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. Free state tax filling Any forgiven tax liability owed to the IRS will not have to be paid. Free state tax filling Any forgiven tax liability that has already been paid will be refunded. Free state tax filling (See Refund of Taxes Paid, later. Free state tax filling ) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. Free state tax filling Then read Amount of Tax Forgiven. Free state tax filling Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. Free state tax filling Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. Free state tax filling See Minimum Amount of Relief later under Amount of Tax Forgiven. Free state tax filling Years Eligible for Tax Forgiveness The following paragraphs explain which years are eligible for tax forgiveness. Free state tax filling Oklahoma City attack. Free state tax filling   For those who died from this attack, income tax is forgiven for 1994 and all later years up to and including the year of death. Free state tax filling Example 1. Free state tax filling A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. Free state tax filling His income tax is forgiven for 1994 and 1995. Free state tax filling Example 2. Free state tax filling A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. Free state tax filling She subsequently died of her wounds in 1996. Free state tax filling Her income tax is forgiven for 1994, 1995, and 1996. Free state tax filling September 11 attacks and anthrax attacks. Free state tax filling   For those who die from these attacks, income tax is forgiven for 2000 and all later years up to and including the year of death. Free state tax filling Example 1. Free state tax filling A Pentagon employee died in the September 11 attack. Free state tax filling Her income tax is forgiven for 2000 and 2001. Free state tax filling Example 2. Free state tax filling A visitor to the World Trade Center died in 2002 of wounds he sustained in the September 11 attack. Free state tax filling His income tax liability is forgiven for 2000, 2001, and 2002. Free state tax filling Amount of Tax Forgiven The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. Free state tax filling On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness. Free state tax filling To figure the tax to be forgiven, use the following worksheets. Free state tax filling Use Worksheet A for any eligible year the decedent filed a return as single, married filing separately, head of household, or qualifying widow(er). Free state tax filling Use Worksheet B for any eligible year the decedent filed a joint return. Free state tax filling See the illustrated Worksheet B near the end of this publication. Free state tax filling Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. Free state tax filling Instead, complete Worksheet C and file a return for the decedent's last tax year. Free state tax filling See Minimum Amount of Relief, later. Free state tax filling If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times. Free state tax filling In English–7 a. Free state tax filling m. Free state tax filling to 10 p. Free state tax filling m. Free state tax filling local time. Free state tax filling In Spanish–8 a. Free state tax filling m. Free state tax filling to 9:30 p. Free state tax filling m. Free state tax filling local time. Free state tax filling Both spouses died. Free state tax filling   If both spouses died as a result of a terrorist attack and they filed a joint return for an eligible tax year, fill out Worksheet B for each spouse for that year. Free state tax filling Do this to determine if each spouse qualifies for the minimum relief of $10,000 (discussed later under Minimum Amount of Relief). Free state tax filling If you are certain that neither spouse's total forgiven tax liability for all eligible years is less than $10,000, skip Worksheet B. Free state tax filling However, attach a computation of the forgiven tax liability to the final income tax return or amended tax return for each eligible year. Free state tax filling The forgiven tax liability is the total tax shown on the joint return minus the taxes listed in the instructions for line 4 of Worksheet B. Free state tax filling Residents of community property states. Free state tax filling   If the decedent was domiciled in a community property state and the spouse reported half the community income on a separate return, the surviving spouse can get a refund of taxes paid on his or her share of the decedent's income for the eligible years. Free state tax filling Also, all of the decedent's income taxes paid for the eligible years will be refunded to either the executor or administrator of the estate, or to the surviving spouse if there is no legal representative. Free state tax filling Worksheet B. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Free state tax filling 1       2 Enter the decedent's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 2       3 Enter the decedent's total tax. Free state tax filling See the instructions. Free state tax filling 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free state tax filling See the instructions. Free state tax filling 4       5 Subtract line 4 from line 3. Free state tax filling 5       6 Enter the surviving spouse's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 6       7 Enter the surviving spouse's total tax. Free state tax filling See the instructions. Free state tax filling 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free state tax filling 8       9 Subtract line 8 from line 7. Free state tax filling 9       10 Add lines 5 and 9. Free state tax filling 10       11 Enter the total tax from the joint return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 11       12 Add lines 4 and 8. Free state tax filling 12       13 Subtract line 12 from line 11. Free state tax filling 13       14 Divide line 5 by line 10. Free state tax filling Enter the result as a decimal. Free state tax filling 14       15 Tax to be forgiven. Free state tax filling Multiply line 13 by line 14 and enter the result. Free state tax filling 15       Note. Free state tax filling If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Worksheet B. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Free state tax filling 1       2 Enter the decedent's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 2       3 Enter the decedent's total tax. Free state tax filling See the instructions. Free state tax filling 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free state tax filling See the instructions. Free state tax filling 4       5 Subtract line 4 from line 3. Free state tax filling 5       6 Enter the surviving spouse's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 6       7 Enter the surviving spouse's total tax. Free state tax filling See the instructions. Free state tax filling 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free state tax filling 8       9 Subtract line 8 from line 7. Free state tax filling 9       10 Add lines 5 and 9. Free state tax filling 10       11 Enter the total tax from the joint return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 11       12 Add lines 4 and 8. Free state tax filling 12       13 Subtract line 12 from line 11. Free state tax filling 13       14 Divide line 5 by line 10. Free state tax filling Enter the result as a decimal. Free state tax filling 14       15 Tax to be forgiven. Free state tax filling Multiply line 13 by line 14 and enter the result. Free state tax filling 15       Note. Free state tax filling If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Instructions for Worksheet B Table 1. Free state tax filling Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. Free state tax filling * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. Free state tax filling ** File Form 4506 to get a transcript of the decedent's account. Free state tax filling Table 1. Free state tax filling Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. Free state tax filling * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. Free state tax filling ** File Form 4506 to get a transcript of the decedent's account. Free state tax filling Lines 2 and 6. Free state tax filling   Allocate income and deductions in the same manner they would have been allocated if the spouses had filed separate returns. Free state tax filling   Allocate wages and salaries to the spouse who performed the services and received the Form W-2. Free state tax filling Business and investment income (including capital gains) are generally allocated to the spouse who owned the business or investment that produced the income. Free state tax filling Income from a jointly owned business or investment should be allocated equally between the spouses unless there is evidence that shows a different allocation is appropriate. Free state tax filling   Allocate business deductions to the owner of the business. Free state tax filling Allocate personal deductions (such as itemized deductions for mortgage interest and taxes) equally between the spouses unless there is evidence that shows a different allocation is appropriate. Free state tax filling Lines 3 and 7. Free state tax filling   Figure the total tax as if a separate return had been filed. Free state tax filling The total tax is the tax that would have been entered on the tax return line shown in Table 1 if a separate return had been filed. Free state tax filling When figuring the tax using the Tax Table or Tax Rate Schedule, use the “Married filing separately” column in the Tax Table or Tax Rate Schedule Y-2. Free state tax filling   When figuring the total tax, allocate credits and other taxes, if any, in the same manner as they would have been allocated if the spouses had filed separate returns. Free state tax filling If a credit would not have been allowed on a separate return, allocate the credit shown on the joint return between the spouses. Free state tax filling Examples of credits generally not allowed on a separate return are the child and dependent care credit, credit for the elderly, adoption credit, education credits, and earned income credit. Free state tax filling Line 4. Free state tax filling   Enter the total, if any, of the following taxes. Free state tax filling Self-employment tax. Free state tax filling Social security and Medicare tax on tip income not reported to employer. Free state tax filling Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Free state tax filling Tax on excess accumulation in qualified retirement plans. Free state tax filling Household employment taxes. Free state tax filling Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Free state tax filling Tax on golden parachute payments. Free state tax filling Minimum Amount of Relief The minimum amount of relief is $10,000. Free state tax filling If the decedent's total forgiven tax liability for all eligible years is less than $10,000, the difference between $10,000 and the total forgiven tax liability for those years will be treated as a tax payment for the decedent's last tax year. Free state tax filling The IRS will refund the difference as explained under Refund of Taxes Paid. Free state tax filling Use Worksheet C to figure the additional tax payment. Free state tax filling But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years. Free state tax filling Example 1. Free state tax filling An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. Free state tax filling The $6,400 is eligible for forgiveness. Free state tax filling The IRS will forgive $6,400 and treat the difference between $10,000 and $6,400 ($3,600) as a tax payment for 2001. Free state tax filling Example 2. Free state tax filling A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. Free state tax filling The IRS will treat $10,000 as a tax payment for 2001. Free state tax filling Income received after date of death. Free state tax filling   Generally, income of the decedent received after the date of death must be reported on Form 1041 if the estate has gross income for the tax year of $600 or more. Free state tax filling Examples are the final paycheck or dividends on stock owned by the decedent. Free state tax filling However, this income is exempt from income tax and is not included on Form 1041 if it is received: After the date of the decedent's death, and Before the end of the decedent's tax year (determined without regard to death). Free state tax filling Nonqualifying income. Free state tax filling   The following income is not exempt from tax. Free state tax filling The tax on it is not eligible for forgiveness. Free state tax filling Deferred compensation that would have been payable if the death had occurred because of an event other than these attacks. Free state tax filling Amounts that would not have been payable but for an action taken after September 11, 2001. Free state tax filling The following are examples of nonqualifying income. Free state tax filling Amounts payable from a qualified retirement plan or IRA to the beneficiary or estate of the decedent. Free state tax filling Amounts payable only as death or survivor's benefits from pre-existing arrangements that would have been paid if the death had occurred for another reason. Free state tax filling Income received as a result of adjustments made by the decedent's employer to a plan or arrangement to accelerate the vesting of restricted property or the payment of nonqualified deferred compensation after the date of the attack. Free state tax filling Interest on savings bonds cashed by the beneficiary of the decedent. Free state tax filling If you are responsible for the estate of a decedent, see Publication 559. Free state tax filling Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due. Free state tax filling Instructions for lines 2–9 of Worksheet C. Free state tax filling   The tax that would have been payable on the exempt income (discussed earlier) must be considered when determining whether a decedent is entitled to the $10,000 minimum relief. Free state tax filling To figure the tax that would have been payable, you can use lines 2 through 9 of Worksheet C. Free state tax filling Or, if special requirements are met, you can use the alternative computation instead. Free state tax filling See Alternative computation, later. Free state tax filling   You have to use lines 2–9 (or the alternative computation) to figure the tax that would have been payable even if Form 1041 was not required to be filed. Free state tax filling Use Form 1041 to figure what the taxable income would be without including the exempt income. Free state tax filling Then enter that taxable income (even if a negative number) on line 2 of Worksheet C (or line 1 of Worksheet D, Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)). Free state tax filling Alternative computation. Free state tax filling   Instead of using lines 2–8 of Worksheet C to figure the tax on exempt income (line 9 of Worksheet C), you may be able to use Worksheet D. Free state tax filling You can use Worksheet D to figure the tax on the exempt income payable by the estate and its beneficiaries only if both of the following requirements are met. Free state tax filling The estate claimed an income distribution deduction on line 18 (Form 1041). Free state tax filling Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate. Free state tax filling If requirement (2) is met but requirement (1) is not, you can still use Worksheet D if: Form 1041 was not required because exempt income was received, and The estate would have claimed an income distribution deduction if the exempt income were taxable. Free state tax filling If you use this alternative computation, skip lines 2–8 of Worksheet C and enter the amount from line 8 of Worksheet D on line 9 of Worksheet C. Free state tax filling Complete the rest of Worksheet C to determine the additional payment allowed. Free state tax filling Worksheet C. Free state tax filling Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free state tax filling Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free state tax filling 1 Minimum relief amount. Free state tax filling Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free state tax filling 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Free state tax filling 3       4 Add lines 2 and 3. Free state tax filling 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 5       6 Add lines 4 and 5. Free state tax filling 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free state tax filling 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free state tax filling 8       9 Tax on exempt income. Free state tax filling Subtract line 8 from line 7. Free state tax filling 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free state tax filling If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free state tax filling 10       11 Add lines 9 and 10. Free state tax filling 11   12 Additional payment allowed. Free state tax filling If line 11 is $10,000 or more, enter -0- and stop here. Free state tax filling No additional amount is allowed as a tax payment. Free state tax filling Otherwise, subtract line 11 from line 1 and enter the result. Free state tax filling 12   Note. Free state tax filling The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free state tax filling Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Free state tax filling If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free state tax filling Write "Sec. Free state tax filling 692(d)(2) Payment" and the amount to the right of the entry space. Free state tax filling Also indicate whether a Form 1041 is being filed for the decedent's estate. Free state tax filling If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free state tax filling Write “Sec. Free state tax filling 692(d)(2) Payment” on the dotted line to the left of the entry space. Free state tax filling Worksheet C. Free state tax filling Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free state tax filling Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free state tax filling 1 Minimum relief amount. Free state tax filling Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free state tax filling 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Free state tax filling 3       4 Add lines 2 and 3. Free state tax filling 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 5       6 Add lines 4 and 5. Free state tax filling 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free state tax filling 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free state tax filling 8       9 Tax on exempt income. Free state tax filling Subtract line 8 from line 7. Free state tax filling 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free state tax filling If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free state tax filling 10       11 Add lines 9 and 10. Free state tax filling 11   12 Additional payment allowed. Free state tax filling If line 11 is $10,000 or more, enter -0- and stop here. Free state tax filling No additional amount is allowed as a tax payment. Free state tax filling Otherwise, subtract line 11 from line 1 and enter the result. Free state tax filling 12   Note. Free state tax filling The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free state tax filling Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Free state tax filling If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free state tax filling Write "Sec. Free state tax filling 692(d)(2) Payment" and the amount to the right of the entry space. Free state tax filling Also indicate whether a Form 1041 is being filed for the decedent's estate. Free state tax filling If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free state tax filling Write “Sec. Free state tax filling 692(d)(2) Payment” on the dotted line to the left of the entry space. Free state tax filling Worksheet D. Free state tax filling Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Free state tax filling 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Free state tax filling 5   6 Estate's tax on exempt income. Free state tax filling Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Free state tax filling Figure the total tax that would have been payable by all beneficiaries. Free state tax filling Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Free state tax filling Add the amounts by which each beneficiary's income tax is increased. Free state tax filling 7   8 Add lines 6 and 7. Free state tax filling Enter this amount on line 9 of Worksheet C. Free state tax filling 8   Worksheet D. Free state tax filling Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Free state tax filling 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Free state tax filling 5   6 Estate's tax on exempt income. Free state tax filling Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Free state tax filling Figure the total tax that would have been payable by all beneficiaries. Free state tax filling Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Free state tax filling Add the amounts by which each beneficiary's income tax is increased. Free state tax filling 7   8 Add lines 6 and 7. Free state tax filling Enter this amount on line 9 of Worksheet C. Free state tax filling 8   Refund of Taxes Paid The IRS will refund the following forgiven income tax liabilities. Free state tax filling Income tax liabilities that have been paid. Free state tax filling Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. Free state tax filling See Minimum Amount of Relief, earlier. Free state tax filling Example 1. Free state tax filling A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. Free state tax filling The total, $14,000, is eligible for tax forgiveness. Free state tax filling However, he paid only $13,000 of that amount. Free state tax filling The IRS will refund the $13,000 paid. Free state tax filling Example 2. Free state tax filling A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. Free state tax filling The child qualifies for the minimum relief of $10,000. Free state tax filling The $10,000 is treated as a tax payment for 2001 and will be refunded. Free state tax filling Period for filing a claim for credit or refund. Free state tax filling   To obtain a tax refund on a previously filed income tax return, file an amended return (Form 1040X or an amended Form 1041) within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. Free state tax filling For example, you have until April 15, 2004, to file an amended return on a 2000 Form 1040, 1040A, or 1040EZ that was filed by April 16, 2001, and for which the tax was paid when due. Free state tax filling To obtain a refund on a return that has not been filed, file the return within 3 years of the original due date of the return. Free state tax filling Extension of time for victims of Oklahoma City attack. Free state tax filling   The period described above has been extended for victims of the Oklahoma City attack. Free state tax filling Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return. Free state tax filling How To Claim Tax Forgiveness Use the following procedures to claim income tax forgiveness. Free state tax filling Which Form To Use The form you use depends on whether an income tax return for the eligible year was already filed for the decedent. Free state tax filling Return required but not yet filed. Free state tax filling   File Form 1040 if the decedent was a U. Free state tax filling S. Free state tax filling citizen or resident. Free state tax filling File Form 1040NR if the decedent was a nonresident alien. Free state tax filling A nonresident alien is someone who is not a U. Free state tax filling S. Free state tax filling citizen or resident. Free state tax filling Return required and already filed. Free state tax filling   File a separate Form 1040X for each year you are claiming tax relief. Free state tax filling Return not required and not filed. Free state tax filling   File Form 1040 only for the year of death if the decedent was a U. Free state tax filling S. Free state tax filling citizen or resident. Free state tax filling File Form 1040NR if the decedent was a nonresident alien. Free state tax filling Return not required but already filed. Free state tax filling   File Form 1040X only for the year of death. Free state tax filling How to complete the returns. Free state tax filling   Fill out Form 1040 or 1040NR according to its instructions but do not reduce the decedent's tax liability by any taxes that will be forgiven. Free state tax filling Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. Free state tax filling If filing Form 1040 or Form 1040NR, also attach any Forms W–2. Free state tax filling If the total forgiven tax liability for all eligible years is less than $10,000, attach to the decedent's final return a computation of the additional tax payment allowed or a copy of Worksheet C. Free state tax filling Also, please write one of the following across the top of page 1 of each return. Free state tax filling KITA—Oklahoma City KITA—9/11 KITA—Anthrax “KITA” means “killed in terrorist attack. Free state tax filling ” Need a copy of a previously filed return?   You will find it easier to prepare Form 1040X if you have a copy of the decedent's previously filed tax return. Free state tax filling If you need a copy, use Form 4506. Free state tax filling The IRS will provide a free copy of the tax return if you write “DISASTER” in the top margin of Form 4506. Free state tax filling Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. Free state tax filling Send Form 4506 to the address shown in the form instructions. Free state tax filling Taxpayer identification number. Free state tax filling   A taxpayer identification number must be furnished on the decedent's returns. Free state tax filling This is usually the decedent's social security number (SSN). Free state tax filling However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). Free state tax filling If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U. Free state tax filling S. Free state tax filling income tax return for any tax year, do not apply for an ITIN. Free state tax filling You may claim a refund by filing Form 1040NR without an SSN or ITIN. Free state tax filling Necessary Documents Please attach the following documents to the return or amended return. Free state tax filling Proof of death. Free state tax filling   Attach a copy of the death certificate. Free state tax filling If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate. Free state tax filling Form 1310. Free state tax filling   You must send Form 1310 with all returns and claims for refund, unless either of the following applies. Free state tax filling You are a surviving spouse filing an original or amended joint return with the decedent. Free state tax filling You are a personal representative filing an original Form 1040 or Form 1040NR for the decedent and a court certificate showing your appointment is attached to the return. Free state tax filling A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. Free state tax filling A copy of the decedent's will cannot be accepted as evidence that you are the personal representative. Free state tax filling      If you have proof of death but do not have enough tax information to file a timely claim for a refund, file Form 1040X with Form 1310. Free state tax filling Include a statement saying an amended return will be filed as soon as the necessary tax information is available. Free state tax filling Where To File The IRS has set up a special office for processing returns and claims for tax forgiveness. Free state tax filling Use one of the addresses shown below. Free state tax filling Where you file the returns or claims depends on whether you use the U. Free state tax filling S. Free state tax filling Postal Service or a private delivery service. Free state tax filling Please do not send these returns or claims to any of the addresses shown in the tax form instructions. Free state tax filling U. Free state tax filling S. Free state tax filling Postal Service. Free state tax filling   If you use the U. Free state tax filling S. Free state tax filling Postal Service, file these returns and claims at the following address. Free state tax filling Internal Revenue Service P. Free state tax filling O. Free state tax filling Box 4053 Woburn, MA 01888 Private delivery service. Free state tax filling   Private delivery services cannot deliver items to P. Free state tax filling O. Free state tax filling boxes. Free state tax filling If you use a private delivery service, file these returns and claims at the following address. Free state tax filling Internal Revenue Service Stop 661 310 Lowell St. Free state tax filling Andover, MA 01810 Designated private delivery services. Free state tax filling   You can use the following private delivery services to file these returns and claims. Free state tax filling Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service. Free state tax filling DHL Worldwide Express (DHL): DHL “Same Day” Service, and DHL USA Overnight. Free state tax filling Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day. Free state tax filling United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Free state tax filling M. Free state tax filling , UPS Worldwide Express Plus, and UPS Worldwide Express. Free state tax filling The private delivery service can tell you how to get written proof of the mailing date. Free state tax filling Payments to Survivors The following section discusses the tax treatment of certain amounts received by survivors. Free state tax filling September 11th Victim Compensation Fund of 2001 Payments from the September 11th Victim Compensation Fund of 2001 are not included in income. Free state tax filling Qualified Disaster Relief Payments Qualified disaster relief payments are not included in income. Free state tax filling These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Free state tax filling No withholding applies to these payments. Free state tax filling Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses. Free state tax filling Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack. Free state tax filling Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. Free state tax filling (A personal residence can be a rented residence or one you own. Free state tax filling ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack. Free state tax filling Qualified disaster relief payments also include the following. Free state tax filling Payments made by common carriers (for example, American Airlines and United Airlines regarding the September 11 attacks) because of death or physical injury incurred as a result of a terrorist attack. Free state tax filling Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack. Free state tax filling Qualified disaster relief payments do not include: Insurance or other reimbursements for expenses, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Free state tax filling Disability Payments For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income. Free state tax filling Death Benefits Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. Free state tax filling Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. Free state tax filling However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack. Free state tax filling If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. Free state tax filling For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. Free state tax filling If that period has expired, you are granted an extension. Free state tax filling You have until January 22, 2003, to file Form 1040X to exclude the death benefits. Free state tax filling On top of page 1 of Form 1040X, write “Extension of Limitations Under PL 107–134, sec. Free state tax filling 102(b)(2). Free state tax filling ” Canceled Debt Canceled debt is not included in your income (or the income of the estate) if: You (or the estate) were liable, or became liable, for the debt of a decedent, and The debt was canceled after September 10, 2001, and before January 1, 2002, because the decedent died as a result of the September 11 attacks or anthrax attacks. Free state tax filling The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt. Free state tax filling Payments to Survivors of Public Safety Officers If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income. Free state tax filling Bureau of Justice Assistance payments. Free state tax filling   If you are a surviving dependent of a public safety officer (law enforcement officer or firefighter) who died in the line of duty, do not include in your income the death benefit paid to you by the Bureau of Justice Assistance. Free state tax filling Government plan annuity. Free state tax filling   If you receive a survivor annuity as the child or spouse (or former spouse) of a public safety officer who was killed in the line of duty, you generally do not have to include it in income. Free state tax filling This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer. Free state tax filling For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews. Free state tax filling More information. Free state tax filling   For more information, see Publication 559. Free state tax filling Postponed Tax Deadlines The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a terrorist attack. Free state tax filling The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Free state tax filling If any tax deadline is postponed, the IRS will publicize the postponement in the affected area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Free state tax filling Affected taxpayers. Free state tax filling   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Free state tax filling Any individual whose main home is located in a covered area (defined later). Free state tax filling Any business entity or sole proprietor whose principal place of business is located in a covered area. Free state tax filling Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained in a covered area. Free state tax filling The main home or principal place of business does not have to be located in the covered area. Free state tax filling Any estate or trust whose tax records necessary to meet a postponed tax deadline are maintained in a covered area. Free state tax filling Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered area. Free state tax filling The spouse on a joint return with a taxpayer who is eligible for postponements. Free state tax filling Any other person determined by the IRS to be affected by a terrorist attack. Free state tax filling Covered area. Free state tax filling   This is an area in which a terrorist attack took place and in which the IRS has decided to postpone tax deadlines for up to 1 year. Free state tax filling Abatement of interest. Free state tax filling   The IRS may abate (forgive) the interest on any underpaid income tax for the length of any postponement. Free state tax filling Disaster Area Losses If your property was damaged or destroyed as a result of the September 11 attacks, you can choose to deduct your disaster loss on your 2000 return (or amended return) rather than on your 2001 return. Free state tax filling You must make this choice to deduct your loss on your 2000 return by the later of the following dates. Free state tax filling The due date (without extensions) for filing your 2001 income tax return (April 15, 2002, if you are a calendar year taxpayer). Free state tax filling The due date (with extensions) for the 2000 return. Free state tax filling For more information about disaster area losses, see Publication 547. Free state tax filling Estate Tax Reduction The federal estate tax is reduced for taxable estates of individuals who died as a result of the Oklahoma City attack, the September 11 attacks, and the anthrax attacks. Free state tax filling The estate tax is computed using a new rate schedule on page 25 of the November 2001 revision of the instructions for Form 706. Free state tax filling The estate tax is reduced by credits against the estate tax, including the unified credit and the state death tax credit. Free state tax filling These credits may reduce or eliminate the estate tax due. Free state tax filling A special rule extends until January 22, 2003, the period of time allowed to file a claim for a refund of estate taxes that have been paid. Free state tax filling Recovery from the September 11th Victim Compensation Fund. Free state tax filling   The value of claims for a decedent's pain and suffering is normally included in the gross estate. Free state tax filling However, if the estate chooses to seek recovery from this fund, the IRS has determined that, in view of the unique circumstances of this situation and the high likelihood that such claims will be valued at a nominal or zero amount, the claims will be valued at zero for estate tax purposes. Free state tax filling Thus, there are no federal estate tax consequences if an estate or beneficiary receives a recovery from this fund. Free state tax filling Which estates must file a return. Free state tax filling   For decedents dying in 2001, Form 706 must be filed by the executor for the estate of every U. Free state tax filling S. Free state tax filling citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $675,000. Free state tax filling Form 706 must be filed within 9 months after the date of decedent's death unless you receive an extension of time to file. Free state tax filling Use Form 4768, Application for Extension of Time To File a Return and/or Pay U. Free state tax filling S. Free state tax filling Estate (and Generation-Skipping Transfer) Taxes, to apply for an extension. Free state tax filling Where to file. Free state tax filling   Returns on which the new rate schedule is used should be sent to the following address, which was not available when Form 706 went to print. Free state tax filling Internal Revenue Service E & G Department/Stop 824T 201 W. Free state tax filling Rivercenter Blvd. Free state tax filling Covington, KY 41011 More information. Free state tax filling   For more information on the federal estate tax, see the instructions for Form 706. Free state tax filling Structured Settlement Factoring Transactions A person who acquires payment rights in a structured settlement arrangement after February 21, 2002, may be subject to a 40% excise tax unless the transfer of the payment rights was approved in advance in a qualified order. Free state tax filling The excise tax is figured on the excess of the undiscounted amount of the payments being acquired over the total amount actually paid to acquire them. Free state tax filling However, this tax will not apply to transactions entered into from February 22, 2002, to July 1, 2002, if certain requirements are met. Free state tax filling For information about these requirements, see Internal Revenue Code section 5891. Free state tax filling Worksheet B Illustrated. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Free state tax filling 1 2000 2001   2 Enter the decedent's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 2 $17,259 $14,295   3 Enter the decedent's total tax. Free state tax filling See the instructions. Free state tax filling 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free state tax filling See the instructions. Free state tax filling 4 3,532 3,109   5 Subtract line 4 from line 3. Free state tax filling 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions for line 2. Free state tax filling 6 29,025 29,850   7 Enter the surviving spouse's total tax. Free state tax filling See the instructions. Free state tax filling 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free state tax filling 8 0 0   9 Subtract line 8 from line 7. Free state tax filling 9 5,277 5,391   10 Add lines 5 and 9. Free state tax filling 10 7,868 7,532   11 Enter the total tax from the joint return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 11 10,789 9,728   12 Add lines 4 and 8. Free state tax filling 12 3,532 3,109   13 Subtract line 12 from line 11. Free state tax filling 13 7,257 6,619   14 Divide line 5 by line 10. Free state tax filling Enter the result as a decimal. Free state tax filling 14 . Free state tax filling 329 . Free state tax filling 284   15 Tax to be forgiven. Free state tax filling Multiply line 13 by line 14 and enter the result. Free state tax filling 15 $2,388 $1,880   Note. Free state tax filling If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Worksheet B Illustrated. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Free state tax filling 1 2000 2001   2 Enter the decedent's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 2 $17,259 $14,295   3 Enter the decedent's total tax. Free state tax filling See the instructions. Free state tax filling 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free state tax filling See the instructions. Free state tax filling 4 3,532 3,109   5 Subtract line 4 from line 3. Free state tax filling 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions for line 2. Free state tax filling 6 29,025 29,850   7 Enter the surviving spouse's total tax. Free state tax filling See the instructions. Free state tax filling 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free state tax filling 8 0 0   9 Subtract line 8 from line 7. Free state tax filling 9 5,277 5,391   10 Add lines 5 and 9. Free state tax filling 10 7,868 7,532   11 Enter the total tax from the joint return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 11 10,789 9,728   12 Add lines 4 and 8. Free state tax filling 12 3,532 3,109   13 Subtract line 12 from line 11. Free state tax filling 13 7,257 6,619   14 Divide line 5 by line 10. Free state tax filling Enter the result as a decimal. Free state tax filling 14 . Free state tax filling 329 . Free state tax filling 284   15 Tax to be forgiven. Free state tax filling Multiply line 13 by line 14 and enter the result. Free state tax filling 15 $2,388 $1,880   Note. Free state tax filling If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Illustrated Worksheets B and C A wife lost her husband in the September 11 attack on the World Trade Center. Free state tax filling They filed a joint return for 2000 and the wife chose to file a joint return as a surviving spouse for 2001. Free state tax filling The returns for 2000 and 2001 showed the following income, deductions, and tax liabilities. Free state tax filling After the husband died, his estate received income of $4,000. Free state tax filling Of that amount, $1,000 is net profit from Schedule C received before the end of 2001. Free state tax filling This net profit is exempt from income tax as explained earlier under Income received after date of death. Free state tax filling The wife files Form 1041 because the gross income of the estate for the tax year ($3,000) is $600 or more. Free state tax filling To determine how much of the husband's tax liability for 2000 and 2001 is to be forgiven, the wife completes Worksheet B. Free state tax filling She also completes Worksheet C because the forgiven tax liabilities for 2000 and 2001 (line 15 of Worksheet B) total less than $10,000. Free state tax filling To claim tax relief for 2000, the wife files Form 1040X and attaches a copy of Worksheet B. Free state tax filling To claim tax relief for 2001, she files Form 1040 and attaches copies of Worksheets B and C. Free state tax filling   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728 Worksheet C Illustrated. Free state tax filling Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free state tax filling Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free state tax filling 1 Minimum relief amount. Free state tax filling Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free state tax filling 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . Free state tax filling 3 0     4 Add lines 2 and 3. Free state tax filling 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 5 1,000     6 Add lines 4 and 5. Free state tax filling 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Free state tax filling 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Free state tax filling 8 435     9 Tax on exempt income. Free state tax filling Subtract line 8 from line 7. Free state tax filling 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free state tax filling If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free state tax filling 10 4,268     11 Add lines 9 and 10. Free state tax filling 11 $4,543 12 Additional payment allowed. Free state tax filling If line 11 is $10,000 or more, enter -0- and stop here. Free state tax filling No additional amount is allowed as a tax payment. Free state tax filling Otherwise, subtract line 11 from line 1 and enter the result. Free state tax filling 12 $5,457 Note. Free state tax filling The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free state tax filling Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Free state tax filling If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free state tax filling Write "Sec. Free state tax filling 692(d)(2) Payment" and the amount to the right of the entry space. Free state tax filling Also indicate whether a Form 1041 is being filed for the decedent's estate. Free state tax filling If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free state tax filling Write “Sec. Free state tax filling 692(d)(2) Payment” on the dotted line to the left of the entry space. Free state tax filling Worksheet C Illustrated. Free state tax filling Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free state tax filling Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free state tax filling 1 Minimum relief amount. Free state tax filling Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free state tax filling 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . Free state tax filling 3 0     4 Add lines 2 and 3. Free state tax filling 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 5 1,000     6 Add lines 4 and 5. Free state tax filling 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Free state tax filling 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Free state tax filling 8 435     9 Tax on exempt income. Free state tax filling Subtract line 8 from line 7. Free state tax filling 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free state tax filling If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free state tax filling 10 4,268     11 Add lines 9 and 10. Free state tax filling 11 $4,543 12 Additional payment allowed. Free state tax filling If line 11 is $10,000 or more, enter -0- and stop here. Free state tax filling No additional amount is allowed as a tax payment. Free state tax filling Otherwise, subtract line 11 from line 1 and enter the result. Free state tax filling 12 $5,457 Note. Free state tax filling The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free state tax filling Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Free state tax filling If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free state tax filling Write "Sec. Free state tax filling 692(d)(2) Payment" and the amount to the right of the entry space. Free state tax filling Also indicate whether a Form 1041 is being filed for the decedent's estate. Free state tax filling If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free state tax filling Write “Sec. Free state tax filling 692(d)(2) Payment” on the dotted line to the left of the entry space. Free state tax filling Additional Worksheets The following additional worksheets are provided for your convenience. Free state tax filling Worksheet A. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. Free state tax filling 1       2 Enter the total tax from the decedent's income tax return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Free state tax filling (These taxes are not eligible for forgiveness. Free state tax filling )           a Self-employment tax. Free state tax filling 3a         b Social security and Medicare tax on tip income not reported to employer. Free state tax filling 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Free state tax filling 3c         d Tax on excess accumulation in qualified retirement plans. Free state tax filling 3d         e Household employment taxes. Free state tax filling 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Free state tax filling 3f         g Tax on golden parachute payments. Free state tax filling 3g       4 Add lines 3a through 3g. Free state tax filling 4       5 Tax to be forgiven. Free state tax filling Subtract line 4 from line 2. Free state tax filling 5       Note. Free state tax filling If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Worksheet A. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. Free state tax filling 1       2 Enter the total tax from the decedent's income tax return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Free state tax filling (These taxes are not eligible for forgiveness. Free state tax filling )           a Self-employment tax. Free state tax filling 3a         b Social security and Medicare tax on tip income not reported to employer. Free state tax filling 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Free state tax filling 3c         d Tax on excess accumulation in qualified retirement plans. Free state tax filling 3d         e Household employment taxes. Free state tax filling 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Free state tax filling 3f         g Tax on golden parachute payments. Free state tax filling 3g       4 Add lines 3a through 3g. Free state tax filling 4       5 Tax to be forgiven. Free state tax filling Subtract line 4 from line 2. Free state tax filling 5       Note. Free state tax filling If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Worksheet B. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Free state tax filling 1       2 Enter the decedent's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 2       3 Enter the decedent's total tax. Free state tax filling See the instructions. Free state tax filling 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free state tax filling See the instructions. Free state tax filling 4       5 Subtract line 4 from line 3. Free state tax filling 5       6 Enter the surviving spouse's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 6       7 Enter the surviving spouse's total tax. Free state tax filling See the instructions. Free state tax filling 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free state tax filling 8       9 Subtract line 8 from line 7. Free state tax filling 9       10 Add lines 5 and 9. Free state tax filling 10       11 Enter the total tax from the joint return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 11       12 Add lines 4 and 8. Free state tax filling 12       13 Subtract line 12 from line 11. Free state tax filling 13       14 Divide line 5 by line 10. Free state tax filling Enter the result as a decimal. Free state tax filling 14       15 Tax to be forgiven. Free state tax filling Multiply line 13 by line 14 and enter the result. Free state tax filling 15       Note. Free state tax filling If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Worksheet B. Free state tax filling Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Free state tax filling 1       2 Enter the decedent's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 2       3 Enter the decedent's total tax. Free state tax filling See the instructions. Free state tax filling 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free state tax filling See the instructions. Free state tax filling 4       5 Subtract line 4 from line 3. Free state tax filling 5       6 Enter the surviving spouse's taxable income. Free state tax filling Figure taxable income as if a separate return had been filed. Free state tax filling See the instructions. Free state tax filling 6       7 Enter the surviving spouse's total tax. Free state tax filling See the instructions. Free state tax filling 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free state tax filling 8       9 Subtract line 8 from line 7. Free state tax filling 9       10 Add lines 5 and 9. Free state tax filling 10       11 Enter the total tax from the joint return. Free state tax filling See Table 1 on page 5 for the line number for years before 2002. Free state tax filling 11       12 Add lines 4 and 8. Free state tax filling 12       13 Subtract line 12 from line 11. Free state tax filling 13       14 Divide line 5 by line 10. Free state tax filling Enter the result as a decimal. Free state tax filling 14       15 Tax to be forgiven. Free state tax filling Multiply line 13 by line 14 and enter the result. Free state tax filling 15       Note. Free state tax filling If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Free state tax filling Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Free state tax filling If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Free state tax filling The IRS will determine the amount to be refunded. Free state tax filling Worksheet C. Free state tax filling Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Free state tax filling Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free state tax filling 1 Minimum tax forgiveness. Free state tax filling Note. Free state tax filling Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free state tax filling 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Free state tax filling 3       4 Add lines 2 and 3. Free state tax filling 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 5       6 Add lines 4 and 5. Free state tax filling 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free state tax filling 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free state tax filling 8       9 Tax on exempt income. Free state tax filling Subtract line 8 from line 7. Free state tax filling 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free state tax filling If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free state tax filling 10       11 Add lines 9 and 10. Free state tax filling 11   12 Additional payment allowed. Free state tax filling If line 11 is $10,000 or more, enter -0- and stop here. Free state tax filling No additional amount is allowed as a tax payment. Free state tax filling Otherwise, subtract line 11 from line 1 and enter the result. Free state tax filling 12   Note. Free state tax filling The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free state tax filling Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Free state tax filling If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free state tax filling Write "Sec. Free state tax filling 692(d)(2) Payment" and the amount to the right of the entry space. Free state tax filling Also indicate whether a Form 1041 is being filed for the decedent's estate. Free state tax filling If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free state tax filling Write “Sec. Free state tax filling 692(d)(2) Payment” on the dotted line to the left of the entry space. Free state tax filling Worksheet C. Free state tax filling Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Free state tax filling Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free state tax filling 1 Minimum tax forgiveness. Free state tax filling Note. Free state tax filling Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free state tax filling 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Free state tax filling 3       4 Add lines 2 and 3. Free state tax filling 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free state tax filling (See Income received after date of death on page 5. Free state tax filling ) 5       6 Add lines 4 and 5. Free state tax filling 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free state tax filling 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free state tax filling 8       9 Tax on exempt income. Free state tax filling Subtract line 8 from line 7. Free state tax filling 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free state tax filling If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free state tax filling 10       11 Add lines 9 and 10. Free state tax filling 11   12 Additional payment allowed. Free state tax filling If line 11 is $10,000 or more, enter -0- and stop here. Free state tax filling No additional amount is allowed as a tax payment. Free state tax filling Otherwise, subtract line 11 from line 1 and enter the result. Free state tax filling 12   Note. Free state tax filling The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free state tax filling Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Free state tax filling If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free state tax filling Write "Sec. Free state tax filling 692(d)(2) Payment" and the amount to the right of the entry space. Free state tax filling Also indicate whether a Form 1041 is being filed for the decedent's estate. Free state tax filling If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free state tax filling Write “Sec. Free state tax filling 692(d)(2) Payment” on the dotted line to the left of the entry space. Free state tax filling How To Get Tax Help Special IRS assistance. Free state tax filling   The IRS is providing special help for those affected by the terrorist attacks, as well as survivors and personal representatives of the victims. Free state tax filling We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by the terrorist attacks, or who have other tax issues related to the attacks. Free state tax filling Call 1–866–562–5227 Monday through Friday In English–7 a. Free state tax filling m. Free state tax filling to 10 p. Free state tax filling m. Free state tax filling local time In Spanish–8 a. Free state tax filling m. Free state tax filling to 9:30 p. Free state tax filling m. Free state tax filling local time   The IRS web site at www. Free state tax filling irs. Free state tax filling gov has notices and other tax relief information. Free state tax filling Check it periodically for any new guidance or to see if Congress has enacted new legislation. Free state tax filling   Business taxpayers affected by the attacks can e-mail their questions to corp. Free state tax filling disaster. Free state tax filling relief@irs. Free state tax filling gov. Free state tax filling   For current information on Presidentially declared disaster areas, check the Federal Emergency Management Agency Web site at www. Free state tax filling fema. Free state tax filling gov. Free state tax filling Other help from the IRS. Free state tax filling   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Free state tax filling By selecting the method that is best for you, you will have quick and easy access to tax help. Free state tax filling Contacting your Taxpayer Advocate. Free state tax filling   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Free state tax filling   The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Free state tax filling While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Free state tax filling   To contact your Taxpayer Advocate: Call the Taxpayer Advocate at 1–877–777–4778. Free state tax filling Call the IRS at 1–800–829–1040. Free state tax filling Call, write, or fax the Taxpayer Advocate office in your area. Free state tax filling Call 1–800–829–4059 if you are a TTY/TDD user. Free state tax filling   For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS. Free state tax filling Free tax services. Free state tax filling   To find out what services are available, get Publication 910, Guide to Free Tax Services. Free state tax filling It contains a list of free tax publications and an index of tax topics. Free state tax filling It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Free state tax filling Personal computer. Free state tax filling With your personal computer and modem, you can access the IRS on the Internet at www. Free state tax filling irs. Free state tax filling gov. Free state tax filling While visiting our web site, you can: Find answers to questions you may have. Free state tax filling Download forms and publications or search for forms and pub