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Free turbo tax 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 turbo tax 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 turbo tax Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. Free turbo tax Any forgiven tax liability owed to the IRS will not have to be paid. Free turbo tax Any forgiven tax liability that has already been paid will be refunded. Free turbo tax (See Refund of Taxes Paid, later. Free turbo tax ) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. Free turbo tax Then read Amount of Tax Forgiven. Free turbo tax Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. Free turbo tax Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. Free turbo tax See Minimum Amount of Relief later under Amount of Tax Forgiven. Free turbo tax Years Eligible for Tax Forgiveness The following paragraphs explain which years are eligible for tax forgiveness. Free turbo tax Oklahoma City attack. Free turbo tax   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 turbo tax Example 1. Free turbo tax A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. Free turbo tax His income tax is forgiven for 1994 and 1995. Free turbo tax Example 2. Free turbo tax A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. Free turbo tax She subsequently died of her wounds in 1996. Free turbo tax Her income tax is forgiven for 1994, 1995, and 1996. Free turbo tax September 11 attacks and anthrax attacks. Free turbo tax   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 turbo tax Example 1. Free turbo tax A Pentagon employee died in the September 11 attack. Free turbo tax Her income tax is forgiven for 2000 and 2001. Free turbo tax Example 2. Free turbo tax A visitor to the World Trade Center died in 2002 of wounds he sustained in the September 11 attack. Free turbo tax His income tax liability is forgiven for 2000, 2001, and 2002. Free turbo tax Amount of Tax Forgiven The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. Free turbo tax On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness. Free turbo tax To figure the tax to be forgiven, use the following worksheets. Free turbo tax 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 turbo tax Use Worksheet B for any eligible year the decedent filed a joint return. Free turbo tax See the illustrated Worksheet B near the end of this publication. Free turbo tax Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. Free turbo tax Instead, complete Worksheet C and file a return for the decedent's last tax year. Free turbo tax See Minimum Amount of Relief, later. Free turbo tax If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times. Free turbo tax In English–7 a. Free turbo tax m. Free turbo tax to 10 p. Free turbo tax m. Free turbo tax local time. Free turbo tax In Spanish–8 a. Free turbo tax m. Free turbo tax to 9:30 p. Free turbo tax m. Free turbo tax local time. Free turbo tax Both spouses died. Free turbo tax   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 turbo tax Do this to determine if each spouse qualifies for the minimum relief of $10,000 (discussed later under Minimum Amount of Relief). Free turbo tax 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 turbo tax However, attach a computation of the forgiven tax liability to the final income tax return or amended tax return for each eligible year. Free turbo tax 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 turbo tax Residents of community property states. Free turbo tax   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 turbo tax 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 turbo tax Worksheet B. Free turbo tax 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 turbo tax 1       2 Enter the decedent's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 2       3 Enter the decedent's total tax. Free turbo tax See the instructions. Free turbo tax 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free turbo tax See the instructions. Free turbo tax 4       5 Subtract line 4 from line 3. Free turbo tax 5       6 Enter the surviving spouse's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 6       7 Enter the surviving spouse's total tax. Free turbo tax See the instructions. Free turbo tax 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free turbo tax 8       9 Subtract line 8 from line 7. Free turbo tax 9       10 Add lines 5 and 9. Free turbo tax 10       11 Enter the total tax from the joint return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 11       12 Add lines 4 and 8. Free turbo tax 12       13 Subtract line 12 from line 11. Free turbo tax 13       14 Divide line 5 by line 10. Free turbo tax Enter the result as a decimal. Free turbo tax 14       15 Tax to be forgiven. Free turbo tax Multiply line 13 by line 14 and enter the result. Free turbo tax 15       Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Worksheet B. Free turbo tax 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 turbo tax 1       2 Enter the decedent's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 2       3 Enter the decedent's total tax. Free turbo tax See the instructions. Free turbo tax 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free turbo tax See the instructions. Free turbo tax 4       5 Subtract line 4 from line 3. Free turbo tax 5       6 Enter the surviving spouse's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 6       7 Enter the surviving spouse's total tax. Free turbo tax See the instructions. Free turbo tax 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free turbo tax 8       9 Subtract line 8 from line 7. Free turbo tax 9       10 Add lines 5 and 9. Free turbo tax 10       11 Enter the total tax from the joint return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 11       12 Add lines 4 and 8. Free turbo tax 12       13 Subtract line 12 from line 11. Free turbo tax 13       14 Divide line 5 by line 10. Free turbo tax Enter the result as a decimal. Free turbo tax 14       15 Tax to be forgiven. Free turbo tax Multiply line 13 by line 14 and enter the result. Free turbo tax 15       Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Instructions for Worksheet B Table 1. Free turbo tax 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 turbo tax * 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 turbo tax ** File Form 4506 to get a transcript of the decedent's account. Free turbo tax Table 1. Free turbo tax 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 turbo tax * 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 turbo tax ** File Form 4506 to get a transcript of the decedent's account. Free turbo tax Lines 2 and 6. Free turbo tax   Allocate income and deductions in the same manner they would have been allocated if the spouses had filed separate returns. Free turbo tax   Allocate wages and salaries to the spouse who performed the services and received the Form W-2. Free turbo tax Business and investment income (including capital gains) are generally allocated to the spouse who owned the business or investment that produced the income. Free turbo tax 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 turbo tax   Allocate business deductions to the owner of the business. Free turbo tax 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 turbo tax Lines 3 and 7. Free turbo tax   Figure the total tax as if a separate return had been filed. Free turbo tax 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 turbo tax 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 turbo tax   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 turbo tax If a credit would not have been allowed on a separate return, allocate the credit shown on the joint return between the spouses. Free turbo tax 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 turbo tax Line 4. Free turbo tax   Enter the total, if any, of the following taxes. Free turbo tax Self-employment tax. Free turbo tax Social security and Medicare tax on tip income not reported to employer. Free turbo tax Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Free turbo tax Tax on excess accumulation in qualified retirement plans. Free turbo tax Household employment taxes. Free turbo tax Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Free turbo tax Tax on golden parachute payments. Free turbo tax Minimum Amount of Relief The minimum amount of relief is $10,000. Free turbo tax 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 turbo tax The IRS will refund the difference as explained under Refund of Taxes Paid. Free turbo tax Use Worksheet C to figure the additional tax payment. Free turbo tax But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years. Free turbo tax Example 1. Free turbo tax An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. Free turbo tax The $6,400 is eligible for forgiveness. Free turbo tax 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 turbo tax Example 2. Free turbo tax A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. Free turbo tax The IRS will treat $10,000 as a tax payment for 2001. Free turbo tax Income received after date of death. Free turbo tax   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 turbo tax Examples are the final paycheck or dividends on stock owned by the decedent. Free turbo tax 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 turbo tax Nonqualifying income. Free turbo tax   The following income is not exempt from tax. Free turbo tax The tax on it is not eligible for forgiveness. Free turbo tax Deferred compensation that would have been payable if the death had occurred because of an event other than these attacks. Free turbo tax Amounts that would not have been payable but for an action taken after September 11, 2001. Free turbo tax The following are examples of nonqualifying income. Free turbo tax Amounts payable from a qualified retirement plan or IRA to the beneficiary or estate of the decedent. Free turbo tax 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 turbo tax 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 turbo tax Interest on savings bonds cashed by the beneficiary of the decedent. Free turbo tax If you are responsible for the estate of a decedent, see Publication 559. Free turbo tax Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due. Free turbo tax Instructions for lines 2–9 of Worksheet C. Free turbo tax   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 turbo tax To figure the tax that would have been payable, you can use lines 2 through 9 of Worksheet C. Free turbo tax Or, if special requirements are met, you can use the alternative computation instead. Free turbo tax See Alternative computation, later. Free turbo tax   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 turbo tax Use Form 1041 to figure what the taxable income would be without including the exempt income. Free turbo tax 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 turbo tax Alternative computation. Free turbo tax   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 turbo tax 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 turbo tax The estate claimed an income distribution deduction on line 18 (Form 1041). Free turbo tax Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate. Free turbo tax 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 turbo tax 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 turbo tax Complete the rest of Worksheet C to determine the additional payment allowed. Free turbo tax Worksheet C. Free turbo tax Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free turbo tax Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free turbo tax 1 Minimum relief amount. Free turbo tax Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free turbo tax 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 turbo tax 3       4 Add lines 2 and 3. Free turbo tax 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free turbo tax (See Income received after date of death on page 5. Free turbo tax ) 5       6 Add lines 4 and 5. Free turbo tax 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free turbo tax 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free turbo tax 8       9 Tax on exempt income. Free turbo tax Subtract line 8 from line 7. Free turbo tax 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free turbo tax If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free turbo tax 10       11 Add lines 9 and 10. Free turbo tax 11   12 Additional payment allowed. Free turbo tax If line 11 is $10,000 or more, enter -0- and stop here. Free turbo tax No additional amount is allowed as a tax payment. Free turbo tax Otherwise, subtract line 11 from line 1 and enter the result. Free turbo tax 12   Note. Free turbo tax The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free turbo tax 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 turbo tax If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free turbo tax Write "Sec. Free turbo tax 692(d)(2) Payment" and the amount to the right of the entry space. Free turbo tax Also indicate whether a Form 1041 is being filed for the decedent's estate. Free turbo tax If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free turbo tax Write “Sec. Free turbo tax 692(d)(2) Payment” on the dotted line to the left of the entry space. Free turbo tax Worksheet C. Free turbo tax Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free turbo tax Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free turbo tax 1 Minimum relief amount. Free turbo tax Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free turbo tax 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 turbo tax 3       4 Add lines 2 and 3. Free turbo tax 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free turbo tax (See Income received after date of death on page 5. Free turbo tax ) 5       6 Add lines 4 and 5. Free turbo tax 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free turbo tax 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free turbo tax 8       9 Tax on exempt income. Free turbo tax Subtract line 8 from line 7. Free turbo tax 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free turbo tax If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free turbo tax 10       11 Add lines 9 and 10. Free turbo tax 11   12 Additional payment allowed. Free turbo tax If line 11 is $10,000 or more, enter -0- and stop here. Free turbo tax No additional amount is allowed as a tax payment. Free turbo tax Otherwise, subtract line 11 from line 1 and enter the result. Free turbo tax 12   Note. Free turbo tax The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free turbo tax 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 turbo tax If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free turbo tax Write "Sec. Free turbo tax 692(d)(2) Payment" and the amount to the right of the entry space. Free turbo tax Also indicate whether a Form 1041 is being filed for the decedent's estate. Free turbo tax If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free turbo tax Write “Sec. Free turbo tax 692(d)(2) Payment” on the dotted line to the left of the entry space. Free turbo tax Worksheet D. Free turbo tax 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 turbo tax (See Income received after date of death on page 5. Free turbo tax ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Free turbo tax 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Free turbo tax 5   6 Estate's tax on exempt income. Free turbo tax Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Free turbo tax Figure the total tax that would have been payable by all beneficiaries. Free turbo tax 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 turbo tax Add the amounts by which each beneficiary's income tax is increased. Free turbo tax 7   8 Add lines 6 and 7. Free turbo tax Enter this amount on line 9 of Worksheet C. Free turbo tax 8   Worksheet D. Free turbo tax 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 turbo tax (See Income received after date of death on page 5. Free turbo tax ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Free turbo tax 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Free turbo tax 5   6 Estate's tax on exempt income. Free turbo tax Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Free turbo tax Figure the total tax that would have been payable by all beneficiaries. Free turbo tax 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 turbo tax Add the amounts by which each beneficiary's income tax is increased. Free turbo tax 7   8 Add lines 6 and 7. Free turbo tax Enter this amount on line 9 of Worksheet C. Free turbo tax 8   Refund of Taxes Paid The IRS will refund the following forgiven income tax liabilities. Free turbo tax Income tax liabilities that have been paid. Free turbo tax Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. Free turbo tax See Minimum Amount of Relief, earlier. Free turbo tax Example 1. Free turbo tax 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 turbo tax The total, $14,000, is eligible for tax forgiveness. Free turbo tax However, he paid only $13,000 of that amount. Free turbo tax The IRS will refund the $13,000 paid. Free turbo tax Example 2. Free turbo tax A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. Free turbo tax The child qualifies for the minimum relief of $10,000. Free turbo tax The $10,000 is treated as a tax payment for 2001 and will be refunded. Free turbo tax Period for filing a claim for credit or refund. Free turbo tax   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 turbo tax 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 turbo tax 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 turbo tax Extension of time for victims of Oklahoma City attack. Free turbo tax   The period described above has been extended for victims of the Oklahoma City attack. Free turbo tax Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return. Free turbo tax How To Claim Tax Forgiveness Use the following procedures to claim income tax forgiveness. Free turbo tax 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 turbo tax Return required but not yet filed. Free turbo tax   File Form 1040 if the decedent was a U. Free turbo tax S. Free turbo tax citizen or resident. Free turbo tax File Form 1040NR if the decedent was a nonresident alien. Free turbo tax A nonresident alien is someone who is not a U. Free turbo tax S. Free turbo tax citizen or resident. Free turbo tax Return required and already filed. Free turbo tax   File a separate Form 1040X for each year you are claiming tax relief. Free turbo tax Return not required and not filed. Free turbo tax   File Form 1040 only for the year of death if the decedent was a U. Free turbo tax S. Free turbo tax citizen or resident. Free turbo tax File Form 1040NR if the decedent was a nonresident alien. Free turbo tax Return not required but already filed. Free turbo tax   File Form 1040X only for the year of death. Free turbo tax How to complete the returns. Free turbo tax   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 turbo tax Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. Free turbo tax If filing Form 1040 or Form 1040NR, also attach any Forms W–2. Free turbo tax 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 turbo tax Also, please write one of the following across the top of page 1 of each return. Free turbo tax KITA—Oklahoma City KITA—9/11 KITA—Anthrax “KITA” means “killed in terrorist attack. Free turbo tax ” 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 turbo tax If you need a copy, use Form 4506. Free turbo tax The IRS will provide a free copy of the tax return if you write “DISASTER” in the top margin of Form 4506. Free turbo tax Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. Free turbo tax Send Form 4506 to the address shown in the form instructions. Free turbo tax Taxpayer identification number. Free turbo tax   A taxpayer identification number must be furnished on the decedent's returns. Free turbo tax This is usually the decedent's social security number (SSN). Free turbo tax However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). Free turbo tax If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U. Free turbo tax S. Free turbo tax income tax return for any tax year, do not apply for an ITIN. Free turbo tax You may claim a refund by filing Form 1040NR without an SSN or ITIN. Free turbo tax Necessary Documents Please attach the following documents to the return or amended return. Free turbo tax Proof of death. Free turbo tax   Attach a copy of the death certificate. Free turbo tax If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate. Free turbo tax Form 1310. Free turbo tax   You must send Form 1310 with all returns and claims for refund, unless either of the following applies. Free turbo tax You are a surviving spouse filing an original or amended joint return with the decedent. Free turbo tax 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 turbo tax A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. Free turbo tax A copy of the decedent's will cannot be accepted as evidence that you are the personal representative. Free turbo tax      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 turbo tax Include a statement saying an amended return will be filed as soon as the necessary tax information is available. Free turbo tax Where To File The IRS has set up a special office for processing returns and claims for tax forgiveness. Free turbo tax Use one of the addresses shown below. Free turbo tax Where you file the returns or claims depends on whether you use the U. Free turbo tax S. Free turbo tax Postal Service or a private delivery service. Free turbo tax Please do not send these returns or claims to any of the addresses shown in the tax form instructions. Free turbo tax U. Free turbo tax S. Free turbo tax Postal Service. Free turbo tax   If you use the U. Free turbo tax S. Free turbo tax Postal Service, file these returns and claims at the following address. Free turbo tax Internal Revenue Service P. Free turbo tax O. Free turbo tax Box 4053 Woburn, MA 01888 Private delivery service. Free turbo tax   Private delivery services cannot deliver items to P. Free turbo tax O. Free turbo tax boxes. Free turbo tax If you use a private delivery service, file these returns and claims at the following address. Free turbo tax Internal Revenue Service Stop 661 310 Lowell St. Free turbo tax Andover, MA 01810 Designated private delivery services. Free turbo tax   You can use the following private delivery services to file these returns and claims. Free turbo tax Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service. Free turbo tax DHL Worldwide Express (DHL): DHL “Same Day” Service, and DHL USA Overnight. Free turbo tax Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day. Free turbo tax United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Free turbo tax M. Free turbo tax , UPS Worldwide Express Plus, and UPS Worldwide Express. Free turbo tax The private delivery service can tell you how to get written proof of the mailing date. Free turbo tax Payments to Survivors The following section discusses the tax treatment of certain amounts received by survivors. Free turbo tax September 11th Victim Compensation Fund of 2001 Payments from the September 11th Victim Compensation Fund of 2001 are not included in income. Free turbo tax Qualified Disaster Relief Payments Qualified disaster relief payments are not included in income. Free turbo tax These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Free turbo tax No withholding applies to these payments. Free turbo tax Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses. Free turbo tax Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack. Free turbo tax Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. Free turbo tax (A personal residence can be a rented residence or one you own. Free turbo tax ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack. Free turbo tax Qualified disaster relief payments also include the following. Free turbo tax 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 turbo tax Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax 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 turbo tax 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 turbo tax 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 turbo tax 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 turbo tax If that period has expired, you are granted an extension. Free turbo tax You have until January 22, 2003, to file Form 1040X to exclude the death benefits. Free turbo tax On top of page 1 of Form 1040X, write “Extension of Limitations Under PL 107–134, sec. Free turbo tax 102(b)(2). Free turbo tax ” 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 turbo tax The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt. Free turbo tax 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 turbo tax Bureau of Justice Assistance payments. Free turbo tax   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 turbo tax Government plan annuity. Free turbo tax   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 turbo tax This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer. Free turbo tax For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews. Free turbo tax More information. Free turbo tax   For more information, see Publication 559. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax Affected taxpayers. Free turbo tax   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Free turbo tax Any individual whose main home is located in a covered area (defined later). Free turbo tax Any business entity or sole proprietor whose principal place of business is located in a covered area. Free turbo tax Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained in a covered area. Free turbo tax The main home or principal place of business does not have to be located in the covered area. Free turbo tax Any estate or trust whose tax records necessary to meet a postponed tax deadline are maintained in a covered area. Free turbo tax Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered area. Free turbo tax The spouse on a joint return with a taxpayer who is eligible for postponements. Free turbo tax Any other person determined by the IRS to be affected by a terrorist attack. Free turbo tax Covered area. Free turbo tax   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 turbo tax Abatement of interest. Free turbo tax   The IRS may abate (forgive) the interest on any underpaid income tax for the length of any postponement. Free turbo tax 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 turbo tax You must make this choice to deduct your loss on your 2000 return by the later of the following dates. Free turbo tax The due date (without extensions) for filing your 2001 income tax return (April 15, 2002, if you are a calendar year taxpayer). Free turbo tax The due date (with extensions) for the 2000 return. Free turbo tax For more information about disaster area losses, see Publication 547. Free turbo tax 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 turbo tax 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 turbo tax The estate tax is reduced by credits against the estate tax, including the unified credit and the state death tax credit. Free turbo tax These credits may reduce or eliminate the estate tax due. Free turbo tax 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 turbo tax Recovery from the September 11th Victim Compensation Fund. Free turbo tax   The value of claims for a decedent's pain and suffering is normally included in the gross estate. Free turbo tax 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 turbo tax Thus, there are no federal estate tax consequences if an estate or beneficiary receives a recovery from this fund. Free turbo tax Which estates must file a return. Free turbo tax   For decedents dying in 2001, Form 706 must be filed by the executor for the estate of every U. Free turbo tax S. Free turbo tax citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $675,000. Free turbo tax 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 turbo tax Use Form 4768, Application for Extension of Time To File a Return and/or Pay U. Free turbo tax S. Free turbo tax Estate (and Generation-Skipping Transfer) Taxes, to apply for an extension. Free turbo tax Where to file. Free turbo tax   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 turbo tax Internal Revenue Service E & G Department/Stop 824T 201 W. Free turbo tax Rivercenter Blvd. Free turbo tax Covington, KY 41011 More information. Free turbo tax   For more information on the federal estate tax, see the instructions for Form 706. Free turbo tax 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 turbo tax 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 turbo tax However, this tax will not apply to transactions entered into from February 22, 2002, to July 1, 2002, if certain requirements are met. Free turbo tax For information about these requirements, see Internal Revenue Code section 5891. Free turbo tax Worksheet B Illustrated. Free turbo tax 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 turbo tax 1 2000 2001   2 Enter the decedent's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 2 $17,259 $14,295   3 Enter the decedent's total tax. Free turbo tax See the instructions. Free turbo tax 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free turbo tax See the instructions. Free turbo tax 4 3,532 3,109   5 Subtract line 4 from line 3. Free turbo tax 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions for line 2. Free turbo tax 6 29,025 29,850   7 Enter the surviving spouse's total tax. Free turbo tax See the instructions. Free turbo tax 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 turbo tax 8 0 0   9 Subtract line 8 from line 7. Free turbo tax 9 5,277 5,391   10 Add lines 5 and 9. Free turbo tax 10 7,868 7,532   11 Enter the total tax from the joint return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 11 10,789 9,728   12 Add lines 4 and 8. Free turbo tax 12 3,532 3,109   13 Subtract line 12 from line 11. Free turbo tax 13 7,257 6,619   14 Divide line 5 by line 10. Free turbo tax Enter the result as a decimal. Free turbo tax 14 . Free turbo tax 329 . Free turbo tax 284   15 Tax to be forgiven. Free turbo tax Multiply line 13 by line 14 and enter the result. Free turbo tax 15 $2,388 $1,880   Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Worksheet B Illustrated. Free turbo tax 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 turbo tax 1 2000 2001   2 Enter the decedent's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 2 $17,259 $14,295   3 Enter the decedent's total tax. Free turbo tax See the instructions. Free turbo tax 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free turbo tax See the instructions. Free turbo tax 4 3,532 3,109   5 Subtract line 4 from line 3. Free turbo tax 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions for line 2. Free turbo tax 6 29,025 29,850   7 Enter the surviving spouse's total tax. Free turbo tax See the instructions. Free turbo tax 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 turbo tax 8 0 0   9 Subtract line 8 from line 7. Free turbo tax 9 5,277 5,391   10 Add lines 5 and 9. Free turbo tax 10 7,868 7,532   11 Enter the total tax from the joint return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 11 10,789 9,728   12 Add lines 4 and 8. Free turbo tax 12 3,532 3,109   13 Subtract line 12 from line 11. Free turbo tax 13 7,257 6,619   14 Divide line 5 by line 10. Free turbo tax Enter the result as a decimal. Free turbo tax 14 . Free turbo tax 329 . Free turbo tax 284   15 Tax to be forgiven. Free turbo tax Multiply line 13 by line 14 and enter the result. Free turbo tax 15 $2,388 $1,880   Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Illustrated Worksheets B and C A wife lost her husband in the September 11 attack on the World Trade Center. Free turbo tax They filed a joint return for 2000 and the wife chose to file a joint return as a surviving spouse for 2001. Free turbo tax The returns for 2000 and 2001 showed the following income, deductions, and tax liabilities. Free turbo tax After the husband died, his estate received income of $4,000. Free turbo tax Of that amount, $1,000 is net profit from Schedule C received before the end of 2001. Free turbo tax This net profit is exempt from income tax as explained earlier under Income received after date of death. Free turbo tax The wife files Form 1041 because the gross income of the estate for the tax year ($3,000) is $600 or more. Free turbo tax To determine how much of the husband's tax liability for 2000 and 2001 is to be forgiven, the wife completes Worksheet B. Free turbo tax 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 turbo tax To claim tax relief for 2000, the wife files Form 1040X and attaches a copy of Worksheet B. Free turbo tax To claim tax relief for 2001, she files Form 1040 and attaches copies of Worksheets B and C. Free turbo tax   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 turbo tax Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free turbo tax Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free turbo tax 1 Minimum relief amount. Free turbo tax Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free turbo tax 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 turbo tax 3 0     4 Add lines 2 and 3. Free turbo tax 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Free turbo tax (See Income received after date of death on page 5. Free turbo tax ) 5 1,000     6 Add lines 4 and 5. Free turbo tax 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Free turbo tax 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Free turbo tax 8 435     9 Tax on exempt income. Free turbo tax Subtract line 8 from line 7. Free turbo tax 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free turbo tax If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free turbo tax 10 4,268     11 Add lines 9 and 10. Free turbo tax 11 $4,543 12 Additional payment allowed. Free turbo tax If line 11 is $10,000 or more, enter -0- and stop here. Free turbo tax No additional amount is allowed as a tax payment. Free turbo tax Otherwise, subtract line 11 from line 1 and enter the result. Free turbo tax 12 $5,457 Note. Free turbo tax The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free turbo tax 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 turbo tax If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free turbo tax Write "Sec. Free turbo tax 692(d)(2) Payment" and the amount to the right of the entry space. Free turbo tax Also indicate whether a Form 1041 is being filed for the decedent's estate. Free turbo tax If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free turbo tax Write “Sec. Free turbo tax 692(d)(2) Payment” on the dotted line to the left of the entry space. Free turbo tax Worksheet C Illustrated. Free turbo tax Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Free turbo tax Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free turbo tax 1 Minimum relief amount. Free turbo tax Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free turbo tax 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 turbo tax 3 0     4 Add lines 2 and 3. Free turbo tax 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Free turbo tax (See Income received after date of death on page 5. Free turbo tax ) 5 1,000     6 Add lines 4 and 5. Free turbo tax 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Free turbo tax 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Free turbo tax 8 435     9 Tax on exempt income. Free turbo tax Subtract line 8 from line 7. Free turbo tax 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free turbo tax If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free turbo tax 10 4,268     11 Add lines 9 and 10. Free turbo tax 11 $4,543 12 Additional payment allowed. Free turbo tax If line 11 is $10,000 or more, enter -0- and stop here. Free turbo tax No additional amount is allowed as a tax payment. Free turbo tax Otherwise, subtract line 11 from line 1 and enter the result. Free turbo tax 12 $5,457 Note. Free turbo tax The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free turbo tax 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 turbo tax If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free turbo tax Write "Sec. Free turbo tax 692(d)(2) Payment" and the amount to the right of the entry space. Free turbo tax Also indicate whether a Form 1041 is being filed for the decedent's estate. Free turbo tax If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free turbo tax Write “Sec. Free turbo tax 692(d)(2) Payment” on the dotted line to the left of the entry space. Free turbo tax Additional Worksheets The following additional worksheets are provided for your convenience. Free turbo tax Worksheet A. Free turbo tax 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 turbo tax 1       2 Enter the total tax from the decedent's income tax return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Free turbo tax (These taxes are not eligible for forgiveness. Free turbo tax )           a Self-employment tax. Free turbo tax 3a         b Social security and Medicare tax on tip income not reported to employer. Free turbo tax 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Free turbo tax 3c         d Tax on excess accumulation in qualified retirement plans. Free turbo tax 3d         e Household employment taxes. Free turbo tax 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Free turbo tax 3f         g Tax on golden parachute payments. Free turbo tax 3g       4 Add lines 3a through 3g. Free turbo tax 4       5 Tax to be forgiven. Free turbo tax Subtract line 4 from line 2. Free turbo tax 5       Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Worksheet A. Free turbo tax 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 turbo tax 1       2 Enter the total tax from the decedent's income tax return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Free turbo tax (These taxes are not eligible for forgiveness. Free turbo tax )           a Self-employment tax. Free turbo tax 3a         b Social security and Medicare tax on tip income not reported to employer. Free turbo tax 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Free turbo tax 3c         d Tax on excess accumulation in qualified retirement plans. Free turbo tax 3d         e Household employment taxes. Free turbo tax 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Free turbo tax 3f         g Tax on golden parachute payments. Free turbo tax 3g       4 Add lines 3a through 3g. Free turbo tax 4       5 Tax to be forgiven. Free turbo tax Subtract line 4 from line 2. Free turbo tax 5       Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Worksheet B. Free turbo tax 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 turbo tax 1       2 Enter the decedent's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 2       3 Enter the decedent's total tax. Free turbo tax See the instructions. Free turbo tax 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free turbo tax See the instructions. Free turbo tax 4       5 Subtract line 4 from line 3. Free turbo tax 5       6 Enter the surviving spouse's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 6       7 Enter the surviving spouse's total tax. Free turbo tax See the instructions. Free turbo tax 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free turbo tax 8       9 Subtract line 8 from line 7. Free turbo tax 9       10 Add lines 5 and 9. Free turbo tax 10       11 Enter the total tax from the joint return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 11       12 Add lines 4 and 8. Free turbo tax 12       13 Subtract line 12 from line 11. Free turbo tax 13       14 Divide line 5 by line 10. Free turbo tax Enter the result as a decimal. Free turbo tax 14       15 Tax to be forgiven. Free turbo tax Multiply line 13 by line 14 and enter the result. Free turbo tax 15       Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Worksheet B. Free turbo tax 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 turbo tax 1       2 Enter the decedent's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 2       3 Enter the decedent's total tax. Free turbo tax See the instructions. Free turbo tax 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Free turbo tax See the instructions. Free turbo tax 4       5 Subtract line 4 from line 3. Free turbo tax 5       6 Enter the surviving spouse's taxable income. Free turbo tax Figure taxable income as if a separate return had been filed. Free turbo tax See the instructions. Free turbo tax 6       7 Enter the surviving spouse's total tax. Free turbo tax See the instructions. Free turbo tax 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Free turbo tax 8       9 Subtract line 8 from line 7. Free turbo tax 9       10 Add lines 5 and 9. Free turbo tax 10       11 Enter the total tax from the joint return. Free turbo tax See Table 1 on page 5 for the line number for years before 2002. Free turbo tax 11       12 Add lines 4 and 8. Free turbo tax 12       13 Subtract line 12 from line 11. Free turbo tax 13       14 Divide line 5 by line 10. Free turbo tax Enter the result as a decimal. Free turbo tax 14       15 Tax to be forgiven. Free turbo tax Multiply line 13 by line 14 and enter the result. Free turbo tax 15       Note. Free turbo tax 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 turbo tax 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 turbo tax 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 turbo tax The IRS will determine the amount to be refunded. Free turbo tax Worksheet C. Free turbo tax Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Free turbo tax Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free turbo tax 1 Minimum tax forgiveness. Free turbo tax Note. Free turbo tax Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free turbo tax 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 turbo tax 3       4 Add lines 2 and 3. Free turbo tax 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free turbo tax (See Income received after date of death on page 5. Free turbo tax ) 5       6 Add lines 4 and 5. Free turbo tax 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free turbo tax 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free turbo tax 8       9 Tax on exempt income. Free turbo tax Subtract line 8 from line 7. Free turbo tax 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free turbo tax If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free turbo tax 10       11 Add lines 9 and 10. Free turbo tax 11   12 Additional payment allowed. Free turbo tax If line 11 is $10,000 or more, enter -0- and stop here. Free turbo tax No additional amount is allowed as a tax payment. Free turbo tax Otherwise, subtract line 11 from line 1 and enter the result. Free turbo tax 12   Note. Free turbo tax The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free turbo tax 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 turbo tax If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free turbo tax Write "Sec. Free turbo tax 692(d)(2) Payment" and the amount to the right of the entry space. Free turbo tax Also indicate whether a Form 1041 is being filed for the decedent's estate. Free turbo tax If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Free turbo tax Write “Sec. Free turbo tax 692(d)(2) Payment” on the dotted line to the left of the entry space. Free turbo tax Worksheet C. Free turbo tax Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Free turbo tax Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Free turbo tax 1 Minimum tax forgiveness. Free turbo tax Note. Free turbo tax Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Free turbo tax 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 turbo tax 3       4 Add lines 2 and 3. Free turbo tax 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Free turbo tax (See Income received after date of death on page 5. Free turbo tax ) 5       6 Add lines 4 and 5. Free turbo tax 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Free turbo tax 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Free turbo tax 8       9 Tax on exempt income. Free turbo tax Subtract line 8 from line 7. Free turbo tax 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Free turbo tax If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Free turbo tax 10       11 Add lines 9 and 10. Free turbo tax 11   12 Additional payment allowed. Free turbo tax If line 11 is $10,000 or more, enter -0- and stop here. Free turbo tax No additional amount is allowed as a tax payment. Free turbo tax Otherwise, subtract line 11 from line 1 and enter the result. Free turbo tax 12   Note. Free turbo tax The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Free turbo tax 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 turbo tax If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Free turbo tax Write "Sec. Free turbo tax 692(d)(2) Payment" and the amount to the right of the entry space. Free turbo tax Also indicate whether a Form 1041 is being filed for the decedent's estate. Free turbo tax If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). 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