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How To File Tax Extension

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How To File Tax Extension

How to file tax extension 5. How to file tax extension   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. How to file tax extension Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. How to file tax extension When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. How to file tax extension Otherwise, these are capital expenses that must be added to the basis of the land. How to file tax extension (See chapter 6 for information on determining basis. How to file tax extension ) Conservation expenses for land in a foreign country do not qualify for this special treatment. How to file tax extension The deduction for conservation expenses cannot be more than 25% of your gross income from farming. How to file tax extension See 25% Limit on Deduction , later. How to file tax extension Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. How to file tax extension These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. How to file tax extension You must include in income most government payments for approved conservation practices. How to file tax extension However, you can exclude some payments you receive under certain cost-sharing conservation programs. How to file tax extension For more information, see Agricultural Program Payments in chapter 3. How to file tax extension To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. How to file tax extension Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. How to file tax extension You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. How to file tax extension You are not farming if you are engaged only in forestry or the growing of timber. How to file tax extension Farm defined. How to file tax extension   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. How to file tax extension It also includes plantations, ranches, ranges, and orchards. How to file tax extension A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. How to file tax extension It does not include an area where they are merely caught or harvested. How to file tax extension A plant nursery is a farm for purposes of deducting soil and water conservation expenses. How to file tax extension Farm rental. How to file tax extension   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. How to file tax extension If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. How to file tax extension   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. How to file tax extension Example. How to file tax extension You own a farm in Iowa and live in California. How to file tax extension You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. How to file tax extension You cannot deduct your soil conservation expenses for this farm. How to file tax extension You must capitalize the expenses and add them to the basis of the land. How to file tax extension     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. How to file tax extension Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. How to file tax extension If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. How to file tax extension Keep a copy of the plan with your books and records to support your deductions. How to file tax extension Conservation plan. How to file tax extension   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. How to file tax extension There are three types of approved plans. How to file tax extension NRCS individual site plans. How to file tax extension These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. How to file tax extension NRCS county plans. How to file tax extension These plans include a listing of farm conservation practices approved for the county where the farmland is located. How to file tax extension You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. How to file tax extension Comparable state agency plans. How to file tax extension These plans are approved by state agencies and can be approved individual site plans or county plans. How to file tax extension   A list of NRCS conservation programs is available at www. How to file tax extension nrcs. How to file tax extension usda. How to file tax extension gov/programs. How to file tax extension Individual site plans can be obtained from NRCS offices and the comparable state agencies. How to file tax extension Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. How to file tax extension These expenses include, but are not limited to, the following. How to file tax extension The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. How to file tax extension The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. How to file tax extension The eradication of brush. How to file tax extension The planting of windbreaks. How to file tax extension You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. How to file tax extension These expenses are added to the basis of the land. How to file tax extension If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. How to file tax extension See chapter 3 for information about payments eligible for the cost-sharing exclusion. How to file tax extension New farm or farmland. How to file tax extension   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. How to file tax extension You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. How to file tax extension The new farming activity does not have to be the same as the old farming activity. How to file tax extension For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. How to file tax extension Land not used for farming. How to file tax extension   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. How to file tax extension For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. How to file tax extension You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. How to file tax extension Depreciable conservation assets. How to file tax extension   You generally cannot deduct your expenses for depreciable conservation assets. How to file tax extension However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. How to file tax extension See Assessment for Depreciable Property , later. How to file tax extension   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. How to file tax extension These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. How to file tax extension You recover your capital investment through annual allowances for depreciation. How to file tax extension   You can deduct soil and water conservation expenses for nondepreciable earthen items. How to file tax extension Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. How to file tax extension Water well. How to file tax extension   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. How to file tax extension It is a capital expense. How to file tax extension You recover your cost through depreciation. How to file tax extension You also must capitalize your cost for drilling a test hole. How to file tax extension If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. How to file tax extension You can recover the total cost through depreciation deductions. How to file tax extension   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. How to file tax extension Abandonment means that all economic benefits from the well are terminated. How to file tax extension For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. How to file tax extension Endangered species recovery expenses. How to file tax extension   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. How to file tax extension Otherwise, these are capital expenses that must be added to the basis of the land. How to file tax extension   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. How to file tax extension See Internal Revenue Code section 175 for more information. How to file tax extension Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. How to file tax extension You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. How to file tax extension Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. How to file tax extension This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. How to file tax extension The depreciable property must be used in the district's soil and water conservation activities. How to file tax extension However, the following limits apply to these assessments. How to file tax extension The total assessment limit. How to file tax extension The yearly assessment limit. How to file tax extension After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. How to file tax extension The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. How to file tax extension See Table 5-1 for a brief summary of these limits. How to file tax extension Table 5-1. How to file tax extension Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. How to file tax extension Your deductible share of the cost to the district for the property. How to file tax extension Your gross income from farming. How to file tax extension No one taxpayer can deduct more than 10% of the total assessment. How to file tax extension Any amount over 10% is a capital expense and is added to the basis of your land. How to file tax extension If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. How to file tax extension If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. How to file tax extension You can deduct the remainder in equal amounts over the next 9 tax years. How to file tax extension Limit for all conservation expenses, including assessments for depreciable property. How to file tax extension Amounts greater than 25% can be carried to the following year and added to that year's expenses. How to file tax extension The total is then subject to the 25% of gross income from farming limit in that year. How to file tax extension To ensure your deduction is within the deduction limits, keep records to show the following. How to file tax extension The total assessment against all members of the district for the depreciable property. How to file tax extension Your deductible share of the cost to the district for the depreciable property. How to file tax extension Your gross income from farming. How to file tax extension Total assessment limit. How to file tax extension   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. How to file tax extension This applies whether you pay the assessment in one payment or in installments. How to file tax extension If your assessment is more than 10% of the total amount assessed, both the following rules apply. How to file tax extension The amount over 10% is a capital expense and is added to the basis of your land. How to file tax extension If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. How to file tax extension Yearly assessment limit. How to file tax extension   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. How to file tax extension If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. How to file tax extension If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. How to file tax extension You can deduct the remainder in equal amounts over the next 9 tax years. How to file tax extension Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. How to file tax extension Example 1. How to file tax extension This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. How to file tax extension Of the assessment, $1,500 is for digging drainage ditches. How to file tax extension You can deduct this part as a soil or conservation expense as if you had paid it directly. How to file tax extension The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. How to file tax extension The total amount assessed by the district against all its members for the depreciable equipment is $7,000. How to file tax extension The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. How to file tax extension The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. How to file tax extension To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. How to file tax extension Add $500 to the result for a total of $570. How to file tax extension Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). How to file tax extension You can deduct the balance at the rate of $70 a year over the next 9 years. How to file tax extension You add $70 to the $1,500 portion of the assessment for drainage ditches. How to file tax extension You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. How to file tax extension Example 2. How to file tax extension Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. How to file tax extension The total amount assessed by the district against all its members for depreciable equipment is $5,500. How to file tax extension The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. How to file tax extension The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). How to file tax extension Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. How to file tax extension You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. How to file tax extension Sale or other disposal of land during 9-year period. How to file tax extension   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. How to file tax extension Death of farmer during 9-year period. How to file tax extension   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. How to file tax extension 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. How to file tax extension Gross income from farming. How to file tax extension   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. How to file tax extension Gains from sales of draft, breeding, or dairy livestock are included. How to file tax extension Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. How to file tax extension Carryover of deduction. How to file tax extension   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. How to file tax extension However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. How to file tax extension Example. How to file tax extension In 2012, you have gross income of $32,000 from two farms. How to file tax extension During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. How to file tax extension However, your deduction is limited to 25% of $32,000, or $8,000. How to file tax extension The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. How to file tax extension The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. How to file tax extension Any expenses over the limit in that year are carried to 2014 and later years. How to file tax extension Net operating loss. How to file tax extension   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. How to file tax extension If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. How to file tax extension When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. How to file tax extension If you do not choose to deduct the expenses, you must capitalize them. How to file tax extension Change of method. How to file tax extension   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. How to file tax extension To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. How to file tax extension You or your authorized representative must sign the request. How to file tax extension   The request must include the following information. How to file tax extension Your name and address. How to file tax extension The first tax year the method or change of method is to apply. How to file tax extension Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. How to file tax extension If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. How to file tax extension The total expenses you paid or incurred in the first tax year the method or change of method is to apply. How to file tax extension A statement that you will account separately in your books for the expenses to which this method or change of method relates. How to file tax extension Send your request to the following  address. How to file tax extension  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. How to file tax extension Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). How to file tax extension However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. How to file tax extension Gain on sale of farmland. How to file tax extension   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. How to file tax extension If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. How to file tax extension See Section 1252 property under Other Gains in chapter 9. 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Understanding your CP03C Notice

You received a tax credit (called the First-Time Homebuyer Credit) for a house you purchased. You may need to file a form to report a change in ownership to the house you purchased.

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Form 2848, Power of Attorney and Declaration of Representative.

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do


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Answers to Common Questions

How much is the repayment amount?
The repayment amount is equal to the full amount of the credit you received minus any credit repayments you may have already made.

Do I have to repay the credit if my home was is destroyed, condemned, or disposed of under threat of condemnation and I acquired a new home within two years?
You do not have to repay the credit if you purchased a new main home within two years of the event.

How and when do I repay the credit?
You must file a Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with your tax return for the year in which the change occurred. You can report your change in ownership status by checking the appropriate box in Part III (Disposition or Change in Use of Main Home for Which the Credit Was Claimed) of the form.

You have to repay the credit by including it as additional tax on the federal income tax return for the year in which the home stopped being your main home. For example, a taxpayer who reports a change of ownership occurring in 2010 must repay the first-time homebuyer credit, minus any payments they might have made to repay the credit, in their 2010 tax return.

I heard that taxpayers didn't have to repay the First Time Homebuyers Credit any longer. Didn't the law change?
The law changed for home purchases in 2009 and 2010, which now have no 15-year repayment requirement. The law did not change the repayment requirement for purchases for home that cease being a main home.

What if my spouse has died, do I have to repay the entire amount of the credit?
If, unfortunately, a spouse is deceased, the remaining spouse only has to repay half of the remaining credit balance: we won't seek repayment for the deceased spouse's half. For example, the surviving spouse will owe only $3,750 for a $7,500 first-time homebuyer credit taken on an earlier joint income tax return.

What if I don't have to pay any additional tax, do I still have to report the change in my ownership status?
Yes, even if you don't have to pay any additional tax, you still need to complete a Form 5405 to report the disposition of your property.

Page Last Reviewed or Updated: 14-Mar-2014

The How To File Tax Extension

How to file tax extension 33. How to file tax extension   Credit for the Elderly or the Disabled Table of Contents Introduction Useful Items - You may want to see: Are You Eligible for the Credit?Qualified Individual Income Limits How to Claim the CreditCredit Figured for You Credit Figured by You Introduction If you qualify, you may be able to reduce the tax you owe by taking the credit for the elderly or the disabled which is figured on Schedule R (Form 1040A or 1040). How to file tax extension This chapter explains the following. How to file tax extension Who qualifies for the credit for the elderly or the disabled. How to file tax extension How to claim the credit. How to file tax extension You may be able to take the credit for the elderly or the disabled if: You are age 65 or older at the end of 2013, or You retired on permanent and total disability and have taxable disability income. How to file tax extension Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 554 Tax Guide for Seniors Form (and Instruction) Schedule R (Form 1040A or 1040) Credit for the Elderly or the Disabled Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. How to file tax extension You are a qualified individual. How to file tax extension Your income is not more than certain limits. How to file tax extension You can use Figure 33-A and Table 33-1 as guides to see if you are eligible for the credit. How to file tax extension Use Figure 33-A first to see if you are a qualified individual. How to file tax extension If you are, go to Table 33-1 to make sure your income is not too high to take the credit. How to file tax extension You can take the credit only if you file Form 1040 or Form 1040A. How to file tax extension You cannot take the credit if you file Form 1040EZ. How to file tax extension Qualified Individual You are a qualified individual for this credit if you are a U. How to file tax extension S. How to file tax extension citizen or resident alien, and either of the following applies. How to file tax extension You were age 65 or older at the end of 2013. How to file tax extension You were under age 65 at the end of 2013 and all three of the following statements are true. How to file tax extension You retired on permanent and total disability (explained later). How to file tax extension You received taxable disability income for 2013. How to file tax extension On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). How to file tax extension Age 65. How to file tax extension   You are considered to be age 65 on the day before your 65th birthday. How to file tax extension Therefore, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. How to file tax extension U. How to file tax extension S. How to file tax extension Citizen or Resident Alien You must be a U. How to file tax extension S. How to file tax extension citizen or resident alien (or be treated as a resident alien) to take the credit. How to file tax extension Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. How to file tax extension Exceptions. How to file tax extension   You may be able to take the credit if you are a nonresident alien who is married to a U. How to file tax extension S. How to file tax extension citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. How to file tax extension S. How to file tax extension resident alien. How to file tax extension If you make that choice, both you and your spouse are taxed on your worldwide incomes. How to file tax extension If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. How to file tax extension S. How to file tax extension citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. How to file tax extension S. How to file tax extension resident alien for the entire year. How to file tax extension In that case, you may be allowed to take the credit. How to file tax extension For information on these choices, see chapter 1 of Publication 519, U. How to file tax extension S. How to file tax extension Tax Guide for Aliens. How to file tax extension Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. How to file tax extension However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. How to file tax extension Head of household. How to file tax extension   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet certain tests. How to file tax extension See Head of Household in chapter 2 for the tests you must meet. How to file tax extension Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). How to file tax extension You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. How to file tax extension Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. How to file tax extension If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. How to file tax extension Permanent and total disability. How to file tax extension    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. How to file tax extension A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. How to file tax extension See Physician's statement , later. How to file tax extension Substantial gainful activity. How to file tax extension   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. How to file tax extension Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. How to file tax extension   Substantial gainful activity is not work you do to take care of yourself or your home. How to file tax extension It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. How to file tax extension However, doing this kind of work may show that you are able to engage in substantial gainful activity. How to file tax extension    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. How to file tax extension Sheltered employment. How to file tax extension   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. How to file tax extension These qualified locations are in sheltered workshops, hospitals, and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. How to file tax extension   Compared to commercial employment, pay is lower for sheltered employment. How to file tax extension Therefore, one usually does not look for sheltered employment if he or she can get other employment. How to file tax extension The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. How to file tax extension Physician's statement. How to file tax extension   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. How to file tax extension You can use the statement in the Instructions for Schedule R. How to file tax extension    Figure 33-A. How to file tax extension Are You a Qualified Individual? This image is too large to be displayed in the current screen. How to file tax extension Please click the link to view the image. How to file tax extension Figure 33-A Are You a Qualified Individual?   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. How to file tax extension Veterans. How to file tax extension   If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. How to file tax extension VA Form 21-0172 must be signed by a person authorized by the VA to do so. How to file tax extension You can get this form from your local VA regional office. How to file tax extension Physician's statement obtained in earlier year. How to file tax extension   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. How to file tax extension For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. How to file tax extension If you meet the required conditions, check the box on your Schedule R, Part II, line 2. How to file tax extension   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. How to file tax extension Table 33-1. How to file tax extension Income Limits IF your filing status is . How to file tax extension . How to file tax extension . How to file tax extension THEN, even if you qualify (see Figure 33-A ), you CANNOT take the credit if. How to file tax extension . How to file tax extension . How to file tax extension   Your adjusted gross income (AGI)* is equal to or more than. How to file tax extension . How to file tax extension . How to file tax extension     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. How to file tax extension . How to file tax extension . How to file tax extension   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure 33-A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure 33-A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. How to file tax extension Disability income. How to file tax extension   If you are under age 65, you must also have taxable disability income to qualify for the credit. How to file tax extension Disability income must meet both of the following requirements. How to file tax extension It must be paid under your employer's accident or health plan or pension plan. How to file tax extension It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. How to file tax extension Payments that are not disability income. How to file tax extension   Any payment you receive from a plan that does not provide for disability retirement is not disability income. How to file tax extension Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. How to file tax extension   For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. How to file tax extension Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. How to file tax extension Income Limits To determine if you can claim the credit, you must consider two income limits. How to file tax extension The first limit is the amount of your adjusted gross income (AGI). How to file tax extension The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. How to file tax extension The limits are shown in Table 33-1. How to file tax extension If your AGI and nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. How to file tax extension See How to Claim the Credit , later. How to file tax extension If either your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. How to file tax extension How to Claim the Credit You can figure the credit yourself or the Internal Revenue Service will figure it for you. How to file tax extension Credit Figured for You If you choose to have the IRS figure the credit for you, read the following discussion for the form you will file (Form 1040 or 1040A). How to file tax extension If you want the IRS to figure your tax, see chapter 30. How to file tax extension Form 1040. How to file tax extension   If you want the IRS to figure your credit, see Form 1040 Line Entries under Tax Figured by IRS in chapter 30. How to file tax extension Form 1040A. How to file tax extension   If you want the IRS to figure your credit, see Form 1040A Line Entries under Tax Figured by IRS in chapter 30. How to file tax extension Credit Figured by You If you choose to figure the credit yourself, fill out the front of Schedule R. How to file tax extension Next, fill out Schedule R, Part III. How to file tax extension If you file Form 1040A, enter the amount from Schedule R, line 22, on Form 1040A, line 30. How to file tax extension If you file Form 1040, include the amount from Schedule R, line 22, on line 53; check box c, and enter “Sch R” on the line next to that box. How to file tax extension For a step-by-step discussion about filling out Part III of Schedule R, see Figuring the Credit Yourself in Publication 524. How to file tax extension Limit on credit. How to file tax extension   The amount of the credit you can claim is generally limited to the amount of your tax. How to file tax extension Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. How to file tax extension Prev  Up  Next   Home   More Online Publications