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Tax Amendment Form

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Tax Amendment Form

Tax amendment form Index A Additional child tax credit, Additional child tax credit. Tax amendment form Additional Medicare Tax, What's New, Useful Items - You may want to see:, Additional Medicare Tax. Tax amendment form , Additional Medicare Tax. Tax amendment form , Additional Medicare Tax. Tax amendment form , Additional Medicare Tax. Tax amendment form , Additional Medicare Tax. Tax amendment form , Additional Medicare Tax Aliens Nonresident (see specific possession) Resident (see specific possession) American Samoa, American Samoa, Double Taxation Form 4563, Form 4563. Tax amendment form Armed forces, U. Tax amendment form S. Tax amendment form Bona fide residence, Special rule for members of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Armed Forces, U. Tax amendment form S. Tax amendment form Earned income credit, Earned income credit. Tax amendment form , U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Source of income, U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Spouse, Special rule for civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Assistance (see Tax help) Awards and prizes, Scholarships, Fellowships, Grants, Prizes, and Awards B Bankruptcy cases, Chapter 11, Chapter 11 Bankruptcy cases. Tax amendment form Bona fide residence, Bona Fide Residence, Worldwide gross income. Tax amendment form Closer connection, Closer Connection, Exception for Year of Move Year of move, Exception for Year of Move, Special Rules in the Year of a Move, Puerto Rico Presence test, Presence Test, Charitable sports event, Charitable Sports Event Child, defined, Days of presence in a possession. Tax amendment form Nonresident aliens, Special rule for nonresident aliens. Tax amendment form Possession, days in, Days of presence in a possession. Tax amendment form Qualifying medical treatment, Qualifying Medical Treatment Significant connection, Significant Connection, Student, Student U. Tax amendment form S. Tax amendment form , days in, Days of presence in the United States. Tax amendment form Reporting change in residency status, Reporting a Change in Bona Fide Residence, Worldwide gross income. Tax amendment form Penalty for not reporting, Penalty for Not Filing Form 8898 Tax home, Tax Home, Year of Move Exceptions, Exceptions Government officials, Students and Government Officials Seafarers, Seafarers Students, Students and Government Officials Year of move, Year of Move, Special Rules in the Year of a Move, Puerto Rico Tests to meet, Bona Fide Residence U. Tax amendment form S. Tax amendment form Armed Forces, Special rule for members of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Year of move, Special Rules in the Year of a Move, Puerto Rico Puerto Rico, Puerto Rico C Change in residency status, reporting, Reporting a Change in Bona Fide Residence, Worldwide gross income. Tax amendment form Penalty for not reporting, Penalty for Not Filing Form 8898 Change of address, Reminders Charitable sports event, Charitable Sports Event Child tax credit, additional, Additional child tax credit. Tax amendment form Child, defined, Days of presence in a possession. Tax amendment form Closer connection, Closer Connection, Exception for Year of Move Year of move, Exception for Year of Move, Special Rules in the Year of a Move, Puerto Rico CNMI tax return, Nonresident Alien (Other Than a Bona Fide Resident of the CNMI) Commonwealth of Puerto Rico, The Commonwealth of Puerto Rico, Double Taxation Commonwealth of the Northern Mariana Islands (CNMI), The Commonwealth of the Northern Mariana Islands, Double Taxation Form 5074, Form 5074. Tax amendment form Compensation for labor or personal services, Compensation for Labor or Personal Services, Pensions. Tax amendment form Alternative basis, Alternative basis. Tax amendment form Multi-year compensation, Multi-year compensation. Tax amendment form Time basis, Time basis. Tax amendment form Competent Authority Assistance, Competent Authority Assistance How to make your request, How to make your request. Tax amendment form Credit or Refund File a claim for credit or refund of any overpayment sought, Credit or Refund Credits Earned income, Reminders, Earned income credit. Tax amendment form Foreign tax, U. Tax amendment form S. Tax amendment form Government employees. Tax amendment form , Moving expense deduction. Tax amendment form , Foreign Tax Credit if Possession Income Is Excluded D Deductions IRA contribution, Individual retirement arrangement (IRA) deduction. Tax amendment form Moving expenses U. Tax amendment form S. Tax amendment form return, Moving expense deduction. Tax amendment form Personal exemptions, Personal Exemptions Self-employment tax, one-half of, Self-employment tax deduction. Tax amendment form Standard deduction, Standard Deduction Deductions if Possession Income Is Excluded, Deductions if Possession Income Is Excluded Dispositions of certain property, special rules for, Special Rules for Gains From Dispositions of Certain Property Dividends, Dividends. Tax amendment form Double taxation, inconsistent tax treatment Mutual agreement procedure, Double Taxation E Earned income credit, Reminders, Earned income credit. Tax amendment form Effectively connected income, Effectively Connected Income Estimated tax payments, Estimated tax payments. Tax amendment form , Estimated tax payments. Tax amendment form , Estimated tax payments. Tax amendment form , Estimated tax payments. Tax amendment form , Estimated tax payments. Tax amendment form , Estimated Tax Exemptions, deduction for, Personal Exemptions Extension of time to file U. Tax amendment form S. Tax amendment form return, Extension of Time To File USVI, Extension of time to file. Tax amendment form F Filing requirements American Samoa, American Samoa, Double Taxation Form 4563, Form 4563. Tax amendment form CNMI, The Commonwealth of the Northern Mariana Islands, Double Taxation Form 5074, Form 5074. Tax amendment form Guam, Guam, Double Taxation Form 5074, Form 5074. Tax amendment form Possessions, Filing Information for Individuals in Certain U. Tax amendment form S. Tax amendment form Possessions, Double Taxation Puerto Rico, The Commonwealth of Puerto Rico, Double Taxation U. Tax amendment form S. Tax amendment form return, Filing Requirement if Possession Income Is Excluded USVI, The U. Tax amendment form S. Tax amendment form Virgin Islands, Double Taxation Form 1040INFO, Form 1040INFO. Tax amendment form Form 4868, Extension of time to file. Tax amendment form Form 8689, Form 8689. Tax amendment form Foreign tax credit, Foreign Tax Credit if Possession Income Is Excluded Form 1040-ES, Estimated Tax 1040-PR, Additional child tax credit. Tax amendment form 1040-SS, Self-employment tax. Tax amendment form , Additional child tax credit. Tax amendment form , Self-employment tax. Tax amendment form , Self-employment tax. Tax amendment form , Self-employment tax. Tax amendment form 1040INFO, Form 1040INFO. Tax amendment form 1040NR, Nonresident alien. Tax amendment form , Nonresident alien. Tax amendment form , Nonresident Alien (Other Than a Bona Fide Resident of the CNMI), Nonresident Alien (Other Than a Bona Fide Resident of Guam), Nonresident Alien (Other Than a Bona Fide Resident of the USVI) 1116, U. Tax amendment form S. Tax amendment form Government employees. Tax amendment form , Moving expense deduction. Tax amendment form , Foreign Tax Credit if Possession Income Is Excluded 3903, Moving expense deduction. Tax amendment form , Moving expense deduction. Tax amendment form , Moving expense deduction. Tax amendment form , Moving expense deduction. Tax amendment form , Moving expense deduction. Tax amendment form , Moving expense deduction. Tax amendment form 4563, Form 4563. Tax amendment form 4563, illustrated example, Illustrated Example of Form 4563, Line 15. Tax amendment form , 4868, Extension of time to file. Tax amendment form , Automatic 6-Month Extension 5074, Form 5074. Tax amendment form , Moving expense deduction. Tax amendment form , Form 5074. Tax amendment form , Moving expense deduction. Tax amendment form 5074, illustrated example, Illustrated Example of Form 5074, Part III. Tax amendment form , 8689, Form 8689. Tax amendment form 8689, illustrated example, Illustrated Example of Form 8689, Part IV. Tax amendment form , 8822, Reminders 8898, Reporting a Change in Bona Fide Residence, Penalty for Not Filing Form 8898 Schedule A (Form 1040), Itemized Deductions Schedule SE (Form 1040), Self-Employment Tax Free tax services, Free help with your tax return. Tax amendment form Fringe benefits, Certain fringe benefits sourced on a geographical basis. Tax amendment form G Government employees, U. Tax amendment form S. Tax amendment form (see specific possession) Grants, Scholarships, Fellowships, Grants, Prizes, and Awards Guam, Guam, Double Taxation Form 5074, Form 5074. Tax amendment form H Help (see Tax help) I Income Awards and prizes, Scholarships, Fellowships, Grants, Prizes, and Awards Effectively connected income, Effectively Connected Income Grants, Scholarships, Fellowships, Grants, Prizes, and Awards Investments, Investment Income, Royalties. Tax amendment form Labor or personal services, Compensation for Labor or Personal Services, Pensions. Tax amendment form Pensions, Pensions. Tax amendment form Sales or other dispositions of property, Sales or Other Dispositions of Property, Special Rules for Gains From Dispositions of Certain Property Scholarships and fellowships, Scholarships, Fellowships, Grants, Prizes, and Awards Services performed partly within a possession, Services performed partly inside and partly outside a relevant possession. Tax amendment form , Alternative basis. Tax amendment form Source of, Possession Source Income U. Tax amendment form S. Tax amendment form Armed Forces, U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form U. Tax amendment form S. Tax amendment form income rule, U. Tax amendment form S. Tax amendment form income rule. Tax amendment form Income from American Samoa or Puerto Rico excluded. Tax amendment form , Income from American Samoa or Puerto Rico excluded. Tax amendment form Deductions if income from American Samoa or Puerto Rico excluded, Deductions if Possession Income Is Excluded Interest income, Interest income. Tax amendment form Inventory Sales or other dispositions of, Inventory. Tax amendment form Investment income, Investment Income, Royalties. Tax amendment form IRA deduction, Individual retirement arrangement (IRA) deduction. Tax amendment form Itemized deductions, Itemized Deductions M Medical treatment, qualifying, Qualifying Medical Treatment Moving expense deduction U. Tax amendment form S. Tax amendment form return, Moving expense deduction. Tax amendment form N Net Investment Income Tax, What's New, Useful Items - You may want to see:, Net Investment Income Tax. Tax amendment form , Net Investment Income Tax. Tax amendment form , Net Investment Income Tax Nonresident alien (see specific possession) Northern Mariana Islands (CNMI), The Commonwealth of the Northern Mariana Islands, Double Taxation P Paying your taxes, Paying Your Taxes Penalty Failure to report change in residency status, Penalty for Not Filing Form 8898 Pension income, Pensions. Tax amendment form Permanent home, Permanent home. Tax amendment form Personal exemptions, deduction for, Personal Exemptions Personal property Sales or other dispositions of, Personal property. Tax amendment form Personal service income, Compensation for Labor or Personal Services, Pensions. Tax amendment form Possession source income, Possession Source Income, Effectively Connected Income Awards and prizes, Scholarships, Fellowships, Grants, Prizes, and Awards Effectively connected income, Effectively Connected Income Grants, Scholarships, Fellowships, Grants, Prizes, and Awards Investment income, Investment Income, Royalties. Tax amendment form Labor or personal services, Compensation for Labor or Personal Services, Pensions. Tax amendment form Pensions, Pensions. Tax amendment form Sales or other dispositions of property, Sales or Other Dispositions of Property, Special Rules for Gains From Dispositions of Certain Property Scholarships and fellowships, Scholarships, Fellowships, Grants, Prizes, and Awards Services performed partly within a possession, Services performed partly inside and partly outside a relevant possession. Tax amendment form , Alternative basis. Tax amendment form U. Tax amendment form S. Tax amendment form Armed Forces, U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form U. Tax amendment form S. Tax amendment form income rule, U. Tax amendment form S. Tax amendment form income rule. Tax amendment form Possessions, list of, Introduction Presence test, Presence Test, Charitable sports event, Charitable Sports Event Child, defined, Days of presence in a possession. Tax amendment form Nonresident aliens, Special rule for nonresident aliens. Tax amendment form Possession, days in, Days of presence in a possession. Tax amendment form Qualifying medical treatment, Qualifying Medical Treatment Significant connection, Significant Connection, Permanent home, Permanent home. Tax amendment form Student, Student U. Tax amendment form S. Tax amendment form , days in, Days of presence in the United States. Tax amendment form Prizes, Scholarships, Fellowships, Grants, Prizes, and Awards Publications (see Tax help) Puerto Rico, The Commonwealth of Puerto Rico, Double Taxation Additional child tax credit, Additional child tax credit. Tax amendment form Bona fide residence Year of move, Puerto Rico Q Qualifying medical treatment, Qualifying Medical Treatment R Real property Sales or other dispositions of, Real property. Tax amendment form Reminders Earned income credit (EIC). Tax amendment form , Reminders Electronic filing. Tax amendment form , Reminders Rental income, Rental income. Tax amendment form Resident alien (see specific possession) Royalty income, Royalties. Tax amendment form S Scholarships and fellowships, Scholarships, Fellowships, Grants, Prizes, and Awards Self-employment tax U. Tax amendment form S. Tax amendment form return, Self-Employment Tax Self-employment tax deduction, Self-employment tax deduction. Tax amendment form Services performed partly within a possession, Services performed partly inside and partly outside a relevant possession. Tax amendment form , Alternative basis. Tax amendment form Significant connection, Significant Connection, Source of income, Possession Source Income, Effectively Connected Income Awards and prizes, Scholarships, Fellowships, Grants, Prizes, and Awards Effectively connected income, Effectively Connected Income Grants, Scholarships, Fellowships, Grants, Prizes, and Awards Investment income, Investment Income, Royalties. Tax amendment form Labor or personal services, Compensation for Labor or Personal Services, Pensions. Tax amendment form Pensions, Pensions. Tax amendment form Sales or other dispositions of property, Sales or Other Dispositions of Property, Special Rules for Gains From Dispositions of Certain Property Scholarships and fellowships, Scholarships, Fellowships, Grants, Prizes, and Awards Services performed partly within a possession, Services performed partly inside and partly outside a relevant possession. Tax amendment form , Alternative basis. Tax amendment form U. Tax amendment form S. Tax amendment form Armed Forces, U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form U. Tax amendment form S. Tax amendment form income rule, U. Tax amendment form S. Tax amendment form income rule. Tax amendment form Special rules for filing (see specific possession) Special rules for gains from dispositions of certain property, Special Rules for Gains From Dispositions of Certain Property Sports event, charitable, Charitable Sports Event Standard deduction, Standard Deduction Statement of Specified Foreign Financial Assets, Form 8938,, Reminders Student, Student T Tables U. Tax amendment form S. Tax amendment form filing requirements for most taxpayers (Table 4-1), U. Tax amendment form S. Tax amendment form source of income (Table 2-1), Table 2-1. Tax amendment form General Rules for Determining U. Tax amendment form S. Tax amendment form Source of Income Tax help, How To Get Tax Help Tax home, Tax Home, Year of Move Exceptions, Exceptions Government officials, Students and Government Officials Seafarers, Seafarers Students, Students and Government Officials Year of move, Year of Move, Special Rules in the Year of a Move, Puerto Rico Taxpayer Clinics, Low Income Taxpayer Clinics, Low Income Taxpayer Clinics (LITCs). Tax amendment form TTY/TDD information, How To Get Tax Help U U. Tax amendment form S. Tax amendment form Armed Forces Bona fide residence, Special rule for members of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Earned income credit, Earned income credit. Tax amendment form , U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Source of income, U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form Spouse, Special rule for civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form , Civilian spouse of active duty member of the U. Tax amendment form S. Tax amendment form Armed Forces. Tax amendment form U. Tax amendment form S. Tax amendment form Government employees (see specific possession) U. Tax amendment form S. Tax amendment form income rule, U. Tax amendment form S. Tax amendment form income rule. Tax amendment form U. Tax amendment form S. Tax amendment form return with excluded income, Deductions if Possession Income Is Excluded U. Tax amendment form S. Tax amendment form return, possession income excluded on, Special Rules for Completing Your U. Tax amendment form S. Tax amendment form Tax Return, Foreign Tax Credit if Possession Income Is Excluded Credits Earned income credit, Earned income credit. Tax amendment form Foreign tax credit, Foreign Tax Credit if Possession Income Is Excluded Deductions IRA contribution, Individual retirement arrangement (IRA) deduction. Tax amendment form Itemized deductions, Itemized Deductions Moving expenses, Moving expense deduction. Tax amendment form Personal exemptions, Personal Exemptions Self-employment tax, one-half of, Self-employment tax deduction. Tax amendment form Standard deduction, Standard Deduction U. Tax amendment form S. Tax amendment form taxation of possession income, to get information on, Introduction U. Tax amendment form S. Tax amendment form Virgin Islands (USVI), The U. Tax amendment form S. Tax amendment form Virgin Islands, Double Taxation Form 1040INFO, Form 1040INFO. Tax amendment form Form 4868, Extension of time to file. Tax amendment form Form 8689, Form 8689. Tax amendment form V Virgin Islands, U. Tax amendment form S. Tax amendment form , The U. Tax amendment form S. Tax amendment form Virgin Islands, Double Taxation W When to file U. Tax amendment form S. Tax amendment form return, When To File, Extension beyond 2 months. Tax amendment form Where To File U. Tax amendment form S. Tax amendment form return, Where To File Which return to file (see specific possession) Who must file U. Tax amendment form S. Tax amendment form return, Filing Requirement if Possession Income Is Excluded Prev  Up     Home   More Online Publications
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Contact My Local Office in California

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone*
Bakersfield 4825 Coffee Rd.
Bakersfield, CA 93308

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(661) 632-2799
Camarillo 751 Daily Dr.
Camarillo, CA 93010

Monday-Friday - 8:30 a.m. - 4:30 p.m.
 

Services Provided

(805) 445-4771
Chico 1395 Ridgewood Dr.
Chico, CA 95973

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)
 

Services Provided

(530) 343-2324
El Centro 2345 S. Second St.
El Centro, CA 92243

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(760) 352-3721
El Monte 9350 East Flair Dr.
El Monte, CA 91731

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(626) 927-1201
Fresno 2525 Capitol St
Fresno, CA 93721

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(559) 444-2044
Laguna Niguel 24000 Avila Rd.
Laguna Niguel, CA 92677

Monday-Friday 8:30 a.m.- 4:30 p.m.

 

Services Provided

(949) 389-4002
Long Beach 501 W. Ocean Blvd.
Long Beach, CA 90802

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(562) 491-7751
Los Angeles 300 N. Los Angeles St.
Los Angeles, CA 90012

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(213) 576-3009
Modesto 1533 Lakewood Ave.
Modesto, CA 95355

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(209) 548-7388
Oakland 1301 Clay St.
Oakland, CA 94612

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(510) 637-2487
Palm Springs 556 S. Paseo Dorotea
Palm Springs, CA 92264

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(760) 866-6125
Redding 850 Industrial St.
Redding, CA 96002

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(530) 224-0695
Sacramento  4330 Watt Ave.
Sacramento, CA 95821 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(916) 974-5225 
Salinas  928 East Blanco Rd
Salinas, CA  93901 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(831) 753-6895 
San Bernardino  290 N. D St.
San Bernardino, CA 92401 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(909) 388-8108 
San Diego  880 Front St.
San Diego, CA 92101 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

  Services Provided

(619) 615-9555 
San Francisco  450 Golden Gate Ave.
San Francisco, CA 94102 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(415) 553-8990 
San Jose  55 S. Market St.
San Jose, CA 95113 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(408) 282-0179 
San Marcos  1 Civic Center Dr.
San Marcos, CA 92069 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(760) 736-7355
Santa Ana  801 Civic Center Drive W.
Santa Ana, CA 92701 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(714) 347-9204 
Santa Barbara  1332 Anacapa St.
Santa Barbara, CA 93101 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.) 

 

Services Provided

(805) 564-7555 
Santa Maria  2384 Professional Parkway
Santa Maria, CA 93455 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 1:00 p.m. - 2:00 p.m.)
 

Services Provided

(805) 352-0355 
Santa Rosa  777 Sonoma Ave.
Santa Rosa, CA 95404 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(707) 523-0924
Stockton  4643 Quail Lakes Dr.
Stockton, CA 95207 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(209) 942-1910 
Van Nuys  6230 Van Nuys Blvd.
Van Nuys, CA 91401 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

Services Provided

(818) 779-3625 
Visalia  5300 W. Tulare St.
Visalia, CA 93277

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.) 
 

Services Provided

(559) 265-4109 

Walnut Creek  185 Lennon Lane
Walnut Creek, CA 94598 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(925) 935-9308

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service:  Within California call:

 Oakland  (510) 637-2703
 San Jose  (408) 817-6850
 Los Angeles  (213) 576-3140
 Laguna Niguel  (949) 389-4804
 Sacramento   (916) 974-5007

Call 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
300 North Los Angeles St. MS 6602
Los Angeles, CA 90012

Internal Revenue Service
4330 Watt Avenue, SA 5650
North Highlands, CA 95660

Internal Revenue Service
1 Civic Center Drive, Ste. 400
San Marcos, CA 92069

Internal Revenue Service
1301 Clay Street, 110S
Oakland, CA 94612

Internal Revenue Service
55 South Market HQ 6600
San Jose, CA 95113

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Tax Amendment Form

Tax amendment form 4. Tax amendment form   Interest Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Allocation of InterestOrder of funds spent. Tax amendment form Payments from checking accounts. Tax amendment form Amounts paid within 30 days. Tax amendment form Optional method for determining date of reallocation. Tax amendment form Interest on a segregated account. Tax amendment form How to report. Tax amendment form Interest You Can DeductStatement. Tax amendment form Expenses paid to obtain a mortgage. Tax amendment form Prepayment penalty. Tax amendment form De minimis OID. Tax amendment form Constant-yield method. Tax amendment form Loan or mortgage ends. Tax amendment form Interest You Cannot DeductPenalties. Tax amendment form Who is a key person? Exceptions for pre-June 1997 contracts. Tax amendment form Interest allocated to unborrowed policy cash value. Tax amendment form Capitalization of Interest When To Deduct InterestPrepaid interest. Tax amendment form Discounted loan. Tax amendment form Refunds of interest. Tax amendment form Prepaid interest. Tax amendment form Discounted loan. Tax amendment form Tax deficiency. Tax amendment form Related person. Tax amendment form Below-Market LoansLimit on forgone interest for gift loans of $100,000 or less. Tax amendment form Introduction This chapter discusses the tax treatment of business interest expense. Tax amendment form Business interest expense is an amount charged for the use of money you borrowed for business activities. Tax amendment form Topics - This chapter discusses: Allocation of interest Interest you can deduct Interest you cannot deduct Capitalization of interest When to deduct interest Below-market loans Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 936 Home Mortgage Interest Deduction Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch E (Form 1040) Supplemental Income and Loss Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Tax amendment form Sch K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. Tax amendment form 1098 Mortgage Interest Statement 3115 Application for Change in Accounting Method 4952 Investment Interest Expense Deduction 8582 Passive Activity Loss Limitations See chapter 12 for information about getting publications and forms. Tax amendment form Allocation of Interest The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. Tax amendment form If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds. Tax amendment form Allocate your interest expense to the following categories. Tax amendment form Nonpassive trade or business activity interest Passive trade or business activity interest Investment interest Portfolio interest Personal interest In general, you allocate interest on a loan the same way you allocate the loan proceeds. Tax amendment form You allocate loan proceeds by tracing disbursements to specific uses. Tax amendment form The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds. Tax amendment form Secured loan. Tax amendment form   The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan. Tax amendment form Example. Tax amendment form You secure a loan with property used in your business. Tax amendment form You use the loan proceeds to buy an automobile for personal use. Tax amendment form You must allocate interest expense on the loan to personal use (purchase of the automobile) even though the loan is secured by business property. Tax amendment form    If the property that secures the loan is your home, you generally do not allocate the loan proceeds or the related interest. Tax amendment form The interest is usually deductible as qualified home mortgage interest, regardless of how the loan proceeds are used. Tax amendment form For more information, see Publication 936. Tax amendment form Allocation period. Tax amendment form   The period for which a loan is allocated to a particular use begins on the date the proceeds are used and ends on the earlier of the following dates. Tax amendment form The date the loan is repaid. Tax amendment form The date the loan is reallocated to another use. Tax amendment form Proceeds not disbursed to borrower. Tax amendment form   Even if the lender disburses the loan proceeds to a third party, the allocation of the loan is still based on your use of the funds. Tax amendment form This applies whether you pay for property, services, or anything else by incurring a loan, or you take property subject to a debt. Tax amendment form Proceeds deposited in borrower's account. Tax amendment form   Treat loan proceeds deposited in an account as property held for investment. Tax amendment form It does not matter whether the account pays interest. Tax amendment form Any interest you pay on the loan is investment interest expense. Tax amendment form If you withdraw the proceeds of the loan, you must reallocate the loan based on the use of the funds. Tax amendment form Example. Tax amendment form Celina, a calendar-year taxpayer, borrows $100,000 on January 4 and immediately uses the proceeds to open a checking account. Tax amendment form No other amounts are deposited in the account during the year and no part of the loan principal is repaid during the year. Tax amendment form On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. Tax amendment form On September 4, Celina uses an additional $40,000 from the account for personal purposes. Tax amendment form Under the interest allocation rules, the entire $100,000 loan is treated as property held for investment for the period from January 4 through April 1. Tax amendment form From April 2 through September 3, Celina must treat $20,000 of the loan as used in the passive activity and $80,000 of the loan as property held for investment. Tax amendment form From September 4 through December 31, she must treat $40,000 of the loan as used for personal purposes, $20,000 as used in the passive activity, and $40,000 as property held for investment. Tax amendment form Order of funds spent. Tax amendment form   Generally, you treat loan proceeds deposited in an account as used (spent) before either of the following amounts. Tax amendment form Any unborrowed amounts held in the same account. Tax amendment form Any amounts deposited after these loan proceeds. Tax amendment form Example. Tax amendment form On January 9, Olena opened a checking account, depositing $500 of the proceeds of Loan A and $1,000 of unborrowed funds. Tax amendment form The following table shows the transactions in her account during the tax year. Tax amendment form Date Transaction January 9 $500 proceeds of Loan A and $1,000 unborrowed funds deposited January 14 $500 proceeds of Loan B  deposited February 19 $800 used for personal purposes February 27 $700 used for passive activity June 19 $1,000 proceeds of Loan C  deposited November 20 $800 used for an investment December 18 $600 used for personal purposes Olena treats the $800 used for personal purposes as made from the $500 proceeds of Loan A and $300 of the proceeds of Loan B. Tax amendment form She treats the $700 used for a passive activity as made from the remaining $200 proceeds of Loan B and $500 of unborrowed funds. Tax amendment form She treats the $800 used for an investment as made entirely from the proceeds of Loan C. Tax amendment form She treats the $600 used for personal purposes as made from the remaining $200 proceeds of Loan C and $400 of unborrowed funds. Tax amendment form For the periods during which loan proceeds are held in the account, Olena treats them as property held for investment. Tax amendment form Payments from checking accounts. Tax amendment form   Generally, you treat a payment from a checking or similar account as made at the time the check is written if you mail or deliver it to the payee within a reasonable period after you write it. Tax amendment form You can treat checks written on the same day as written in any order. Tax amendment form Amounts paid within 30 days. Tax amendment form   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Tax amendment form This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Tax amendment form   If the loan proceeds are deposited in an account, you can apply this rule even if the rules stated earlier under Order of funds spent would otherwise require you to treat the proceeds as used for other purposes. Tax amendment form If you apply this rule to any payments, disregard those payments (and the proceeds from which they are made) when applying the rules stated under Order of funds spent. Tax amendment form   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Tax amendment form Example. Tax amendment form Giovanni gets a loan of $1,000 on August 4 and receives the proceeds in cash. Tax amendment form Giovanni deposits $1,500 in an account on August 18 and on August 28 writes a check on the account for a passive activity expense. Tax amendment form Also, Giovanni deposits his paycheck, deposits other loan proceeds, and pays his bills during the same period. Tax amendment form Regardless of these other transactions, Giovanni can treat $1,000 of the deposit he made on August 18 as being paid on August 4 from the loan proceeds. Tax amendment form In addition, Giovanni can treat the passive activity expense he paid on August 28 as made from the $1,000 loan proceeds treated as deposited in the account. Tax amendment form Optional method for determining date of reallocation. Tax amendment form   You can use the following method to determine the date loan proceeds are reallocated to another use. Tax amendment form You can treat all payments from loan proceeds in the account during any month as taking place on the later of the following dates. Tax amendment form The first day of that month. Tax amendment form The date the loan proceeds are deposited in the account. Tax amendment form However, you can use this optional method only if you treat all payments from the account during the same calendar month in the same way. Tax amendment form Interest on a segregated account. Tax amendment form   If you have an account that contains only loan proceeds and interest earned on the account, you can treat any payment from that account as being made first from the interest. Tax amendment form When the interest earned is used up, any remaining payments are from loan proceeds. Tax amendment form Example. Tax amendment form You borrowed $20,000 and used the proceeds of this loan to open a new savings account. Tax amendment form When the account had earned interest of $867, you withdrew $20,000 for personal purposes. Tax amendment form You can treat the withdrawal as coming first from the interest earned on the account, $867, and then from the loan proceeds, $19,133 ($20,000 − $867). Tax amendment form All the interest charged on the loan from the time it was deposited in the account until the time of the withdrawal is investment interest expense. Tax amendment form The interest charged on the part of the proceeds used for personal purposes ($19,133) from the time you withdrew it until you either repay it or reallocate it to another use is personal interest expense. Tax amendment form The interest charged on the loan proceeds you left in the account ($867) continues to be investment interest expense until you either repay it or reallocate it to another use. Tax amendment form Loan repayment. Tax amendment form   When you repay any part of a loan allocated to more than one use, treat it as being repaid in the following order. Tax amendment form Personal use. Tax amendment form Investments and passive activities (other than those included in (3)). Tax amendment form Passive activities in connection with a rental real estate activity in which you actively participate. Tax amendment form Former passive activities. Tax amendment form Trade or business use and expenses for certain low-income housing projects. Tax amendment form Line of credit (continuous borrowings). Tax amendment form   The following rules apply if you have a line of credit or similar arrangement. Tax amendment form Treat all borrowed funds on which interest accrues at the same fixed or variable rate as a single loan. Tax amendment form Treat borrowed funds or parts of borrowed funds on which interest accrues at different fixed or variable rates as different loans. Tax amendment form Treat these loans as repaid in the order shown on the loan agreement. Tax amendment form Loan refinancing. Tax amendment form   Allocate the replacement loan to the same uses to which the repaid loan was allocated. Tax amendment form Make the allocation only to the extent you use the proceeds of the new loan to repay any part of the original loan. Tax amendment form Debt-financed distribution. Tax amendment form   A debt-financed distribution occurs when a partnership or S corporation borrows funds and allocates those funds to distributions made to partners or shareholders. Tax amendment form The manner in which you report the interest expense associated with the distributed debt proceeds depends on your use of those proceeds. Tax amendment form How to report. Tax amendment form   If the proceeds were used in a nonpassive trade or business activity, report the interest on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership or S corporation in column (a) and the amount in column (h). Tax amendment form If the proceeds were used in a passive activity, follow the Instructions for Form 8582, Passive Activity Loss Limitations, to determine the amount of interest expense that can be reported on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership in column (a) and the amount in column (f). Tax amendment form If the proceeds were used in an investment activity, enter the interest on Form 4952. Tax amendment form If the proceeds are used for personal purposes, the interest is generally not deductible. Tax amendment form Interest You Can Deduct You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Tax amendment form Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. Tax amendment form It does not matter what type of property secures the loan. Tax amendment form You can deduct interest on a debt only if you meet all the following requirements. Tax amendment form You are legally liable for that debt. Tax amendment form Both you and the lender intend that the debt be repaid. Tax amendment form You and the lender have a true debtor-creditor relationship. Tax amendment form Partial liability. Tax amendment form   If you are liable for part of a business debt, you can deduct only your share of the total interest paid or accrued. Tax amendment form Example. Tax amendment form You and your brother borrow money. Tax amendment form You are liable for 50% of the note. Tax amendment form You use your half of the loan in your business, and you make one-half of the loan payments. Tax amendment form You can deduct your half of the total interest payments as a business deduction. Tax amendment form Mortgage. Tax amendment form   Generally, mortgage interest paid or accrued on real estate you own legally or equitably is deductible. Tax amendment form However, rather than deducting the interest currently, you may have to add it to the cost basis of the property as explained later under Capitalization of Interest. Tax amendment form Statement. Tax amendment form   If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement. Tax amendment form You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Tax amendment form A governmental unit is a person for purposes of furnishing the statement. Tax amendment form   If you receive a refund of interest you overpaid in an earlier year, this amount will be reported in box 3 of Form 1098. Tax amendment form You cannot deduct this amount. Tax amendment form For information on how to report this refund, see Refunds of interest, later in this chapter. Tax amendment form Expenses paid to obtain a mortgage. Tax amendment form   Certain expenses you pay to obtain a mortgage cannot be deducted as interest. Tax amendment form These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses. Tax amendment form If the property mortgaged is business or income-producing property, you can amortize the costs over the life of the mortgage. Tax amendment form Prepayment penalty. Tax amendment form   If you pay off your mortgage early and pay the lender a penalty for doing this, you can deduct the penalty as interest. Tax amendment form Interest on employment tax deficiency. Tax amendment form   Interest charged on employment taxes assessed on your business is deductible. Tax amendment form Original issue discount (OID). Tax amendment form   OID is a form of interest. Tax amendment form A loan (mortgage or other debt) generally has OID when its proceeds are less than its principal amount. Tax amendment form The OID is the difference between the stated redemption price at maturity and the issue price of the loan. Tax amendment form   A loan's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on it other than qualified stated interest. Tax amendment form Qualified stated interest is stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a single fixed rate. Tax amendment form You generally deduct OID over the term of the loan. Tax amendment form Figure the amount to deduct each year using the constant-yield method, unless the OID on the loan is de minimis. Tax amendment form De minimis OID. Tax amendment form   The OID is de minimis if it is less than one-fourth of 1% (. Tax amendment form 0025) of the stated redemption price of the loan at maturity multiplied by the number of full years from the date of original issue to maturity (the term of the loan). Tax amendment form   If the OID is de minimis, you can choose one of the following ways to figure the amount you can deduct each year. Tax amendment form On a constant-yield basis over the term of the loan. Tax amendment form On a straight-line basis over the term of the loan. Tax amendment form In proportion to stated interest payments. Tax amendment form In its entirety at maturity of the loan. Tax amendment form You make this choice by deducting the OID in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Tax amendment form Example. Tax amendment form On January 1, 2013, you took out a $100,000 discounted loan and received $98,500 in proceeds. Tax amendment form The loan will mature on January 1, 2023 (a 10-year term), and the $100,000 principal is payable on that date. Tax amendment form Interest of $10,000 is payable on January 1 of each year, beginning January 1, 2014. Tax amendment form The $1,500 OID on the loan is de minimis because it is less than $2,500 ($100,000 × . Tax amendment form 0025 × 10). Tax amendment form You choose to deduct the OID on a straight-line basis over the term of the loan. Tax amendment form Beginning in 2013, you can deduct $150 each year for 10 years. Tax amendment form Constant-yield method. Tax amendment form   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Tax amendment form You figure your deduction for the first year using the following steps. Tax amendment form Determine the issue price of the loan. Tax amendment form Generally, this equals the proceeds of the loan. Tax amendment form If you paid points on the loan (as discussed later), the issue price generally is the difference between the proceeds and the points. Tax amendment form Multiply the result in (1) by the yield to maturity. Tax amendment form Subtract any qualified stated interest payments from the result in (2). Tax amendment form This is the OID you can deduct in the first year. Tax amendment form   To figure your deduction in any subsequent year, follow the above steps, except determine the adjusted issue price in step (1). Tax amendment form To get the adjusted issue price, add to the issue price any OID previously deducted. Tax amendment form Then follow steps (2) and (3) above. Tax amendment form   The yield to maturity is generally shown in the literature you receive from your lender. Tax amendment form If you do not have this information, consult your lender or tax advisor. Tax amendment form In general, the yield to maturity is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Tax amendment form Example. Tax amendment form The facts are the same as in the previous example, except that you deduct the OID on a constant yield basis over the term of the loan. Tax amendment form The yield to maturity on your loan is 10. Tax amendment form 2467%, compounded annually. Tax amendment form For 2013, you can deduct $93 [($98,500 × . Tax amendment form 102467) − $10,000]. Tax amendment form For 2014, you can deduct $103 [($98,593 × . Tax amendment form 102467) − $10,000]. Tax amendment form Loan or mortgage ends. Tax amendment form   If your loan or mortgage ends, you may be able to deduct any remaining OID in the tax year in which the loan or mortgage ends. Tax amendment form A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Tax amendment form If you refinance with the original lender, you generally cannot deduct the remaining OID in the year in which the refinancing occurs, but you may be able to deduct it over the term of the new mortgage or loan. Tax amendment form See Interest paid with funds borrowed from original lender under Interest You Cannot Deduct, later. Tax amendment form Points. Tax amendment form   The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a loan or a mortgage. Tax amendment form These charges are also called loan origination fees, maximum loan charges, discount points, or premium charges. Tax amendment form If any of these charges (points) are solely for the use of money, they are interest. Tax amendment form   Because points are prepaid interest, you generally cannot deduct the full amount in the year paid. Tax amendment form However, you can choose to fully deduct points in the year paid if you meet certain tests. Tax amendment form For exceptions to the general rule, see Publication 936. Tax amendment form The points reduce the issue price of the loan and result in original issue discount (OID), deductible as explained in the preceding discussion. Tax amendment form Partial payments on a nontax debt. Tax amendment form   If you make partial payments on a debt (other than a debt owed the IRS), the payments are applied, in general, first to interest and any remainder to principal. Tax amendment form You can deduct only the interest. Tax amendment form This rule does not apply when it can be inferred that the borrower and lender understood that a different allocation of the payments would be made. Tax amendment form Installment purchase. Tax amendment form   If you make an installment purchase of business property, the contract between you and the seller generally provides for the payment of interest. Tax amendment form If no interest or a low rate of interest is charged under the contract, a portion of the stated principal amount payable under the contract may be recharacterized as interest (unstated interest). Tax amendment form The amount recharacterized as interest reduces your basis in the property and increases your interest expense. Tax amendment form For more information on installment sales and unstated interest, see Publication 537. Tax amendment form Interest You Cannot Deduct Certain interest payments cannot be deducted. Tax amendment form In addition, certain other expenses that may seem to be interest but are not, cannot be deducted as interest. Tax amendment form You cannot currently deduct interest that must be capitalized, and you generally cannot deduct personal interest. Tax amendment form Interest paid with funds borrowed from original lender. Tax amendment form   If you use the cash method of accounting, you cannot deduct interest you pay with funds borrowed from the original lender through a second loan, an advance, or any other arrangement similar to a loan. Tax amendment form You can deduct the interest expense once you start making payments on the new loan. Tax amendment form   When you make a payment on the new loan, you first apply the payment to interest and then to the principal. Tax amendment form All amounts you apply to the interest on the first loan are deductible, along with any interest you pay on the second loan, subject to any limits that apply. Tax amendment form Capitalized interest. Tax amendment form   You cannot currently deduct interest you are required to capitalize under the uniform capitalization rules. Tax amendment form See Capitalization of Interest, later. Tax amendment form In addition, if you buy property and pay interest owed by the seller (for example, by assuming the debt and any interest accrued on the property), you cannot deduct the interest. Tax amendment form Add this interest to the basis of the property. Tax amendment form Commitment fees or standby charges. Tax amendment form   Fees you incur to have business funds available on a standby basis, but not for the actual use of the funds, are not deductible as interest payments. Tax amendment form You may be able to deduct them as business expenses. Tax amendment form   If the funds are for inventory or certain property used in your business, the fees are indirect costs and you generally must capitalize them under the uniform capitalization rules. Tax amendment form See Capitalization of Interest, later. Tax amendment form Interest on income tax. Tax amendment form   Interest charged on income tax assessed on your individual income tax return is not a business deduction even though the tax due is related to income from your trade or business. Tax amendment form Treat this interest as a business deduction only in figuring a net operating loss deduction. Tax amendment form Penalties. Tax amendment form   Penalties on underpaid deficiencies and underpaid estimated tax are not interest. Tax amendment form You cannot deduct them. Tax amendment form Generally, you cannot deduct any fines or penalties. Tax amendment form Interest on loans with respect to life insurance policies. Tax amendment form   You generally cannot deduct interest on a debt incurred with respect to any life insurance, annuity, or endowment contract that covers any individual unless that individual is a key person. Tax amendment form   If the policy or contract covers a key person, you can deduct the interest on up to $50,000 of debt for that person. Tax amendment form However, the deduction for any month cannot be more than the interest figured using Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's Corporate Bond Yield Average-Monthly Average Corporates) (Moody's rate) for that month. Tax amendment form Who is a key person?   A key person is an officer or 20% owner. Tax amendment form However, the number of individuals you can treat as key persons is limited to the greater of the following. Tax amendment form Five individuals. Tax amendment form The lesser of 5% of the total officers and employees of the company or 20 individuals. Tax amendment form Exceptions for pre-June 1997 contracts. Tax amendment form   You can generally deduct the interest if the contract was issued before June 9, 1997, and the covered individual is someone other than an employee, officer, or someone financially interested in your business. Tax amendment form If the contract was purchased before June 21, 1986, you can generally deduct the interest no matter who is covered by the contract. Tax amendment form Interest allocated to unborrowed policy cash value. Tax amendment form   Corporations and partnerships generally cannot deduct any interest expense allocable to unborrowed cash values of life insurance, annuity, or endowment contracts. Tax amendment form This rule applies to contracts issued after June 8, 1997, that cover someone other than an officer, director, employee, or 20% owner. Tax amendment form For more information, see section 264(f) of the Internal Revenue Code. Tax amendment form Capitalization of Interest Under the uniform capitalization rules, you generally must capitalize interest on debt equal to your expenditures to produce real property or certain tangible personal property. Tax amendment form The property must be produced by you for use in your trade or business or for sale to customers. Tax amendment form You cannot capitalize interest related to property that you acquire in any other manner. Tax amendment form Interest you paid or incurred during the production period must be capitalized if the property produced is designated property. Tax amendment form Designated property is any of the following. Tax amendment form Real property. Tax amendment form Tangible personal property with a class life of 20 years or more. Tax amendment form Tangible personal property with an estimated production period of more than 2 years. Tax amendment form Tangible personal property with an estimated production period of more than 1 year if the estimated cost of production is more than $1 million. Tax amendment form Property you produce. Tax amendment form   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow it. Tax amendment form Treat property produced for you under a contract as produced by you up to the amount you pay or incur for the property. Tax amendment form Carrying charges. Tax amendment form   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. Tax amendment form You can choose to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. Tax amendment form For more information, see chapter 7. Tax amendment form Capitalized interest. Tax amendment form   Treat capitalized interest as a cost of the property produced. Tax amendment form You recover your interest when you sell or use the property. Tax amendment form If the property is inventory, recover capitalized interest through cost of goods sold. Tax amendment form If the property is used in your trade or business, recover capitalized interest through an adjustment to basis, depreciation, amortization, or other method. Tax amendment form Partnerships and S corporations. Tax amendment form   The interest capitalization rules are applied first at the partnership or S corporation level. Tax amendment form The rules are then applied at the partners' or shareholders' level to the extent the partnership or S corporation has insufficient debt to support the production or construction costs. Tax amendment form   If you are a partner or a shareholder, you may have to capitalize interest you incur during the tax year for the production costs of the partnership or S corporation. Tax amendment form You may also have to capitalize interest incurred by the partnership or S corporation for your own production costs. Tax amendment form To properly capitalize interest under these rules, you must be given the required information in an attachment to the Schedule K-1 you receive from the partnership or S corporation. Tax amendment form Additional information. Tax amendment form   The procedures for applying the uniform capitalization rules are beyond the scope of this publication. Tax amendment form For more information, see sections 1. Tax amendment form 263A-8 through 1. Tax amendment form 263A-15 of the regulations and Notice 88-99. Tax amendment form Notice 88-99 is in Cumulative Bulletin 1988-2. Tax amendment form When To Deduct Interest If the uniform capitalization rules, discussed under Capitalization of Interest, earlier, do not apply to you, deduct interest as follows. Tax amendment form Cash method. Tax amendment form   Under the cash method, you can generally deduct only the interest you actually paid during the tax year. Tax amendment form You cannot deduct a promissory note you gave as payment because it is a promise to pay and not an actual payment. Tax amendment form Prepaid interest. Tax amendment form   You generally cannot deduct any interest paid before the year it is due. Tax amendment form Interest paid in advance can be deducted only in the tax year in which it is due. Tax amendment form Discounted loan. Tax amendment form   If interest or a discount is subtracted from your loan proceeds, it is not a payment of interest and you cannot deduct it when you get the loan. Tax amendment form For more information, see Original issue discount (OID) under Interest You Can Deduct, earlier. Tax amendment form Refunds of interest. Tax amendment form   If you pay interest and then receive a refund in the same tax year of any part of the interest, reduce your interest deduction by the refund. Tax amendment form If you receive the refund in a later tax year, include the refund in your income to the extent the deduction for the interest reduced your tax. Tax amendment form Accrual method. Tax amendment form   Under an accrual method, you can deduct only interest that has accrued during the tax year. Tax amendment form Prepaid interest. Tax amendment form   See Prepaid interest, earlier. Tax amendment form Discounted loan. Tax amendment form   See Discounted loan, earlier. Tax amendment form Tax deficiency. Tax amendment form   If you contest a federal income tax deficiency, interest does not accrue until the tax year the final determination of liability is made. Tax amendment form If you do not contest the deficiency, then the interest accrues in the year the tax was asserted and agreed to by you. Tax amendment form   However, if you contest but pay the proposed tax deficiency and interest, and you do not designate the payment as a cash bond, then the interest is deductible in the year paid. Tax amendment form Related person. Tax amendment form   If you use an accrual method, you cannot deduct interest owed to a related person who uses the cash method until payment is made and the interest is includible in the gross income of that person. Tax amendment form The relationship is determined as of the end of the tax year for which the interest would otherwise be deductible. Tax amendment form See section 267 of the Internal Revenue Code for more information. Tax amendment form Below-Market Loans If you receive a below-market gift or demand loan and use the proceeds in your trade or business, you may be able to deduct the forgone interest. Tax amendment form See Treatment of gift and demand loans, later, in this discussion. Tax amendment form A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Tax amendment form A gift or demand loan that is a below-market loan generally is considered an arm's-length transaction in which you, the borrower, are considered as having received both the following. Tax amendment form A loan in exchange for a note that requires the payment of interest at the applicable federal rate. Tax amendment form An additional payment in an amount equal to the forgone interest. Tax amendment form The additional payment is treated as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Tax amendment form Forgone interest. Tax amendment form   For any period, forgone interest is The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Tax amendment form Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Tax amendment form Internal Revenue Bulletins are available on the IRS web site at www. Tax amendment form irs. Tax amendment form gov/irb. Tax amendment form You can also contact an IRS office to get these rates. Tax amendment form Loans subject to the rules. Tax amendment form   The rules for below-market loans apply to the following. Tax amendment form Gift loans (below-market loans where the forgone interest is in the nature of a gift). Tax amendment form Compensation-related loans (below-market loans between an employer and an employee or between an independent contractor and a person for whom the contractor provides services). Tax amendment form Corporation-shareholder loans. Tax amendment form Tax avoidance loans (below-market loans where the avoidance of federal tax is one of the main purposes of the interest arrangement). Tax amendment form Loans to qualified continuing care facilities under a continuing care contract (made after October 11, 1985). Tax amendment form   Except as noted in (5) above, these rules apply to demand loans (loans payable in full at any time upon the lender's demand) outstanding after June 6, 1984, and to term loans (loans that are not demand loans) made after that date. Tax amendment form Treatment of gift and demand loans. Tax amendment form   If you receive a below-market gift loan or demand loan, you are treated as receiving an additional payment (as a gift, dividend, etc. Tax amendment form ) equal to the forgone interest on the loan. Tax amendment form You are then treated as transferring this amount back to the lender as interest. Tax amendment form These transfers are considered to occur annually, generally on December 31. Tax amendment form If you use the loan proceeds in your trade or business, you can deduct the forgone interest each year as a business interest expense. Tax amendment form The lender must report it as interest income. Tax amendment form Limit on forgone interest for gift loans of $100,000 or less. Tax amendment form   For gift loans between individuals, forgone interest treated as transferred back to the lender is limited to the borrower's net investment income for the year. Tax amendment form This limit applies if the outstanding loans between the lender and borrower total $100,000 or less. Tax amendment form If the borrower's net investment income is $1,000 or less, it is treated as zero. Tax amendment form This limit does not apply to a loan if the avoidance of any federal tax is one of the main purposes of the interest arrangement. Tax amendment form Treatment of term loans. Tax amendment form   If you receive a below-market term loan other than a gift or demand loan, you are treated as receiving an additional cash payment (as a dividend, etc. Tax amendment form ) on the date the loan is made. Tax amendment form This payment is equal to the loan amount minus the present value, at the applicable federal rate, of all payments due under the loan. Tax amendment form The same amount is treated as original issue discount on the loan. Tax amendment form See Original issue discount (OID) under Interest You Can Deduct, earlier. Tax amendment form Exceptions for loans of $10,000 or less. Tax amendment form   The rules for below-market loans do not apply to any day on which the total outstanding loans between the borrower and lender is $10,000 or less. Tax amendment form This exception applies only to the following. Tax amendment form Gift loans between individuals if the loan is not directly used to buy or carry income-producing assets. Tax amendment form Compensation-related loans or corporation-shareholder loans if the avoidance of any federal tax is not a principal purpose of the interest arrangement. Tax amendment form This exception does not apply to a term loan described in (2) above that was previously subject to the below-market loan rules. Tax amendment form Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Tax amendment form Exceptions for loans without significant tax effect. Tax amendment form   The following loans are specifically exempted from the rules for below-market loans because their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Tax amendment form Loans made available by lenders to the general public on the same terms and conditions that are consistent with the lender's customary business practices. Tax amendment form Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public. Tax amendment form Certain employee-relocation loans. Tax amendment form Certain loans to or from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Tax amendment form S. Tax amendment form trade or business and not exempt from U. Tax amendment form S. Tax amendment form tax under an income tax treaty. Tax amendment form Any other loan if the taxpayer can show that the interest arrangement has no significant effect on the federal tax liability of the lender or the borrower. Tax amendment form Whether an interest arrangement has a significant effect on the federal tax liability of the lender or the borrower will be determined by all the facts and circumstances. Tax amendment form Consider all the following factors. Tax amendment form Whether items of income and deduction generated by the loan offset each other. Tax amendment form The amount of the items. Tax amendment form The cost of complying with the below-market loan provisions if they were to apply. Tax amendment form Any reasons, other than taxes, for structuring the transaction as a below-market loan. Tax amendment form Exception for loans to qualified continuing care facilities. Tax amendment form   The below-market interest rules do not apply to a loan owed by a qualified continuing care facility under a continuing care contract if the lender or lender's spouse is age 62 or older by the end of the calendar year. Tax amendment form A qualified continuing care facility is one or more facilities (excluding nursing homes) meeting the requirements listed below. Tax amendment form Designed to provide services under continuing care contracts (defined below). Tax amendment form Includes an independent living unit, and either an assisted living or nursing facility, or both. Tax amendment form Substantially all of the independent living unit residents are covered by continuing care contracts. Tax amendment form A continuing care contract is a written contract between an individual and a qualified continuing care facility that includes all of the following conditions. Tax amendment form The individual or individual's spouse must be entitled to use the facility for the rest of their life or lives. Tax amendment form The individual or individual's spouse will be provided with housing, as appropriate for the health of the individual or individual's spouse in an: independent living unit (which has additional available facilities outside the unit for the provision of meals and other personal care), and assisted living or nursing facility available in the continuing care facility. Tax amendment form The individual or individual's spouse will be provided with assisted living or nursing care available in the continuing care facility, as required for the health of the individual or the individual's spouse. Tax amendment form For more information, see section 7872(h) of the Internal Revenue Code. Tax amendment form Sale or exchange of property. Tax amendment form   Different rules generally apply to a loan connected with the sale or exchange of property. Tax amendment form If the loan does not provide adequate stated interest, part of the principal payment may be considered interest. Tax amendment form However, there are exceptions that may require you to apply the below-market interest rate rules to these loans. Tax amendment form See Unstated Interest and Original Issue Discount (OID) in Publication 537. Tax amendment form More information. Tax amendment form   For more information on below-market loans, see section 7872 of the Internal Revenue Code and section 1. Tax amendment form 7872-5 of the regulations. Tax amendment form Prev  Up  Next   Home   More Online Publications