File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Tax Amendments 2013 14

H And R Block Free File OnlineFree State And Federal Tax Return1040ez2012Irs 1040 Ez Form 2012How To File 2010 Taxes Online For Free1040ez FormFiling Taxes As A College StudentE File Tax ReturnsTax Forms For 20112012 Tax Tables FederalDownload 1040ezHow To File 2010 Taxes In 20122011 TaxIrs Tax Forms 2012Form 1040sTurbotax Premier Federal & State Returns Plus Federal E File 2013Irs Free EfileForm 1040 EzHow To File A 2011 Tax Return For FreeState Tax Return Free E-fileHow To Amend 2010 Tax Return OnlineFiling Tax ReturnFile Federal And State Taxes Free OnlineTax Cut Software1040 Irs Tax Forms 2012I Need To File My 2011 Tax ReturnHow To Amend Last Year's TaxesAarp Free Tax Preparation2010 Tax PreparationAmend 2011 Tax Return TurbotaxFree Tax Filing Online State And FederalFree State Tax Forms To PrintH&r Block 1040ezHow To File Amended Tax Return 2012How Do I File My 2011 Tax Return2011taxesFile 2012 Taxes Free OnlineFederal Tax FilingTax Return For UnemployedFile Ez 1040 Free

Tax Amendments 2013 14

Tax amendments 2013 14 Publication 600 - Main Contents Table of Contents Actual Expenses Optional Sales Tax Tables Instructions for the State and Local General Sales Tax Deduction WorksheetWhat if you lived in more than one state? What if you lived in more than one locality? What if your local general sales tax rate changed during 2006? What if you lived in more than one locality in the same state during 2006? Actual Expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2006 if the tax rate was the same as the general sales tax rate. Tax amendments 2013 14 However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Tax amendments 2013 14 If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Tax amendments 2013 14 Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Tax amendments 2013 14 Also include any state and local general sales taxes paid for a leased motor vehicle. Tax amendments 2013 14 Do not include sales taxes paid on items used in your trade or business. Tax amendments 2013 14 To deduct your actual expenses, enter the amount on Schedule A, line 5, and enter “ST” on the dotted line to the left of the line 5 entry space. Tax amendments 2013 14 You must keep your actual receipts showing general sales taxes paid to use this method. Tax amendments 2013 14 Refund of general sales taxes. Tax amendments 2013 14   If you received a refund of state or local general sales taxes in 2006 for amounts paid in 2006, reduce your actual 2006 state and local general sales taxes by this amount. Tax amendments 2013 14 If you received a refund of state or local general sales taxes in 2006 for prior year purchases, do not reduce your 2006 state and local general sales taxes by this amount. Tax amendments 2013 14 But if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Form 1040, line 21. Tax amendments 2013 14 See Recoveries in Pub. Tax amendments 2013 14 525 for details. Tax amendments 2013 14 Optional Sales Tax Tables Instead of using your actual expenses, you can use the tables on pages 5 through 7 to figure your state and local general sales tax deduction. Tax amendments 2013 14 You may also be able to add the state and local general sales taxes paid on certain specified items. Tax amendments 2013 14 To figure your state and local general sales tax deduction using the tables, complete the worksheet below. Tax amendments 2013 14 If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction. Tax amendments 2013 14 State and Local General Sales Tax Deduction Worksheet (See the instructions that begin on page 3. Tax amendments 2013 14 ) Before you begin: See the instructions for line 1 on page 3 if: You lived in more than one state during 2006, or You had any nontaxable income in 2006. Tax amendments 2013 14   1. Tax amendments 2013 14 Enter your state general sales taxes from the applicable table on page 5 or 6 (see page 3 of the instructions) 1. Tax amendments 2013 14 $     Next. Tax amendments 2013 14 If, for all of 2006, you lived only in Connecticut, the District of Columbia, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Virginia, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. Tax amendments 2013 14 Otherwise, go to line 2       2. Tax amendments 2013 14 Did you live in Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York State, or North Carolina in 2006?         No. Tax amendments 2013 14 Enter -0-                   Yes. Tax amendments 2013 14 Enter your local general sales taxes from the applicable table on page 7 (see page 3 of the instructions)     2. Tax amendments 2013 14 $       3. Tax amendments 2013 14 Did your locality impose a local general sales tax in 2006? Residents of California, Nevada, and Texarkana, Arkansas, see page 3 of the instructions             No. Tax amendments 2013 14 Skip lines 3 through 5, enter -0- on line 6, and go to line 7             Yes. Tax amendments 2013 14 Enter your local general sales tax rate, but omit the percentage sign. Tax amendments 2013 14 For example, if your local general sales tax rate was 2. Tax amendments 2013 14 5%, enter 2. Tax amendments 2013 14 5. Tax amendments 2013 14 If your local general sales tax rate changed or you lived in more than one locality in the same state during 2006, see page 3 of the instructions. Tax amendments 2013 14 (If you do not know your local general sales tax rate, contact your local government. Tax amendments 2013 14 ) 3. Tax amendments 2013 14 . Tax amendments 2013 14       4. Tax amendments 2013 14 Did you enter -0- on line 2 above?             No. Tax amendments 2013 14 Skip lines 4 and 5 and go to line 6             Yes. Tax amendments 2013 14 Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. Tax amendments 2013 14 For example, if your state general sales tax rate is 6%, enter 6. Tax amendments 2013 14 0 4. Tax amendments 2013 14 . Tax amendments 2013 14       5. Tax amendments 2013 14 Divide line 3 by line 4. Tax amendments 2013 14 Enter the result as a decimal (rounded to at least three places) 5. Tax amendments 2013 14 . Tax amendments 2013 14       6. Tax amendments 2013 14 Did you enter -0- on line 2 above?             No. Tax amendments 2013 14 Multiply line 2 by line 3   6. Tax amendments 2013 14 $     Yes. Tax amendments 2013 14 Multiply line 1 by line 5. Tax amendments 2013 14 If you lived in more than one locality in the same state during 2006, see page 4 of the instructions           7. Tax amendments 2013 14 Enter your state and local general sales taxes paid on specified items, if any (see page 4 of the instructions) 7. Tax amendments 2013 14 $   8. Tax amendments 2013 14 Deduction for general sales taxes. Tax amendments 2013 14 Add lines 1, 6, and 7. Tax amendments 2013 14 Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. Tax amendments 2013 14 Be sure to enter “ST” on the dotted line to the left of the entry space 8. Tax amendments 2013 14 $     Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. Tax amendments 2013 14    If you lived in the same state for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional state sales tax table for your state on page 5 or 6. Tax amendments 2013 14 Read down the “At least-But less than” columns for your state and find the line that includes your 2006 income. Tax amendments 2013 14 If married filing separately, do not include your spouse's income. Tax amendments 2013 14 Your 2006 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. Tax amendments 2013 14 Tax-exempt interest. Tax amendments 2013 14 Veterans' benefits. Tax amendments 2013 14 Nontaxable combat pay. Tax amendments 2013 14 Workers' compensation. Tax amendments 2013 14 Nontaxable part of social security and railroad retirement benefits. Tax amendments 2013 14 Nontaxable part of IRA, pension, or annuity distributions. Tax amendments 2013 14 Do not include rollovers. Tax amendments 2013 14 Public assistance payments. Tax amendments 2013 14 The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. Tax amendments 2013 14 Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. Tax amendments 2013 14 What if you lived in more than one state?    If you lived in more than one state during 2006, look up the table amount for each state using the above rules. Tax amendments 2013 14 If there is no table for your state, the table amount is considered to be zero. Tax amendments 2013 14 Multiply the table amount for each state you lived in by a fraction. Tax amendments 2013 14 The numerator of the fraction is the number of days you lived in the state during 2006 and the denominator is the total number of days in the year (365). Tax amendments 2013 14 Enter the total of the prorated table amounts for each state on line 1. Tax amendments 2013 14 However, if you also lived in a locality during 2006 that imposed a local general sales tax, do not enter the total on line 1. Tax amendments 2013 14 Instead, complete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. Tax amendments 2013 14 Example. Tax amendments 2013 14 You lived in State A from January 1 through August 31, 2006 (243 days), and in State B from September 1 through December 31, 2006 (122 days). Tax amendments 2013 14 The table amount for State A is $500. Tax amendments 2013 14 The table amount for State B is $400. Tax amendments 2013 14 You would figure your state general sales tax as follows. Tax amendments 2013 14 State A: $500 x 243/365 = $333   State B: $400 x 122/365 = 134   Total = $467   If none of the localities in which you lived during 2006 imposed a local general sales tax, enter $467 on line 1 of your worksheet. Tax amendments 2013 14 Otherwise, complete a separate worksheet for State A and State B. Tax amendments 2013 14 Enter $333 on line 1 of the State A worksheet and $134 on line 1 of the State B worksheet. Tax amendments 2013 14 Line 2. Tax amendments 2013 14   If you checked the “No” box, enter -0- on line 2, and go to line 3. Tax amendments 2013 14 If you checked the “Yes” box and lived in the same locality for all of 2006, enter the applicable amount, based on your 2006 income and exemptions, from the optional local sales tax table for your locality on page 7. Tax amendments 2013 14 Read down the “At least-But less than” columns for your locality and find the line that includes your 2006 income. Tax amendments 2013 14 See the line 1 instructions on this page to figure your 2006 income. Tax amendments 2013 14 The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. Tax amendments 2013 14 Do not include any additional exemptions you listed on Form 8914 for individuals displaced by Hurricane Katrina. Tax amendments 2013 14 What if you lived in more than one locality?   If you lived in more than one locality during 2006, look up the table amount for each locality using the above rules. Tax amendments 2013 14 If there is no table for your locality, the table amount is considered to be zero. Tax amendments 2013 14 Multiply the table amount for each locality you lived in by a fraction. Tax amendments 2013 14 The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). Tax amendments 2013 14 If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prorated table amounts for each locality in that state on line 2. Tax amendments 2013 14 Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prorated table amount on line 2 of the applicable worksheet. Tax amendments 2013 14 Example. Tax amendments 2013 14 You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). Tax amendments 2013 14 The table amount for Locality 1 is $100. Tax amendments 2013 14 The table amount for Locality 2 is $150. Tax amendments 2013 14 You would figure the amount to enter on line 2 as follows. Tax amendments 2013 14 Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. Tax amendments 2013 14 Locality 1: $100 x 243/365 = $67   Locality 2: $150 x 122/365 = 50   Total = $117   Line 3. Tax amendments 2013 14   If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7. Tax amendments 2013 14 25%. Tax amendments 2013 14 Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 7. Tax amendments 2013 14 25%. Tax amendments 2013 14   If you lived in Nevada, check the “No” box if your combined state and local general sales tax rate is 6. Tax amendments 2013 14 5%. Tax amendments 2013 14 Otherwise, check the “Yes” box and include on line 3 only the part of the combined rate that is more than 6. Tax amendments 2013 14 5%. Tax amendments 2013 14   If you lived in Texarkana, Arkansas, check the “Yes” box and enter “4. Tax amendments 2013 14 0” on line 3. Tax amendments 2013 14 Your local general sales tax rate of 4. Tax amendments 2013 14 0% includes the additional 1. Tax amendments 2013 14 0% Arkansas state sales tax rate for Texarkana and the 1. Tax amendments 2013 14 5% sales tax rate for Miller County. Tax amendments 2013 14 What if your local general sales tax rate changed during 2006?    If you checked the “Yes” box and your local general sales tax rate changed during 2006, figure the rate to enter on line 3 as follows. Tax amendments 2013 14 Multiply each tax rate for the period it was in effect by a fraction. Tax amendments 2013 14 The numerator of the fraction is the number of days the rate was in effect during 2006 and the denominator is the total number of days in the year (365). Tax amendments 2013 14 Enter the total of the prorated tax rates on line 3. Tax amendments 2013 14 Example. Tax amendments 2013 14 Locality 1 imposed a 1% local general sales tax from January 1 through September 30, 2006 (273 days). Tax amendments 2013 14 The rate increased to 1. Tax amendments 2013 14 75% for the period from October 1 through December 31, 2006 (92 days). Tax amendments 2013 14 You would enter “1. Tax amendments 2013 14 189” on line 3, figured as follows. Tax amendments 2013 14 January 1 - September 30: 1. Tax amendments 2013 14 00 x 273/365 = 0. Tax amendments 2013 14 748   October 1 - December 31: 1. Tax amendments 2013 14 75 x 92/365 = 0. Tax amendments 2013 14 441   Total = 1. Tax amendments 2013 14 189   What if you lived in more than one locality in the same state during 2006?    Complete a separate worksheet for lines 2 through 6 for each locality in your state if you lived in more than one locality in the same state during 2006 and either of the following applies. Tax amendments 2013 14 Each locality did not have the same local general sales tax rate. Tax amendments 2013 14 You lived in Texarkana, AR, or Los Angeles County, CA. Tax amendments 2013 14   To figure the amount to enter on line 3 of the worksheet for each locality in which you lived (except a locality for which you used the table on page 7 to figure your local general sales tax deduction), multiply the local general sales tax rate by a fraction. Tax amendments 2013 14 The numerator of the fraction is the number of days you lived in the locality during 2006 and the denominator is the total number of days in the year (365). Tax amendments 2013 14 Example. Tax amendments 2013 14 You lived in Locality 1 from January 1 through August 31, 2006 (243 days), and in Locality 2 from September 1 through December 31, 2006 (122 days). Tax amendments 2013 14 The local general sales tax rate for Locality 1 is 1%. Tax amendments 2013 14 The rate for Locality 2 is 1. Tax amendments 2013 14 75%. Tax amendments 2013 14 You would enter “0. Tax amendments 2013 14 666” on line 3 for the Locality 1 worksheet and “0. Tax amendments 2013 14 585” for the Locality 2 worksheet, figured as follows. Tax amendments 2013 14 Locality 1: 1. Tax amendments 2013 14 00 x 243/365 = 0. Tax amendments 2013 14 666   Locality 2: 1. Tax amendments 2013 14 75 x 122/365 = 0. Tax amendments 2013 14 585   Line 6. Tax amendments 2013 14   If you lived in more than one locality in the same state during 2006, you should have completed line 1 only on the first worksheet for that state and separate worksheets for lines 2 through 6 for any other locality within that state in which you lived during 2006. Tax amendments 2013 14 If you checked the “Yes” box on line 6 of any of those worksheets, multiply line 5 of that worksheet by the amount that you entered on line 1 for that state on the first worksheet. Tax amendments 2013 14 Line 7. Tax amendments 2013 14    Enter on line 7 any state and local general sales taxes paid on the following specified items. Tax amendments 2013 14 If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets. Tax amendments 2013 14 A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). Tax amendments 2013 14 Also include any state and local general sales taxes paid for a leased motor vehicle. Tax amendments 2013 14 If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate. Tax amendments 2013 14 An aircraft or boat, if the tax rate was the same as the general sales tax rate. Tax amendments 2013 14 A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies. Tax amendments 2013 14 Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation. Tax amendments 2013 14 You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly. Tax amendments 2013 14 Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. Tax amendments 2013 14 The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. Tax amendments 2013 14 In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly. Tax amendments 2013 14   Do not include sales taxes paid on items used in your trade or business. Tax amendments 2013 14 If you received a refund of state or local general sales taxes in 2006, see Refund of general sales taxes on page 1. Tax amendments 2013 14 Prev  Up  Next   Home   More Online Publications
Español

U.S. Central Command (CENTCOM)

Located between the European and Pacific combatant commands, U.S. Central Command’s area of responsibility covers the "central" area of the globe and consists of 20 countries — Afghanistan, Bahrain, Egypt, Iran, Iraq, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, Tajikistan, Turkmenistan, United Arab Emirates, Uzbekistan, and Yemen.

Contact the Agency or Department

Website: U.S. Central Command (CENTCOM)

Address: 7115 South Boundary Boulevard
MacDill Air Force Base, FL 33621-5101

Phone Number: (813) 828-1110

The Tax Amendments 2013 14

Tax amendments 2013 14 2. Tax amendments 2013 14   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. Tax amendments 2013 14 Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. Tax amendments 2013 14 Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. Tax amendments 2013 14 Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. Tax amendments 2013 14 The annual accounting period for your income tax return is called a tax year. Tax amendments 2013 14 You can use one of the following tax years. Tax amendments 2013 14 A calendar tax year. Tax amendments 2013 14 A fiscal tax year. Tax amendments 2013 14 Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. Tax amendments 2013 14 A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. Tax amendments 2013 14 Calendar tax year. Tax amendments 2013 14   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Tax amendments 2013 14   You must adopt the calendar tax year if any of the following apply. Tax amendments 2013 14 You do not keep books. Tax amendments 2013 14 You have no annual accounting period. Tax amendments 2013 14 Your present tax year does not qualify as a fiscal year. Tax amendments 2013 14 Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. Tax amendments 2013 14   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Tax amendments 2013 14 For more information, see Change in tax year, later. Tax amendments 2013 14   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. Tax amendments 2013 14 Fiscal tax year. Tax amendments 2013 14   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Tax amendments 2013 14 A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Tax amendments 2013 14   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. Tax amendments 2013 14   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. Tax amendments 2013 14 Change in tax year. Tax amendments 2013 14   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. Tax amendments 2013 14 See the Instructions for Form 1128 for exceptions. Tax amendments 2013 14 If you qualify for an automatic approval request, a user fee is not required. Tax amendments 2013 14 If you do not qualify for automatic approval, a ruling must be requested. Tax amendments 2013 14 See the instructions for Form 1128 for information about user fees if you are requesting a ruling. Tax amendments 2013 14 Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Tax amendments 2013 14 Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. Tax amendments 2013 14 You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. Tax amendments 2013 14 After that, if you want to change your accounting method, you must generally get IRS approval. Tax amendments 2013 14 See Change in Accounting Method, later. Tax amendments 2013 14 Kinds of methods. Tax amendments 2013 14   Generally, you can use any of the following accounting methods. Tax amendments 2013 14 Cash method. Tax amendments 2013 14 An accrual method. Tax amendments 2013 14 Special methods of accounting for certain items of income and expenses. Tax amendments 2013 14 Combination method using elements of two or more of the above. Tax amendments 2013 14 You must use the same accounting method to figure your taxable income and to keep your books. Tax amendments 2013 14 Also, you must use an accounting method that clearly shows your income. Tax amendments 2013 14 Business and personal items. Tax amendments 2013 14   You can account for business and personal items under different accounting methods. Tax amendments 2013 14 For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Tax amendments 2013 14 Two or more businesses. Tax amendments 2013 14   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. Tax amendments 2013 14 They are separate and distinct only if you maintain complete and separate books and records for each business. Tax amendments 2013 14 Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. Tax amendments 2013 14 However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. Tax amendments 2013 14 For more information, see Inventories, later. Tax amendments 2013 14 Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. Tax amendments 2013 14 If you receive property or services, you must include their fair market value in income. Tax amendments 2013 14 Example. Tax amendments 2013 14 On December 30, 2012, Mrs. Tax amendments 2013 14 Sycamore sent you a check for interior decorating services you provided to her. Tax amendments 2013 14 You received the check on January 2, 2013. Tax amendments 2013 14 You must include the amount of the check in income for 2013. Tax amendments 2013 14 Constructive receipt. Tax amendments 2013 14   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. Tax amendments 2013 14 You do not need to have possession of it. Tax amendments 2013 14 If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. Tax amendments 2013 14 Example. Tax amendments 2013 14 Interest is credited to your bank account in December 2013. Tax amendments 2013 14 You do not withdraw it or enter it into your passbook until 2014. Tax amendments 2013 14 You must include it in your gross income for 2013. Tax amendments 2013 14 Delaying receipt of income. Tax amendments 2013 14   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Tax amendments 2013 14 You must report the income in the year the property is received or made available to you without restriction. Tax amendments 2013 14 Example. Tax amendments 2013 14 Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. Tax amendments 2013 14 She was told in December that her payment was available. Tax amendments 2013 14 At her request, she was not paid until January 2014. Tax amendments 2013 14 She must include this payment in her 2013 income because it was constructively received in 2013. Tax amendments 2013 14 Checks. Tax amendments 2013 14   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. Tax amendments 2013 14 Example. Tax amendments 2013 14 Dr. Tax amendments 2013 14 Redd received a check for $500 on December 31, 2013, from a patient. Tax amendments 2013 14 She could not deposit the check in her business account until January 2, 2014. Tax amendments 2013 14 She must include this fee in her income for 2013. Tax amendments 2013 14 Debts paid by another person or canceled. Tax amendments 2013 14   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Tax amendments 2013 14 If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Tax amendments 2013 14 For more information, see Canceled Debt under Kinds of Income in chapter 5. Tax amendments 2013 14 Repayment of income. Tax amendments 2013 14   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. Tax amendments 2013 14 If the amount you repay is over $3,000, a special rule applies. Tax amendments 2013 14 For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. Tax amendments 2013 14 Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. Tax amendments 2013 14 This includes business expenses for which you contest liability. Tax amendments 2013 14 However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. Tax amendments 2013 14 Expenses paid in advance. Tax amendments 2013 14   You can deduct an expense you pay in advance only in the year to which it applies. Tax amendments 2013 14 Example. Tax amendments 2013 14 You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. Tax amendments 2013 14 You can deduct $500 in 2013 and $500 in 2014. Tax amendments 2013 14 Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Tax amendments 2013 14 The purpose of an accrual method of accounting is to match income and expenses in the correct year. Tax amendments 2013 14 Income—General Rule Under an accrual method, you generally include an amount in your gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. Tax amendments 2013 14 Example. Tax amendments 2013 14 You are a calendar year accrual method taxpayer. Tax amendments 2013 14 You sold a computer on December 28, 2013. Tax amendments 2013 14 You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. Tax amendments 2013 14 You must include the amount received for the computer in your 2013 income. Tax amendments 2013 14 Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. Tax amendments 2013 14 Estimated income. Tax amendments 2013 14   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. Tax amendments 2013 14 Change in payment schedule for services. Tax amendments 2013 14   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. Tax amendments 2013 14 Advance payments for services. Tax amendments 2013 14   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. Tax amendments 2013 14 However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. Tax amendments 2013 14 However, you cannot postpone including any payment beyond that tax year. Tax amendments 2013 14   For more information, see Advance Payment for Services under Accrual Method in Publication 538. Tax amendments 2013 14 That publication also explains special rules for reporting the following types of income. Tax amendments 2013 14 Advance payments for service agreements. Tax amendments 2013 14 Prepaid rent. Tax amendments 2013 14 Advance payments for sales. Tax amendments 2013 14   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. Tax amendments 2013 14 If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. Tax amendments 2013 14 An agreement includes a gift certificate that can be redeemed for goods. Tax amendments 2013 14 Treat amounts that are due and payable as amounts you received. Tax amendments 2013 14   You generally include an advance payment in income for the tax year in which you receive it. Tax amendments 2013 14 However, you can use an alternative method. Tax amendments 2013 14 For information about the alternative method, see Publication 538. Tax amendments 2013 14 Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. Tax amendments 2013 14 The all-events test has been met. Tax amendments 2013 14 The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Tax amendments 2013 14 Economic performance has occurred. Tax amendments 2013 14 Economic performance. Tax amendments 2013 14   You generally cannot deduct or capitalize a business expense until economic performance occurs. Tax amendments 2013 14 If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Tax amendments 2013 14 If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Tax amendments 2013 14 An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Tax amendments 2013 14 For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. Tax amendments 2013 14 Example. Tax amendments 2013 14 You are a calendar year taxpayer and use an accrual method of accounting. Tax amendments 2013 14 You buy office supplies in December 2013. Tax amendments 2013 14 You receive the supplies and the bill in December, but you pay the bill in January 2014. Tax amendments 2013 14 You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. Tax amendments 2013 14 Your office supplies may qualify as a recurring expense. Tax amendments 2013 14 In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). Tax amendments 2013 14 Keeping inventories. Tax amendments 2013 14   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. Tax amendments 2013 14 If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. Tax amendments 2013 14 For more information, see Inventories , later. Tax amendments 2013 14 Special rule for related persons. Tax amendments 2013 14   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. Tax amendments 2013 14 Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Tax amendments 2013 14 If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. Tax amendments 2013 14   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Tax amendments 2013 14 For a list of other related persons, see section 267 of the Internal Revenue Code. Tax amendments 2013 14 Combination Method You can generally use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Tax amendments 2013 14 However, the following restrictions apply. Tax amendments 2013 14 If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. Tax amendments 2013 14 (See, however, Inventories, later. Tax amendments 2013 14 ) You can use the cash method for all other items of income and expenses. Tax amendments 2013 14 If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Tax amendments 2013 14 If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Tax amendments 2013 14 If you use a combination method that includes the cash method, treat that combination method as the cash method. Tax amendments 2013 14 Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. Tax amendments 2013 14 However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. Tax amendments 2013 14 These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). Tax amendments 2013 14 A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Tax amendments 2013 14 A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Tax amendments 2013 14 Qualifying taxpayer. Tax amendments 2013 14   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. Tax amendments 2013 14 (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. Tax amendments 2013 14 ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. Tax amendments 2013 14 Qualifying small business taxpayer. Tax amendments 2013 14   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. Tax amendments 2013 14 (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. Tax amendments 2013 14 ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. Tax amendments 2013 14 Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). Tax amendments 2013 14 Business not owned or not in existence for 3 years. Tax amendments 2013 14   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. Tax amendments 2013 14 If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. Tax amendments 2013 14 Materials and supplies that are not incidental. Tax amendments 2013 14   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. Tax amendments 2013 14 If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. Tax amendments 2013 14 Changing accounting method. Tax amendments 2013 14   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. Tax amendments 2013 14 See Change in Accounting Method, later. Tax amendments 2013 14 More information. Tax amendments 2013 14    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Tax amendments 2013 14 For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Tax amendments 2013 14 Items included in inventory. Tax amendments 2013 14   If you are required to account for inventories, include the following items when accounting for your inventory. Tax amendments 2013 14 Merchandise or stock in trade. Tax amendments 2013 14 Raw materials. Tax amendments 2013 14 Work in process. Tax amendments 2013 14 Finished products. Tax amendments 2013 14 Supplies that physically become a part of the item intended for sale. Tax amendments 2013 14 Valuing inventory. Tax amendments 2013 14   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). Tax amendments 2013 14 To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. Tax amendments 2013 14   Inventory valuation rules cannot be the same for all kinds of businesses. Tax amendments 2013 14 The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Tax amendments 2013 14 Your inventory practices must be consistent from year to year. Tax amendments 2013 14 More information. Tax amendments 2013 14   For more information about inventories, see Publication 538. Tax amendments 2013 14 Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. Tax amendments 2013 14 Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Tax amendments 2013 14 You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Tax amendments 2013 14 Activities subject to the uniform capitalization rules. Tax amendments 2013 14   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Tax amendments 2013 14 Produce real or tangible personal property. Tax amendments 2013 14 For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Tax amendments 2013 14 Acquire property for resale. Tax amendments 2013 14 Exceptions. Tax amendments 2013 14   These rules do not apply to the following property. Tax amendments 2013 14 Personal property you acquire for resale if your average annual gross receipts are $10 million or less. Tax amendments 2013 14 Property you produce if you meet either of the following conditions. Tax amendments 2013 14 Your indirect costs of producing the property are $200,000 or less. Tax amendments 2013 14 You use the cash method of accounting and do not account for inventories. Tax amendments 2013 14 For more information, see Inventories, earlier. Tax amendments 2013 14 Special Methods There are special methods of accounting for certain items of income or expense. Tax amendments 2013 14 These include the following. Tax amendments 2013 14 Amortization, discussed in chapter 8 of Publication 535, Business Expenses. Tax amendments 2013 14 Bad debts, discussed in chapter 10 of Publication 535. Tax amendments 2013 14 Depletion, discussed in chapter 9 of Publication 535. Tax amendments 2013 14 Depreciation, discussed in Publication 946, How To Depreciate Property. Tax amendments 2013 14 Installment sales, discussed in Publication 537, Installment Sales. Tax amendments 2013 14 Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Tax amendments 2013 14 A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. Tax amendments 2013 14 To get approval, you must file Form 3115, Application for Change in Accounting Method. Tax amendments 2013 14 You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. Tax amendments 2013 14 You may have to pay a user fee. Tax amendments 2013 14 For more information, see the form instructions. Tax amendments 2013 14 Automatic change procedures. Tax amendments 2013 14   Certain taxpayers can presume to have IRS approval to change their method of accounting. Tax amendments 2013 14 The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. Tax amendments 2013 14 No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. Tax amendments 2013 14   Generally, you must use Form 3115 to request an automatic change. Tax amendments 2013 14 For more information, see the Instructions for Form 3115. Tax amendments 2013 14 Prev  Up  Next   Home   More Online Publications