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 Form 1040

How To File State Taxes Online For FreeUsaf1040ez Tax Forms 20141040ez Tax Forms To PrintH&r Block Free State Tax FilingTax Return AmendmentFree State Tax SoftwareHrblock Tax2008 Tax ReturnI Need To File 2012 TaxesTax Preparation FormsWhere To File 2011 Tax ReturnFree Efile State Taxes2012 1040State Tax FilingFreetax1040ez 2012 Fillable FormFree Tax UsaIncome Tax Filing OnlineEz1040Where Can I File My Federal And State Taxes For FreeFiling Taxes 2014Free State Efile TaxesAmended 1040x2012 Tax Forms 10402012 Irs Forms 1040Irs ProblemsWww Freefilefillableforms Com Ffa Freefileforms HtmFile 2011 Taxes OnlineMyfreetaxHow To File My 2012 Taxes For FreeTurbo Tax For 2012 Sign InSelf Employed Tax ReturnAarp Tax FilingHow To File 2010 Tax ReturnWalmart Free Tax Preparation 2013Need To File 2012 Tax ReturnsFree Turbo Tax 2013 DownloadHow Do You File A Tax Extension For Free540ez

Tax Form 1040

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

Oops! We can't find the file

Official information and services from the U.S. government

We're sorry, but the page you're looking for might have been removed, had its name changed, or is temporarily unavailable.

What should you do?

  • If you typed the page url, check the spelling.
  • Go to our home page and browse through our topics for the information you want.
  • Go to our site index, and look through the alphabetical listing for links to the page you want.
  • If you need help finding government information, please contact us.
  • Use our search engine to find the information you want.

The Tax Form 1040

Tax form 1040 3. Tax form 1040   Gifts Table of Contents If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Tax form 1040 This chapter explains the limits and rules for deducting the costs of gifts. Tax form 1040 $25 limit. Tax form 1040   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Tax form 1040 A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Tax form 1040   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Tax form 1040 This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use. Tax form 1040   If you and your spouse both give gifts, both of you are treated as one taxpayer. Tax form 1040 It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Tax form 1040 If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Tax form 1040 Example. Tax form 1040 Bob Jones sells products to Local Company. Tax form 1040 He and his wife, Jan, gave Local Company three gourmet gift baskets to thank them for their business. Tax form 1040 They paid $80 for each gift basket, or $240 total. Tax form 1040 Three of Local Company's executives took the gift baskets home for their families' use. Tax form 1040 Bob and Jan have no independent business relationship with any of the executives' other family members. Tax form 1040 They can deduct a total of $75 ($25 limit × 3) for the gift baskets. Tax form 1040 Incidental costs. Tax form 1040   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Tax form 1040   A cost is incidental only if it does not add substantial value to the gift. Tax form 1040 For example, the cost of gift wrapping is an incidental cost. Tax form 1040 However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Tax form 1040 Exceptions. Tax form 1040   The following items are not considered gifts for purposes of the $25 limit. Tax form 1040 An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Tax form 1040 Examples include pens, desk sets, and plastic bags and cases. Tax form 1040 Signs, display racks, or other promotional material to be used on the business premises of the recipient. Tax form 1040    Figure B. Tax form 1040 When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Tax form 1040 (Do not use this chart if your home is your principal place of business. Tax form 1040 See Office in the home . Tax form 1040 ) Please click here for the text description of the image. Tax form 1040 Figure B. Tax form 1040 When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1. Tax form 1040 162-1(a); RR 55–109; RR 94–47 Gift or entertainment. Tax form 1040   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Tax form 1040 However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Tax form 1040    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Tax form 1040 You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Tax form 1040   You can change your treatment of the tickets at a later date by filing an amended return. Tax form 1040 Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Tax form 1040    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Tax form 1040 You cannot choose, in this case, to treat the cost of the tickets as a gift expense. Tax form 1040 Prev  Up  Next   Home   More Online Publications