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What Is A 1040x

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What Is A 1040x

What is a 1040x 37. What is a 1040x   Other Credits Table of Contents What's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld What's New Adoption credit. What is a 1040x  The maximum adoption credit is $12,970 for 2013. What is a 1040x See Adoption Credit . What is a 1040x Plug-in electric vehicle credit. What is a 1040x  This credit has expired. What is a 1040x Credit for prior year minimum tax. What is a 1040x  The refundable portion of the credit for prior year minimum tax has expired. What is a 1040x Excess withholding of social security and railroad retirement tax. What is a 1040x  Social security tax and tier 1 railroad retirement (RRTA) tax were both withheld during 2013 at a rate of 6. What is a 1040x 2% of wages up to $113,700. What is a 1040x If you worked for more than one employer and had too much social security or RRTA tax withheld during 2013, you may be entitled to a credit for the excess withholding. What is a 1040x See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld . What is a 1040x Introduction This chapter discusses the following nonrefundable credits. What is a 1040x Adoption credit. What is a 1040x Alternative motor vehicle credit. What is a 1040x Alternative fuel vehicle refueling property credit. What is a 1040x Credit to holders of tax credit bonds. What is a 1040x Foreign tax credit. What is a 1040x Mortgage interest credit. What is a 1040x Nonrefundable credit for prior year minimum tax. What is a 1040x Plug-in electric drive motor vehicle credit. What is a 1040x Residential energy credits. What is a 1040x Retirement savings contributions credit. What is a 1040x This chapter also discusses the following refundable credits. What is a 1040x Credit for tax on undistributed capital gain. What is a 1040x Health coverage tax credit. What is a 1040x Credit for excess social security tax or railroad retirement tax withheld. What is a 1040x Several other credits are discussed in other chapters in this publication. What is a 1040x Child and dependent care credit (chapter 32). What is a 1040x Credit for the elderly or the disabled (chapter 33). What is a 1040x Child tax credit (chapter 34). What is a 1040x Education credits (chapter 35). What is a 1040x Earned income credit (chapter 36). What is a 1040x Nonrefundable credits. What is a 1040x   The first part of this chapter, Nonrefundable Credits , covers ten credits that you subtract from your tax. What is a 1040x These credits may reduce your tax to zero. What is a 1040x If these credits are more than your tax, the excess is not refunded to you. What is a 1040x Refundable credits. What is a 1040x   The second part of this chapter, Refundable Credits , covers three credits that are treated as payments and are refundable to you. What is a 1040x These credits are added to the federal income tax withheld and any estimated tax payments you made. What is a 1040x If this total is more than your total tax, the excess will be refunded to you. What is a 1040x Useful Items - You may want to see: Publication 502 Medical and Dental Expenses 514 Foreign Tax Credit for  Individuals 530 Tax Information for Homeowners 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1116 Foreign Tax Credit 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 5695 Residential Energy Credits 8396 Mortgage Interest Credit 8801 Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts 8828 Recapture of Federal Mortgage Subsidy 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions 8885 Health Coverage Tax Credit 8910 Alternative Motor Vehicle Credit 8911 Alternative Fuel Vehicle Refueling Property Credit 8912 Credit to Holders of Tax Credit Bonds 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit Nonrefundable Credits The credits discussed in this part of the chapter can reduce your tax. What is a 1040x However, if the total of these credits is more than your tax, the excess is not refunded to you. What is a 1040x Adoption Credit You may be able to take a tax credit of up to $12,970 for qualified expenses paid to adopt an eligible child. What is a 1040x The credit may be allowed for the adoption of a child with special needs even if you do not have any qualified expenses. What is a 1040x If your modified adjusted gross income (AGI) is more than $194,580, your credit is reduced. What is a 1040x If your modified AGI is $234,580 or more, you cannot take the credit. What is a 1040x Qualified adoption expenses. What is a 1040x   Qualified adoption expenses are reasonable and necessary expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. What is a 1040x These expenses include: Adoption fees, Court costs, Attorney fees, Travel expenses (including amounts spent for meals and lodging) while away from home, and Re-adoption expenses to adopt a foreign child. What is a 1040x Nonqualified expenses. What is a 1040x   Qualified adoption expenses do not include expenses: That violate state or federal law, For carrying out any surrogate parenting arrangement, For the adoption of your spouse's child, For which you received funds under any federal, state, or local program, Allowed as a credit or deduction under any other federal income tax rule, or Paid or reimbursed by your employer or any other person or organization. What is a 1040x Eligible child. What is a 1040x   The term “eligible child” means any individual: Under 18 years old, or Physically or mentally incapable of caring for himself or herself. What is a 1040x Child with special needs. What is a 1040x   An eligible child is a child with special needs if all three of the following apply. What is a 1040x The child was a citizen or resident of the United States (including U. What is a 1040x S. What is a 1040x possessions) at the time the adoption process began. What is a 1040x A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home. What is a 1040x The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. What is a 1040x Factors used by states to make this determination include: The child's ethnic background, The child's age, Whether the child is a member of a minority or sibling group, and Whether the child has a medical condition or a physical, mental, or emotional handicap. What is a 1040x When to take the credit. What is a 1040x   Generally, until the adoption becomes final, you take the credit in the year after your qualified expenses were paid or incurred. What is a 1040x If the adoption becomes final, you take the credit in the year your expenses were paid or incurred. What is a 1040x See the Instructions for Form 8839 for more specific information on when to take the credit. What is a 1040x Foreign child. What is a 1040x   If the child is not a U. What is a 1040x S. What is a 1040x citizen or resident at the time the adoption process began, you cannot take the credit unless the adoption becomes final. What is a 1040x You treat all adoption expenses paid or incurred in years before the adoption becomes final as paid or incurred in the year it becomes final. What is a 1040x How to take the credit. What is a 1040x   Figure your 2013 nonrefundable credit and any carryforward to 2014 on Form 8839 and attach it to your Form 1040. What is a 1040x Include the credit in your total for Form 1040, line 53. What is a 1040x Check box c and enter “8839” on the line next to that box. What is a 1040x More information. What is a 1040x   For more information, see the Instructions for Form 8839. What is a 1040x Alternative Motor Vehicle Credit You may be able to take this credit if you place a qualified fuel cell vehicle in service in 2013. What is a 1040x Amount of credit. What is a 1040x   Generally, you can rely on the manufacturer's certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies. What is a 1040x In the case of a foreign manufacturer, you generally can rely on its domestic distributor's certification to the IRS. What is a 1040x   Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification to the IRS of the maximum credit allowable. What is a 1040x How to take the credit. What is a 1040x   To take the credit, you must complete Form 8910 and attach it to your Form 1040. What is a 1040x Include the credit in your total for Form 1040, line 53. What is a 1040x Check box c and enter “8910” on the line next to that box. What is a 1040x More information. What is a 1040x   For more information on the credit, see the Instructions for Form 8910. What is a 1040x Alternative Fuel Vehicle Refueling Property Credit You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2013. What is a 1040x Qualified alternative fuel vehicle refueling property. What is a 1040x   Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used for either of the following. What is a 1040x To store or dispense alternative fuel into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into that tank. What is a 1040x To recharge an electric vehicle, but only if the recharging property is located at the point where the vehicle is recharged. What is a 1040x   The following are alternative fuels. What is a 1040x Any fuel at least 85% of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. What is a 1040x Any mixture which consists of two or more of the following: biodiesel, diesel fuel, or kerosene, and at least 20% of the volume of which consists of biodiesel determined without regard to any kerosene. What is a 1040x Electricity. What is a 1040x Amount of the credit. What is a 1040x   For personal use property, the credit is generally the smaller of 30% of the property's cost or $1,000. What is a 1040x For business use property, the credit is generally the smaller of 30% of the property's cost or $30,000. What is a 1040x How to take the credit. What is a 1040x   To take the credit, you must complete Form 8911 and attach it to your Form 1040. What is a 1040x Include the credit in your total for Form 1040, line 53. What is a 1040x Check box c and enter “8911” on the line next to that box. What is a 1040x More information. What is a 1040x   For more information on the credit, see the Form 8911 instructions. What is a 1040x Credit to Holders of Tax Credit Bonds Tax credit bonds are bonds in which the holder receives a tax credit in lieu of some or all of the interest on the bond. What is a 1040x You may be able to take a credit if you are a holder of one of the following bonds. What is a 1040x Clean renewable energy bonds (issued before 2010). What is a 1040x New clean renewable energy bonds. What is a 1040x Qualified energy conservation bonds. What is a 1040x Qualified school construction bonds. What is a 1040x Qualified zone academy bonds. What is a 1040x Build America bonds. What is a 1040x In some instances, an issuer may elect to receive a credit for interest paid on the bond. What is a 1040x If the issuer makes this election, you cannot also claim a credit. What is a 1040x Interest income. What is a 1040x   The amount of any tax credit allowed (figured before applying tax liability limits) must be included as interest income on your tax return. What is a 1040x How to take the credit. What is a 1040x   Complete Form 8912 and attach it to your Form 1040. What is a 1040x Include the credit in your total for Form 1040, line 53. What is a 1040x Check box c and enter “8912” on the line next to that box. What is a 1040x More information. What is a 1040x   For more information, see the Instructions for Form 8912. What is a 1040x Foreign Tax Credit You generally can choose to take income taxes you paid or accrued during the year to a foreign country or U. What is a 1040x S. What is a 1040x possession as a credit against your U. What is a 1040x S. What is a 1040x income tax. What is a 1040x Or, you can deduct them as an itemized deduction (see chapter 22). What is a 1040x You cannot take a credit (or deduction) for foreign income taxes paid on income that you exclude from U. What is a 1040x S. What is a 1040x tax under any of the following. What is a 1040x Foreign earned income exclusion. What is a 1040x Foreign housing exclusion. What is a 1040x Income from Puerto Rico exempt from U. What is a 1040x S. What is a 1040x tax. What is a 1040x Possession exclusion. What is a 1040x Limit on the credit. What is a 1040x   Unless you can elect not to file Form 1116 (see Exception , later), your foreign tax credit cannot be more than your U. What is a 1040x S. What is a 1040x tax liability (Form 1040, line 44), multiplied by a fraction. What is a 1040x The numerator of the fraction is your taxable income from sources outside the United States. What is a 1040x The denominator is your total taxable income from U. What is a 1040x S. What is a 1040x and foreign sources. What is a 1040x See Publication 514 for more information. What is a 1040x How to take the credit. What is a 1040x   Complete Form 1116 and attach it to your Form 1040. What is a 1040x Enter the credit on Form 1040, line 47. What is a 1040x Exception. What is a 1040x   You do not have to complete Form 1116 to take the credit if all of the following apply. What is a 1040x All of your gross foreign source income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). What is a 1040x If you had dividend income from shares of stock, you held those shares for at least 16 days. What is a 1040x You are not filing Form 4563 or excluding income from sources within Puerto Rico. What is a 1040x The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). What is a 1040x All of your foreign taxes were: Legally owed and not eligible for a refund, and Paid to countries that are recognized by the United States and do not support terrorism. What is a 1040x More information. What is a 1040x   For more information on the credit and these requirements, see the Instructions for Form 1116. What is a 1040x Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals own a home. What is a 1040x If you qualify, you can take the credit each year for part of the home mortgage interest you pay. What is a 1040x Who qualifies. What is a 1040x   You may be eligible for the credit if you were issued a qualified mortgage credit certificate (MCC) from your state or local government. What is a 1040x Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. What is a 1040x Amount of credit. What is a 1040x   Figure your credit on Form 8396. What is a 1040x If your mortgage loan amount is equal to (or smaller than) the certified indebtedness (loan) amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. What is a 1040x   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. What is a 1040x To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. What is a 1040x      Certified indebtedness amount on your MCC     Original amount of your mortgage   Limit based on credit rate. What is a 1040x   If the certificate credit rate is more than 20%, the credit you are allowed cannot be more than $2,000. What is a 1040x If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, this $2,000 limit must be divided based on the interest held by each person. What is a 1040x See Publication 530 for more information. What is a 1040x Carryforward. What is a 1040x   Your credit (after applying the limit based on the credit rate) is also subject to a limit based on your tax that is figured using Form 8396. What is a 1040x If your allowable credit is reduced because of this tax liability limit, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. What is a 1040x   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). What is a 1040x How to take the credit. What is a 1040x    Figure your 2013 credit and any carryforward to 2014 on Form 8396, and attach it to your Form 1040. What is a 1040x Be sure to include any credit carryforward from 2010, 2011, and 2012. What is a 1040x   Include the credit in your total for Form 1040, line 53. What is a 1040x Check box c and enter “8396” on the line next to that box. What is a 1040x Reduced home mortgage interest deduction. What is a 1040x   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. What is a 1040x You must do this even if part of that amount is to be carried forward to 2014. What is a 1040x For more information about the home mortgage interest deduction, see chapter 23. What is a 1040x Recapture of federal mortgage subsidy. What is a 1040x   If you received an MCC with your mortgage loan, you may have to recapture (pay back) all or part of the benefit you received from that program. What is a 1040x The recapture may be required if you sell or dispose of your home at a gain during the first 9 years after the date you closed your mortgage loan. What is a 1040x See the Instructions for Form 8828 and chapter 15 for more information. What is a 1040x More information. What is a 1040x   For more information on the credit, see the Form 8396 instructions. What is a 1040x Nonrefundable Credit for Prior Year Minimum Tax The tax laws give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. What is a 1040x If you benefit from these laws, you may have to pay at least a minimum amount of tax in addition to any other tax on these items. What is a 1040x This is called the alternative minimum tax. What is a 1040x The special treatment of some items of income and expenses only allows you to postpone paying tax until a later year. What is a 1040x If in prior years you paid alternative minimum tax because of these tax postponement items, you may be able to take a credit for prior year minimum tax against your current year's regular tax. What is a 1040x You may be able to take a credit against your regular tax if for 2012 you had: An alternative minimum tax liability and adjustments or preferences other than exclusion items, A minimum tax credit that you are carrying forward to 2013, or An unallowed qualified electric vehicle credit. What is a 1040x How to take the credit. What is a 1040x    Figure your 2013 nonrefundable credit (if any), and any carryforward to 2014 on Form 8801, and attach it to your Form 1040. What is a 1040x Include the credit in your total for Form 1040, line 53, and check box b. What is a 1040x You can carry forward any unused credit for prior year minimum tax to later years until it is completely used. What is a 1040x More information. What is a 1040x   For more information on the credit, see the Instructions for Form 8801. What is a 1040x Plug-in Electric Drive Motor Vehicle Credit You may be able to take this credit if you placed in service for business or personal use a qualified plug-in electric drive motor vehicle or a qualified two- or three-wheeled plug-in electric vehicle in 2013 and you meet some other requirements. What is a 1040x Qualified plug-in electric drive motor vehicle. What is a 1040x   This is a new vehicle with at least four wheels that: Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. What is a 1040x Qualified two- or three-wheeled plug-in electric vehicle. What is a 1040x   This is a new vehicle with two or three wheels that: Is capable of achieving a speed of 45 miles per hour or greater, Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2. What is a 1040x 5 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. What is a 1040x Certification and other requirements. What is a 1040x   Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and, if applicable, the amount of the credit for which it qualifies. What is a 1040x However, if the IRS publishes an announcement that the certification for any specific make, model, and model year vehicle has been withdrawn, you cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement. What is a 1040x   The following requirements must also be met to qualify for the credit. What is a 1040x You are the owner of the vehicle. What is a 1040x If the vehicle is leased, only the lessor, and not the lessee, is entitled to the credit. What is a 1040x You placed the vehicle in service during 2013. What is a 1040x The vehicle is manufactured primarily for use on public streets, roads, and highways. What is a 1040x The original use of the vehicle began with you. What is a 1040x You acquired the vehicle for your use or to lease to others, and not for resale. What is a 1040x In the case of the qualified two- or three-wheeled plug-in electric vehicle, the vehicle is acquired after 2011 and before 2014. What is a 1040x You use the vehicle primarily in the United States. What is a 1040x How to take the credit. What is a 1040x   To take the credit, you must complete Form 8936 and attach it to your Form 1040. What is a 1040x Include the credit in your total for Form 1040, line 53. What is a 1040x Check box c and enter “8936” on the line next to that box. What is a 1040x More information. What is a 1040x   For more information on the credit, see the Form 8936 instructions. What is a 1040x Residential Energy Credits You may be able to take one or both of the following credits if you made energy saving improvements to your home located in the United States in 2013. What is a 1040x Nonbusiness energy property credit. What is a 1040x Residential energy efficient property credit. What is a 1040x If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of the association or corporation for purposes of these credits. What is a 1040x Nonbusiness energy property credit. What is a 1040x   You may be able to take a credit equal to the sum of: 10% of the amount paid or incurred for qualified energy efficiency improvements installed during 2013, and Any residential energy property costs paid or incurred in 2013. What is a 1040x   There is a lifetime limit of $500 for all years after 2005, of which only $200 can be for windows; $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property. What is a 1040x    If the total of nonbusiness energy property credits you have taken in previous years (after 2005) is more than $500, you cannot take this credit in 2013. What is a 1040x   Qualified energy efficiency improvements are the following improvements that are new, can be expected to remain in use at least 5 years, and meet certain requirements for energy efficiency. What is a 1040x Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home. What is a 1040x Exterior window (including skylights). What is a 1040x Exterior doors. What is a 1040x Any metal or asphalt roof that has appropriate pigmented coatings or cooling granules specifically and primarily designed to reduce heat gain of the home. What is a 1040x   Residential energy property is any of the following. What is a 1040x Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heater; and stoves that use biomass fuel. What is a 1040x Qualified natural gas, propane, or oil furnaces; and qualified natural gas, propane, or oil hot water boilers. What is a 1040x Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces. What is a 1040x Residential energy efficient property credit. What is a 1040x   You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. What is a 1040x The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property. What is a 1040x Basis reduction. What is a 1040x   You must reduce the basis of your home by the amount of any credit allowed. What is a 1040x How to take the credit. What is a 1040x   Complete Form 5695 and attach it to your Form 1040. What is a 1040x Enter the credit on Form 1040, line 52. What is a 1040x More information. What is a 1040x   For more information on these credits, see the Form 5695 instructions. What is a 1040x Retirement Savings Contributions Credit (Saver's Credit) You may be able to take this credit if you, or your spouse if filing jointly, made: Contributions (other than rollover contributions) to a traditional or Roth IRA, Elective deferrals to a 401(k) or 403(b) plan (including designated Roth contributions) or to a governmental 457, SEP, or SIMPLE plan, Voluntary employee contributions to a qualified retirement plan (including the federal Thrift Savings Plan), or Contributions to a 501(c)(18)(D) plan. What is a 1040x However, you cannot take the credit if either of the following applies. What is a 1040x The amount on Form 1040, line 38, or Form 1040A, line 22, is more than $29,500 ($44,250 if head of household; $59,000 if married filing jointly). What is a 1040x The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1996, (b) is claimed as a dependent on someone else's 2013 tax return, or (c) was a student (defined next). What is a 1040x Student. What is a 1040x   You were a student if during any part of 5 calendar months of 2013 you: Were enrolled as a full-time student at a school, or Took a full-time, on-farm training course given by a school or a state, county, or local government agency. What is a 1040x School. What is a 1040x   A school includes a technical, trade, or mechanical school. What is a 1040x It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. What is a 1040x How to take the credit. What is a 1040x   Figure the credit on Form 8880. What is a 1040x Enter the credit on your Form 1040, line 50, or your Form 1040A, line 32, and attach Form 8880 to your return. What is a 1040x More information. What is a 1040x   For more information on the credit, see the Form 8880 instructions. What is a 1040x Refundable Credits The credits discussed in this part of the chapter are treated as payments of tax. What is a 1040x If the total of these credits, withheld federal income tax, and estimated tax payments is more than your total tax, the excess can be refunded to you. What is a 1040x Credit for Tax on Undistributed Capital Gain You must include in your income any amounts that regulated investment companies (commonly called mutual funds) or real estate investment trusts (REITs) allocated to you as capital gain distributions, even if you did not actually receive them. What is a 1040x If the mutual fund or REIT paid a tax on the capital gain, you are allowed a credit for the tax since it is considered paid by you. What is a 1040x The mutual fund or REIT will send you Form 2439 showing your share of the undistributed capital gains and the tax paid, if any. What is a 1040x How to take the credit. What is a 1040x   To take the credit, attach Copy B of Form 2439 to your Form 1040. What is a 1040x Include the amount from box 2 of your Form 2439 in the total for Form 1040, line 71, and check box a. What is a 1040x More information. What is a 1040x   See Capital Gain Distributions in chapter 8 for more information on undistributed capital gains. What is a 1040x Health Coverage Tax Credit You may be able to take this credit for any month in which all the following statements were true on the first day of the month. What is a 1040x You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient (defined later); or you were a qualified family member of one of these individuals when the individual died or you finalized a divorce with one of these individuals. What is a 1040x You and/or your family members were covered by a qualified health insurance plan for which you paid the entire premiums, or your portion of the premiums, directly to your health plan or to “U. What is a 1040x S. What is a 1040x Treasury–HCTC. What is a 1040x ” You were not enrolled in Medicare Part A, B, or C, or you were enrolled in Medicare but your family member(s) qualified for the HCTC. What is a 1040x You were not enrolled in Medicaid or the Children's Health Insurance Program (CHIP). What is a 1040x You were not enrolled in the Federal Employees Health Benefits program (FEHBP) or eligible to receive benefits under the U. What is a 1040x S. What is a 1040x military health system (TRICARE). What is a 1040x You were not imprisoned under federal, state, or local authority. What is a 1040x Your employer did not pay 50% or more of the cost of coverage. What is a 1040x You did not receive a 65% COBRA premium reduction from your former employer or COBRA administrator. What is a 1040x But, you cannot take the credit if you can be claimed as a dependent on someone else's 2013 tax return. What is a 1040x If you meet all of these conditions, you may be able to take a credit of up to 72. What is a 1040x 5% of the amount you paid directly to a qualified health plan for you and any qualifying family members. What is a 1040x You cannot take the credit for insurance premiums on coverage that was actually paid for with a National Emergency Grant. What is a 1040x The amount you paid for qualified health insurance coverage must be reduced by any Archer MSA and health savings account distributions used to pay for the coverage. What is a 1040x You can take this credit on your tax return or have it paid on your behalf in advance to your insurance company. What is a 1040x If the credit is paid on your behalf in advance, that amount will reduce the amount of the credit you can take on your tax return. What is a 1040x TAA recipient. What is a 1040x   You were an eligible TAA recipient on the first day of the month if, for any day in that month or the prior month, you: Received a trade readjustment allowance, or Would have been entitled to receive such an allowance except that you had not exhausted all rights to any unemployment insurance (except additional compensation that is funded by a state and is not reimbursed from any federal funds) to which you were entitled (or would be entitled if you applied). What is a 1040x Example. What is a 1040x You received a trade adjustment allowance for January 2013. What is a 1040x You were an eligible TAA recipient on the first day of January and February. What is a 1040x Alternative TAA recipient. What is a 1040x   You were an eligible alternative TAA recipient on the first day of the month if, for that month or the prior month, you received benefits under an alternative trade adjustment assistance program for older workers established by the Department of Labor. What is a 1040x Example. What is a 1040x You received benefits under an alternative trade adjustment assistance program for older workers for October 2013. What is a 1040x The program was established by the Department of Labor. What is a 1040x You were an eligible alternative TAA recipient on the first day of October and November. What is a 1040x RTAA recipient. What is a 1040x   You were an eligible RTAA recipient on the first day of the month if, for that month or the prior month, you received benefits under a reemployment trade adjustment assistance program for older workers established by the Department of Labor. What is a 1040x PBGC pension recipient. What is a 1040x   You were an eligible PBGC pension recipient on the first day of the month, if both of the following apply. What is a 1040x You were age 55 or older on the first day of the month. What is a 1040x You received a benefit for that month paid by the PBGC under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). What is a 1040x If you received a lump-sum payment from the PBGC after August 5, 2002, you meet item (2) above for any month that you would have received a PBGC benefit if you had not received the lump-sum payment. What is a 1040x How to take the credit. What is a 1040x   To take the credit, complete Form 8885 and attach it to your Form 1040. What is a 1040x Include your credit in the total for Form 1040, line 71, and check box c. What is a 1040x   You must attach health insurance bills (or COBRA payment coupons) and proof of payment for any amounts you include on Form 8885, line 2. What is a 1040x For details, see Publication 502 or Form 8885. What is a 1040x More information. What is a 1040x   For definitions and special rules, including those relating to qualified health insurance plans, qualifying family members, the effect of certain life events, and employer-sponsored health insurance plans, see Publication 502 and the Form 8885 instructions. What is a 1040x Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Most employers must withhold social security tax from your wages. What is a 1040x If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. What is a 1040x If you worked for two or more employers in 2013, you may have had too much social security tax withheld from your pay. What is a 1040x If one or more of those employers was a railroad employer, too much tier 1 RRTA tax may also have been withheld at the 6. What is a 1040x 2% rate. What is a 1040x You can claim the excess social security or tier 1 RRTA tax as a credit against your income tax when you file your return. What is a 1040x For the tier 1 RRTA tax, only use the portion of the tier 1 RRTA tax that was taxed at the 6. What is a 1040x 2% rate when figuring if excess tier 1 RRTA tax was withheld; do not include any portion of the tier 1 RRTA tax that was withheld at the Medicare tax rate (1. What is a 1040x 45%) or the Additional Medicare Tax rate (. What is a 1040x 9%). What is a 1040x The following table shows the maximum amount of wages subject to tax and the maximum amount of tax that should have been withheld for 2013. What is a 1040x Type of tax Maximum  wages subject to tax Maximum tax that should have been withheld Social security or RRTA tier 1 $113,700 $7,049. What is a 1040x 40 RRTA tier 2 $84,300 $3,709. What is a 1040x 20 All wages are subject to Medicare tax withholding. What is a 1040x   Use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess tier 2 RRTA tax. What is a 1040x Be sure to attach a copy of all of your W-2 forms. What is a 1040x Use Worksheet 3-3 in Publication 505, Tax Withholding and Estimated Tax, to help you figure the excess amount. What is a 1040x Employer's error. What is a 1040x   If any one employer withheld too much social security or tier 1 RRTA tax, you cannot take the excess as a credit against your income tax. What is a 1040x The employer should adjust the tax for you. What is a 1040x If the employer does not adjust the overcollection, you can file a claim for refund using Form 843. What is a 1040x Joint return. What is a 1040x   If you are filing a joint return, you cannot add the social security or tier 1 RRTA tax withheld from your spouse's wages to the amount withheld from your wages. What is a 1040x Figure the withholding separately for you and your spouse to determine if either of you has excess withholding. What is a 1040x How to figure the credit if you did not work for a railroad. What is a 1040x   If you did not work for a railroad during 2013, figure the credit as follows: 1. What is a 1040x Add all social security tax withheld (but not more than $7,049. What is a 1040x 40 for each employer). What is a 1040x Enter the total here   2. What is a 1040x Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. What is a 1040x Add lines 1 and 2. What is a 1040x If $7,049. What is a 1040x 40 or less, stop here. What is a 1040x You cannot take  the credit   4. What is a 1040x Social security tax limit 7,049. What is a 1040x 40 5. What is a 1040x Credit. What is a 1040x Subtract line 4 from line 3. What is a 1040x Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ Example. What is a 1040x You are married and file a joint return with your spouse who had no gross income in 2013. What is a 1040x During 2013, you worked for the Brown Technology Company and earned $60,000 in wages. What is a 1040x Social security tax of $3,720 was withheld. What is a 1040x You also worked for another employer in 2013 and earned $55,000 in wages. What is a 1040x $3,410 of social security tax was withheld from these wages. What is a 1040x Because you worked for more than one employer and your total wages were more than $113,700, you can take a credit of $80. What is a 1040x 60 for the excess social security tax withheld. What is a 1040x 1. What is a 1040x Add all social security tax withheld (but not more than $7,049. What is a 1040x 40 for each employer). What is a 1040x Enter the total here $7,130. What is a 1040x 00 2. What is a 1040x Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT” -0- 3. What is a 1040x Add lines 1 and 2. What is a 1040x If $7,049. What is a 1040x 40 or less, stop here. What is a 1040x You cannot take the credit 7,130. What is a 1040x 00 4. What is a 1040x Social security tax limit 7,049. What is a 1040x 40 5. What is a 1040x Credit. What is a 1040x Subtract line 4 from line 3. What is a 1040x Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $80. What is a 1040x 60 How to figure the credit if you worked for a railroad. What is a 1040x   If you were a railroad employee at any time during 2013, figure the credit as follows: 1. What is a 1040x Add all social security and tier 1 RRTA tax withheld at the 6. What is a 1040x 2% rate (but not more than $7,049. What is a 1040x 40 for each employer). What is a 1040x Enter the total here   2. What is a 1040x Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. What is a 1040x Add lines 1 and 2. What is a 1040x If $7,049. What is a 1040x 40 or less, stop here. What is a 1040x You cannot take  the credit   4. What is a 1040x Social security and tier 1 RRTA  tax limit 7,049. What is a 1040x 40 5. What is a 1040x Credit. What is a 1040x Subtract line 4 from line 3. What is a 1040x Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ How to take the credit. What is a 1040x   Enter the credit on Form 1040, line 69, or include it in the total for Form 1040A, line 41. What is a 1040x More information. What is a 1040x   For more information on the credit, see Publication 505. What is a 1040x Prev  Up  Next   Home   More Online Publications
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Tax Exempt Bonds Forms and Publications

Forms used by the tax-exempt bond community and useful publications relating to tax-exempt bonds.

The freely available Adobe Acrobat Reader software is required to view, print, and search the items below.

Forms

Name

Title

Version

Separate Instructions

Form 8038

Information Return for Tax-Exempt Private Activity Bond Issues

04-2011

Yes

Form 8038-G Information Return for Government Purpose Tax-Exempt Bond Issues

09-2011

Yes

Form 8038-GC Consolidated Information Return for Small Tax-Exempt Government Bond Issues

01-2012

No

Form 8038-B Information Return for Build America Bonds and Recovery Zone Economic Development Bonds

01-2010

Yes

Form 8038-TC Information Return for Tax Credit Bonds and Specified Tax Credit Bonds

11-2012

Yes

Form 8038-CP Credit for Qualified Bonds Allowed to Issuer

01-2012

Yes

Form 8038-T

Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate

04-2011

Yes

Form 8038-R Request for Recovery of Overpayment Under Arbitrage Rebate Provisions

04-2011

No

Form 8328 Carryforward Election of Unused Private Activity Bond Volume Cap

09-2011

No

Form 8703 Annual Certification of a Residential Rental Project

09-2013

No

Form 990, Schedule K Supplemental Information on Tax-Exempt Bonds

2013

Yes

Form 14429 Tax Exempt Bonds Voluntary Closing Agreement Program Request 03-2013 No

 

Publications

Name

Title

Version

Publication 1-TEB Understanding the Tax Exempt Bonds Examination Process 07-2011
Publication 3755 Tax Exempt Bonds-Filing Requirements 05-2001
Publication 4077 Tax-Exempt Bonds for 501(c)(3) Charitable Organizations / Compliance Guide

09-2005

Publication 4078 Tax-Exempt Private Activity Bonds / Compliance Guide 

09-2005

Publication 4079

Tax-Exempt Governmental Bonds / Compliance Guide

09-2005

Publication 5005 Your Responsibilities as a Conduit Issuer of Tax-Exempt Bonds

04-2012

Publication 5091 Voluntary Compliance for Tax-Exempt and Tax-Credit Bonds 06-2013
Page Last Reviewed or Updated: 26-Mar-2014

The What Is A 1040x

What is a 1040x 10. What is a 1040x   Business Bad Debts Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Definition of Business Bad DebtAccrual method. What is a 1040x Cash method. What is a 1040x Debt acquired from a decedent. What is a 1040x Liquidation. What is a 1040x Types of Business Bad Debts When a Debt Becomes Worthless How To Claim a Business Bad DebtSpecific Charge-Off Method Nonaccrual-Experience Method Recovery of a Bad DebtNet operating loss (NOL) carryover. What is a 1040x Introduction You have a bad debt if you cannot collect money owed to you. What is a 1040x A bad debt is either a business bad debt or a nonbusiness bad debt. What is a 1040x This chapter discusses only business bad debts. What is a 1040x Generally, a business bad debt is one that comes from operating your trade or business. What is a 1040x You can deduct business bad debts on Schedule C (Form 1040) or your applicable business income tax return. What is a 1040x All other bad debts are nonbusiness bad debts and are deductible only as short-term capital losses. What is a 1040x For more information on nonbusiness bad debts, see Publication 550. What is a 1040x Topics - This chapter discusses: Definition of business bad debt When a debt becomes worthless How to claim a business bad debt Recovery of a bad debt Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 556 Examination of Returns, Appeal Rights, and Claims for Refund Form (and Instructions) Schedule C (Form 1040) Profit or Loss From Business 1040X Amended U. What is a 1040x S. What is a 1040x Individual Income Tax Return 1045 Application for Tentative Refund 1139 Corporation Application for Tentative Refund 3115 Application for Change in Accounting Method See chapter 12 for information about getting publications and forms. What is a 1040x Definition of Business Bad Debt A business bad debt is a loss from the worthlessness of a debt that was either: Created or acquired in your trade or business, or Closely related to your trade or business when it became partly or totally worthless. What is a 1040x A debt is closely related to your trade or business if your primary motive for incurring the debt is business related. What is a 1040x Bad debts of a corporation (other than an S corporation) are always business bad debts. What is a 1040x Credit sales. What is a 1040x   Business bad debts are mainly the result of credit sales to customers. What is a 1040x Goods that have been sold, but not yet paid for, and services that have been performed, but not yet paid for, are recorded in your books as either accounts receivable or notes receivable. What is a 1040x After a reasonable period of time, if you have tried to collect the amount due, but are unable to do so, the uncollectible part becomes a business bad debt. What is a 1040x   Accounts or notes receivable valued at fair market value (FMV) when received are deductible only at that value, even though the FMV may be less than the face value. What is a 1040x If you purchased an account receivable for less than its face value, and the receivable subsequently becomes worthless, the most you are allowed to deduct is the amount you paid to acquire it. What is a 1040x    You can claim a business bad debt deduction only if the amount owed to you was previously included in gross income. What is a 1040x This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest. What is a 1040x Accrual method. What is a 1040x   If you use the accrual method of accounting, you generally report income as you earn it. What is a 1040x You can only claim a bad debt deduction for an uncollectible receivable if you have previously included the uncollectible amount in income. What is a 1040x   If you qualify, you can use the nonaccrual-experience method of accounting discussed later. What is a 1040x Under this method, you do not have to accrue income that, based on your experience, you do not expect to collect. What is a 1040x Cash method. What is a 1040x   If you use the cash method of accounting, you generally report income when you receive payment. What is a 1040x You cannot claim a bad debt deduction for amounts owed to you because you never included those amounts in income. What is a 1040x For example, a cash basis architect cannot claim a bad debt deduction if a client fails to pay the bill because the architect's fee was never included in income. What is a 1040x Debts from a former business. What is a 1040x   If you sell your business but retain its receivables, these debts are business debts because they arose out of your trade or business. What is a 1040x If any of these receivables subsequently become worthless, the loss is still a business bad debt. What is a 1040x Debt acquired from a decedent. What is a 1040x   The character of a loss from debts of a business acquired from a decedent is determined in the same way as debts acquired on the purchase of a business. What is a 1040x The executor of the decedent's estate treats any loss from the debts as a business bad debt if the debts were closely related to the decedent's trade or business when they became worthless. What is a 1040x Otherwise, a loss from these debts becomes a nonbusiness bad debt for the decedent's estate. What is a 1040x Liquidation. What is a 1040x   If you liquidate your business and some of the accounts receivable that you retain become worthless, they become business bad debts. What is a 1040x Types of Business Bad Debts Business bad debts may result from the following. What is a 1040x Loans to clients and suppliers. What is a 1040x   If you loan money to a client, supplier, employee, or distributor for a business reason and you are unable to collect the loan after attempting to do so, you have a business bad debt. What is a 1040x Debts owed by political parties. What is a 1040x   If a political party (or other organization that accepts contributions or spends money to influence elections) owes you money and the debt becomes worthless, you can claim a bad debt deduction only if all of the following requirements are met. What is a 1040x You use the accrual method of accounting. What is a 1040x The debt arose from the sale of goods or services in the ordinary course of your trade or business. What is a 1040x More than 30% of your receivables accrued in the year of the sale were from sales to political parties. What is a 1040x You made substantial and continuing efforts to collect on the debt. What is a 1040x Loan or capital contribution. What is a 1040x   You cannot claim a bad debt deduction for a loan you made to a corporation if, based on the facts and circumstances, the loan is actually a contribution to capital. What is a 1040x Debts of an insolvent partner. What is a 1040x   If your business partnership breaks up and one of your former partners becomes insolvent, you may have to pay more than your pro rata share of the partnership's debts. What is a 1040x If you pay any part of the insolvent partner's share of the debts, you can claim a bad debt deduction for the amount you paid that is attributable to the insolvent partner's share. What is a 1040x Business loan guarantee. What is a 1040x   If you guarantee a debt that subsequently becomes worthless, the debt can qualify as a business bad debt if all the following requirements are met. What is a 1040x You made the guarantee in the course of your trade or business. What is a 1040x You have a legal duty to pay the debt. What is a 1040x You made the guarantee before the debt became worthless. What is a 1040x You meet this requirement if you reasonably expected you would not have to pay the debt without full reimbursement from the borrower. What is a 1040x You received reasonable consideration for making the guarantee. What is a 1040x You meet this requirement if you made the guarantee in accord with normal business practice or for a good faith business purpose. What is a 1040x Example. What is a 1040x Jane Zayne owns the Zayne Dress Company. What is a 1040x She guaranteed payment of a $20,000 note for Elegant Fashions, a dress outlet. What is a 1040x Elegant Fashions is one of Zayne's largest clients. What is a 1040x Elegant Fashions later defaulted on the loan. What is a 1040x As a result, Ms. What is a 1040x Zayne paid the remaining balance of the loan in full to the bank. What is a 1040x She can claim a business bad debt deduction only for the amount she paid, since her guarantee was made in the course of her trade or business for a good faith business purpose. What is a 1040x She was motivated by the desire to retain one of her better clients and keep a sales outlet. What is a 1040x Deductible in the year paid. What is a 1040x   If you make a payment on a loan you guaranteed, you can deduct it in the year paid, unless you have rights against the borrower. What is a 1040x Rights against a borrower. What is a 1040x   When you make payment on a loan you guaranteed, you may have the right to take the place of the lender. What is a 1040x The debt is then owed to you. What is a 1040x If you have this right, or some other right to demand payment from the borrower, you cannot claim a bad debt deduction until these rights become partly or totally worthless. What is a 1040x Joint debtor. What is a 1040x   If two or more debtors jointly owe you money, your inability to collect from one does not enable you to deduct a proportionate amount as a bad debt. What is a 1040x Sale of mortgaged property. What is a 1040x   If mortgaged or pledged property is sold for less than the debt, the unpaid, uncollectible balance of the debt is a bad debt. What is a 1040x When a Debt Becomes Worthless A debt becomes worthless when there is no longer any chance the amount owed will be paid. What is a 1040x This may occur when the debt is due or prior to that date. What is a 1040x To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. What is a 1040x It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. What is a 1040x Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. What is a 1040x Property received for debt. What is a 1040x   If you receive property in partial settlement of a debt, reduce the debt by the property's FMV, which becomes the property's basis. What is a 1040x You can deduct the remaining debt as a bad debt if and when it becomes worthless. What is a 1040x   If you later sell the property for more than its basis, any gain on the sale is due to the appreciation of the property. What is a 1040x It is not a recovery of a bad debt. What is a 1040x For information on the sale of an asset, see Publication 544. What is a 1040x How To Claim a Business Bad Debt There are two methods to claim a business bad debt. What is a 1040x The specific charge-off method. What is a 1040x The nonaccrual-experience method. What is a 1040x Generally, you must use the specific charge-off method. What is a 1040x However, you may use the nonaccrual-experience method if you meet the requirements discussed later under Nonaccrual-Experience Method . What is a 1040x Specific Charge-Off Method If you use the specific charge-off method, you can deduct specific business bad debts that become either partly or totally worthless during the tax year. What is a 1040x However, with respect to partly worthless bad debts, your deduction is limited to the amount you charged off on your books during the year. What is a 1040x Partly worthless debts. What is a 1040x   You can deduct specific bad debts that become partly uncollectible during the tax year. What is a 1040x Your tax deduction is limited to the amount you charge off on your books during the year. What is a 1040x You do not have to charge off and deduct your partly worthless debts annually. What is a 1040x You can delay the charge off until a later year. What is a 1040x However, you cannot deduct any part of a debt after the year it becomes totally worthless. What is a 1040x Significantly modified debt. What is a 1040x   An exception to the charge-off rule exists for debt which has been significantly modified and on which the holder recognized gain. What is a 1040x For more information, see Regulations section 1. What is a 1040x 166-3(a)(3). What is a 1040x Deduction disallowed. What is a 1040x   Generally, you can claim a partial bad debt deduction only in the year you make the charge-off on your books. What is a 1040x If, under audit, the IRS does not allow your deduction and the debt becomes partly worthless in a later tax year, you can deduct the amount you charged off in that year plus the disallowed amount charged off in the earlier year. What is a 1040x The charge-off in the earlier year, unless reversed on your books, fulfills the charge-off requirement for the later year. What is a 1040x Totally worthless debts. What is a 1040x   If a debt becomes totally worthless in the current tax year, you can deduct the entire amount, less any amount deducted in an earlier tax year when the debt was only partly worthless. What is a 1040x   You do not have to make an actual charge-off on your books to claim a bad debt deduction for a totally worthless debt. What is a 1040x However, you may want to do so. What is a 1040x If you do not and the IRS later rules the debt is only partly worthless, you will not be allowed a deduction for the debt in that tax year because a deduction of a partly worthless bad debt is limited to the amount actually charged off. What is a 1040x See Partly worthless debts, earlier. What is a 1040x Filing a claim for refund. What is a 1040x   If you did not deduct a bad debt on your original return for the year it became worthless, you can file a claim for a credit or refund. What is a 1040x If the bad debt was totally worthless, you must file the claim by the later of the following dates. What is a 1040x 7 years from the date your original return was due (not including extensions). What is a 1040x 2 years from the date you paid the tax. What is a 1040x   If the claim is for a partly worthless bad debt, you must file the claim by the later of the following dates. What is a 1040x 3 years from the date you filed your original return. What is a 1040x 2 years from the date you paid the tax. What is a 1040x You may have longer to file the claim if you were unable to manage your financial affairs due to a physical or mental impairment. What is a 1040x Such an impairment requires proof of existence. What is a 1040x   For details and more information about filing a claim, see Publication 556. What is a 1040x Use one of the following forms to file a claim. What is a 1040x For more information, see the instructions for the applicable form. What is a 1040x Table 10-1. What is a 1040x Forms Used To File a Claim IF you filed as a. What is a 1040x . What is a 1040x . What is a 1040x THEN file. What is a 1040x . What is a 1040x . What is a 1040x Sole proprietor or farmer Form 1040X Corporation Form 1120X S corporation Form 1120S and check box H(4) Partnership Form 1065X if filing on paper or  Form 1065 and check box G(5) if filing electronically Nonaccrual-Experience Method If you use an accrual method of accounting and qualify under the rules explained in this section, you can use the nonaccrual-experience method for bad debts. What is a 1040x Under this method, you do not accrue service related income you expect to be uncollectible. What is a 1040x Because the expected uncollectible amounts are not included in income, these amounts are not later deducted from income. What is a 1040x Generally, you can use the nonaccrual-experience method for accounts receivable for services you performed only if: The services are provided in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, or the performing arts, or You meet the $5 million gross receipts test for all prior years. What is a 1040x Service related income. What is a 1040x   You can use the nonaccrual-experience method only for amounts earned by performing services. What is a 1040x You cannot use this method for amounts owed to you from activities such as lending money, selling goods, or acquiring receivables or other rights to receive payment. What is a 1040x Gross receipts test. What is a 1040x   To find out if you meet the $5 million gross receipts test for all prior years, you must figure the average annual gross receipts for each prior year. What is a 1040x If your average annual gross receipts for any year exceeds $5 million, you cannot use the non-accural experience method. What is a 1040x   The average annual gross receipts for any year is the average of gross receipts from the year in question and the 2 previous years. What is a 1040x For example, if you were figuring the average annual gross receipts for 2013, you would average your gross receipts for 2011, 2012, and 2013. What is a 1040x Interest or penalty charged. What is a 1040x   Generally, you cannot use the nonaccrual-experience method for amounts due on which you charge interest or a late payment penalty. What is a 1040x However, do not treat a discount offered for early payment as the charging of interest or a penalty if both the following apply. What is a 1040x You otherwise accrue the full amount due as gross income at the time you provide the services. What is a 1040x You treat the discount allowed for early payment as an adjustment to gross income in the year of payment. What is a 1040x Change in accounting method. What is a 1040x   Generally, you must obtain consent to change to a nonaccrual-experience method (other than one of the safe harbor methods) or to change from one method to another. What is a 1040x See Form 3115 and the Instructions for Form 3115 for more information. What is a 1040x Recovery of a Bad Debt If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. What is a 1040x The amount you include is limited to the amount you actually deducted. What is a 1040x However, you can exclude the amount deducted that did not reduce your tax. What is a 1040x Report the recovery as “Other income” on the appropriate business form or schedule. What is a 1040x See Recoveries in Publication 525 for more information. What is a 1040x Net operating loss (NOL) carryover. What is a 1040x   If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. What is a 1040x A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. What is a 1040x For more information about NOLs, see Publication 536. What is a 1040x Also, see the Instructions for Form 1045, and the Instructions for Form 1139. What is a 1040x Prev  Up  Next   Home   More Online Publications