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

Where To File Taxes For Free

File For 2012 TaxesHow To Do A Amended Tax ReturnWhere To File State Taxes Online For Free1040 VTaxes Supplemental Security Income Ssi2013 Income Tax Forms 1040ezState Income TaxesWww Irs Gov 1040x InstructionsIrs Forms 2011Free State Tax File Online1040 Ez Tax FormsWww Irs Gov Freefile Fillable FormsIrs 1040ez 2012 InstructionsWww H&rblock Com2011 Tax CalculatorFederal Income Tax FormsTax Forms 1040Federal Income Tax Forms 2012Tax Forms 20121040nrFree State Tax FillingHr Block Free MilitaryTax Software ReviewFree 2012 Tax Software DownloadHow To File A Revised Tax ReturnEfile State TaxesIrs AmendmentHow To Fill Out A 1040ezWebsite Efile Past Year Tax ReturnsFile Taxes Free OnlineTurbotax 1040x 2012Hand R Block ComHow To File State And Federal Taxes For FreeIllinois 1040xAmending Tax ReturnsPrior Year Tax ReturnClues Fill 1040x FormHow To File Amended Tax ReturnTax Return For College StudentsWww Gov Freefile

Where To File Taxes For Free

Where to file taxes for free Publication 523 - Main Content Table of Contents Main HomeVacant land. Where to file taxes for free Factors used to determine main home. Where to file taxes for free Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining BasisCost As Basis Basis Other Than Cost Adjusted Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Nonqualified Use Business Use or Rental of HomeUnrecaptured section 1250 gain. Where to file taxes for free Property Used Partly for Business or Rental Reporting the SaleSeller-financed mortgage. Where to file taxes for free Individual taxpayer identification number (ITIN). Where to file taxes for free More information. Where to file taxes for free Comprehensive Examples Special SituationsException for sales to related persons. Where to file taxes for free Deducting Taxes in the Year of SaleForm 1099-S. Where to file taxes for free More information. Where to file taxes for free Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of First-Time Homebuyer CreditExample. Where to file taxes for free Worksheets How To Get Tax HelpLow Income Taxpayer Clinics Main Home This section explains the term “main home. Where to file taxes for free ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Where to file taxes for free To exclude gain under the rules in this publication, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Where to file taxes for free Land. Where to file taxes for free   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Where to file taxes for free Example. Where to file taxes for free You buy a piece of land and move your main home to it. Where to file taxes for free Then, you sell the land on which your main home was located. Where to file taxes for free This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Where to file taxes for free Vacant land. Where to file taxes for free   The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land. Where to file taxes for free If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. Where to file taxes for free See Excluding the Gain , later. Where to file taxes for free The destruction of your home is treated as a sale of your home. Where to file taxes for free As a result, you may be able to meet these requirements if you sell vacant land used as a part of your main home within 2 years from the date of the destruction of your main home. Where to file taxes for free For information, see Publication 547. Where to file taxes for free More than one home. Where to file taxes for free   If you have more than one home, you can exclude gain only from the sale of your main home. Where to file taxes for free You must include in income the gain from the sale of any other home. Where to file taxes for free If you have two homes and live in each of them, your main home is ordinarily the one you live in most of the time during the year. Where to file taxes for free Example 1. Where to file taxes for free You own two homes, one in New York and one in Florida. Where to file taxes for free From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Where to file taxes for free In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Where to file taxes for free You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Where to file taxes for free Example 2. Where to file taxes for free You own a house, but you live in another house that you rent. Where to file taxes for free The rented house is your main home. Where to file taxes for free Example 3. Where to file taxes for free You own two homes, one in Virginia and one in New Hampshire. Where to file taxes for free In 2009 and 2010, you lived in the Virginia home. Where to file taxes for free In 2011 and 2012, you lived in the New Hampshire home. Where to file taxes for free In 2013, you lived again in the Virginia home. Where to file taxes for free Your main home in 2009, 2010, and 2013 is the Virginia home. Where to file taxes for free Your main home in 2011 and 2012 is the New Hampshire home. Where to file taxes for free You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Where to file taxes for free Factors used to determine main home. Where to file taxes for free   In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Where to file taxes for free Those factors include the following. Where to file taxes for free Your place of employment. Where to file taxes for free The location of your family members' main home. Where to file taxes for free Your mailing address for bills and correspondence. Where to file taxes for free The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. Where to file taxes for free The location of the banks you use. Where to file taxes for free The location of recreational clubs and religious organizations of which you are a member. Where to file taxes for free Property used partly as your main home. Where to file taxes for free   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Where to file taxes for free For details, see Business Use or Rental of Home , later. Where to file taxes for free Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Where to file taxes for free Subtract the adjusted basis from the amount realized to get your gain or loss. Where to file taxes for free     Selling price     − Selling expenses       Amount realized     − Adjusted basis       Gain or loss   Gain. Where to file taxes for free   Gain is the excess of the amount realized over the adjusted basis of the property. Where to file taxes for free Loss. Where to file taxes for free   Loss is the excess of the adjusted basis over the amount realized for the property. Where to file taxes for free Selling Price The selling price is the total amount you receive for your home. Where to file taxes for free It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Where to file taxes for free Personal property. Where to file taxes for free   The selling price of your home does not include amounts you received for personal property sold with your home. Where to file taxes for free Personal property is property that is not a permanent part of the home. Where to file taxes for free Examples are furniture, draperies, rugs, a washer and dryer, and lawn equipment. Where to file taxes for free Separately stated amounts you received for these items should not be shown on Form 1099-S (discussed later). Where to file taxes for free Any gains from sales of personal property must be included in your income, but not as part of the sale of your home. Where to file taxes for free Payment by employer. Where to file taxes for free   You may have to sell your home because of a job transfer. Where to file taxes for free If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Where to file taxes for free Your employer will include it as wages in box 1 of your Form W-2 and you will include it in your income on Form 1040, line 7, or on Form 1040NR, line 8. Where to file taxes for free Option to buy. Where to file taxes for free   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Where to file taxes for free If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Where to file taxes for free Report this amount on Form 1040, line 21, or on Form 1040NR, line 21. Where to file taxes for free Form 1099-S. Where to file taxes for free   If you received Form 1099-S, box 2 (gross proceeds) should show the total amount you received for your home. Where to file taxes for free   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Where to file taxes for free Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Where to file taxes for free Amount Realized The amount realized is the selling price minus selling expenses. Where to file taxes for free Selling expenses. Where to file taxes for free   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Where to file taxes for free ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Where to file taxes for free This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Where to file taxes for free For information on how to figure your home's adjusted basis, see Determining Basis , later. Where to file taxes for free Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Where to file taxes for free Gain on sale. Where to file taxes for free   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, generally is taxable. Where to file taxes for free Loss on sale. Where to file taxes for free   If the amount realized is less than the adjusted basis, the difference is a loss. Where to file taxes for free Generally, a loss on the sale of your main home cannot be deducted. Where to file taxes for free Jointly owned home. Where to file taxes for free   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Where to file taxes for free Separate returns. Where to file taxes for free   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Where to file taxes for free Your ownership interest is generally determined by state law. Where to file taxes for free Joint owners not married. Where to file taxes for free   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Where to file taxes for free Each of you applies the rules discussed in this publication on an individual basis. Where to file taxes for free Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Where to file taxes for free Foreclosure or repossession. Where to file taxes for free   If your home was foreclosed on or repossessed, you have a disposition. Where to file taxes for free See Publication 4681 to determine if you have ordinary income, gain, or loss. Where to file taxes for free More information. Where to file taxes for free   If part of a home is used for business or rental purposes, see Foreclosures and Repossessions in chapter 1 of Publication 544 for more information. Where to file taxes for free Publication 544 has examples of how to figure gain or loss on a foreclosure or repossession. Where to file taxes for free Abandonment. Where to file taxes for free   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Where to file taxes for free Trading (exchanging) homes. Where to file taxes for free   If you trade your home for another home, treat the trade as a sale and a purchase. Where to file taxes for free Example. Where to file taxes for free You owned and lived in a home with an adjusted basis of $41,000. Where to file taxes for free A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Where to file taxes for free This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 − $41,000). Where to file taxes for free If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Where to file taxes for free Transfer to spouse. Where to file taxes for free   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss (unless the Exception, discussed next, applies). Where to file taxes for free This is true even if you receive cash or other consideration for the home. Where to file taxes for free As a result, the rules explained in this publication do not apply. Where to file taxes for free   If you owned your home jointly with your spouse and transfer your interest in the home to your spouse, or to your former spouse incident to your divorce, the same rule applies. Where to file taxes for free You have no gain or loss. Where to file taxes for free Exception. Where to file taxes for free   These transfer rules do not apply if your spouse or former spouse is a nonresident alien. Where to file taxes for free In that case, you generally will have a gain or loss. Where to file taxes for free More information. Where to file taxes for free    See Property Settlements in Publication 504, Divorced or Separated Individuals, for more information. Where to file taxes for free Involuntary conversion. Where to file taxes for free   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Where to file taxes for free This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations (see Home destroyed or condemned ). Where to file taxes for free Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Where to file taxes for free Your basis in your home is determined by how you got the home. Where to file taxes for free Generally, your basis is its cost if you bought it or built it. Where to file taxes for free If you got it in some other way (inheritance, gift, etc. Where to file taxes for free ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Where to file taxes for free While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Where to file taxes for free The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Where to file taxes for free To figure your adjusted basis, you can use Worksheet 1, near the end of this publication. Where to file taxes for free Filled-in examples of that worksheet are included in the Comprehensive Examples , later. Where to file taxes for free Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Where to file taxes for free Purchase. Where to file taxes for free   If you bought your home, your basis is its cost to you. Where to file taxes for free This includes the purchase price and certain settlement or closing costs. Where to file taxes for free In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Where to file taxes for free If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed later. Where to file taxes for free Seller-paid points. Where to file taxes for free   If the person who sold you your home paid points on your loan, you may have to reduce your home's basis by the amount of the points, as shown in the following chart. Where to file taxes for free    IF you bought your home. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free THEN reduce your home's basis by the seller-paid points. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free after 1990 but before April 4, 1994 only if you deducted them as home mortgage interest in the year paid. Where to file taxes for free after April 3, 1994 even if you did not deduct them. Where to file taxes for free Settlement fees or closing costs. Where to file taxes for free   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Where to file taxes for free You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Where to file taxes for free A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Where to file taxes for free   Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Where to file taxes for free   Some of the settlement fees or closing costs that you can include in your basis are: Abstract fees (abstract of title fees), Charges for installing utility services, Legal fees (including fees for the title search and preparing the sales contract and deed), Recording fees, Survey fees, Transfer or stamp taxes, Owner's title insurance, and Any amounts the seller owes that you agree to pay, such as: Certain real estate taxes (discussed later), Back interest, Recording or mortgage fees, Charges for improvements or repairs, and Sales commissions. Where to file taxes for free   Some settlement fees and closing costs you cannot include in your basis are: Fire insurance premiums, Rent for occupancy of the house before closing, Charges for utilities or other services related to occupancy of the house before closing, Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994), Charges connected with getting a mortgage loan, such as: Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs), Loan assumption fees, Cost of a credit report, Fee for an appraisal required by a lender, and Fees for refinancing a mortgage. Where to file taxes for free Real estate taxes. Where to file taxes for free   Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart. Where to file taxes for free    IF. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free AND. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free THEN the taxes. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free you pay taxes that the seller owed on the home up to the date of sale the seller does not reimburse you are added to the basis of your home. Where to file taxes for free the seller reimburses you do not affect the basis of your home. Where to file taxes for free the seller pays taxes for you (taxes owed beginning on the date of sale) you do not reimburse the seller are subtracted from the basis of your home. Where to file taxes for free you reimburse the seller do not affect the basis of your home. Where to file taxes for free Construction. Where to file taxes for free   If you contracted to have your house built on land you own, your basis is: The cost of the land, plus The amount it cost you to complete the house, including: The cost of labor and materials, Any amounts paid to a contractor, Any architect's fees, Building permit charges, Utility meter and connection charges, and Legal fees directly connected with building the house. Where to file taxes for free   Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. Where to file taxes for free It also includes certain settlement or closing costs. Where to file taxes for free You may have to reduce your basis by points the seller paid for you. Where to file taxes for free For more information, see Seller-paid points and Settlement fees or closing costs , earlier. Where to file taxes for free Built by you. Where to file taxes for free   If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. Where to file taxes for free Do not include in the cost of the house: The value of your own labor, or The value of any other labor you did not pay for. Where to file taxes for free Temporary housing. Where to file taxes for free   If a builder gave you temporary housing while your home was being finished, you must reduce your basis by the part of the contract price that was for the temporary housing. Where to file taxes for free To figure the amount of the reduction, multiply the contract price by a fraction. Where to file taxes for free The numerator is the value of the temporary housing, and the denominator is the sum of the value of the temporary housing plus the value of the new home. Where to file taxes for free Cooperative apartment. Where to file taxes for free   If you are a tenant-stockholder in a cooperative housing corporation, your basis in the cooperative apartment used as your home is usually the cost of your stock in the corporation. Where to file taxes for free This may include your share of a mortgage on the apartment building. Where to file taxes for free Condominium. Where to file taxes for free   To determine your basis in a condominium apartment used as your home, use the same rules as for any other home. Where to file taxes for free Basis Other Than Cost You must use a basis other than cost, such as adjusted basis or fair market value, if you received your home as a gift, inheritance, a trade, or from your spouse. Where to file taxes for free These situations are discussed in the following pages. Where to file taxes for free Also, the instructions for Worksheet 1 (near the end of the publication) address each of these issues. Where to file taxes for free Other special rules may apply in certain situations. Where to file taxes for free If you converted the property, or some part of it, to business or rental use, see Property Changed to Business or Rental Use, in Publication 551. Where to file taxes for free Home received as gift. Where to file taxes for free   Use the following chart to find the basis of a home you received as a gift. Where to file taxes for free IF the donor's adjusted basis at the time of the gift was. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free THEN your basis is. Where to file taxes for free . Where to file taxes for free . Where to file taxes for free more than the fair market value of the home at that time the same as the donor's adjusted basis at the time of the gift. Where to file taxes for free   Exception: If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of the gift as your basis. Where to file taxes for free If using the fair market value results in a gain, you have neither gain nor loss. Where to file taxes for free equal to or less than the fair market value at that time, and you received the gift before 1977 the smaller of the: • donor's adjusted basis, plus  any federal gift tax paid on  the gift, or • the home's fair market value  at the time of the gift. Where to file taxes for free equal to or less than the fair market value at that time, and you received the gift after 1976 the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home (explained next). Where to file taxes for free Fair market value. Where to file taxes for free   The fair market value of property at the time of the gift is the value of the property as appraised for purposes of the federal gift tax. Where to file taxes for free If the gift was not subject to the federal gift tax, the fair market value is the value as appraised for the purposes of a state gift tax. Where to file taxes for free Part of federal gift tax due to net increase in value. Where to file taxes for free   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Where to file taxes for free The numerator of the fraction is the net increase in the value of the home, and the denominator is the value of the home for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Where to file taxes for free The net increase in the value of the home is its fair market value minus the donor's adjusted basis immediately before the gift. Where to file taxes for free Home acquired from a decedent who died before or after 2010. Where to file taxes for free   If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). Where to file taxes for free If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. Where to file taxes for free If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes. Where to file taxes for free Surviving spouse. Where to file taxes for free   If you are a surviving spouse and you owned your home jointly, your basis in the home will change. Where to file taxes for free The new basis for the interest your spouse owned will be its fair market value on the date of death (or alternate valuation date). Where to file taxes for free The basis in your interest will remain the same. Where to file taxes for free Your new basis in the home is the total of these two amounts. Where to file taxes for free   If you and your spouse owned the home either as tenants by the entirety or as joint tenants with right of survivorship, you will each be considered to have owned one-half of the home. Where to file taxes for free Example. Where to file taxes for free Your jointly owned home (owned as joint tenants with right of survivorship) had an adjusted basis of $50,000 on the date of your spouse's death, and the fair market value on that date was $100,000. Where to file taxes for free Your new basis in the home is $75,000 ($25,000 for one-half of the adjusted basis plus $50,000 for one-half of the fair market value). Where to file taxes for free Community property. Where to file taxes for free   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), each spouse is usually considered to own half of the community property. Where to file taxes for free When either spouse dies, the total fair market value of the community property becomes the basis of the entire property, including the part belonging to the surviving spouse. Where to file taxes for free For this to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Where to file taxes for free   For more information about community property, see Publication 555, Community Property. Where to file taxes for free    If you are selling a home in which you acquired an interest from a decedent who died in 2010, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your basis. Where to file taxes for free Home received as trade. Where to file taxes for free   If you acquired your home as a trade for other property, in most cases, the basis of your home is the fair market value (at the time of the trade) of the property you gave up. Where to file taxes for free If you traded one home for another, you have made a sale and purchase. Where to file taxes for free In that case, you may have a gain. Where to file taxes for free See Trading (exchanging) homes under Dispositions Other Than Sales, earlier, for an example of figuring the gain. Where to file taxes for free Home received from spouse. Where to file taxes for free   If you received your home from your spouse or from your former spouse incident to your divorce, your basis in the home depends on the date of the transfer. Where to file taxes for free Transfers after July 18, 1984. Where to file taxes for free   If you received the home after July 18, 1984, there was no gain or loss on the transfer. Where to file taxes for free In most cases, your basis in this home is the same as your spouse's (or former spouse's) adjusted basis just before you received it. Where to file taxes for free This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other considerations. Where to file taxes for free   If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, in most cases, your basis in the half interest received from your spouse is the same as your spouse's adjusted basis just before the transfer. Where to file taxes for free This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. Where to file taxes for free Your basis in the half interest you already owned does not change. Where to file taxes for free Your new basis in the home is the total of these two amounts. Where to file taxes for free Transfers before July 19, 1984. Where to file taxes for free   If you received your home before July 19, 1984, in exchange for your release of marital rights, in most cases, your basis in the home is generally its fair market value at the time you received it. Where to file taxes for free More information. Where to file taxes for free   For more information on property received from a spouse or former spouse, see Property Settlements in Publication 504. Where to file taxes for free Involuntary conversion. Where to file taxes for free   If your home is destroyed or condemned, you may receive insurance proceeds or a condemnation award. Where to file taxes for free If you acquired a replacement home with these proceeds, the basis is its cost decreased by any gain not recognized on the conversion under the rules explained in: Publication 547, in the case of a home that was destroyed, or Chapter 1 of Publication 544, in the case of a home that was condemned. Where to file taxes for free Example. Where to file taxes for free A fire destroyed your home that you owned and used for only 6 months. Where to file taxes for free The home had an adjusted basis of $80,000 and the insurance company paid you $130,000 for the loss. Where to file taxes for free Your gain is $50,000 ($130,000 − $80,000). Where to file taxes for free You bought a replacement home for $100,000. Where to file taxes for free The part of your gain that is taxable is $30,000 ($130,000 − $100,000), the unspent part of the payment from the insurance company. Where to file taxes for free The rest of the gain ($20,000) is not taxable, so that amount reduces your basis in the new home. Where to file taxes for free The basis of the new home is figured as follows. Where to file taxes for free Cost of replacement home $100,000 Minus: Gain not recognized 20,000 Basis of the replacement home $80,000 More information. Where to file taxes for free   For more information about basis, see Publication 551. Where to file taxes for free Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Where to file taxes for free To figure your adjusted basis, you can use Worksheet 1, found toward the end of this publication. Where to file taxes for free Filled-in examples of that worksheet are included in Comprehensive Examples , later. Where to file taxes for free Recordkeeping. Where to file taxes for free You should keep records to prove your home's adjusted basis. Where to file taxes for free Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Where to file taxes for free But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Where to file taxes for free Keep records proving the basis of both homes as long as they are needed for tax purposes. Where to file taxes for free The records you should keep include: Proof of the home's purchase price and purchase expenses; Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; Any Form 982 you filed to exclude any discharge of qualified principal residence indebtedness; Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Where to file taxes for free Increases to Basis These include the following. Where to file taxes for free Additions and other improvements that have a useful life of more than 1 year. Where to file taxes for free Special assessments for local improvements. Where to file taxes for free Amounts you spent after a casualty to restore damaged property. Where to file taxes for free Improvements. Where to file taxes for free   These add to the value of your home, prolong its useful life, or adapt it to new uses. Where to file taxes for free You add the cost of additions and other improvements to the basis of your property. Where to file taxes for free   The following chart lists some other examples of improvements. Where to file taxes for free Examples of Improvements That Increase Basis Additions Bedroom Bathroom Deck Garage Porch Patio Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence  Retaining wall Sprinkler system Swimming pool  Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system  Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances  Kitchen modernization  Flooring Wall-to-wall carpeting  Insulation Attic Walls Floors Pipes and duct work Improvements no longer part of home. Where to file taxes for free   Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Where to file taxes for free Example. Where to file taxes for free You put wall-to-wall carpeting in your home 15 years ago. Where to file taxes for free Later, you replaced that carpeting with new wall-to-wall carpeting. Where to file taxes for free The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Where to file taxes for free Repairs. Where to file taxes for free   These maintain your home in good condition but do not add to its value or prolong its life. Where to file taxes for free You do not add their cost to the basis of your property. Where to file taxes for free Examples. Where to file taxes for free Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs. Where to file taxes for free Exception. Where to file taxes for free   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. Where to file taxes for free For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. Where to file taxes for free Decreases to Basis These include the following. Where to file taxes for free Discharge of qualified principal residence indebtedness that was excluded from income (but not below zero). Where to file taxes for free For details, see Publication 4681. Where to file taxes for free Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Where to file taxes for free For details, see Publication 4681. Where to file taxes for free Gain you postponed from the sale of a previous home before May 7, 1997. Where to file taxes for free Deductible casualty losses. Where to file taxes for free Insurance payments you received or expect to receive for casualty losses. Where to file taxes for free Payments you received for granting an easement or right-of-way. Where to file taxes for free Depreciation allowed or allowable if you used your home for business or rental purposes. Where to file taxes for free Energy-related credits allowed for expenditures made on the residence. Where to file taxes for free (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Where to file taxes for free ) Adoption credit you claimed for improvements added to the basis of your home. Where to file taxes for free Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Where to file taxes for free Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Where to file taxes for free An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Where to file taxes for free District of Columbia first-time homebuyer credit allowed on the purchase of a principal residence in the District of Columbia. Where to file taxes for free General sales taxes claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Where to file taxes for free Discharges of qualified principal residence indebtedness. Where to file taxes for free   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Where to file taxes for free This exclusion applies to discharges made after 2006 and before 2014. Where to file taxes for free If you choose to exclude this income, you must reduce (but not below zero) the basis of your principal residence by the amount excluded from gross income. Where to file taxes for free   File Form 982 with your tax return. Where to file taxes for free See the form's instructions for detailed information. Where to file taxes for free    A decrease in basis due to a discharge of qualified principal residence indebtedness that is excluded from income occurs only if you retain ownership of the principal residence after a discharge. Where to file taxes for free In most cases, this would occur in a refinancing or a restructuring of the mortgage. Where to file taxes for free Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Where to file taxes for free This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Where to file taxes for free To qualify, you must meet the ownership and use tests described later. Where to file taxes for free You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Where to file taxes for free This choice can be made (or revoked) at any time before the expiration of a 3-year period beginning on the due date of your return (not including extensions) for the year of the sale. Where to file taxes for free You can use Worksheet 2 (near the end of this publication) to figure the amount of your exclusion and your taxable gain, if any. Where to file taxes for free If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Where to file taxes for free See Publication 505, Tax Withholding and Estimated Tax. Where to file taxes for free Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Where to file taxes for free You meet the ownership test. Where to file taxes for free You meet the use test. Where to file taxes for free During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Where to file taxes for free For details on gain allocated to periods of nonqualified use, see Nonqualified Use , later. Where to file taxes for free If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed. Where to file taxes for free You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Where to file taxes for free Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Where to file taxes for free This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Where to file taxes for free Exception. Where to file taxes for free   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Where to file taxes for free However, the maximum amount you may be able to exclude will be reduced. Where to file taxes for free See Reduced Maximum Exclusion , later. Where to file taxes for free Example 1—home owned and occupied for at least 2 years. Where to file taxes for free Mya bought and moved into her main home in September 2011. Where to file taxes for free She sold the home at a gain in October 2013. Where to file taxes for free During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Where to file taxes for free She meets the ownership and use tests. Where to file taxes for free Example 2—ownership test met but use test not met. Where to file taxes for free Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Where to file taxes for free He later sold the home for a gain in June 2013. Where to file taxes for free He owned the home during the entire 5-year period ending on the date of sale. Where to file taxes for free He meets the ownership test but not the use test. Where to file taxes for free He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Where to file taxes for free Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Where to file taxes for free You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Where to file taxes for free Example. Where to file taxes for free Naomi bought and moved into a house in July 2009. Where to file taxes for free She lived there for 13 months and then moved in with a friend. Where to file taxes for free She later moved back into her house and lived there for 12 months until she sold it in August 2013. Where to file taxes for free Naomi meets the ownership and use tests because, during the 5-year period ending on the date of sale, she owned the house for more than 2 years and lived in it for a total of 25 (13 + 12) months. Where to file taxes for free Temporary absence. Where to file taxes for free   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Where to file taxes for free The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Where to file taxes for free Example 1. Where to file taxes for free David Johnson, who is single, bought and moved into his home on February 1, 2011. Where to file taxes for free Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Where to file taxes for free David sold the house on March 1, 2013. Where to file taxes for free Although the total time David lived in his home is less than 2 years (21 months), he meets the use requirement and may exclude gain. Where to file taxes for free The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Where to file taxes for free Example 2. Where to file taxes for free Professor Paul Beard, who is single, bought and moved into a house in December 2010, went abroad for a 1-year sabbatical leave in January 2012, returned to the house in January 2013, and sold it at a gain in February 2013. Where to file taxes for free Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Where to file taxes for free He cannot exclude any part of his gain because he did not use the residence for the required 2 years. Where to file taxes for free Ownership and use tests met at different times. Where to file taxes for free   You can meet the ownership and use tests during different 2-year periods. Where to file taxes for free However, you must meet both tests during the 5-year period ending on the date of the sale. Where to file taxes for free Example. Where to file taxes for free Beginning in 2002, Helen Jones lived in a rented apartment. Where to file taxes for free The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Where to file taxes for free In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Where to file taxes for free On July 12, 2013, while still living in her daughter's home, she sold her condominium. Where to file taxes for free Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Where to file taxes for free She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Where to file taxes for free She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Where to file taxes for free The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Where to file taxes for free Cooperative apartment. Where to file taxes for free   If you sold stock as a tenant-shareholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitled you to occupy as your main home for at least 2 years. Where to file taxes for free Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Where to file taxes for free Exception for individuals with a disability. Where to file taxes for free   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Where to file taxes for free Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Where to file taxes for free   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Where to file taxes for free Previous home destroyed or condemned. Where to file taxes for free   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Where to file taxes for free This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home (see Involuntary Conversions in Publication 551). Where to file taxes for free Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Where to file taxes for free Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Where to file taxes for free   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty (defined later) as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Where to file taxes for free You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on qualified official extended duty (defined later) or as an enrolled volunteer or volunteer leader of the Peace Corps. Where to file taxes for free This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Where to file taxes for free   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Where to file taxes for free Example. Where to file taxes for free John bought and moved into a home in 2005. Where to file taxes for free He lived in it as his main home for 2½ years. Where to file taxes for free For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. Where to file taxes for free He then sold the home at a gain in 2013. Where to file taxes for free To meet the use test, John chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. Where to file taxes for free This means he can disregard those 6 years. Where to file taxes for free Therefore, John's 5-year test period consists of the 5 years before he went on qualified official extended duty. Where to file taxes for free He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. Where to file taxes for free Period of suspension. Where to file taxes for free   The period of suspension cannot last more than 10 years. Where to file taxes for free Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. Where to file taxes for free You cannot suspend the 5-year period for more than one property at a time. Where to file taxes for free You can revoke your choice to suspend the 5-year period at any time. Where to file taxes for free Example. Where to file taxes for free Mary bought a home on April 1, 1997. Where to file taxes for free She used it as her main home until August 31, 2000. Where to file taxes for free On September 1, 2000, she went on qualified official extended duty with the Navy. Where to file taxes for free She did not live in the house again before selling it on July 31, 2013. Where to file taxes for free Mary chooses to use the entire 10-year suspension period. Where to file taxes for free Therefore, the suspension period would extend back from July 31, 2013, to August 1, 2003, and the 5-year test period would extend back to August 1, 1998. Where to file taxes for free During that period, Mary owned the house all 5 years and lived in it as her main home from August 1, 1998, until August 31, 2000, a period of more than 24 months. Where to file taxes for free She meets the ownership and use tests because she owned and lived in the home for at least 2 years during this test period. Where to file taxes for free Uniformed services. Where to file taxes for free   The uniformed services are: The Armed Forces (the Army, Navy, Air Force, Marine Corps, and Coast Guard), The commissioned corps of the National Oceanic and Atmospheric Administration, and The commissioned corps of the Public Health Service. Where to file taxes for free Foreign Service member. Where to file taxes for free   For purposes of the choice to suspend the 5-year test period for ownership and use, you are a member of the Foreign Service if you are any of the following. Where to file taxes for free A Chief of mission. Where to file taxes for free An Ambassador at large. Where to file taxes for free A member of the Senior Foreign Service. Where to file taxes for free A Foreign Service officer. Where to file taxes for free Part of the Foreign Service personnel. Where to file taxes for free Employee of the intelligence community. Where to file taxes for free   For purposes of the choice to suspend the 5-year test period for ownership and use, you are an employee of the intelligence community if you are an employee of any of the following. Where to file taxes for free The Office of the Director of National Intelligence. Where to file taxes for free The Central Intelligence Agency. Where to file taxes for free The National Security Agency. Where to file taxes for free The Defense Intelligence Agency. Where to file taxes for free The National Geospatial-Intelligence Agency. Where to file taxes for free The National Reconnaissance Office and any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs. Where to file taxes for free Any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard. Where to file taxes for free The Bureau of Intelligence and Research of the Department of State. Where to file taxes for free Any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information. Where to file taxes for free Qualified official extended duty. Where to file taxes for free   You are on qualified official extended duty if you are on extended duty while: Serving at a duty station at least 50 miles from your main home, or Living in Government quarters under Government orders. Where to file taxes for free   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. Where to file taxes for free Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Where to file taxes for free (But see Special rules for joint returns, next. Where to file taxes for free ) Special rules for joint returns. Where to file taxes for free   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Where to file taxes for free You are married and file a joint return for the year. Where to file taxes for free Either you or your spouse meets the ownership test. Where to file taxes for free Both you and your spouse meet the use test. Where to file taxes for free During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Where to file taxes for free If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Where to file taxes for free For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Where to file taxes for free Example 1—one spouse sells a home. Where to file taxes for free Emily sells her home in June 2013 for a gain of $300,000. Where to file taxes for free She marries Jamie later in the year. Where to file taxes for free She meets the ownership and use tests, but Jamie does not. Where to file taxes for free Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Where to file taxes for free The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Where to file taxes for free Example 2—each spouse sells a home. Where to file taxes for free The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Where to file taxes for free He meets the ownership and use tests on his home, but Emily does not. Where to file taxes for free Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Where to file taxes for free However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Where to file taxes for free Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Where to file taxes for free The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Where to file taxes for free Sale of main home by surviving spouse. Where to file taxes for free   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Where to file taxes for free   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Where to file taxes for free The sale or exchange took place after 2008. Where to file taxes for free The sale or exchange took place no more than 2 years after the date of death of your spouse. Where to file taxes for free You have not remarried. Where to file taxes for free You and your spouse met the use test at the time of your spouse's death. Where to file taxes for free You or your spouse met the ownership test at the time of your spouse's death. Where to file taxes for free Neither you nor your spouse excluded gain from the sale of another home during the last 2 years before the date of death. Where to file taxes for free The ownership and use tests were described earlier. Where to file taxes for free Example. Where to file taxes for free Harry owned and used a house as his main home since 2009. Where to file taxes for free Harry and Wilma married on July 1, 2013, and from that date they used Harry's house as their main home. Where to file taxes for free Harry died on August 15, 2013, and Wilma inherited the property. Where to file taxes for free Wilma sold the property on September 1, 2013, at which time she had not remarried. Where to file taxes for free Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Where to file taxes for free Home transferred from spouse. Where to file taxes for free   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Where to file taxes for free Use of home after divorce. Where to file taxes for free   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Where to file taxes for free Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Where to file taxes for free This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Where to file taxes for free In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Where to file taxes for free A change in place of employment. Where to file taxes for free Health. Where to file taxes for free Unforeseen circumstances. Where to file taxes for free Qualified individual. Where to file taxes for free   For purposes of the reduced maximum exclusion, a qualified individual is any of the following. Where to file taxes for free You. Where to file taxes for free Your spouse. Where to file taxes for free A co-owner of the home. Where to file taxes for free A person whose main home is the same as yours. Where to file taxes for free Primary reason for sale. Where to file taxes for free   One of the three reasons above will be considered to be the primary reason you sold your home if either (1) or (2) is true. Where to file taxes for free You qualify under a “safe harbor. Where to file taxes for free ” This is a specific set of facts and circumstances that, if applicable, qualifies you to claim a reduced maximum exclusion. Where to file taxes for free Safe harbors corresponding to the reasons listed above are described later. Where to file taxes for free A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances. Where to file taxes for free  Factors that may be relevant in determining your primary reason for sale include whether: Your sale and the circumstances causing it were close in time, The circumstances causing your sale occurred during the time you owned and used the property as your main home, The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home, Your financial ability to maintain the property became materially impaired, The suitability of the property as your main home materially changed, and During the time you owned the property, you used it as your home. Where to file taxes for free Change in Place of Employment You may qualify for a reduced exclusion if the primary reason for the sale of your main home is a change in the location of employment of a qualified individual. Where to file taxes for free Employment. Where to file taxes for free   For this purpose, employment includes the start of work with a new employer or continuation of work with the same employer. Where to file taxes for free It also includes the start or continuation of self-employment. Where to file taxes for free Distance safe harbor. Where to file taxes for free   A change in place of employment is considered to be the reason you sold your home if: The change occurred during the period you owned and used the property as your main home, and The new place of employment is at least 50 miles farther from the home you sold than was the former place of employment (or, if there was no former place of employment, the distance between your new place of employment and the home sold is at least 50 miles). Where to file taxes for free Example. Where to file taxes for free Justin was unemployed and living in a townhouse in Florida he had owned and used as his main home since 2012. Where to file taxes for free He got a job in North Carolina and sold his townhouse in 2013. Where to file taxes for free Because the distance between Justin's new place of employment and the home he sold is at least 50 miles, the sale satisfies the conditions of the distance safe harbor. Where to file taxes for free Justin's sale of his home is considered to be because of a change in place of employment, and he is entitled to claim a reduced maximum exclusion of gain from the sale. Where to file taxes for free Health The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual, or To obtain or provide medical or personal care for a qualified individual suffering from a disease, illness, or injury. Where to file taxes for free The sale of your home is not because of health if the sale merely benefits a qualified individual's general health or well-being. Where to file taxes for free For purposes of this reason, a qualified individual includes, in addition to the individuals listed earlier under Qualified individual , any of the following family members of these individuals. Where to file taxes for free Parent, grandparent, stepmother, stepfather. Where to file taxes for free Child, grandchild, stepchild, adopted child, eligible foster child. Where to file taxes for free Brother, sister, stepbrother, stepsister, half-brother, half-sister. Where to file taxes for free Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. Where to file taxes for free Uncle, aunt, nephew, niece, or cousin. Where to file taxes for free Example. Where to file taxes for free In 2012, Chase and Lauren, spouses, bought a house that they used as their main home. Where to file taxes for free Lauren's father has a chronic disease and is unable to care for himself. Where to file taxes for free In 2013, Chase and Lauren sold their home in order to move into Lauren's father's house to provide care for him. Where to file taxes for free Because the primary reason for the sale of their home was to provide care for Lauren's father, Chase and Lauren are entitled to a reduced maximum exclusion. Where to file taxes for free Doctor's recommendation safe harbor. Where to file taxes for free   Health is considered to be the reason you sold your home if, for one or more of the reasons listed at the beginning of this discussion, a doctor recommends a change of residence. Where to file taxes for free Unforeseen Circumstances The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying that home. Where to file taxes for free You are not considered to have an unforeseen circumstance if the primary reason you sold your home was that you preferred to get a different home or because your finances improved. Where to file taxes for free Specific event safe harbors. Where to file taxes for free   Unforeseen circumstances are considered to be the reason for selling your home if any of the following events occurred while you owned and used the property as your main home. Where to file taxes for free An involuntary conversion of your home, such as when your home is destroyed or condemned. Where to file taxes for free Natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible. Where to file taxes for free In the case of qualified individuals (listed earlier under Qualified individual ): Death, Unemployment (if the individual is eligible for unemployment compensation), A change in employment or self-employment status that results in the individual's inability to pay reasonable basic living expenses (listed under Reasonable basic living expenses , later) for his or her household, Divorce or legal separation under a decree of divorce or separate maintenance, or Multiple births resulting from the same pregnancy. Where to file taxes for free An event the IRS determined to be an unforeseen circumstance in published guidance of general applicability. Where to file taxes for free For example, the IRS determined the September 11, 2001, terrorist attacks to be an unforeseen circumstance. Where to file taxes for free Reasonable basic living expenses. Where to file taxes for free   Reasonable basic living expenses for your household include the following. Where to file taxes for free Amounts spent for food. Where to file taxes for free Amounts spent for clothing. Where to file taxes for free Housing and related expenses. Where to file taxes for free Medical expenses. Where to file taxes for free Transportation expenses. Where to file taxes for free Tax payments. Where to file taxes for free Court-ordered payments. Where to file taxes for free Expenses reasonably necessary to produce income. Where to file taxes for free   Any of these amounts spent to maintain an affluent or luxurious standard of living are not reasonable basic living expenses. Where to file taxes for free Nonqualified Use Gain from the sale or exchange of the main home is not excludable from income if it is allocable to periods of nonqualified use. Where to file taxes for free Nonqualified use means any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions (see next). Where to file taxes for free Exceptions. Where to file taxes for free   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Where to file taxes for free Calculation. Where to file taxes for free   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain (net of any depreciation allowed or allowable on the property for periods after May 6, 1997) by the following fraction:   Total nonqualified use during the period of ownership after 2008     Total period of ownership     This calculation can be found in Worksheet 2, line 10, later in this publication. Where to file taxes for free   For examples of this calculation, see Business Use or Rental of Home , next. Where to file taxes for free Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income if you meet the ownership and use tests. Where to file taxes for free Example 1. Where to file taxes for free On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Where to file taxes for free She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Where to file taxes for free The house was rented from June 1, 2009, to March 31, 2011. Where to file taxes for free Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Where to file taxes for free Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Where to file taxes for free During the 5-year period ending on the date of the sale (January 31, 2008–January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Where to file taxes for free Five-Year Period Used as Home Used as Rental 1/31/08 – 5/31/09 16 months   6/01/09 – 3/31/11   22 months 4/01/11 – 1/31/13 22 months     38 months 22 months       During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Where to file taxes for free Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain, as shown on Worksheet 2. Where to file taxes for free Example 2. Where to file taxes for free William owned and used a house as his main home from 2007 through 2010. Where to file taxes for free On January 1, 2011, he moved to another state. Where to file taxes for free He rented his house from that date until April 30, 2013, when he sold it. Where to file taxes for free During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Where to file taxes for free Because it was rental property at the time of the sale, he must report the sale on Form 4797. Where to file taxes for free Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Where to file taxes for free Because he met the ownership and use tests, he can exclude gain up to $250,000. Where to file taxes for free However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Where to file taxes for free Depreciation after May 6, 1997. Where to file taxes for free   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Where to file taxes for free If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Where to file taxes for free Unrecaptured section 1250 gain. Where to file taxes for free   This is the part of any long-term capital gain from the sale of your home that is due to depreciation and cannot be excluded. Where to file taxes for free To figure the amount of unrecaptured section 1250 gain to be reported on Schedule D (Form 1040), you must also take into account certain gains or losses from the sale of property other than your home. Where to file taxes for free Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions for this purpose. Where to file taxes for free Worksheet 2. Where to file taxes for free Taxable Gain on Sale of Home—Completed Example 1 for Amy Part 1. Where to file taxes for free Gain or (Loss) on Sale       1. Where to file taxes for free   Selling price of home 1. Where to file taxes for free     2. Where to file taxes for free   Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) 2. Where to file taxes for free     3. Where to file taxes for free   Subtract line 2 from line 1. Where to file taxes for free This is the amount realized 3. Where to file taxes for free     4. Where to file taxes for free   Adjusted basis of home sold (from Worksheet 1, line 13) 4. Where to file taxes for free     5. Where to file taxes for free   Gain or (loss) on the sale. Where to file taxes for free Subtract line 4 from line 3. Where to file taxes for free If this is a loss, stop here 5. Where to file taxes for free 200,000   Part 2. Where to file taxes for free Exclusion and Taxable Gain       6. Where to file taxes for free   Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. Where to file taxes for free If none, enter -0- 6. Where to file taxes for free 10,000   7. Where to file taxes for free   Subtract line 6 from line 5. Where to file taxes for free If the result is less than zero, enter -0- 7. Where to file taxes for free 190,000   8. Where to file taxes for free   Aggregate number of days of nonqualified use after 2008. Where to file taxes for free If none, enter -0-. Where to file taxes for free  If line 8 is equal to zero, skip to line 12 and enter the amount from line 7 on line 12 8. Where to file taxes for free 668   9. Where to file taxes for free   Number of days taxpayer owned the property 9. Where to file taxes for free 2,080   10. Where to file taxes for free   Divide the amount on line 8 by the amount on line 9. Where to file taxes for free Enter the result as a decimal (rounded to at least 3 places). Where to file taxes for free But do not enter an amount greater than 1. Where to file taxes for free 00 10. Where to file taxes for free 0. Where to file taxes for free 321   11. Where to file taxes for free   Gain allocated to nonqualified use. Where to file taxes for free (Line 7 multiplied by line 10) 11. Where to file taxes for free 60,990   12. Where to file taxes for free   Gain eligible for exclusion. Where to file taxes for free Subtract line 11 from line 7 12. Where to file taxes for free 129,010   13. Where to file taxes for free   If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion ). Where to file taxes for free  If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. Where to file taxes for free If you do  not qualify to exclude gain, enter -0- 13. Where to file taxes for free 250,000   14. Where to file taxes for free   Exclusion. Where to file taxes for free Enter the smaller of line 12 or line 13 14. Where to file taxes for free 129,010   15. Where to file taxes for free   Taxable gain. Where to file taxes for free Subtract line 14 from line 5. Where to file taxes for free Report your taxable gain as described under Reporting the Sale . Where to file taxes for free If the amount on line 6 is more than zero, complete line 16 15. Where to file taxes for free 70,990   16. Where to file taxes for free   Enter the smaller of line 6 or line 15. Where to file taxes for free Enter this amount on line 12 of the Unrecaptured Section 1250 Gain  Worksheet in the instructions for Schedule D (Form 1040) 16. Where to file taxes for free 10,000 Property Used Partly for Business or Rental If you use property partly as a home and partly for business or to produce rental income, the treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. Where to file taxes for free Part of Home Used for Business or Rental If the part of your property used for business or to produce rental income is within your home, such as a room used as a home office for a business, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home. Where to file taxes for free In addition, you do not need to report the sale of the business or rental part on Form 4797. Where to file taxes for free This is true whether or not you were entitled to claim any depreciation. Where to file taxes for free However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, 1997. Where to file taxes for free See Depreciation after May 6, 1997, earlier. Where to file taxes for free Example 1. Where to file taxes for free Ray sold his main home in 2013 at a $30,000 gain. Where to file taxes for free He has no gains or losses from the sale of property other than the gain from the sale of his home. Where to file taxes for free He meets the ownership and use tests to exclude the gain from his income. Where to file taxes for free However, he used part of the home as a business office in 2012 and claimed $500 depreciation. Where to file taxes for free Because the business office was part of his home (not separate from it), he does not have to allocate the gain on the sale between the business part of the property and the part used as a home. Where to file taxes for free In addition, he does not have to report any part of the gain on Form 4797. Where to file taxes for free Because Ray was entitled to take a depreciation deduction, he must recognize $500 of the gain as unrecaptured section 1250 gain. Where to file taxes for free He reports his gain, exclusion, and the taxable gain of $500 on Form 8949 and Schedule D (Form 1040). Where to file taxes for free Example 2. Where to file taxes for free The facts are the same as in Example 1 except that Ray was not entitled to claim depreciation for the business use of his home. Where to file taxes for free Since Ray did not claim any depreciation, he can exclude the entire $30,000 gain. Where to file taxes for free Separate Part of Property Used for Business or Rental You may have used part of your property as your home and a separate part of it for business or to produce rental income. Where to file taxes for free Examples are: A working farm on which your house was located, A duplex in w
Print - Click this link to Print this page

Tax Relief for Victims of Severe Storms, Tornadoes, Straight-line Winds and Flooding in Tennessee

AL/TN-2012-14TN, March 19, 2012

NASHVILLE — Victims of the severe storms, tornadoes, straight-line winds, and flooding that began on Feb. 29, 2012 in parts of Tennessee may qualify for tax relief from the Internal Revenue Service.

The President has declared Bradley, Claiborne, Cumberland, DeKalb, Hamilton, Jackson, McMinn, Monroe, Overton and Polk counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Feb. 29, and on or before May 31, have been postponed to May 31, 2012. This includes the April 17 deadline for filing 2011 individual income tax returns, making income tax payments and making 2011 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Feb. 29, and on or before March 15, as long as the deposits are made by March 15, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until May 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Feb. 29 and on or before May 31.

The IRS also gives affected taxpayers until May 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Feb. 29 and on or before May 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Feb. 29 and on or before March 15 provided the taxpayer makes these deposits by March 15.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Tennessee/Severe Storms, Tornadoes, Straight-line Winds, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 03-Feb-2014

The Where To File Taxes For Free

Where to file taxes for free Publication 4681 - Additional Material Prev  Up  Next   Home   More Online Publications