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1040ez Irs

1040ez irs Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). 1040ez irs Low Income Taxpayer Clinics (LITCs). 1040ez irs Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. 1040ez irs All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. 1040ez irs The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). 1040ez irs After notice and hearing, the bankruptcy court may extend the period for another 30 days. 1040ez irs Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. 1040ez irs Note. 1040ez irs Individual debtors should use their home address when filing Form 1040 with the IRS. 1040ez irs Returns should not be filed “in care of” the trustee's address. 1040ez irs Ordering tax transcripts and copies of returns. 1040ez irs   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. 1040ez irs The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. 1040ez irs If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. 1040ez irs Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. 1040ez irs Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. 1040ez irs A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. 1040ez irs To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. 1040ez irs It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. 1040ez irs 00 per tax return for copies of the returns. 1040ez irs Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. 1040ez irs If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. 1040ez irs Tax returns and payment of taxes in chapter 11 cases. 1040ez irs   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. 1040ez irs Disclosure of debtor's return information to trustee. 1040ez irs   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. 1040ez irs If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. 1040ez irs    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. 1040ez irs Material interest is generally defined as a financial or monetary interest. 1040ez irs Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 1040ez irs   However, the U. 1040ez irs S. 1040ez irs Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. 1040ez irs Disclosure of bankruptcy estate's return information to debtor. 1040ez irs    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. 1040ez irs Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. 1040ez irs Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. 1040ez irs Chapter 13 relief is not available to corporations or partnerships. 1040ez irs The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. 1040ez irs In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. 1040ez irs S. 1040ez irs Individual Income Tax Return. 1040ez irs On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. 1040ez irs Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. 1040ez irs To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. 1040ez irs See Debt Cancellation, later. 1040ez irs Interest on trust accounts in chapter 13 cases. 1040ez irs   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. 1040ez irs This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. 1040ez irs S. 1040ez irs Trustee system. 1040ez irs The interest is also not taxable to the trustee as income. 1040ez irs Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. 1040ez irs The bankruptcy estate in a chapter 7 case is represented by a trustee. 1040ez irs The trustee is appointed to administer the estate and liquidate any nonexempt assets. 1040ez irs In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. 1040ez irs However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. 1040ez irs During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. 1040ez irs The bankruptcy trustee files a Form 1041 for the bankruptcy estate. 1040ez irs However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). 1040ez irs Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. 1040ez irs Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). 1040ez irs For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 1040ez irs Debtor's Election To End Tax Year – Form 1040 Short tax years. 1040ez irs   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. 1040ez irs If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. 1040ez irs The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. 1040ez irs   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. 1040ez irs Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. 1040ez irs    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. 1040ez irs Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. 1040ez irs Note. 1040ez irs The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. 1040ez irs Making the Election - Filing Requirements First short tax year. 1040ez irs   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. 1040ez irs The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. 1040ez irs Second short tax year. 1040ez irs   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. 1040ez irs   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. 1040ez irs To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. 1040ez irs Example. 1040ez irs Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. 1040ez irs If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. 1040ez irs Jane's second short year runs from May 8, 2012, through December 31, 2012. 1040ez irs To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. 1040ez irs To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. 1040ez irs The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. 1040ez irs S. 1040ez irs Individual Tax Return. 1040ez irs The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. 1040ez irs The debtor must file Form 4868 by the due date of the return for the first short tax year. 1040ez irs The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. 1040ez irs Election by debtor's spouse. 1040ez irs   If the debtor is married, the debtor's spouse may join in the election to end the tax year. 1040ez irs If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. 1040ez irs The debtor must elect by the due date for filing the return for the first short tax year. 1040ez irs Once the election is made, it cannot be revoked for the first short tax year. 1040ez irs However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. 1040ez irs Later bankruptcy of spouse. 1040ez irs    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. 1040ez irs   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. 1040ez irs If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. 1040ez irs However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. 1040ez irs The debtor and the spouse are precluded from this election because they have different tax years. 1040ez irs This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. 1040ez irs Example 1. 1040ez irs Paul and Mary Harris are calendar-year taxpayers. 1040ez irs Paul's voluntary chapter 7 bankruptcy case begins on March 4. 1040ez irs If Paul does not make an election, his tax year does not end on March 3. 1040ez irs If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. 1040ez irs Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. 1040ez irs They must make the election by July 15, the due date for filing the joint return. 1040ez irs Example 2. 1040ez irs Fred and Ethel Barnes are calendar-year taxpayers. 1040ez irs Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. 1040ez irs Ethel could elect to end her tax year on October 31. 1040ez irs If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. 1040ez irs Her first tax year is January 1–October 31, and her second year is November 1–December 31. 1040ez irs If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. 1040ez irs If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. 1040ez irs Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. 1040ez irs Example 3. 1040ez irs Jack and Karen Thomas are calendar-year taxpayers. 1040ez irs Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. 1040ez irs Karen elected to close her tax year on April 9 and Jack joins in Karen's election. 1040ez irs Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. 1040ez irs The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. 1040ez irs Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). 1040ez irs If Karen does join in, she would have the same 3 short tax years as Jack. 1040ez irs Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. 1040ez irs Annualizing taxable income. 1040ez irs   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. 1040ez irs See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. 1040ez irs Dismissal of bankruptcy case. 1040ez irs   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. 1040ez irs It is as if no bankruptcy estate was created for tax purposes. 1040ez irs In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. 1040ez irs Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. 1040ez irs Attach a statement to the amended returns explaining why the debtor is filing an amended return. 1040ez irs Taxes and the Bankruptcy Estate Property of the bankruptcy estate. 1040ez irs   At the commencement of a bankruptcy case a bankruptcy estate is created. 1040ez irs Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. 1040ez irs This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. 1040ez irs However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. 1040ez irs Note. 1040ez irs Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. 1040ez irs Excluded property is never included in the estate. 1040ez irs Transfer of assets between debtor and bankruptcy estate. 1040ez irs   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. 1040ez irs The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. 1040ez irs For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. 1040ez irs The estate assumes the same basis, holding period, and character of the transferred assets. 1040ez irs Also, the estate generally accounts for the transferred assets in the same manner as debtor. 1040ez irs   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. 1040ez irs The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. 1040ez irs Abandoned property. 1040ez irs    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. 1040ez irs If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. 1040ez irs Separate taxable entity. 1040ez irs   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. 1040ez irs The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. 1040ez irs S. 1040ez irs Income Tax Return for Estates and Trusts, and paying its taxes. 1040ez irs The debtor remains responsible for filing his or her own returns on Form 1040, U. 1040ez irs S. 1040ez irs Individual Income Tax Return, and paying taxes on income that does not belong to the estate. 1040ez irs Employer identification number. 1040ez irs   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 1040ez irs The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 1040ez irs See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 1040ez irs    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 1040ez irs Income, deductions, and credits – Form 1040. 1040ez irs   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). 1040ez irs Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. 1040ez irs The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. 1040ez irs See Debt Cancellation, below. 1040ez irs Note. 1040ez irs The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. 1040ez irs Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. 1040ez irs However, other exclusions, such as the insolvency exclusion, may apply. 1040ez irs Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. 1040ez irs    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. 1040ez irs Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. 1040ez irs   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. 1040ez irs Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. 1040ez irs Income of the estate in individual chapter 11 cases. 1040ez irs    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. 1040ez irs Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. 1040ez irs S. 1040ez irs C. 1040ez irs section 1115). 1040ez irs Note. 1040ez irs A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. 1040ez irs Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). 1040ez irs Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. 1040ez irs See Administrative expenses, below. 1040ez irs Conversion or dismissal of chapter 11 cases. 1040ez irs   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. 1040ez irs If the chapter 11 case is converted to a chapter 7 case, 11 U. 1040ez irs S. 1040ez irs C. 1040ez irs section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. 1040ez irs Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. 1040ez irs If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. 1040ez irs Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. 1040ez irs Note. 1040ez irs Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). 1040ez irs Administrative expenses. 1040ez irs   Allowable expenses include administrative expenses. 1040ez irs    Administrative expenses can only be deducted by the estate, never by the debtor. 1040ez irs   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. 1040ez irs These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. 1040ez irs See IRC section 67(e). 1040ez irs Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. 1040ez irs Note. 1040ez irs The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. 1040ez irs See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. 1040ez irs Administrative expense loss. 1040ez irs   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. 1040ez irs The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. 1040ez irs The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. 1040ez irs For a discussion of NOLs, see Publication 536. 1040ez irs Attribute carryovers. 1040ez irs   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. 1040ez irs These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. 1040ez irs The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. 1040ez irs   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. 1040ez irs See Debt Cancellation, later. 1040ez irs   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. 1040ez irs The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. 1040ez irs Note. 1040ez irs The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. 1040ez irs See Administrative expense loss, above. 1040ez irs Passive and at-risk activities. 1040ez irs   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. 1040ez irs Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. 1040ez irs These transfers include the return of exempt property and abandonment of estate property to the debtor. 1040ez irs Carrybacks from the debtor's activities. 1040ez irs   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. 1040ez irs Carrybacks from the bankruptcy estate. 1040ez irs   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. 1040ez irs The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. 1040ez irs Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. 1040ez irs    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. 1040ez irs The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. 1040ez irs These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. 1040ez irs The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. 1040ez irs The same method must be used to allocate the income and the withheld tax. 1040ez irs Example. 1040ez irs If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. 1040ez irs Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. 1040ez irs See IRC section 31(a). 1040ez irs   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. 1040ez irs In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. 1040ez irs    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. 1040ez irs The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. 1040ez irs Note. 1040ez irs The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). 1040ez irs   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. 1040ez irs Self-employment taxes in individual chapter 11 cases. 1040ez irs   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. 1040ez irs Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. 1040ez irs   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. 1040ez irs Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. 1040ez irs This schedule includes self-employment income earned post-petition and the attributable deductions. 1040ez irs The debtor must pay any self-employment tax imposed by IRC section 1401. 1040ez irs Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. 1040ez irs   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. 1040ez irs However, section 1115 of the Bankruptcy Code (11 U. 1040ez irs S. 1040ez irs C. 1040ez irs section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. 1040ez irs See Notice 2006-83. 1040ez irs   The reporting and withholding obligations of a debtor's employer also do not change. 1040ez irs An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. 1040ez irs Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. 1040ez irs   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. 1040ez irs See IRC section 6109(a)(2). 1040ez irs As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). 1040ez irs   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. 1040ez irs See Notice 2006-83. 1040ez irs An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. 1040ez irs   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. 1040ez irs However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. 1040ez irs See Employment Tax Regulations section 31. 1040ez irs 3402(f)(2)-1. 1040ez irs Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. 1040ez irs See IRC section 6654(a). 1040ez irs Notice required in converted and dismissed cases. 1040ez irs   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. 1040ez irs The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. 1040ez irs This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. 1040ez irs   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. 1040ez irs Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. 1040ez irs However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. 1040ez irs After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. 1040ez irs Employment taxes. 1040ez irs   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 1040ez irs See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. 1040ez irs   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 1040ez irs For a further discussion of employment taxes, see Employment Taxes, later. 1040ez irs Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . 1040ez irs The bankruptcy court case number is . 1040ez irs Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. 1040ez irs   Year Taxpayer   Estate 1. 1040ez irs Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. 1040ez irs Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. 1040ez irs Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. 1040ez irs Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. 1040ez irs   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. 1040ez irs This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. 1040ez irs   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). 1040ez irs   These amounts are generally adjusted annually. 1040ez irs See the present year Form 1041 Instructions at www. 1040ez irs irs. 1040ez irs gov/form1041 for the current dollar amounts. 1040ez irs Accounting period. 1040ez irs   A bankruptcy estate may have a fiscal year. 1040ez irs However, this period cannot be longer than 12 months. 1040ez irs Change of accounting period. 1040ez irs   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. 1040ez irs This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. 1040ez irs The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. 1040ez irs Employer identification number. 1040ez irs   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 1040ez irs The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 1040ez irs    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 1040ez irs   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. 1040ez irs irs. 1040ez irs gov/businesses/small. 1040ez irs The EIN is issued immediately once the application information is validated. 1040ez irs By telephone at 1-800-829-4933 from 7:00 a. 1040ez irs m. 1040ez irs to 7:00 p. 1040ez irs m. 1040ez irs in the trustee's or debtor-in-possession's local time zone. 1040ez irs Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. 1040ez irs   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. 1040ez irs For more details, see Pub. 1040ez irs 583, Starting a Business and Keeping Records. 1040ez irs   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. 1040ez irs Figuring tax due. 1040ez irs   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. 1040ez irs However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. 1040ez irs The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. 1040ez irs The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. 1040ez irs Tax rate schedule. 1040ez irs The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. 1040ez irs When to file. 1040ez irs   Calendar year bankruptcy estates must file Form 1041 by April 15th. 1040ez irs Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. 1040ez irs For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. 1040ez irs If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. 1040ez irs Note. 1040ez irs The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. 1040ez irs Transmittal for Form 1040. 1040ez irs   Form 1041 is used as a transmittal for Form 1040. 1040ez irs If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. 1040ez irs   Prepare the bankruptcy estate's return by completing Form 1040. 1040ez irs In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. 1040ez irs ” Then, attach Form 1040 to the Form 1041 transmittal. 1040ez irs Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. 1040ez irs An example of a bankruptcy estate's tax return is prepared below. 1040ez irs Note. 1040ez irs The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. 1040ez irs Payment of Tax Due Payment methods. 1040ez irs   Payment of tax due may be made by check or money order or by credit or debit card. 1040ez irs For information on how to make payments electronically by credit or debit card, go to irs. 1040ez irs gov/e-pay. 1040ez irs      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. 1040ez irs To enroll in EFTPS, go to eftps. 1040ez irs gov or call 1-800-555-4477. 1040ez irs For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. 1040ez irs Payment voucher – Form 1041-V. 1040ez irs   Form 1041-V accompanies payments made by check or money order for Form 1041. 1040ez irs The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. 1040ez irs Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. 1040ez irs We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. 1040ez irs Estimated tax – Form 1041-ES. 1040ez irs   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. 1040ez irs See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. 1040ez irs Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 1040ez irs Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. 1040ez irs If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. 1040ez irs   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. 1040ez irs Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. 1040ez irs The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 1040ez irs If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040ez irs , with their individual income tax returns. 1040ez irs Tax Return Example – Form 1041 This publication is not revised annually. 1040ez irs Future changes to the forms and their instructions may not be reflected in this example. 1040ez irs Note. 1040ez irs The following return was prepared for tax year 2011. 1040ez irs In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). 1040ez irs Facts and circumstances. 1040ez irs   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. 1040ez irs Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. 1040ez irs   The estate received the following assets from Mr. 1040ez irs Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. 1040ez irs   Also, the estate received a $251,500 capital loss carryover. 1040ez irs   Mr. 1040ez irs Smith's bankruptcy case was closed on December 31, 2011. 1040ez irs During 2011, Mr. 1040ez irs Smith was relieved of $70,000 of debt by the bankruptcy court. 1040ez irs The estate chose a calendar year as its tax year. 1040ez irs Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. 1040ez irs Schedule B (Form 1040). 1040ez irs    The certificate of deposit earned $5,500 of interest during 2011. 1040ez irs Joan reports this interest on Schedule B. 1040ez irs She completes this schedule and enters the result on Form 1040. 1040ez irs Form 4562. 1040ez irs   Joan enters the depreciation allowed on Form 4562. 1040ez irs She completes the form and enters the result on Schedule E. 1040ez irs Schedule E (Form 1040). 1040ez irs   The commercial real estate was rented through the date of sale. 1040ez irs Joan reports the income and expenses on Schedule E. 1040ez irs She enters the net income on Form 1040. 1040ez irs Form 4797. 1040ez irs   The commercial real estate was sold on July 1, 2011, for $280,000. 1040ez irs The property was purchased in 2001 at a cost of $250,000. 1040ez irs The total depreciation allowable as of the date of sale was $120,000. 1040ez irs Additionally, $25,000 of selling expenses were incurred. 1040ez irs Joan reports the gain or loss from the sale on Form 4797. 1040ez irs She completes the form and enters the gain on Schedule D (Form 1040). 1040ez irs   Mr. 1040ez irs Smith's former residence was sold on September 30, 2011. 1040ez irs The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. 1040ez irs This sale is excluded from gross income under IRC section 121. 1040ez irs Note. 1040ez irs Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). 1040ez irs Bankruptcy estates succeed to this exclusion at the commencement of the case. 1040ez irs See Regulation section 1. 1040ez irs 1398-3. 1040ez irs Schedule D (Form 1040). 1040ez irs   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). 1040ez irs She enters the results on Form 1040. 1040ez irs Form 1040, page 1. 1040ez irs   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. 1040ez irs Schedule A (Form 1040). 1040ez irs   During 2011, the estate paid mortgage interest and real property tax on Mr. 1040ez irs Smith's former residence. 1040ez irs It also paid income tax to the state. 1040ez irs Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. 1040ez irs Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. 1040ez irs She completes the Schedule A and enters the result on page 2 of Form 1040. 1040ez irs Form 1040, page 2. 1040ez irs   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. 1040ez irs She then enters the estate's estimated tax payments and figures the amount the estate still owes. 1040ez irs Form 982. 1040ez irs   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. 1040ez irs Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. 1040ez irs See Debt Cancellation, later. 1040ez irs After the bankruptcy case ends, Mr. 1040ez irs Smith will assume the estate's tax attributes. 1040ez irs Mr. 1040ez irs Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). 1040ez irs Note. 1040ez irs If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. 1040ez irs Form 1041. 1040ez irs   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. 1040ez irs She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. 1040ez irs This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Schedule A This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Schedule B This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Schedule D This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Schedule E This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 2119 This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 4562 This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. 1040ez irs Please click the link to view the image. 1040ez irs Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. 1040ez irs Otherwise, you do not have any carryovers. 1040ez irs 1. 1040ez irs Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. 1040ez irs If a loss, enclose the amount in parentheses 1. 1040ez irs 19,880   2. 1040ez irs Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. 1040ez irs 1,500   3. 1040ez irs Combine lines 1 and 2. 1040ez irs If zero or less, enter -0- 3. 1040ez irs 21,380   4. 1040ez irs Enter the smaller of line 2 or line 3 4. 1040ez irs 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. 1040ez irs       5. 1040ez irs Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. 1040ez irs 0   6. 1040ez irs Enter any gain from your 2010 Schedule D, line 15. 1040ez irs If a loss, enter -0- 6. 1040ez irs         7. 1040ez irs Add lines 4 and 6 7. 1040ez irs 1,500   8. 1040ez irs Short-term capital loss carryover for 2011. 1040ez irs Subtract line 7 from line 5. 1040ez irs If zero or less, enter -0-. 1040ez irs If more than zero, also enter this amount on Schedule D, line 6 8. 1040ez irs 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. 1040ez irs       9. 1040ez irs Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. 1040ez irs 251,500   10. 1040ez irs Enter any gain from your 2010 Schedule D, line 7. 1040ez irs If a loss, enter -0- 10. 1040ez irs 0       11. 1040ez irs Subtract line 5 from line 4. 1040ez irs If zero or less, enter -0- 11. 1040ez irs 1,500       12. 1040ez irs Add lines 10 and 11 12. 1040ez irs 1,500   13. 1040ez irs Long-term capital loss carryover for 2011. 1040ez irs Subtract line 12 from line 9. 1040ez irs If zero or less, enter -0-. 1040ez irs If more than zero, also enter this amount on Schedule D, line 14 13. 1040ez irs 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. 1040ez irs The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. 1040ez irs In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. 1040ez irs The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. 1040ez irs Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. 1040ez irs However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. 1040ez irs A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. 1040ez irs However, It may or may not be included in the individual partners' income. 1040ez irs See Partnerships, below under Debt Cancellation. 1040ez irs Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. 1040ez irs A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. 1040ez irs The following discussion only highlights bankruptcy tax rules applying to corporations. 1040ez irs The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. 1040ez irs Therefore, you may wish to seek the help of a professional tax advisor. 1040ez irs See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. 1040ez irs Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. 1040ez irs However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. 1040ez irs A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. 1040ez irs In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. 1040ez irs In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. 1040ez irs Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. 1040ez irs In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. 1040ez irs IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. 1040ez irs IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. 1040ez irs In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. 1040ez irs No loss is recognized in this situation. 1040ez irs Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. 1040ez irs To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. 1040ez irs The exemption request must be submitted to the local IRS Insolvency Office handling the case. 1040ez irs The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. 1040ez irs The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. 1040ez irs ” The statement must be signed by the trustee, receiver or assignee. 1040ez irs The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). 1040ez irs The IRS will act on your request within 90 days. 1040ez irs Disclosure of return information to trustee. 1040ez irs   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. 1040ez irs However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. 1040ez irs Material interest is generally defined as a financial or monetary interest. 1040ez irs Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 1040ez irs Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. 1040ez irs Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. 1040ez irs QSFs are required to file an annual income tax return, Form 1120-SF, U. 1040ez irs S. 1040ez irs Income Tax Return for Settlement Funds. 1040ez irs More information about QSFs may be found in Treasury Regulation sections 1. 1040ez irs 468B-1 through -5. 1040ez irs Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. 1040ez irs After a return is filed, the IRS will either accept the return as filed or select the return for examination. 1040ez irs Under examination the IRS may redetermine the tax liability shown on the return. 1040ez irs If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. 1040ez irs See Court Jurisdiction over Tax Matters, later. 1040ez irs Prompt Determination Requests Pursuant to Rev. 1040ez irs Proc. 1040ez irs 2006-24, 2006-22 I. 1040ez irs R. 1040ez irs B. 1040ez irs 943, www. 1040ez irs irs. 1040ez irs gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. 1040ez irs irs. 1040ez irs gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. 1040ez irs Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). 1040ez irs Making the request for determination. 1040ez irs   As detailed in Rev. 1040ez irs Proc. 1040ez irs 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. 1040ez irs O. 1040ez irs Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). 1040ez irs   The request must be submitted in duplicate and must be executed under penalties of perjury. 1040ez irs In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. 1040ez irs The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. 1040ez irs The name and location of the office where the return was filed. 1040ez irs The name of the debtor. 1040ez irs Debtor's social security number, TIN, or EIN. 1040ez irs Type of bankruptcy estate. 1040ez irs Bankruptcy case number. 1040ez irs Court where the bankruptcy case is pending. 1040ez irs   The copy of the return(s) submitted with the request must be an exact copy of a valid return. 1040ez irs A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. 1040ez irs    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. 1040ez irs A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. 1040ez irs Examination of return. 1040ez irs   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. 1040ez irs If the return is selected for examination, it will be examined as soon as possible. 1040ez irs The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. 1040ez irs   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. 1040ez irs   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. 1040ez irs   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. 1040ez irs Note. 1040ez irs An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. 1040ez irs   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei
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Time May be Running Out -- March 31 is an Important Deadline

IRS Health Care Tax Tip 2014-11, March 25, 2014                                                Español

Time May be Running Out – March 31 is an Important Deadline

Health Care Law Considerations for 2014

For most people, the Affordable Care Act has no effect on the 2013 income tax return they are filing in 2014. However, some people may need to make important decisions by the March 31, 2014 deadline for open enrollment. 

Below are five things about the health care law you may need to consider soon.

  • Currently Insured – No Change: If you already insured, you do not need to do anything more than continue your insurance.
  • Uninsured – Enroll by March 31: The open enrollment period to purchase health care coverage through the Health Insurance Marketplace for 2014 runs through March 31, 2014. When you get health insurance through the marketplace, you may be able to get advance payments of the premium tax credit that will immediately help lower your monthly premium. Learn more at HealthCare.gov.
  • Premium Tax Credit To Lower Your Monthly Premium: If you get insurance through the Marketplace, you may be eligible to claim the premium tax credit. You can elect to have advance payments of the tax credit sent directly to your insurer during 2014 so that the monthly premium you pay is lower, or wait to claim the credit when you file your tax return in 2015. If you choose to have advance payments sent to your insurer, you will have to reconcile the payments on your 2014 tax return, which will be filed in 2015. If you’re already receiving advance payments of the credit, you need to do nothing at this time unless you have a change in circumstance like a change in income or family size. Learn More.
  • Change in Circumstances: If you're receiving advance payments of the premium tax credit to help pay for your insurance coverage, you should report life changes, such as income, marital status or family size changes, to the Marketplace. Reporting changes will help to make sure you have the right coverage and are getting the proper amount of advance payments of the premium tax credit.
  • Individual Shared Responsibility Payment: Starting January 2014, you and your family have been required to have health care coverage or have an exemption from coverage.  Most people already have qualifying health care coverage.  These individuals will not need to do anything more than maintain that coverage throughout 2014. If you can afford coverage but decide not to buy it and remain uninsured, you may have to make an individual shared responsibility payment when you file your 2014 tax return in 2015. Learn More.

 

More Information

Find out more tax-related provisions of the health care law at IRS.gov/aca

Find out more about the Health Insurance Marketplace at HealthCare.gov.

To receive copies of IRS tax tips via email, subscribe at www.irs.gov/uac/Subscribe-to-IRS-Tax-Tips.

Page Last Reviewed or Updated: 26-Mar-2014

 

The 1040ez Irs

1040ez irs 4. 1040ez irs   Filing U. 1040ez irs S. 1040ez irs Tax Returns Table of Contents Who Must FileFiling Requirement if Possession Income Is Excluded When To FileExtension of Time To File Where To File Special Rules for Completing Your U. 1040ez irs S. 1040ez irs Tax ReturnU. 1040ez irs S. 1040ez irs Armed Forces. 1040ez irs Deductions if Possession Income Is Excluded Foreign Tax Credit if Possession Income Is Excluded Self-Employment Tax Additional Medicare Tax Net Investment Income Tax Paying Your TaxesEstimated Tax Double TaxationCompetent Authority Assistance The information in chapter 3 will tell you if a U. 1040ez irs S. 1040ez irs income tax return is required for your situation. 1040ez irs If a U. 1040ez irs S. 1040ez irs return is required, your next step is to see if you meet the filing requirements. 1040ez irs If you do meet the filing requirements, the information presented in this chapter will help you understand the special procedures involved. 1040ez irs This chapter discusses: Filing requirements, When to file your return, Where to send your return, How to adjust your deductions and credits if you are excluding income from American Samoa or Puerto Rico, How to make estimated tax payments and pay self-employment tax, and How to request assistance in resolving instances of double taxation. 1040ez irs Who Must File If you are not required to file a possession tax return that includes your worldwide income, you must generally file a U. 1040ez irs S. 1040ez irs income tax return if your gross income is at least the amount shown in Table 4-1, later, for your filing status and age. 1040ez irs If you were a bona fide resident of American Samoa or Puerto Rico and are able to exclude your possession income from your U. 1040ez irs S. 1040ez irs tax return, your filing requirement may be less than the amount in Table 4-1. 1040ez irs For details, see the information under Filing Requirement if Possession Income Is Excluded , later. 1040ez irs Some individuals (such as those who can be claimed as a dependent on another person's return or who owe certain taxes, such as self-employment tax) must file a tax return even though the gross income is less than the amount shown in Table 4-1 for their filing status and age. 1040ez irs For more information, see the Form 1040 instructions. 1040ez irs Filing Requirement if Possession Income Is Excluded If you were a bona fide resident of American Samoa or Puerto Rico and qualify to exclude possession income on your U. 1040ez irs S. 1040ez irs tax return, you must determine your adjusted filing requirement. 1040ez irs Generally, your filing requirement is based on the total of your (and your spouse's if filing a joint return) personal exemption(s) plus your standard deduction. 1040ez irs Personal exemption. 1040ez irs   When figuring your filing requirement, your personal exemption is allowed in full. 1040ez irs Do not reduce it for this purpose. 1040ez irs Do not include exemptions for your dependents. 1040ez irs Allowable standard deduction. 1040ez irs   Unless your filing status is married filing separately, the minimum income level at which you must file a return is based, in part, on the standard deduction for your filing status and age. 1040ez irs Because the standard deduction applies to all types of income, it must be divided between your excluded income and income from other sources. 1040ez irs Multiply the regular standard deduction for your filing status and age (this is zero if you are married filing a separate return; all others, see Form 1040 instructions) by the following fraction:      Gross income subject to U. 1040ez irs S. 1040ez irs income tax     Gross income from all sources (including excluded possession income)   Example. 1040ez irs Barbara Spruce, a U. 1040ez irs S. 1040ez irs citizen, is single, under 65, and a bona fide resident of American Samoa. 1040ez irs During 2013, she received $20,000 of income from American Samoa sources (qualifies for exclusion) and $8,000 of income from sources outside the possession (subject to U. 1040ez irs S. 1040ez irs income tax). 1040ez irs Her allowable standard deduction for 2013 is figured as follows:   $8,000 $28,000 × $6,100 (regular standard deduction) = $1,743   Adjusted filing requirement. 1040ez irs   Figure your adjusted filing requirement by adding the amount of your allowable standard deduction to the amount of your personal exemption. 1040ez irs You must file a U. 1040ez irs S. 1040ez irs income tax return if your gross income is at least the amount shown on line 3 of the following worksheet. 1040ez irs    1. 1040ez irs Enter the allowable standard deduction you figured earlier under Allowable standard deduction . 1040ez irs If your filing status is married filing separately, enter -0-   2. 1040ez irs Personal exemption. 1040ez irs If your filing status is married filing jointly, enter $7,800; if someone can claim you as a dependent, enter -0-; otherwise, enter $3,900   3. 1040ez irs Add lines 1 and 2. 1040ez irs You must file a U. 1040ez irs S. 1040ez irs income tax return if your gross income from sources outside the relevant possession is at least this amount   Table 4-1. 1040ez irs 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. 1040ez irs . 1040ez irs . 1040ez irs AND at the end of 2013 you were*. 1040ez irs . 1040ez irs . 1040ez irs THEN file a return if your gross income** was at least. 1040ez irs . 1040ez irs . 1040ez irs single under 65 $10,000 65 or older $11,500 married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married filing separately any age $3,900 head of household under 65 $12,850 65 or older $14,350 qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. 1040ez irs ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States (even if you can exclude part or all of it). 1040ez irs Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013, or (b) one-half of your social security benefits plus your other gross income is more than $25,000 ($32,000 if married filing jointly). 1040ez irs If (a) or (b) applies, see the instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. 1040ez irs *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900 you must file a return regardless of your age. 1040ez irs Example 1. 1040ez irs James and Joan Thompson, one over 65, are U. 1040ez irs S. 1040ez irs citizens and bona fide residents of Puerto Rico during the entire tax year. 1040ez irs They file a joint income tax return. 1040ez irs During 2013, they received $35,000 of income from Puerto Rico sources (qualifies for exclusion) and $6,000 of income from sources outside Puerto Rico (subject to U. 1040ez irs S. 1040ez irs income tax). 1040ez irs Their allowable standard deduction for 2013 is figured as follows:   $6,000 $41,000 × $13,400 ( standard deduction for 65 or older (one spouse) ) = $1,961   The Thompsons do not have to file a U. 1040ez irs S. 1040ez irs income tax return because their gross income subject to U. 1040ez irs S. 1040ez irs tax ($6,000) is less than their allowable standard deduction plus their personal exemptions ($1,961+ $7,800= $9,761). 1040ez irs Example 2. 1040ez irs Barbara Spruce (see Example under Allowable standard deduction, earlier), however, must file a U. 1040ez irs S. 1040ez irs income tax return because her gross income subject to U. 1040ez irs S. 1040ez irs tax ($8,000) is more than her allowable standard deduction plus her personal exemption ($1,743 + $3,900 = $5,643). 1040ez irs If you must file a U. 1040ez irs S. 1040ez irs income tax return, you may be able to file a paperless return using IRS e-file. 1040ez irs See your form instructions or visit our website at IRS. 1040ez irs gov. 1040ez irs When To File If you file on a calendar year basis, the due date for filing your U. 1040ez irs S. 1040ez irs income tax return is April 15 following the end of your tax year. 1040ez irs If you use a fiscal year (a year ending on the last day of a month other than December), the due date is the 15th day of the 4th month after the end of your fiscal year. 1040ez irs If any due date falls on a Saturday, Sunday, or legal holiday, your tax return is due on the next business day. 1040ez irs For your 2013 tax return, the due date is April 15, 2014. 1040ez irs If you mail your federal tax return, it is considered timely if it bears an official postmark dated on or before the due date, including any extensions. 1040ez irs If you use a private delivery service designated by the IRS, generally the postmark date is the date the private delivery service records in its database or marks on the mailing label. 1040ez irs See your form instructions for a list of designated private delivery services. 1040ez irs Extension of Time To File You can get an extension of time to file your U. 1040ez irs S. 1040ez irs income tax return. 1040ez irs Special rules apply for those living outside the United States. 1040ez irs Automatic 6-Month Extension If you cannot file your 2013 return by the due date, you can get an automatic 6-month extension of time to file. 1040ez irs Example. 1040ez irs If your return must be filed by April 15, 2014, you will have until October 15, 2014, to file. 1040ez irs Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. 1040ez irs If you do not pay the amount due by the regular due date (generally April 15), you will owe interest on any unpaid tax from the original due date to the date you pay the tax. 1040ez irs You may also be charged penalties (see the Instructions for Form 4868). 1040ez irs How to get the automatic extension. 1040ez irs   You can get the automatic 6-month extension if you do one of the following by the due date for filing your return. 1040ez irs E-file Form 4868 using your personal computer or a tax professional. 1040ez irs E-file and pay by credit or debit card. 1040ez irs Your payment must be at least $1. 1040ez irs You may pay by phone or over the Internet. 1040ez irs Do not file Form 4868. 1040ez irs File a paper Form 4868. 1040ez irs If you are a fiscal year taxpayer, you must file a paper Form 4868. 1040ez irs See Form 4868 for information on getting an extension using these options. 1040ez irs When to file. 1040ez irs   You must request the automatic extension by the due date for your return. 1040ez irs You can file your return any time before the 6-month extension period ends. 1040ez irs When you file your return. 1040ez irs   Enter any payment you made related to the extension of time to file on Form 1040, line 68. 1040ez irs If you file Form 1040A, U. 1040ez irs S. 1040ez irs Individual Income Tax Return, or Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, include that payment in your total payments on Form 1040A, line 41, or Form 1040EZ, line 9. 1040ez irs Also enter “Form 4868” and the amount paid in the space to the left of the entry space for line 41 or line 9. 1040ez irs You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file. 1040ez irs Individuals Outside the United States and Puerto Rico You are allowed an automatic 2-month extension (until June 16, 2014, if you use the calendar year) to file your 2013 return and pay any federal income tax due if: You are a U. 1040ez irs S. 1040ez irs citizen or resident, and On the due date of your return: You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. 1040ez irs However, if you pay the tax due after the regular due date (generally April 15), interest will be charged from April 15 until the date the tax is paid. 1040ez irs If you serve in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. 1040ez irs For more information, see Publication 3, Armed Forces' Tax Guide. 1040ez irs Married taxpayers. 1040ez irs   If you file a joint return, only one spouse has to qualify for this automatic extension. 1040ez irs However, if you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies. 1040ez irs How to get the extension. 1040ez irs   To use this special automatic extension, you must attach a statement to your return explaining what situation qualified you for the extension. 1040ez irs (See the situations listed under (2), earlier. 1040ez irs ) Extension beyond 2 months. 1040ez irs   If you cannot file your 2013 return within the automatic 2-month extension period, you can get an additional 4-month extension, for a total of 6 months. 1040ez irs File Form 4868 by the end of the automatic extension period (June 16, 2014 for calendar year taxpayers). 1040ez irs Be sure to check the box on Form 4868, line 8, if appropriate. 1040ez irs   In addition to this 6-month extension, taxpayers who are out of the country (as defined under (2) earlier) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). 1040ez irs   To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. 1040ez irs Send the letter by the extended due date (October 15 for calendar year taxpayers) to:  Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA   You will not receive any notification from the IRS unless your request is denied for being untimely. 1040ez irs Where To File Use the addresses listed below if you have to file Form 1040 with the United States and you are excluding possession income from American Samoa or Puerto Rico. 1040ez irs If you are not including a check or a money order, send your U. 1040ez irs S. 1040ez irs tax return and all attachments to:   Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA If you are including a check or a money order, send your U. 1040ez irs S. 1040ez irs tax return and all attachments to:  Internal Revenue Service P. 1040ez irs O. 1040ez irs Box 1303 Charlotte, NC 28201-1303 USA Also send your U. 1040ez irs S. 1040ez irs return to these addresses if you are attaching Form 5074 or Form 8689. 1040ez irs If you are not in either of the above categories, send your return to the address shown in the Form 1040 instructions for the possession or state in which you reside. 1040ez irs Special Rules for Completing Your U. 1040ez irs S. 1040ez irs Tax Return If you are not excluding possession income from your U. 1040ez irs S. 1040ez irs tax return, follow the instructions for the specific forms you file. 1040ez irs However, you may not qualify to claim the earned income credit (EIC). 1040ez irs Earned income credit. 1040ez irs   Even if you maintain a household in one of the possessions discussed in this publication that is your main home and the home of your qualifying child, you cannot claim the earned income credit on your U. 1040ez irs S. 1040ez irs tax return. 1040ez irs This credit is available only if you maintain the household in the United States or you are serving on extended active duty in the U. 1040ez irs S. 1040ez irs Armed Forces. 1040ez irs U. 1040ez irs S. 1040ez irs Armed Forces. 1040ez irs   U. 1040ez irs S. 1040ez irs military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. 1040ez irs Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. 1040ez irs Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. 1040ez irs Income from American Samoa or Puerto Rico excluded. 1040ez irs   You will not be allowed to take deductions and credits that apply to the excluded income. 1040ez irs The additional information you need follows. 1040ez irs Deductions if Possession Income Is Excluded Deductions that specifically apply to your excluded possession income, such as employee business expenses, are not allowable on your U. 1040ez irs S. 1040ez irs income tax return. 1040ez irs Deductions that do not specifically apply to any particular type of income must be divided between your excluded income from sources in the relevant possession and income from all other sources to find the part that you can deduct on your U. 1040ez irs S. 1040ez irs tax return. 1040ez irs Examples of such deductions are alimony payments, the standard deduction, and certain itemized deductions (such as medical expenses, charitable contributions, real estate taxes, and mortgage interest on your home). 1040ez irs Figuring the deduction. 1040ez irs   To find the part of a deduction that is allowable, multiply the deduction by the following fraction. 1040ez irs   Gross income subject to U. 1040ez irs S. 1040ez irs income tax     Gross income from all sources (including excluded possession income)   Adjustments to Income Your adjusted gross income equals your gross income minus certain deductions (adjustments). 1040ez irs Moving expense deduction. 1040ez irs   Generally, expenses of a move to a possession are directly attributable to wages, salaries, and other earned income from that possession. 1040ez irs Likewise, the expenses of a move back to the United States are generally attributable to U. 1040ez irs S. 1040ez irs earned income. 1040ez irs   If you are claiming expenses for a move to a relevant possession, how and where you will deduct the expenses depends on your status as a bona fide resident and if any of your possession income is excluded on your U. 1040ez irs S. 1040ez irs tax return. 1040ez irs For more information, see Moving expense deduction in chapter 3 under the name of the relevant possession. 1040ez irs   If you are claiming expenses for a move from a U. 1040ez irs S. 1040ez irs possession to the United States, use Form 3903 to figure your deductible expenses and enter the amount on Form 1040, line 26. 1040ez irs For purposes of deducting moving expenses, the possessions are considered part of the United States. 1040ez irs See Publication 521, Moving Expenses, for information about what expenses are deductible. 1040ez irs Self-employment tax deduction. 1040ez irs   Generally, if you are reporting self-employment income on your U. 1040ez irs S. 1040ez irs return, you can include the deductible part of your self-employment tax on Form 1040, line 27. 1040ez irs This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment (for self-employment tax). 1040ez irs   However, if you are a bona fide resident of American Samoa or Puerto Rico and you exclude all of your self-employment income from gross income, you cannot take the deduction on Form 1040, line 27, because the deduction is related to excluded income. 1040ez irs   If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed. 1040ez irs This would happen if, for instance, you have two businesses and only the income from one of them is excludable. 1040ez irs   For purposes of the deduction only, figure the self-employment tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE (Form 1040)), Self-Employment Tax) by the following fraction. 1040ez irs   Self-employment income subject to U. 1040ez irs S. 1040ez irs income tax     Total self-employment income (including excluded possession income)   The result is your self-employment tax on nonexcluded income. 1040ez irs Include the deductible part of this amount on Form 1040, line 27. 1040ez irs Individual retirement arrangement (IRA) deduction. 1040ez irs   Do not take excluded income into account when figuring your deductible IRA contribution. 1040ez irs Standard Deduction The standard deduction is composed of the regular standard deduction amount and the additional standard deduction for taxpayers who are blind or age 65 or over. 1040ez irs To find the amount you can claim on Form 1040, line 40, first figure your full standard deduction according to the Instructions for Form 1040. 1040ez irs Then multiply your full standard deduction by the following fraction. 1040ez irs   Gross income subject to U. 1040ez irs S. 1040ez irs income tax     Gross income from all sources (including excluded possession income)   In the space above line 40, enter “Standard deduction modified due to income excluded under section 931 (if American Samoa) or section 933 (if Puerto Rico). 1040ez irs ” This calculation may not be the same as the one you used to determine if you need to file a U. 1040ez irs S. 1040ez irs tax return. 1040ez irs Itemized Deductions Most itemized deductions do not apply to a particular type of income. 1040ez irs However, itemized deductions can be divided into three categories. 1040ez irs Those that apply specifically to excluded income, such as employee business expenses, are not deductible. 1040ez irs Those that apply specifically to income subject to U. 1040ez irs S. 1040ez irs income tax, which might also be employee business expenses, are fully allowable under the Instructions for Schedule A (Form 1040), Itemized Deductions. 1040ez irs Those that do not apply to specific income must be allocated between your gross income subject to U. 1040ez irs S. 1040ez irs income tax and your total gross income from all sources. 1040ez irs The example given later shows how to figure the deductible part of each type of expense that is not related to specific income. 1040ez irs Example. 1040ez irs In 2013, you and your spouse are both under 65 and U. 1040ez irs S. 1040ez irs citizens who are bona fide residents of Puerto Rico during the entire tax year. 1040ez irs You file a joint income tax return. 1040ez irs During 2013, you earned $20,000 from Puerto Rican sources (excluded from U. 1040ez irs S. 1040ez irs gross income) and your spouse earned $60,000 from the U. 1040ez irs S. 1040ez irs Government. 1040ez irs You have $16,000 of itemized deductions that do not apply to any specific type of income. 1040ez irs These are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and charitable contributions of $1,000 (cash contributions). 1040ez irs You determine the amount of each deduction that you can claim on your Schedule A (Form 1040), Itemized Deductions, by multiplying the deduction by the fraction shown under Figuring the deduction , earlier under Deductions if Possession Income is Excluded. 1040ez irs   Medical Expenses   $60,000$80,000 × $4,000 = $3,000  (enter on line 1  of Schedule A)     Real Estate Taxes   $60,000$80,000 × $5,000 = $3,750  (enter on line 6  of Schedule A)     Home Mortgage Interest   $60,000$80,000 × $6,000 = $4,500  (enter on line 10 or 11 of  Schedule A)     Charitable Contributions (cash contributions)   $60,000$80,000 × $1,000 = $750  (enter on line 16 of Schedule A)   Enter on Schedule A (Form 1040) only the allowable portion of each deduction. 1040ez irs Overall limitation on itemized deductions. 1040ez irs   If your adjusted gross income (discussed earlier) is over $300,000 if married filing jointly or qualifying widow(er); $275,000 if head of household; $250,000 if single; or $150,000 if married filing separately; see the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040), to figure your itemized deductions. 1040ez irs Personal Exemptions Personal exemptions are allowed in full even if excluding possession income. 1040ez irs However, depending upon your adjusted gross income and filing status, the amount you can deduct may be reduced. 1040ez irs See the Deduction for Exemptions Worksheet—Line 42 in the instructions for Form 1040. 1040ez irs Foreign Tax Credit if Possession Income Is Excluded If you must report American Samoa or Puerto Rico source income on your U. 1040ez irs S. 1040ez irs tax return, you can claim a foreign tax credit for income taxes paid to the possession on that income. 1040ez irs However, you cannot claim a foreign tax credit for taxes paid on possession income that is excluded on your U. 1040ez irs S. 1040ez irs tax return. 1040ez irs The foreign tax credit is generally figured on Form 1116. 1040ez irs If you have income, such as U. 1040ez irs S. 1040ez irs Government wages, that is not excludable, and you also have possession source income that is excludable, you must figure the credit by reducing your foreign taxes paid or accrued by the taxes based on the excluded income. 1040ez irs You make this reduction for each separate income category. 1040ez irs To find the amount of this reduction, use the following formula for each income category. 1040ez irs Excluded income from possession sources less deductible expenses based on that income x Tax paid or accrued to the possession = Reduction in foreign taxes Total income subject to possession tax less deductible expenses based on that income Enter the amount of the reduction on Form 1116, line 12. 1040ez irs For more information on the foreign tax credit, see Publication 514. 1040ez irs Example. 1040ez irs Jason and Lynn Reddy are U. 1040ez irs S. 1040ez irs citizens who were bona fide residents of Puerto Rico during all of 2013. 1040ez irs They file a joint tax return. 1040ez irs The following table shows their excludable and taxable income for U. 1040ez irs S. 1040ez irs federal income tax purposes. 1040ez irs   Taxable   Excludable Jason's wages from  U. 1040ez irs S. 1040ez irs Government $25,000     Lynn's wages from Puerto Rico  corp. 1040ez irs     $15,000 Dividend from Puerto Rico corp. 1040ez irs doing business in Puerto Rico     200 Dividend from U. 1040ez irs S. 1040ez irs  corp. 1040ez irs doing business  in U. 1040ez irs S. 1040ez irs * 1,000     Totals $26,000   $15,200 * Income from sources outside Puerto Rico is taxable. 1040ez irs   Jason and Lynn must file 2013 income tax returns with both Puerto Rico and the United States. 1040ez irs They have gross income of $26,000 for U. 1040ez irs S. 1040ez irs tax purposes. 1040ez irs They paid taxes to Puerto Rico of $4,000 ($3,980 on their wages and $20 on the dividend from the Puerto Rico corporation). 1040ez irs They figure their foreign tax credit on two Forms 1116, which they must attach to their U. 1040ez irs S. 1040ez irs return. 1040ez irs They fill out one Form 1116 for wages and one Form 1116 for the dividend. 1040ez irs Jason and Lynn figure the Puerto Rico taxes on excluded income as follows. 1040ez irs   Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493   Dividend: ($200 ÷ $200) × $20 = $20 They enter $1,493 on Form 1116, line 12, for wages and $20 on the second Form 1116, line 12, for the dividend. 1040ez irs Self-Employment Tax Self-employment tax includes both social security and Medicare taxes for individuals who are self-employed. 1040ez irs A U. 1040ez irs S. 1040ez irs citizen or resident alien who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. 1040ez irs This rule applies whether or not the earnings are excludable from gross income (or whether or not a U. 1040ez irs S. 1040ez irs income tax return must otherwise be filed). 1040ez irs Bona fide residents of the possessions discussed in this publication are considered U. 1040ez irs S. 1040ez irs residents for this purpose and are subject to the self-employment tax. 1040ez irs Forms to file. 1040ez irs   If you have net self-employment income and are subject to self-employment tax, file one of the following with the United States. 1040ez irs If you are required to file Form 1040 with the United States, complete Schedule SE (Form 1040) and attach it to your Form 1040. 1040ez irs If you are not required to file Form 1040 with the United States and you are a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, file Form 1040-SS. 1040ez irs If you are a resident of Puerto Rico, you can file the Spanish-language Form 1040-PR instead. 1040ez irs Do not file forms 1040-SS or 1040-PR with Form 1040. 1040ez irs If you are required to pay Additional Medicare Tax (discussed later) on your self-employment income, attach Form 8959, Additional Medicare Tax to Form 1040, Form 1040-SS, or Form 1040-PR, as applicable. 1040ez irs Chapter 11 Bankruptcy cases. 1040ez irs   While you are a debtor in a chapter 11 bankruptcy case, your net profit or loss from self-employment will be included on the income tax return (Form 1041, U. 1040ez irs S. 1040ez irs Income Tax Return for Estates and Trusts) of the bankruptcy estate. 1040ez irs However, you—not the bankruptcy estate—are responsible for paying self-employment tax on your net earnings from self-employment. 1040ez irs   Use Schedule SE (Form 1040), Form 1040-SS, or Form 1040-PR, as determined above, to figure your correct amount of self-employment tax. 1040ez irs   For other reporting requirements, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040. 1040ez irs Additional Medicare Tax Beginning in 2013, a 0. 1040ez irs 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 if single, head of household, or qualifying widow(er). 1040ez irs Medicare wages and self-employment income are combined to determine if income exceeds the threshold. 1040ez irs A self-employment loss should not be considered for purposes of this tax. 1040ez irs RRTA compensation should be separately compared to the threshold. 1040ez irs Your employer is responsible for withholding the 0. 1040ez irs 9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000. 1040ez irs You should consider this withholding, if applicable, in determining whether you need to make estimated tax payments. 1040ez irs There are no special rules for U. 1040ez irs S. 1040ez irs citizens and nonresident aliens living abroad for purposes of this provision. 1040ez irs Wages, RRTA compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold. 1040ez irs For more information, see Form 8959, Additional Medicare Tax, and its instructions or visit www. 1040ez irs irs. 1040ez irs gov and enter the following words in the search box: Additional Medicare Tax. 1040ez irs You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. 1040ez irs Net Investment Income Tax Beginning in 2013, the Net Investment Income Tax (NIIT) imposes a 3. 1040ez irs 8% tax on the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. 1040ez irs Bona fide residents of Puerto Rico and American Samoa who may have a federal income tax return filing obligation may be liable for the NIIT if the taxpayer’s modified adjusted gross income from non-territory sources exceeds a specified threshold amount. 1040ez irs The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. 1040ez irs Bona fide residents must take into account any additional tax liability associated with the NIIT when calculating your estimated tax payments. 1040ez irs Forms to file. 1040ez irs   If you are a bona fide resident of American Samoa and Puerto Rico and you are required to pay the NIIT, you must file Form 1040 with the United States and attach Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts. 1040ez irs For more information, see Form 8960 and its instructions. 1040ez irs Paying Your Taxes You may find that not all of your income tax has been paid through withholding by either the United States or the possession. 1040ez irs This is often true if you have income that is not subject to withholding, such as self-employment, interest, or rental income. 1040ez irs In this situation, you may need to make estimated tax payments. 1040ez irs Estimated Tax If your estimated income tax obligation is to the United States, use the worksheet in the Form 1040-ES package to figure your estimated tax, including self-employment tax. 1040ez irs Include the Additional Medicare Tax and Net Investment Income Tax if applicable. 1040ez irs If you are paying by check or money order, use the payment vouchers in the Form 1040-ES package. 1040ez irs Or, you can make your payments electronically and not have to file any paper forms. 1040ez irs See the Form 1040-ES instructions for information on making payments. 1040ez irs Double Taxation Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions. 1040ez irs American Samoa. 1040ez irs The Commonwealth of Puerto Rico. 1040ez irs The Commonwealth of the Northern Mariana Islands. 1040ez irs Guam. 1040ez irs The U. 1040ez irs S. 1040ez irs Virgin Islands. 1040ez irs These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses. 1040ez irs Competent Authority Assistance The tax coordination agreements between the United States and the possession tax departments contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. 1040ez irs How to make your request. 1040ez irs   Your request for competent authority assistance must include all the information listed in Revenue Procedure 2006-23, 2006-20 I. 1040ez irs R. 1040ez irs B. 1040ez irs 900 available at www. 1040ez irs irs. 1040ez irs gov/pub/irs-irbs/irb06-49. 1040ez irs pdf. 1040ez irs    Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. 1040ez irs S. 1040ez irs competent authority assistance under tax treaties. 1040ez irs As noted, an update to Revenue Procedure 2006-23 will be published in the future. 1040ez irs   Your request must be in the form of a letter addressed to the Deputy Commissioner (International) LB&I. 1040ez irs It must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession. 1040ez irs You (or a person having authority to sign your federal return) must sign and date the request. 1040ez irs    Send your written request for U. 1040ez irs S. 1040ez irs assistance under this procedure to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, N. 1040ez irs W. 1040ez irs  Routing: M4-365 Washington, DC 20224 (Attention: TAIT) Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency. 1040ez irs Credit or Refund In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U. 1040ez irs S. 1040ez irs tax paid on the income in question, you should file a claim on Form 1040X, Amended U. 1040ez irs S. 1040ez irs Individual Income Tax Return. 1040ez irs Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. 1040ez irs Attach a copy of the request to the form. 1040ez irs Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax. 1040ez irs See Revenue Procedure 2006-54 (or its successor), section 9, for complete information. 1040ez irs Prev  Up  Next   Home   More Online Publications