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1040ez online filing free Publication 530 - Main Content Table of Contents What You Can and Cannot DeductHardest Hit Fund and Emergency Homeowners' Loan Programs Real Estate Taxes Sales Taxes Home Mortgage Interest Mortgage Insurance Premiums Mortgage Interest CreditFiguring the Credit BasisFiguring Your Basis Adjusted Basis Keeping Records How To Get Tax HelpLow Income Taxpayer Clinics What You Can and Cannot Deduct To deduct expenses of owning a home, you must file Form 1040, U. 1040ez online filing free S. 1040ez online filing free Individual Income Tax Return, and itemize your deductions on Schedule A (Form 1040). 1040ez online filing free If you itemize, you cannot take the standard deduction. 1040ez online filing free This section explains what expenses you can deduct as a homeowner. 1040ez online filing free It also points out expenses that you cannot deduct. 1040ez online filing free There are four primary discussions: real estate taxes, sales taxes, home mortgage interest, and mortgage insurance premiums. 1040ez online filing free Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment. 1040ez online filing free Your house payment. 1040ez online filing free   If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. 1040ez online filing free Your house payment may include several costs of owning a home. 1040ez online filing free The only costs you can deduct are real estate taxes actually paid to the taxing authority, interest that qualifies as home mortgage interest, and mortgage insurance premiums. 1040ez online filing free These are discussed in more detail later. 1040ez online filing free   Some nondeductible expenses that may be included in your house payment include: Fire or homeowner's insurance premiums, and The amount applied to reduce the principal of the mortgage. 1040ez online filing free Minister's or military housing allowance. 1040ez online filing free   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real estate taxes and your home mortgage interest. 1040ez online filing free You do not have to reduce your deductions by your nontaxable allowance. 1040ez online filing free For more information see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Publication 3, Armed Forces' Tax Guide. 1040ez online filing free Nondeductible payments. 1040ez online filing free   You cannot deduct any of the following items. 1040ez online filing free Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. 1040ez online filing free Wages you pay for domestic help. 1040ez online filing free Depreciation. 1040ez online filing free The cost of utilities, such as gas, electricity, or water. 1040ez online filing free Most settlement costs. 1040ez online filing free See Settlement or closing costs under Cost as Basis, later, for more information. 1040ez online filing free Forfeited deposits, down payments, or earnest money. 1040ez online filing free Hardest Hit Fund and Emergency Homeowners' Loan Programs You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. 1040ez online filing free You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. 1040ez online filing free You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. 1040ez online filing free If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) and box 5 (real property taxes). 1040ez online filing free However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. 1040ez online filing free Real Estate Taxes Most state and local governments charge an annual tax on the value of real property. 1040ez online filing free This is called a real estate tax. 1040ez online filing free You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. 1040ez online filing free The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. 1040ez online filing free Deductible Real Estate Taxes You can deduct real estate taxes imposed on you. 1040ez online filing free You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. 1040ez online filing free If you own a cooperative apartment, see Special Rules for Cooperatives , later. 1040ez online filing free Where to deduct real estate taxes. 1040ez online filing free   Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6. 1040ez online filing free Real estate taxes paid at settlement or closing. 1040ez online filing free   Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. 1040ez online filing free Your share of these taxes is fully deductible if you itemize your deductions. 1040ez online filing free Division of real estate taxes. 1040ez online filing free   For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. 1040ez online filing free You (the buyer) are treated as paying the taxes beginning with the date of sale. 1040ez online filing free This applies regardless of the lien dates under local law. 1040ez online filing free Generally, this information is included on the settlement statement you get at closing. 1040ez online filing free   You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. 1040ez online filing free You each can deduct your own share, if you itemize deductions, for the year the property is sold. 1040ez online filing free Example. 1040ez online filing free You bought your home on September 1. 1040ez online filing free The property tax year (the period to which the tax relates) in your area is the calendar year. 1040ez online filing free The tax for the year was $730 and was due and paid by the seller on August 15. 1040ez online filing free You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). 1040ez online filing free You figure your deduction for real estate taxes on your home as follows. 1040ez online filing free 1. 1040ez online filing free Enter the total real estate taxes for the real property tax year $730 2. 1040ez online filing free Enter the number of days in the property tax year that you owned the property 122 3. 1040ez online filing free Divide line 2 by 365 . 1040ez online filing free 3342 4. 1040ez online filing free Multiply line 1 by line 3. 1040ez online filing free This is your deduction. 1040ez online filing free Enter it on Schedule A (Form 1040), line 6 $244   You can deduct $244 on your return for the year if you itemize your deductions. 1040ez online filing free You are considered to have paid this amount and can deduct it on your return even if, under the contract, you did not have to reimburse the seller. 1040ez online filing free Delinquent taxes. 1040ez online filing free   Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. 1040ez online filing free If you agree to pay delinquent taxes when you buy your home, you cannot deduct them. 1040ez online filing free You treat them as part of the cost of your home. 1040ez online filing free See Real estate taxes , later, under Basis. 1040ez online filing free Escrow accounts. 1040ez online filing free   Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. 1040ez online filing free You may not be able to deduct the total you pay into the escrow account. 1040ez online filing free You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. 1040ez online filing free Your real estate tax bill will show this amount. 1040ez online filing free Refund or rebate of real estate taxes. 1040ez online filing free   If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. 1040ez online filing free If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. 1040ez online filing free For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income. 1040ez online filing free Items You Cannot Deduct as Real Estate Taxes The following items are not deductible as real estate taxes. 1040ez online filing free Charges for services. 1040ez online filing free   An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. 1040ez online filing free You cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance). 1040ez online filing free    You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. 1040ez online filing free If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it. 1040ez online filing free Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. 1040ez online filing free Assessments for local benefits. 1040ez online filing free   You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. 1040ez online filing free Local benefits include the construction of streets, sidewalks, or water and sewer systems. 1040ez online filing free You must add these amounts to the basis of your property. 1040ez online filing free   You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. 1040ez online filing free An example is a charge to repair an existing sidewalk and any interest included in that charge. 1040ez online filing free   If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. 1040ez online filing free If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. 1040ez online filing free   An assessment for a local benefit may be listed as an item in your real estate tax bill. 1040ez online filing free If so, use the rules in this section to find how much of it, if any, you can deduct. 1040ez online filing free Transfer taxes (or stamp taxes). 1040ez online filing free   You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. 1040ez online filing free If you are the buyer and you pay them, include them in the cost basis of the property. 1040ez online filing free If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale. 1040ez online filing free Homeowners association assessments. 1040ez online filing free   You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them. 1040ez online filing free Special Rules for Cooperatives If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. 1040ez online filing free As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. 1040ez online filing free You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets the following conditions: The corporation has only one class of stock outstanding, Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation, No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation, and At least one of the following: At least 80% of the corporation's gross income for the tax year was paid by the tenant-stockholders. 1040ez online filing free For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership. 1040ez online filing free At least 80% of the total square footage of the corporation's property must be available for use by the tenant-stockholders during the entire tax year. 1040ez online filing free At least 90% of the expenditures paid or incurred by the corporation were used for the acquisition, construction, management, maintenance, or care of the property for the benefit of the tenant-shareholders during the entire tax year. 1040ez online filing free Tenant-stockholders. 1040ez online filing free   A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. 1040ez online filing free The tenant-stockholder does not have to live in any of the cooperative's dwelling units. 1040ez online filing free The units that the tenant-stockholder has the right to occupy can be rented to others. 1040ez online filing free Deductible taxes. 1040ez online filing free   You figure your share of real estate taxes in the following way. 1040ez online filing free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. 1040ez online filing free Multiply the corporation's deductible real estate taxes by the number you figured in (1). 1040ez online filing free This is your share of the real estate taxes. 1040ez online filing free   Generally, the corporation will tell you your share of its real estate tax. 1040ez online filing free This is the amount you can deduct if it reasonably reflects the cost of real estate taxes for your dwelling unit. 1040ez online filing free Refund of real estate taxes. 1040ez online filing free   If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year when it allocates the tax expense to you. 1040ez online filing free Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund the corporation received. 1040ez online filing free Sales Taxes Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). 1040ez online filing free Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if the tax rate was the same as the general sales tax rate. 1040ez online filing free For information on figuring your deduction, see the Instructions for Schedule A (Form 1040). 1040ez online filing free If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the home. 1040ez online filing free Home Mortgage Interest This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement, points, and Form 1098, Mortgage Interest Statement. 1040ez online filing free Most home buyers take out a mortgage (loan) to buy their home. 1040ez online filing free They then make monthly payments to either the mortgage holder or someone collecting the payments for the mortgage holder. 1040ez online filing free Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). 1040ez online filing free However, your deduction may be limited if: Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or You took out a mortgage for reasons other than to buy, build, or improve your home. 1040ez online filing free If either of these situations applies to you, see Publication 936 for more information. 1040ez online filing free Also see Publication 936 if you later refinance your mortgage or buy a second home. 1040ez online filing free Refund of home mortgage interest. 1040ez online filing free   If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the refund in income in the year you receive it. 1040ez online filing free For more information, see Recoveries in Publication 525. 1040ez online filing free The amount of the refund will usually be shown on the mortgage interest statement you receive from your mortgage lender. 1040ez online filing free See Mortgage Interest Statement , later. 1040ez online filing free Deductible Mortgage Interest To be deductible, the interest you pay must be on a loan secured by your main home or a second home. 1040ez online filing free The loan can be a first or second mortgage, a home improvement loan, or a home equity loan. 1040ez online filing free Prepaid interest. 1040ez online filing free   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. 1040ez online filing free Generally, you can deduct in each year only the interest that qualifies as home mortgage interest for that year. 1040ez online filing free An exception (discussed later) applies to points. 1040ez online filing free Late payment charge on mortgage payment. 1040ez online filing free   You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan. 1040ez online filing free Mortgage prepayment penalty. 1040ez online filing free   If you pay off your home mortgage early, you may have to pay a penalty. 1040ez online filing free You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. 1040ez online filing free Ground rent. 1040ez online filing free   In some states (such as Maryland), you may buy your home subject to a ground rent. 1040ez online filing free A ground rent is an obligation you assume to pay a fixed amount per year on the property. 1040ez online filing free Under this arrangement, you are leasing (rather than buying) the land on which your home is located. 1040ez online filing free Redeemable ground rents. 1040ez online filing free   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. 1040ez online filing free The ground rent is a redeemable ground rent only if all of the following are true. 1040ez online filing free Your lease, including renewal periods, is for more than 15 years. 1040ez online filing free You can freely assign the lease. 1040ez online filing free You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specified amount. 1040ez online filing free The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. 1040ez online filing free   Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. 1040ez online filing free You cannot deduct them. 1040ez online filing free Nonredeemable ground rents. 1040ez online filing free   Payments on a nonredeemable ground rent are not mortgage interest. 1040ez online filing free You can deduct them as rent only if they are a business expense or if they are for rental property. 1040ez online filing free Cooperative apartment. 1040ez online filing free   You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a cooperative apartment, and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives . 1040ez online filing free In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. 1040ez online filing free Figure your share of mortgage interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate taxes, earlier. 1040ez online filing free For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in Publication 936. 1040ez online filing free Refund of cooperative's mortgage interest. 1040ez online filing free   You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. 1040ez online filing free The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. 1040ez online filing free   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. 1040ez online filing free Mortgage Interest Paid at Settlement One item that normally appears on a settlement or closing statement is home mortgage interest. 1040ez online filing free You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). 1040ez online filing free This amount should be included in the mortgage interest statement provided by your lender. 1040ez online filing free See the discussion under Mortgage Interest Statement , later. 1040ez online filing free Also, if you pay interest in advance, see Prepaid interest , earlier, and Points , next. 1040ez online filing free Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. 1040ez online filing free Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points. 1040ez online filing free A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. 1040ez online filing free See Points paid by the seller , later. 1040ez online filing free General rule. 1040ez online filing free   You cannot deduct the full amount of points in the year paid. 1040ez online filing free They are prepaid interest, so you generally must deduct them over the life (term) of the mortgage. 1040ez online filing free Exception. 1040ez online filing free   You can deduct the full amount of points in the year paid if you meet all the following tests. 1040ez online filing free Your loan is secured by your main home. 1040ez online filing free (Generally, your main home is the one you live in most of the time. 1040ez online filing free ) Paying points is an established business practice in the area where the loan was made. 1040ez online filing free The points paid were not more than the points generally charged in that area. 1040ez online filing free You use the cash method of accounting. 1040ez online filing free This means you report income in the year you receive it and deduct expenses in the year you pay them. 1040ez online filing free Most individuals use this method. 1040ez online filing free The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. 1040ez online filing free The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. 1040ez online filing free The funds you provided are not required to have been applied to the points. 1040ez online filing free They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. 1040ez online filing free You cannot have borrowed these funds. 1040ez online filing free You use your loan to buy or build your main home. 1040ez online filing free The points were computed as a percentage of the principal amount of the mortgage. 1040ez online filing free The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the mortgage. 1040ez online filing free The points may be shown as paid from either your funds or the seller's. 1040ez online filing free Note. 1040ez online filing free If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. 1040ez online filing free If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions. 1040ez online filing free Home improvement loan. 1040ez online filing free   You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier. 1040ez online filing free Refinanced loan. 1040ez online filing free   If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. 1040ez online filing free You can deduct the rest of the points over the life of the loan. 1040ez online filing free Points not fully deductible in year paid. 1040ez online filing free    If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in Publication 936 for the rules on when and how much you can deduct. 1040ez online filing free Figure A. 1040ez online filing free   You can use Figure A, next, as a quick guide to see whether your points are fully deductible in the year paid. 1040ez online filing free    Please click here for the text description of the image. 1040ez online filing free Figure A. 1040ez online filing free Are my points fully deductible this year? Amounts charged for services. 1040ez online filing free   Amounts charged by the lender for specific services connected to the loan are not interest. 1040ez online filing free Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. 1040ez online filing free You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. 1040ez online filing free For information about the tax treatment of these amounts and other settlement fees and closing costs, see Basis , later. 1040ez online filing free Points paid by the seller. 1040ez online filing free   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. 1040ez online filing free Treatment by seller. 1040ez online filing free   The seller cannot deduct these fees as interest. 1040ez online filing free However, they are a selling expense that reduces the seller's amount realized. 1040ez online filing free See Publication 523 for more information. 1040ez online filing free Treatment by buyer. 1040ez online filing free   The buyer treats seller-paid points as if he or she had paid them. 1040ez online filing free If all the tests listed earlier under Exception are met, the buyer can deduct the points in the year paid. 1040ez online filing free If any of those tests are not met, the buyer must deduct the points over the life of the loan. 1040ez online filing free   The buyer must also reduce the basis of the home by the amount of the seller-paid points. 1040ez online filing free For more information about the basis of your home, see Basis , later. 1040ez online filing free Funds provided are less than points. 1040ez online filing free   If you meet all the tests listed earlier under Exception except that the funds you provided were less than the points charged to you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. 1040ez online filing free In addition, you can deduct any points paid by the seller. 1040ez online filing free Example 1. 1040ez online filing free When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). 1040ez online filing free You meet all the tests for deducting points in the year paid (see Exception , earlier), except the only funds you provided were a $750 down payment. 1040ez online filing free Of the $1,000 you were charged for points, you can deduct $750 in the year paid. 1040ez online filing free You spread the remaining $250 over the life of the mortgage. 1040ez online filing free Example 2. 1040ez online filing free The facts are the same as in Example 1 , except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. 1040ez online filing free In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). 1040ez online filing free You spread the remaining $250 over the life of the mortgage. 1040ez online filing free You must reduce the basis of your home by the $1,000 paid by the seller. 1040ez online filing free Excess points. 1040ez online filing free   If you meet all the tests under Exception , earlier, except that the points paid were more than are generally charged in your area (test 3), you can deduct in the year paid only the points that are generally charged. 1040ez online filing free You must spread any additional points over the life of the mortgage. 1040ez online filing free Mortgage ending early. 1040ez online filing free   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. 1040ez online filing free A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. 1040ez online filing free Example. 1040ez online filing free Dan paid $3,000 in points in 2006 that he had to spread out over the 15-year life of the mortgage. 1040ez online filing free He had deducted $1,400 of these points through 2012. 1040ez online filing free Dan prepaid his mortgage in full in 2013. 1040ez online filing free He can deduct the remaining $1,600 of points in 2013. 1040ez online filing free Exception. 1040ez online filing free   If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. 1040ez online filing free Instead, deduct them over the term of the new loan. 1040ez online filing free Form 1098. 1040ez online filing free   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. 1040ez online filing free See Mortgage Interest Statement , later. 1040ez online filing free Where To Deduct Home Mortgage Interest Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). 1040ez online filing free If you did not receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. 1040ez online filing free See Table 1 below for a summary of where to deduct home mortgage interest and real estate taxes. 1040ez online filing free If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. 1040ez online filing free The seller must give you this number and you must give the seller your SSN. 1040ez online filing free Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. 1040ez online filing free Failure to meet either of these requirements may result in a $50 penalty for each failure. 1040ez online filing free Table 1. 1040ez online filing free Where To Deduct Interest and Taxes Paid on Your Home See the text for information on what expenses are eligible. 1040ez online filing free IF you are eligible to deduct . 1040ez online filing free . 1040ez online filing free . 1040ez online filing free THEN report the amount  on Schedule A (Form 1040) . 1040ez online filing free . 1040ez online filing free . 1040ez online filing free real estate taxes line 6. 1040ez online filing free home mortgage interest and points reported on Form 1098 line 10. 1040ez online filing free home mortgage interest not reported on  Form 1098 line 11. 1040ez online filing free points not reported on Form 1098 line 12. 1040ez online filing free qualified mortgage insurance premiums line 13. 1040ez online filing free Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage to a mortgage holder in the course of that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. 1040ez online filing free The statement will show the total interest paid on your mortgage during the year. 1040ez online filing free If you bought a main home during the year, it also will show the deductible points you paid and any points you can deduct that were paid by the person who sold you your home. 1040ez online filing free See Points , earlier. 1040ez online filing free The interest you paid at settlement should be included on the statement. 1040ez online filing free If it is not, add the interest from the settlement sheet that qualifies as home mortgage interest to the total shown on Form 1098 or similar statement. 1040ez online filing free Put the total on Schedule A (Form 1040), line 10, and attach a statement to your return explaining the difference. 1040ez online filing free Write “See attached” to the right of line 10. 1040ez online filing free A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. 1040ez online filing free If a statement comes from a cooperative housing corporation, it generally will show your share of interest. 1040ez online filing free Your mortgage interest statement for 2013 should be provided or sent to you by January 31, 2014. 1040ez online filing free If it is mailed, you should allow adequate time to receive it before contacting the mortgage holder. 1040ez online filing free A copy of this form will be sent to the IRS also. 1040ez online filing free Example. 1040ez online filing free You bought a new home on May 3. 1040ez online filing free You paid no points on the purchase. 1040ez online filing free During the year, you made mortgage payments which included $4,480 deductible interest on your new home. 1040ez online filing free The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. 1040ez online filing free The mortgage statement you receive from the lender includes total interest of $5,100 ($4,480 + $620). 1040ez online filing free You can deduct the $5,100 if you itemize your deductions. 1040ez online filing free Refund of overpaid interest. 1040ez online filing free   If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3. 1040ez online filing free Generally, you must include the refund in income in the year you receive it. 1040ez online filing free See Refund of home mortgage interest , earlier, under Home Mortgage Interest. 1040ez online filing free More than one borrower. 1040ez online filing free   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. 1040ez online filing free Show how much of the interest each of you paid, and give the name and address of the person who received the form. 1040ez online filing free Deduct your share of the interest on Schedule A (Form 1040), line 11, and write “See attached” to the right of that line. 1040ez online filing free Mortgage Insurance Premiums You may be able to take an itemized deduction on Schedule A (Form 1040), line 13, for premiums you pay or accrue during 2013 for qualified mortgage insurance in connection with home acquisition debt on your qualified home. 1040ez online filing free Mortgage insurance premiums you paid or accrued on any mortgage insurance contract issued before January 1, 2007, are not deductible as an itemized deduction. 1040ez online filing free Qualified Mortgage Insurance Qualified mortgage insurance is mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). 1040ez online filing free Prepaid mortgage insurance premiums. 1040ez online filing free   If you paid premiums that are allocable to periods after 2013, you must allocate them over the shorter of: The stated term of the mortgage, or 84 months, beginning with the month the insurance was obtained. 1040ez online filing free The premiums are treated as paid in the year to which they were allocated. 1040ez online filing free If the mortgage is satisfied before its term, no deduction is allowed for the unamortized balance. 1040ez online filing free See Publication 936 for details. 1040ez online filing free Exception for certain mortgage insurance. 1040ez online filing free   The allocation rules, explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or Rural Housing Service. 1040ez online filing free Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home. 1040ez online filing free It also must be secured by that home. 1040ez online filing free If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. 1040ez online filing free Home acquisition debt limit. 1040ez online filing free   The total amount you can treat as home acquisition debt at any time on your home cannot be more than $1 million ($500,000 if married filing separately). 1040ez online filing free Discharges of qualified principal residence indebtedness. 1040ez online filing free   You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and before 2014. 1040ez online filing free You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. 1040ez online filing free Principal residence. 1040ez online filing free   Your principal residence is the home where you ordinarily live most of the time. 1040ez online filing free You can have only one principal residence at any one time. 1040ez online filing free Qualified principal residence indebtedness. 1040ez online filing free   This is a mortgage that you took out to buy, build, or substantially improve your principal residence and that is secured by that residence. 1040ez online filing free If the amount of your original mortgage is more than the cost of your principal residence plus the cost of substantial improvements, qualified principal residence indebtedness cannot be more than the cost of your principal residence plus improvements. 1040ez online filing free   Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness is qualified principal residence indebtedness up to the amount of your old mortgage principal just before the refinancing. 1040ez online filing free Additional debt incurred to substantially improve your principal residence is also qualified principal residence indebtedness. 1040ez online filing free Amount you can exclude. 1040ez online filing free   You can only exclude debt discharged after 2006 and before 2014. 1040ez online filing free The most you can exclude is $2 million ($1 million if married filing separately). 1040ez online filing free You cannot exclude any amount that was discharged because of services performed for the lender or on account of any other factor not directly related either to a decline in the value of your residence or to your financial condition. 1040ez online filing free Ordering rule. 1040ez online filing free   If only a part of a loan is qualified principal residence indebtedness, you can exclude only the amount of the discharge that is more than the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness. 1040ez online filing free Qualified Home This means your main home or your second home. 1040ez online filing free A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. 1040ez online filing free Main home. 1040ez online filing free   You can have only one main home at any one time. 1040ez online filing free This is the home where you ordinarily live most of the time. 1040ez online filing free Second home and other special situations. 1040ez online filing free   If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Publication 936. 1040ez online filing free Limit on Deduction If your adjusted gross income (AGI) on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are deductible is reduced and may be eliminated. 1040ez online filing free See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. 1040ez online filing free If your AGI is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. 1040ez online filing free Form 1098. 1040ez online filing free   The amount of mortgage insurance premiums you paid during 2013 should be reported in box 4. 1040ez online filing free See Form 1098, Mortgage Interest Statement in Publication 936. 1040ez online filing free Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals afford home ownership. 1040ez online filing free If you qualify, you can claim the credit on Form 8396 each year for part of the home mortgage interest you pay. 1040ez online filing free Who qualifies. 1040ez online filing free   You may be eligible for the credit if you were issued a qualified Mortgage Credit Certificate (MCC) from your state or local government. 1040ez online filing free Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. 1040ez online filing free The MCC will show the certificate credit rate you will use to figure your credit. 1040ez online filing free It also will show the certified indebtedness amount. 1040ez online filing free Only the interest on that amount qualifies for the credit. 1040ez online filing free See Figuring the Credit , later. 1040ez online filing free You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. 1040ez online filing free Contact your state or local housing finance agency for information about the availability of MCCs in your area. 1040ez online filing free How to claim the credit. 1040ez online filing free   To claim the credit, complete Form 8396 and attach it to your Form 1040 or Form 1040NR, U. 1040ez online filing free S. 1040ez online filing free Nonresident Alien Income Tax Return. 1040ez online filing free Include the credit in your total for Form 1040, line 53, or Form 1040NR, line 50; be sure to check box c and write “Form 8396” on that line. 1040ez online filing free Reducing your home mortgage interest deduction. 1040ez online filing free   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. 1040ez online filing free You must do this even if part of that amount is to be carried forward to 2014. 1040ez online filing free Selling your home. 1040ez online filing free   If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit you received from the MCC program. 1040ez online filing free For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication 523. 1040ez online filing free Figuring the Credit Figure your credit on Form 8396. 1040ez online filing free Mortgage not more than certified indebtedness. 1040ez online filing free   If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. 1040ez online filing free Mortgage more than certified indebtedness. 1040ez online filing free   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. 1040ez online filing free To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. 1040ez online filing free Certified indebtedness amount on your MCC Original amount of your mortgage   The fraction will not change as long as you are entitled to take the mortgage interest credit. 1040ez online filing free Example. 1040ez online filing free Emily bought a home this year. 1040ez online filing free Her mortgage loan is $125,000. 1040ez online filing free The certified indebtedness amount on her MCC is $100,000. 1040ez online filing free She paid $7,500 interest this year. 1040ez online filing free Emily figures the interest to enter on Form 8396, line 1, as follows:   $100,000 = 80% (. 1040ez online filing free 80)       $125,000       $7,500 x . 1040ez online filing free 80 = $6,000   Emily enters $6,000 on Form 8396, line 1. 1040ez online filing free In each later year, she will figure her credit using only 80% of the interest she pays for that year. 1040ez online filing free Limits Two limits may apply to your credit. 1040ez online filing free A limit based on the credit rate, and A limit based on your tax. 1040ez online filing free Limit based on credit rate. 1040ez online filing free   If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000. 1040ez online filing free Limit based on tax. 1040ez online filing free   After applying the limit based on the credit rate, your credit generally cannot be more than your tax liability. 1040ez online filing free See the Credit Limit Worksheet in the Form 8396 instructions to calculate the limit based on tax. 1040ez online filing free Dividing the Credit If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must be divided based on the interest held by each person. 1040ez online filing free Example. 1040ez online filing free John and his brother, George, were issued an MCC. 1040ez online filing free They used it to get a mortgage on their main home. 1040ez online filing free John has a 60% ownership interest in the home, and George has a 40% ownership interest in the home. 1040ez online filing free John paid $5,400 mortgage interest this year and George paid $3,600. 1040ez online filing free The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. 1040ez online filing free The loan amount (mortgage) on their home is $120,000. 1040ez online filing free The credit is limited to $2,000 because the credit rate is more than 20%. 1040ez online filing free John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350. 1040ez online filing free His credit is limited to $1,200 ($2,000 × 60%). 1040ez online filing free George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900. 1040ez online filing free His credit is limited to $800 ($2,000 × 40%). 1040ez online filing free Carryforward If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. 1040ez online filing free Example. 1040ez online filing free You receive a mortgage credit certificate from State X. 1040ez online filing free This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and your mortgage interest credit is $1,700. 1040ez online filing free You claim no other credits. 1040ez online filing free Your unused mortgage interest credit for this year is $600 ($1,700 − $1,100). 1040ez online filing free You can carry forward this amount to the next 3 years or until used, whichever comes first. 1040ez online filing free Credit rate more than 20%. 1040ez online filing free   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). 1040ez online filing free Example. 1040ez online filing free In the earlier example under Dividing the Credit , John and George used the entire $2,000 credit. 1040ez online filing free The excess   John $1,350 − $1,200 = $150     George $900 − $800 = $100   $150 for John ($1,350 − $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and George. 1040ez online filing free Refinancing If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new loan. 1040ez online filing free The amount of credit you can claim on the new loan may change. 1040ez online filing free Table 2 below summarizes how to figure your credit if you refinance your original mortgage loan. 1040ez online filing free Table 2. 1040ez online filing free Effect of Refinancing on Your Credit IF you get a new (reissued) MCC and the amount of your new mortgage is . 1040ez online filing free . 1040ez online filing free . 1040ez online filing free THEN the interest you claim on Form 8396, line 1, is* . 1040ez online filing free . 1040ez online filing free . 1040ez online filing free smaller than or equal to the certified indebtedness amount on the new MCC all the interest paid during the year on your new mortgage. 1040ez online filing free larger than the certified indebtedness amount on the new MCC interest paid during the year on your new mortgage multiplied by the following fraction. 1040ez online filing free         certified indebtedness  amount on your new MCC       original amount of your  mortgage   *The credit using the new MCC cannot be more than the credit using the old MCC. 1040ez online filing free  See New MCC cannot increase your credit above. 1040ez online filing free An issuer may reissue an MCC after you refinance your mortgage. 1040ez online filing free If you did not get a new MCC, you may want to contact the state or local housing finance agency that issued your original MCC for information about whether you can get a reissued MCC. 1040ez online filing free Year of refinancing. 1040ez online filing free   In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new mortgage, and enter the total on Form 8396, line 1. 1040ez online filing free   If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. 1040ez online filing free The statement must show the calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. 1040ez online filing free It must show a separate calculation for the part of the year when the new MCC was in effect. 1040ez online filing free Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write “See attached” on the dotted line next to line 2. 1040ez online filing free New MCC cannot increase your credit. 1040ez online filing free   The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC. 1040ez online filing free   In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. 1040ez online filing free However, if either your old loan or your new loan has a variable (adjustable) interest rate, you will need to check this yourself. 1040ez online filing free In that case, you will need to know the amount of the credit you could have claimed using the old MCC. 1040ez online filing free   There are two methods for figuring the credit you could have claimed. 1040ez online filing free Under one method, you figure the actual credit that would have been allowed. 1040ez online filing free This means you use the credit rate on the old MCC and the interest you would have paid on the old loan. 1040ez online filing free   If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. 1040ez online filing free Under this method, you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of the old mortgage. 1040ez online filing free The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal Truth in Lending Act. 1040ez online filing free The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on the old MCC. 1040ez online filing free    You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC. 1040ez online filing free    As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage. 1040ez online filing free Basis Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your home for business purposes or for rent. 1040ez online filing free While you own your home, you may add certain items to your basis. 1040ez online filing free You may subtract certain other items from your basis. 1040ez online filing free These items are called adjustments to basis and are explained later under Adjusted Basis . 1040ez online filing free It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis during the period you own your home. 1040ez online filing free You also must keep records of the events that affect basis or adjusted basis. 1040ez online filing free See Keeping Records , below. 1040ez online filing free Figuring Your Basis How you figure your basis depends on how you acquire your home. 1040ez online filing free If you buy or build your home, your cost is your basis. 1040ez online filing free If you receive your home as a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. 1040ez online filing free If you inherit your home from a decedent, different rules apply depending on the date of the decedent's death. 1040ez online filing free Each of these topics is discussed later. 1040ez online filing free Property transferred from a spouse. 1040ez online filing free   If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's (or former spouse's) adjusted basis just before the transfer. 1040ez online filing free Publication 504, Divorced or Separated Individuals, fully discusses transfers between spouses. 1040ez online filing free Cost as Basis The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed. 1040ez online filing free The cost of your home includes most settlement or closing costs you paid when you bought the home. 1040ez online filing free If you built your home, your cost includes most closing costs paid when you bought the land or settled on your mortgage. 1040ez online filing free See Settlement or closing costs , later. 1040ez online filing free If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot include the sales taxes as part of your cost basis in the home. 1040ez online filing free Purchase. 1040ez online filing free   The basis of a home you bought is the amount you paid for it. 1040ez online filing free This usually includes your down payment and any debt you assumed. 1040ez online filing free The basis of a cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. 1040ez online filing free This amount includes any purchase commissions or other costs of acquiring the shares. 1040ez online filing free Construction. 1040ez online filing free   If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have the home built. 1040ez online filing free This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges, utility meter and connection charges, and legal fees that are directly connected with building your home. 1040ez online filing free If you built all or part of your home yourself, your basis is the total amount it cost you to build it. 1040ez online filing free You cannot include in basis the value of your own labor or any other labor for which you did not pay. 1040ez online filing free Real estate taxes. 1040ez online filing free   Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. 1040ez online filing free See the earlier discussion of Real estate taxes paid at settlement or closing , under Real Estate Taxes, earlier, to figure the real estate taxes you paid or are considered to have paid. 1040ez online filing free   If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add those taxes to your basis in the home. 1040ez online filing free You cannot deduct them as taxes paid. 1040ez online filing free   If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. 1040ez online filing free Do not include those taxes in your basis. 1040ez online filing free If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. 1040ez online filing free Example 1. 1040ez online filing free You bought your home on September 1. 1040ez online filing free The property tax year in your area is the calendar year, and the tax is due on August 15. 1040ez online filing free The real estate taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. 1040ez online filing free You did not reimburse the seller for your share of the real estate taxes from September 1 through December 31. 1040ez online filing free You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the seller paid for you. 1040ez online filing free You can deduct your $426 share of real estate taxes on your return for the year you purchased your home. 1040ez online filing free Example 2. 1040ez online filing free You bought your home on May 3, 2013. 1040ez online filing free The property tax year in your area is the calendar year. 1040ez online filing free The taxes for the previous year are assessed on January 2 and are due on May 31 and November 30. 1040ez online filing free Under state law, the taxes become a lien on May 31. 1040ez online filing free You agreed to pay all taxes due after the date of sale. 1040ez online filing free The taxes due in 2013 for 2012 were $1,375. 1040ez online filing free The taxes due in 2014 for 2013 will be $1,425. 1040ez online filing free You cannot deduct any of the taxes paid in 2013 because they relate to the 2012 property tax year and you did not own the home until 2013. 1040ez online filing free Instead, you add the $1,375 to the cost (basis) of your home. 1040ez online filing free You owned the home in 2013 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2014 return of $949 [(243 ÷ 365) × $1,425] paid in 2014 for 2013. 1040ez online filing free You add the remaining $476 ($1,425 − $949) of taxes paid in 2014 to the cost (basis) of your home. 1040ez online filing free Settlement or closing costs. 1040ez online filing free   If you bought your home, you probably paid settlement or closing costs in addition to the contract price. 1040ez online filing free These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. 1040ez online filing free If you built your home, you probably paid these costs when you bought the land or settled on your mortgage. 1040ez online filing free   The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. 1040ez online filing free You deduct them in the year you buy your home if you itemize your deductions. 1040ez online filing free You can add certain other settlement or closing costs to the basis of your home. 1040ez online filing free Items added to basis. 1040ez online filing free   You can include in your basis the settlement fees and closing costs you paid for buying your home. 1040ez online filing free A fee is for buying the home if you would have had to pay it even if you paid cash for the home. 1040ez online filing free   The following are some of the settlement fees and closing costs that you can include in the original basis of your home. 1040ez online filing free Abstract fees (abstract of title fees). 1040ez online filing free Charges for installing utility services. 1040ez online filing free Legal fees (including fees for the title search and preparation of the sales contract and deed). 1040ez online filing free Recording fees. 1040ez online filing free Surveys. 1040ez online filing free Transfer or stamp taxes. 1040ez online filing free Owner's title insurance. 1040ez online filing free Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or repairs, and sales commissions. 1040ez online filing free   If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement. 1040ez online filing free Items not added to basis and not deductible. 1040ez online filing free   Here are some settlement and closing costs that you cannot deduct or add to your basis. 1040ez online filing free Fire insurance premiums. 1040ez online filing free Charges for using utilities or other services related to occupancy of the home before closing. 1040ez online filing free Rent for occupying the home before closing. 1040ez online filing free Charges connected with getting or refinancing a mortgage loan, such as: Loan assumption fees, Cost of a credit report, and Fee for an appraisal required by a lender. 1040ez online filing free Points paid by seller. 1040ez online filing free   If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home. 1040ez online filing free   If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. 1040ez online filing free See Points , earlier, for the rules on deducting points. 1040ez online filing free Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to you, its fair market value (FMV) at the time it was given to you, and any gift tax paid on it. 1040ez online filing free Fair market value. 1040ez online filing free   Fair market value (FMV) is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and who both have a reasonable knowledge of all the necessary facts. 1040ez online filing free Donor's adjusted basis is more than FMV. 1040ez online filing free   If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis. 1040ez online filing free Disposition basis. 1040ez online filing free   If the donor's adjusted basis at the time of the gift is more than the FMV, your basis (plus or minus any required adjustments, see Adjusted Basis , later) when you dispose of the property will depend on whether you have a gain or a loss. 1040ez online filing free Your basis for figuring a gain is the same as the donor's adjusted basis. 1040ez online filing free Your basis for figuring a loss is the FMV when you received the gift. 1040ez online filing free If you use the donor's adjusted basis to figure a gain and it results in a loss, then you must use the FMV (at the time of the gift) to refigure the loss. 1040ez online filing free However, if using the FMV results in a gain, then you neither have a gain nor a loss. 1040ez online filing free Example 1. 1040ez online filing free Andrew received a house as a gift from Ishmael (the donor). 1040ez online filing free At the time of the gift, the home had an FMV of $80,000. 1040ez online filing free Ishmael's adjusted basis was $100,000. 1040ez online filing free After he received the house, no events occurred to increase or decrease the basis. 1040ez online filing free If Andrew sells the house for $120,000, he will have a $20,000 gain because he must use the donor's adjusted basis ($100,000) at the time of the gift as his basis to figure the gain. 1040ez online filing free Example 2. 1040ez online filing free Same facts as Example 1 , except this time Andrew sells the house for $70,000. 1040ez online filing free He will have a loss of $10,000 because he must use the FMV ($80,000) at the time of the gift as his basis to figure the loss. 1040ez online filing free Example 3. 1040ez online filing free Same facts as Example 1 , except this time Andrew sells the house for $90,000. 1040ez online filing free Initially, he figures the gain using Ishmael's adjusted basis ($100,000), which results in a loss of $10,000. 1040ez online filing free Since it is a loss, Andrew must now recalculate the loss using the FMV ($80,000), which results in a gain of $10,000. 1040ez online filing free So in this situation, Andrew will neither have a gain nor a loss. 1040ez online filing free Donor's adjusted basis equal to or less than the FMV. 1040ez online filing free   If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the FMV, your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home. 1040ez online filing free Part of federal gift tax due to net increase in value. 1040ez online filing free   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. 1040ez online filing free The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. 1040ez online filing free The net increase in the value of the home is its FMV minus the adjusted basis of the donor. 1040ez online filing free Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift. 1040ez online filing free Inheritance Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternative valuation date if the personal representative for the estate chooses to use alternative valuation. 1040ez online filing free If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return. 1040ez online filing free If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or transmission taxes. 1040ez online filing free Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited property. 1040ez online filing free If you inherited your home from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. 1040ez online filing free Adjusted Basis While you own your home, various events may take place that can change the original basis of your home. 1040ez online filing free These events can increase or decrease your original basis. 1040ez online filing free The result is called adjusted basis. 1040ez online filing free See Table 3, on this page, for a list of some of the items that can adjust your basis. 1040ez online filing free Table 3. 1040ez online filing free Adjusted Basis This table lists examples of some items that generally will increase or decrease your basis in your home. 1040ez online filing free It is not intended to be all-inclusive. 1040ez online filing free Increases to Basis Decreases to Basis Improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Assessments for local improvements (see Assessments for local benefits , under What You Can and Cannot Deduct, earlier) Amounts spent to restore damaged property Insurance or other reimbursement for casualty losses Deductible casualty loss not covered by insurance Payments received for easement or right-of-way granted Depreciation allowed or allowable if home is used for business or rental purposes Value of subsidy for energy conservation measure excluded from income Improvements. 1040ez online filing free   An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. 1040ez online filing free You must add the cost of any improvements to the basis of your home. 1040ez online filing free You cannot deduct these costs. 1040ez online filing free   Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, and paving your driveway. 1040ez online filing free Amount added to basis. 1040ez online filing free   The amount you add to your basis for improvements is your actual cost. 1040ez online filing free This includes all costs for material and labor, except your own labor, and all expenses related to the improvement. 1040ez online filing free For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. 1040ez online filing free   You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the property. 1040ez online filing free These assessments are discussed earlier under Real Estate Taxes . 1040ez online filing free Improvements no longer part of home. 1040ez online filing free    Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. 1040ez online filing free Example. 1040ez online filing free You put wall-to-wall carpeting in your home 15 years ago. 1040ez online filing free Later, you replaced that carpeting with new wall-to-wall carpeting. 1040ez online filing free The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. 1040ez online filing free Repairs versus improvements. 1040ez online filing free   A repair keeps your home in an ordinary, efficient operating condition. 1040ez online filing free It does not add to the value of your home or prolong its life. 1040ez online filing free Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. 1040ez online filing free You cannot deduct repair costs and generally cannot add them to the basis of your home. 1040ez online filing free   However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. 1040ez online filing free You add them to the basis of your home. 1040ez online filing free Records to keep. 1040ez online filing free   You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. 1040ez online filing free Also see Keeping Records , below. 1040ez online filing free Energy conservation subsidy. 1040ez online filing free   If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home, do not include the value of that subsidy in your income. 1040ez online filing free You must reduce the basis of your home by that value. 1040ez online filing free   An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand. 1040ez online filing free Keeping Records Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the basis or adjusted basis of your home. 1040ez online filing free These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. 1040ez online filing free You should keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis. 1040ez online filing free In addition, you should keep track of any decreases to the basis such as those listed in Table 3, earlier. 1040ez online filing free How to keep records. 1040ez online filing free   How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. 1040ez online filing free How long to keep records. 1040ez online filing free   You must keep your records for as long as they are important for meeting any provision of the federal tax law. 1040ez online filing free   Keep records that support an item of income, a deduction, or a credit appearing on a return until the period of limitations for the return runs out. 1040ez online filing free (A period of limitations is the period of time after which no legal action can be brought. 1040ez online filing free ) For assessment of tax you owe, this is generally 3 years from the date you filed the return. 1040ez online filing free For filing a claim for credit or refund, this is generally 3 years from the date you filed the original return, or 2 years from the date you paid the tax, whichever is later. 1040ez online filing free Returns filed before the due date are treated as filed on the due date. 1040ez online filing free   You may need to keep records relating to the basis of property (discussed earlier) for longer than the period of limitations. 1040ez online filing free Keep those records as long as they are important in figuring the basis of the original or replacement property. 1040ez online filing free Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you. 1040ez online filing free Table 4. 1040ez online filing free Record of Home Improvements Keep this for your records. 1040ez online filing free Also, keep receipts or other proof of improvements. 1040ez online filing free Remove from this record any improvements that are no longer part of your main home. 1040ez online filing free For example, if you put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting. 1040ez online filing free (a) Type of Improvement (b) Date (c) Amount   (a) Type of Improvement (b) Date (c) Amount Additions:       Heating & Air  Conditioning:     Bedroom       Heating system     Bathroom       Central air conditioning     Deck       Furnace     Garage       Duct work     Porch       Central humidifier     Patio       Filtration system     Storage shed       Other     Fireplace       Electrical:     Other           Lawn & Grounds:       Lighting fixtures           Wiring upgrades     Landscaping       Other     Driveway       Plumbing:     Walkway           Fences       Water heater     Retaining wall       Soft water system     Sprinkler system       Filtration system     Swimming pool       Other     Exterior lighting       Insulation:     Other           Communications:       Attic           Walls     Satellite dish       Floors     Intercom       Pipes and duct work     Security system       Other     Other             Miscellaneous:       Interior  Improvements:     Storm windows and doors       Built-in appliances     Roof       Kitchen modernization     Central vacuum       Bathroom modernization     Other       Flooring             Wall-to-wall carpeting             Other     How To
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The 1040ez Online Filing Free

1040ez online filing free 1. 1040ez online filing free   Application, Approval, and Appeal Procedures Table of Contents Introduction Topics - This chapter discusses: Application ProceduresForms Required Required Inclusions Miscellaneous Procedures Rulings and Determination LettersEffective Date of Exemption Revocation or Modification of Exemption Appeal ProceduresAppeals Office Consideration EO Technical Consideration Administrative Remedies Appeal to Courts Group Exemption LetterCentral Organization Application Procedure Keeping the Group Exemption Letter in Force Events Causing Loss of Group Exemption Introduction If your organization is one of the organizations described in this publication and is seeking recognition of tax-exempt status from the IRS, you should follow the procedures described in this chapter and the instructions that accompany the appropriate application forms. 1040ez online filing free For information on section 501(c)(3) organizations, go to Section 501(c)(3) Organizations chapter 3. 1040ez online filing free If your organization is seeking exemption under one of the other paragraphs of section 501(c), see chapter 4. 1040ez online filing free Topics - This chapter discusses: Application procedures that generally apply to all organizations discussed in this publication, including the application forms; Rulings and determination letters (approvals/disapprovals); Appeal procedures available if an adverse determination letter is proposed; and Group exemption letters. 1040ez online filing free Application Procedures Oral requests for recognition of exemption will not be considered by the IRS. 1040ez online filing free Your application for tax-exempt status must be in writing using the appropriate forms as discussed below. 1040ez online filing free Forms Required If your organization is seeking recognition of exemption from federal income tax, it must use a specific application prescribed by the IRS in Revenue Procedure 2013–9, sec. 1040ez online filing free 3. 1040ez online filing free If your organization is a central organization with exempt status, see Group Exemption Letter , later. 1040ez online filing free All applications must be signed by an authorized individual. 1040ez online filing free Form 1023, Application for Recognition of Exemption. 1040ez online filing free   File Form 1023 if you are seeking recognition of exemption under section: 501(c)(3) Corporations, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports, or prevention of cruelty for children or animals, 501(e) Cooperative hospital service organization, 501(f) Cooperative service organization of operating educational organizations, 501(k) Certain organizations providing child care, 501(n) Charitable risk pools, and 501(q) Credit counseling organizations. 1040ez online filing free Form 1024, Application for Recognition of Exemption Under Section 501(a). 1040ez online filing free    File Form 1024 if you are seeking recognition of exemption under section: 501(c)(2) Title holding corporations, 501(c)(4) Civic leagues, social welfare organizations, 501(c)(5) Labor, agricultural, or horticultural organizations, 501(c)(6) Business leagues, chambers of commerce, etc. 1040ez online filing free , 501(c)(7) Social clubs, 501(c)(8) Fraternal beneficiary societies, orders, or associations, 501(c)(9) Voluntary employees’ beneficiary associations, 501(c)(10) Domestic fraternal societies, orders, etc. 1040ez online filing free , 501(c)(12) Benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies, 501(c)(13) Cemetery companies, 501(c)(15) Mutual insurance companies or associations, 501(c)(17) Trusts providing for the payment of supplemental unemployment compensation benefits, 501(c)(19) A post, organization, auxiliary unit, etc. 1040ez online filing free of past or present members of the Armed Forces of the United States, and 501(c)(25) Title holding corporations or trusts. 1040ez online filing free  Form 8718, User Fee for Exempt Organization Determination Letter Request, must also be sent along with Form 1024. 1040ez online filing free Letter application. 1040ez online filing free   If your organization is seeking recognition of exemption under section 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), or (29), submit a letter application with Form 8718. 1040ez online filing free See Required Inclusions for the information to include with the letter application. 1040ez online filing free Form 1028. 1040ez online filing free   Use Form 1028 if your organization is a farmers’ cooperative seeking recognition of exemption under section 521. 1040ez online filing free You must also submit Form 8718. 1040ez online filing free Form 8871. 1040ez online filing free    Use Form 8871 if you are a political party or campaign committee for a candidate for federal, state or local office seeking to be treated as tax-exempt under section 527. 1040ez online filing free See Political Organization Income Tax Return , later. 1040ez online filing free    Some organizations do not have to use specific application forms. 1040ez online filing free The application your organization must use is specified in the chapter in this publication dealing with your kind of organization. 1040ez online filing free It is also shown in the Organization Reference Chart, later. 1040ez online filing free Power of attorney. 1040ez online filing free   If your organization expects to be represented by an individual such as an attorney, CPA, officer or other person authorized to practice before the IRS, whether in person or by correspondence, you must file a Form 2848 with your exemption application. 1040ez online filing free The power of attorney must specifically authorize an individual to represent your organization. 1040ez online filing free You cannot name an organization, firm, etc. 1040ez online filing free as your representative. 1040ez online filing free Form 2848, Power of Attorney and Declaration of Representative, can be used for this purpose. 1040ez online filing free The categories of individuals who can represent you before the IRS are listed on the form. 1040ez online filing free Non-exemption for terrorist organizations. 1040ez online filing free   An organization that is identified or designated as a terrorist organization within the meaning of section 501(p)(2) is not eligible to apply for recognition of exemption. 1040ez online filing free User fee. 1040ez online filing free   The law requires the payment of a user fee for determination letter requests such as your application for recognition of tax-exempt status. 1040ez online filing free If you are filing Form 1023, user fee information is included in Part XI. 1040ez online filing free If you are required to apply for recognition of exemption by submitting Form 1024, a letter application, etc. 1040ez online filing free and you must pay a user fee, you should use Form 8718 to figure the amount of your user fee and to pay it. 1040ez online filing free Your payment must accompany your request. 1040ez online filing free The IRS will not process a request unless the fee has been paid. 1040ez online filing free    For the current user fee amount and processing time for applications go to IRS. 1040ez online filing free gov and select “Charities and Non-Profits” from the buttons near the top. 1040ez online filing free Then select the underlined link “How to Apply To Be Tax-Exempt” for the latest user fees or I want to check the status of my application for more information. 1040ez online filing free You can also call 1-877-829-5500. 1040ez online filing free Required Inclusions Employer identification number (EIN). 1040ez online filing free   Every exempt organization must have an EIN, whether or not it has any employees. 1040ez online filing free An EIN is required before an exemption application is submitted. 1040ez online filing free Information on how to apply for an EIN by using one of the following methods can be found at Employer ID Numbers (EIN): Online— This is the preferred method for requesting an EIN. 1040ez online filing free The EIN is issued immediately once the application information is validated. 1040ez online filing free By telephone at 1-800-829-4933, from 7:00 a. 1040ez online filing free m. 1040ez online filing free to 7:00 p. 1040ez online filing free m. 1040ez online filing free local time, Monday through Friday. 1040ez online filing free The EIN is provided over the phone to an authorized individual. 1040ez online filing free By mailing or faxing Form SS-4, Application for Employer Identification Number. 1040ez online filing free If the faxed Form SS-4 includes the taxpayer's fax number, a fax will be sent back with the EIN within four (4) business days. 1040ez online filing free    Use only one method for each entity so you do not receive more than one EIN for an entity. 1040ez online filing free   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. 1040ez online filing free Organizing documents. 1040ez online filing free   Your application should include a copy of the organizing or enabling document that is signed by a principal officer or is accompanied by a written declaration signed by an authorized individual certifying that the document is a complete and accurate copy of the original or meets the requirements of a conformed copy. 1040ez online filing free   If your organizing or enabling document are articles of incorporation, include evidence that it was filed and approved by a state official. 1040ez online filing free (For example, a stamped “Filed” copy dated by the Secretary of State is prima facie evidence that it was filed and approved by a state official. 1040ez online filing free ) A copy of the articles of incorporation can also be submitted with a written declaration signed by an authorized individual indicating the copy is complete and was filed and approved by the state, including the date filed. 1040ez online filing free Bylaws. 1040ez online filing free   Bylaws alone are not organizing documents. 1040ez online filing free However, if your organization has adopted bylaws, include a current copy. 1040ez online filing free The bylaws need not be signed if submitted as an attachment. 1040ez online filing free   If your organization's name has been officially changed by an amendment to your organizing instruments, you should also attach a conformed copy of that amendment to your application. 1040ez online filing free    Bylaws may be considered an organizing document only if they are properly structured (includes name, purpose, signatures, and intent to form an organization). 1040ez online filing free Conformed copy. 1040ez online filing free   A conformed copy is a copy that agrees with the original and all amendments to it. 1040ez online filing free If the original document required a signature, the copy should either be signed by a principal officer or, if not signed, be accompanied by a written declaration signed by an authorized officer of the organization. 1040ez online filing free With either option, the officer must certify that the document is a complete and accurate copy of the original. 1040ez online filing free A certificate of incorporation should be approved and dated by an appropriate state official. 1040ez online filing free Attachments. 1040ez online filing free    When submitting attachments, every attachment should show your organization's name and EIN. 1040ez online filing free It should also state that it is an attachment to your application form and identify the part and line item number to which it applies. 1040ez online filing free Original documents. 1040ez online filing free   Do not submit original documents because they become part of the IRS file and cannot be returned. 1040ez online filing free Description of activities. 1040ez online filing free   Your application must include a full description of the proposed activities of your organization, including each of the fundraising activities of a section 501(c)(3) organization and a narrative description of anticipated receipts and contemplated expenditures. 1040ez online filing free When describing the activities in which your organization expects to engage, you must include the standards, criteria, procedures, or other means that your organization adopted or planned for carrying out those activities. 1040ez online filing free   To determine the information you need to provide, you should study the part of this publication that applies to your organization. 1040ez online filing free The appropriate chapter will describe the purposes and activities that your organization must pursue, engage in, and include in your application in order to achieve exempt status. 1040ez online filing free   Often, your organization's articles of organization (or other organizing instruments) contain descriptions of your organization's purposes and activities. 1040ez online filing free   Your application should describe completely and in detail your past, present, and planned activities. 1040ez online filing free Financial data. 1040ez online filing free   You must include in your application financial statements showing your receipts and expenditures and a balance sheet for the current year and the 3 preceding years (or for the number of years your organization was in existence, if less than 4 years). 1040ez online filing free For each accounting period, you must describe the sources of your receipts and the nature of your expenditures. 1040ez online filing free   If you have not yet begun operations, or have operated for less than 1 year, a proposed budget for 2 full accounting periods and a current statement of assets and liabilities will be acceptable. 1040ez online filing free Exempt status established in application. 1040ez online filing free   If your application and its supporting documents show that your organization meets the requirements for tax-exempt status under the Code section you applied, the IRS will issue a favorable determination letter or ruling. 1040ez online filing free Miscellaneous Procedures To help in processing your application, be sure to attach all schedules, statements, and other documents required by the application form. 1040ez online filing free If you do not attach them, you may have to resubmit your application or you may otherwise encounter a delay in processing your application. 1040ez online filing free Incomplete application. 1040ez online filing free   If an application is not complete and does not contain all the required attachments found under Required Inclusions, the IRS may return it to you for completion. 1040ez online filing free The IRS may keep the application and send a letter requesting the missing information if most of the information has been received. 1040ez online filing free   If the IRS returns the application or requests additional information from you, that application will be considered filed on the date the substantially completed application is postmarked, or if no postmark, received at the IRS. 1040ez online filing free   Generally, the user fee will not be refunded if an incomplete application is filed. 1040ez online filing free   Additional information may be requested if necessary to clarify the nature of your organization. 1040ez online filing free Application made under wrong paragraph of section 501(c). 1040ez online filing free   Occasionally, an organization appears to qualify for exemption under a paragraph of section 501(c) that is different from the one for which the organization applied. 1040ez online filing free If the application was made on Form 1024, which applies to more than one paragraph of section 501(c), the organization can be recognized as exempt under any paragraph to which the form applies if the organization has agreed to have its application considered under that paragraph. 1040ez online filing free It must also supply any additional information required for the application under the new paragraph. 1040ez online filing free Different application form needed. 1040ez online filing free   If a different application form is required for your organization, the IRS will so advise your organization and will provide the appropriate application form for your convenience in reapplying under that paragraph, if you wish to do so. 1040ez online filing free Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application. 1040ez online filing free If your reply is not received within a limited time, your application will be processed only for the paragraph under which you originally applied. 1040ez online filing free   When a specific application form is needed for the paragraph under which your organization qualifies, that form is required before a letter recognizing exemption can be issued. 1040ez online filing free This includes cases in which a determination letter is modified to recognize an organization's exempt status under a paragraph other than the paragraph under which it originally established exemption. 1040ez online filing free IRS responses. 1040ez online filing free   Organizations that submit a complete application will receive an acknowledgment from the IRS. 1040ez online filing free Others will receive a letter requesting more information or returning an incomplete application. 1040ez online filing free Applicants also will be notified if the application is forwarded to EO Technical Office for consideration. 1040ez online filing free These letters will be sent out as soon as possible after receipt of the organization's application. 1040ez online filing free Withdrawal of application. 1040ez online filing free   An application may be withdrawn at any time before the issuance of a ruling or determination letter upon the written request of a principal officer or authorized representative of your organization. 1040ez online filing free However, the withdrawal will not prevent the information contained in the application from being used by the IRS in any subsequent examination of your organization's returns. 1040ez online filing free The information forwarded with an application will not be returned to your organization and, generally, when an application is withdrawn, the user fee paid will not be refunded. 1040ez online filing free Requests for withholding of information from the public. 1040ez online filing free   The law requires many exempt organizations and private foundations to make their application forms and annual information returns available for public inspection. 1040ez online filing free The law also requires the IRS to make available for public inspection, in accordance with section 6104 and the related regulations, your approved application for recognition of exemption (including any papers submitted in support of the application) and the ruling or determination letter (discussed later, under Rulings and Determination Letters . 1040ez online filing free )   Any information submitted in the application or in support of it that relates to any trade secret, patent, process, style of work, or apparatus, upon request, can be withheld from public inspection if the IRS determines that the disclosure of such information would adversely affect the organization. 1040ez online filing free Your request must: Identify the material to be withheld (the document, page, paragraph, and line) by clearly marking it “Not Subject To Public Inspection. 1040ez online filing free ” Include the reasons for your organization's position that the information is of the type that can be withheld from public inspection. 1040ez online filing free Be filed with the office where your organization files the documents in which the material to be withheld is contained. 1040ez online filing free Where to file. 1040ez online filing free   Send your application for exempt status and Form 8718, (if required) to: Internal Revenue Service PO Box 12192 Covington, KY 41012-0192   Your application will be considered by EO Determinations, who will either issue a favorable determination letter to your organization, issue an adverse determination letter denying the exempt status claimed in the application, or refer the case to the Exempt Organizations Technical Office (EO Technical). 1040ez online filing free    Form 8940, Request for Miscellaneous Determination. 1040ez online filing free You can request miscellaneous determinations under sections 507, 509(a), 4940, 4942, 4945, and 6033 with Form 8940. 1040ez online filing free Nonexempt charitable trusts also file Form 8940 for an initial determination of section 509(a)(3) status or change to their type. 1040ez online filing free See Form 8940 and instructions for more information. 1040ez online filing free Requests other than applications. 1040ez online filing free Requests other than applications for recognition of exemption or Form 8940 (for example, requests for rulings involving feeder organizations, application of excise taxes to activities of private foundations, taxation of unrelated business income, etc. 1040ez online filing free ) should be sent to: Internal Revenue Service  Attention: EO Letter Rulings PO Box 27720 McPherson Station Washington, DC 20038 These requests, similar to applications for recognition of exemption previously discussed, must be accompanied by the appropriate user fee. 1040ez online filing free The schedule for user fees, including those for requests other than applications, can be found in Revenue Procedure 2013-8, 2013-1 I. 1040ez online filing free R. 1040ez online filing free B. 1040ez online filing free 237. 1040ez online filing free Referral to EO Technical. 1040ez online filing free   EO Determinations will refer to EO Technical any exempt organization issue concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. 1040ez online filing free EO Determinations can request technical advice on any technical or procedural question that cannot be resolved on the basis of law, regulations, or a clearly applicable revenue ruling or other published precedent. 1040ez online filing free An organization can request that an issue be referred to EO Technical for technical advice if it feels that a lack of uniformity exists as to the disposition of the issue or if an issue is so unusual or complex as to warrant consideration by EO Technical. 1040ez online filing free If a determination letter is issued based on technical advice from EO Technical regarding qualification for exemption or foundation status, no further administrative appeal is available on the issue that was the subject of technical advice. 1040ez online filing free Reminder. 1040ez online filing free   The law requires payment of a user fee for determination letter requests. 1040ez online filing free Go to IRS. 1040ez online filing free gov/Charities and select Current User Fees-Exempt Organizations to find the required payment. 1040ez online filing free Payment must accompany each request. 1040ez online filing free Rulings and Determination Letters Elimination of the advance public charity status. 1040ez online filing free   New regulations eliminate the advance ruling process for a section 501(c)(3) organization. 1040ez online filing free Under the new regulations, a new section 501(c)(3) organization will be classified as a publicly supported organization and not a private foundation if it can show when it applies for tax-exempt status that it reasonably can be expected to be publicly supported. 1040ez online filing free The new rules no longer require the organization to file Form 8734, Support Schedule for Advance Ruling Period, after completing its first 5 tax years. 1040ez online filing free See Elimination of the Advance Ruling Process . 1040ez online filing free An organization must describe fully the activities in which it expects to engage. 1040ez online filing free This includes standards, procedures, or other means adopted or planned by the organization for carrying out its activities, expected sources of funds, and the nature of its contemplated expenses. 1040ez online filing free When an organization does not supply the information previously mentioned under Application Procedures , or fails to furnish a sufficiently detailed description of its proposed activities to permit a conclusion that it will clearly be exempt, a proposed adverse determination letter or ruling may be issued. 1040ez online filing free Adverse determination. 1040ez online filing free   A proposed adverse ruling or determination letter will be issued to an organization that has not provided sufficiently detailed information to establish that it qualifies for exemption or if the information provided establishes that it does not qualify for exemption. 1040ez online filing free An organization can appeal a proposed adverse ruling or determination letter. 1040ez online filing free See Appeal Procedures , later. 1040ez online filing free Effective Date of Exemption A ruling or determination letter recognizing exemption is usually effective as of the date of formation of an organization if, during the period before the date of the ruling or determination letter, its purposes and activities were those required by the law. 1040ez online filing free (See Application for Recognition of Exemption in chapter 3 for the special rule for organizations applying for recognition of exemption under section 501(c)(3). 1040ez online filing free ) Upon obtaining recognition of exemption, the organization can file a claim for a refund of income taxes paid for the period for which its exempt status is recognized. 1040ez online filing free If an organization is required to alter its activities or substantially amend its charter to qualify, the ruling or determination letter recognizing exemption will be effective as of the date specified in the letter. 1040ez online filing free If a nonsubstantive amendment is made, such as correction of a clerical error in the enabling instrument or the addition of a dissolution clause, exemption will ordinarily be recognized as of the date of formation if the activities of the organization before the ruling or determination are consistent with the exemption requirements. 1040ez online filing free A ruling or determination letter recognizing exemption cannot be relied on if there is a material change, inconsistent with exemption, in the character, the purpose, or the method of operation of the organization. 1040ez online filing free Also, a ruling or determination letter cannot be relied on if it is based on any inaccurate material factual representations. 1040ez online filing free Revocation or Modification of Exemption A ruling or determination letter recognizing exemption may be revoked or modified by: A notice to the organization to which the ruling or determination letter originally was issued, Enactment of legislation or ratification of a tax treaty, A decision of the United States Supreme Court, Issuance of temporary or final regulations, or Issuance of a revenue ruling, a revenue procedure, or other statement published in the Internal Revenue Bulletin or Cumulative Bulletin. 1040ez online filing free When revocation takes effect. 1040ez online filing free   If the organization omitted or misstated a material fact, operated in a manner materially different from that originally represented, or, with regard to organizations to which section 503 applies, engaged in a prohibited transaction (such as diverting corpus or income from its exempt purpose), the revocation or modification may be retroactive. 1040ez online filing free Material change in organization. 1040ez online filing free   If there is a material change, inconsistent with exemption, in the character, purpose, or method of operation of the organization, revocation or modification will ordinarily take effect as of the date of that material change. 1040ez online filing free Relief from retroactivity. 1040ez online filing free   If a ruling or determination letter was issued in error or the IRS changed its position after issuing a letter or ruling, and if section 7805(b) relief is granted, retroactivity of the revocation or modification ordinarily will be limited to a date not earlier than that on which the original ruling or determination letter was modified or revoked. 1040ez online filing free For more information on requesting section 7805(b) relief, see Revenue Procedure 2013-4, 2013-1 I. 1040ez online filing free R. 1040ez online filing free B. 1040ez online filing free 126, sec. 1040ez online filing free 13 (or later update). 1040ez online filing free Foundations. 1040ez online filing free   The determination of the effective date is the same for the revocation or modification of foundation status or operating foundation status unless the effective date is expressly covered by statute or regulations. 1040ez online filing free Written notice. 1040ez online filing free   If an EO area manager concludes, as a result of examining an information return or considering information from any other source, that a ruling or determination letter should be revoked or modified, the organization will be advised in writing of the proposed action and the reasons for it. 1040ez online filing free   The organization will also be advised of its right to protest the proposed action by requesting Appeals Office consideration. 1040ez online filing free The appeal procedures are discussed next. 1040ez online filing free Appeal Procedures If your organization applies for tax-exempt status and EO Determination decides your organization does not qualify, your organization will be advised of its rights to protest the determination by requesting Appeals Office consideration. 1040ez online filing free This process does not apply to determinations issued by EO Technical. 1040ez online filing free Your organization must submit a statement of its views fully explaining its reasoning. 1040ez online filing free The statement must be submitted within 30 days from the date of the adverse determination letter and must state whether it wishes Appeals Office consideration. 1040ez online filing free Representation. 1040ez online filing free   A principal officer or trustee can represent an organization at any level of appeal within the IRS. 1040ez online filing free Also, an attorney, certified public accountant, or individual enrolled to practice before the IRS can represent the organization. 1040ez online filing free   If the organization's representative attends a conference without a principal officer or trustee, the representative must file a proper power of attorney or a tax information authorization before receiving or inspecting confidential information. 1040ez online filing free Form 2848 or Form 8821, Tax Information Authorization, as appropriate (or any other properly written power of attorney or authorization), can be used for this purpose. 1040ez online filing free These forms can be obtained from the IRS. 1040ez online filing free For more information, see Publication 947, Practice Before the IRS and Power of Attorney. 1040ez online filing free Appeals Office Consideration EO Determinations will consider the statement protesting and appealing (hereinafter appealing) the adverse determination and decide if the information affects its determination. 1040ez online filing free If the appeal does not provide a basis to reconsider its adverse determination, it will forward the appeal and case file to the Appeals Office. 1040ez online filing free For more information about the role of the Appeals Office, see Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues. 1040ez online filing free The appeal should include the following information. 1040ez online filing free The organization's name, address, daytime telephone number, and employer identification number. 1040ez online filing free A statement that the organization wants to protest the determination. 1040ez online filing free A copy of the letter showing the determination you disagree with, or the date and symbols on the determination letter. 1040ez online filing free A statement of facts supporting the organization's position in any contested factual issue. 1040ez online filing free A statement outlining the law or other authority the organization is relying on. 1040ez online filing free A statement as to whether a conference at the Appeals Office is desired. 1040ez online filing free The statement of facts in item 4 must be declared true under penalties of perjury. 1040ez online filing free This may be done by adding to the protest the following signed declaration:   “Under penalties of perjury, I declare that I have examined the statement of facts presented in this protest and in any accompanying schedules and statements and, to the best of my knowledge and belief, it is true, correct, and complete. 1040ez online filing free ”           Signature. 1040ez online filing free   If the organization's representative submits the appeal, a substitute declaration must be included, stating: That the representative prepared the appeal and accompanying documents, and Whether the representative knows personally that the statements of fact contained in the appeal and accompanying documents are true and correct. 1040ez online filing free Be sure the appeal contains all of the information requested. 1040ez online filing free Incomplete appeals will be returned for completion. 1040ez online filing free If a conference is requested, it will be held at the Appeals Office, unless the organization requests that the meeting be held at a field office convenient to both parties. 1040ez online filing free The Appeals Office, after considering the organization's appeal as well as information presented in any conference held, will notify the organization of its decision and issue an appropriate determination letter. 1040ez online filing free An adverse decision can be appealed to the courts (discussed later). 1040ez online filing free The Appeals Office must request technical advice from EO Technical on any exempt organization issue concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. 1040ez online filing free If an organization believes that its case involves such an issue, it should ask the Appeals Office to request technical advice. 1040ez online filing free Any determination letter issued on the basis of technical advice from EO Technical cannot be appealed to the Appeals Office for those issues that were the subject of the technical advice from EO Technical. 1040ez online filing free EO Technical Consideration If an application is referred to EO Technical for issuance of a ruling and an adverse ruling is issued, the organization will be informed of the basis for the conclusion, its right to file a protest within 30 days, and its right to have a conference with EO Technical. 1040ez online filing free Administrative Remedies In the case of an application under section 501(c)(3), all of the following actions, called administrative remedies, must be completed by your organization before an unfavorable ruling or determination letter from the IRS can be appealed to the courts. 1040ez online filing free The filing of a substantially completed application Form 1023 or group exemption request under section 501(c)(3) (described earlier in this chapter) or the filing of a request for a determination of foundation status (see Private Foundations and Public Charities in chapter 3). 1040ez online filing free In the case of a late-filed application, requesting relief under Regulations section 301. 1040ez online filing free 9100 regarding applications for extensions of time for making an election or application for relief from tax (see Application for Recognition of Exemption in chapter 3). 1040ez online filing free The timely submission of all additional information requested to perfect an exemption application or request for determination of private foundation status. 1040ez online filing free Exhaustion of all administrative appeals available within the IRS, including protest of an adverse ruling issued by EO Technical in the case of an exemption application. 1040ez online filing free The actions just described will not be considered completed until the IRS has had a reasonable time to act upon the appeal or protest, as the case may be. 1040ez online filing free An organization will not be considered to have exhausted its administrative remedies before the earlier of: The completion of the steps just listed and the sending by certified or registered mail of a notice of final determination, or The expiration of the 270-day period in which the IRS has not issued a notice of final determination and the organization has taken, in a timely manner, all reasonable steps to secure a ruling or determination. 1040ez online filing free 270-day period. 1040ez online filing free   The 270-day period will be considered by the IRS to begin on the date a substantially completed Form 1023 or group exemption request is sent to the IRS. 1040ez online filing free See Application Procedures , earlier, for information needed to complete Form 1023. 1040ez online filing free   If the application does not contain all of the required items, it will not be further processed and may be returned to the applicant for completion. 1040ez online filing free The 270-day period, in this event, will not be considered as starting until the date the application is remailed to the IRS with the requested information, or, if a postmark is not evident, on the date the IRS receives a substantially completed application. 1040ez online filing free Appeal to Courts If the IRS issues an unfavorable determination letter or ruling to your organization and you have exhausted all the administrative remedies just discussed, your organization can seek judicial remedies. 1040ez online filing free For example, if your organization has paid the tax resulting from the adverse determination and met all other statutory prerequisites, it can file suit for a refund in a U. 1040ez online filing free S. 1040ez online filing free District Court or the U. 1040ez online filing free S. 1040ez online filing free Court of Federal Claims. 1040ez online filing free Or, if your organization elected not to pay the tax deficiency resulting from the adverse determination and met all other statutory prerequisites, it can file suit for a redetermination of the tax deficiencies in the United States Tax Court. 1040ez online filing free For more information on these types of suits, get Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. 1040ez online filing free In certain situations, your organization can file suit for a declaratory judgment in the U. 1040ez online filing free S. 1040ez online filing free District Court for the District of Columbia, the U. 1040ez online filing free S. 1040ez online filing free Court of Federal Claims, or the U. 1040ez online filing free S. 1040ez online filing free Tax Court. 1040ez online filing free This remedy is available if your organization received an adverse notice of final determination, or if the IRS failed to make a timely determination on your initial or continuing qualification or classification as an exempt organization. 1040ez online filing free However, your exempt status claim must be as: An organization qualifying under section 501(c)(3), An organization to which a deduction for a contribution is allowed under section 170(c)(2), An organization that is a private foundation under section 509(a), A private operating foundation under section 4942(j)(3), or A cooperative organization that is exempt from tax under section 521. 1040ez online filing free Adverse notice of final determination. 1040ez online filing free   The adverse notice of final determination referred to above is a ruling or determination letter sent by certified or registered mail holding that your organization: Is not described in section 501(c)(3) or section 170(c)(2), Is a private foundation as defined in section 4942(j)(3), or Is a public charity described in a part of section 509(a) or section 170(b)(1)(A) other than the part under which your organization requested classification. 1040ez online filing free Favorable court rulings - IRS procedure. 1040ez online filing free   If a suit results in a final determination that your organization is exempt from tax, the IRS will issue a favorable ruling or determination letter, provided your organization has filed an application for exemption and submitted a statement that the underlying facts and applicable law are the same as in the period considered by the court. 1040ez online filing free Group Exemption Letter A group exemption letter is a ruling or determination letter issued to a central organization recognizing on a group basis the exemption under section 501(c) of subordinate organizations on whose behalf the central organization has applied for recognition of exemption. 1040ez online filing free A central organization is an organization that has one or more subordinates under its general supervision or control. 1040ez online filing free A subordinate organization is a chapter, local, post, or unit of a central organization. 1040ez online filing free A central organization may be a subordinate itself, such as a state organization that has subordinate units and is itself affiliated with a national (central) organization. 1040ez online filing free A subordinate organization may or may not be incorporated, but it must have an organizing document. 1040ez online filing free A subordinate that is organized and operated in a foreign country cannot be included in a group exemption letter. 1040ez online filing free A subordinate described in section 501(c)(3) cannot be included in a group exemption letter if it is a private foundation described in section 509(a). 1040ez online filing free If your organization is a subordinate controlled by a central organization (for example, a church, a veterans' organization, or a fraternal organization), you should check with the central organization to see if it has been issued a group exemption letter that covers your organization. 1040ez online filing free If it has, you do not have to file a separate application unless your organization no longer wants to be included in the group exemption letter. 1040ez online filing free If the group exemption letter does not cover your organization, ask your central organization about being included in the next annual group ruling update that it submits to the IRS. 1040ez online filing free Central Organization Application Procedure If your organization is a central organization with affiliated subordinates under its control, it can apply for a group exemption letter for its subordinates, provided it has obtained recognition of its own exemption before or concurrently with the group exemption. 1040ez online filing free You should make the application for such subordinates by letter instead of submitting either Form 1023 or 1024. 1040ez online filing free This procedure relieves each of the subordinates covered by a group exemption letter from filing its own application. 1040ez online filing free A central organization obtains its own recognition of exemption by sending its application to the IRS address shown on Form 8718 or Form 1023. 1040ez online filing free If the central organization has previously obtained recognition of its own exemption, it must indicate its employer identification number and the date of the letter recognizing its exemption. 1040ez online filing free It need not forward documents already submitted. 1040ez online filing free However, if it has not already done so, the central organization must submit a copy of any amendment to its governing instruments or internal regulations as well as any information about changes in its character, purposes, or method of operation. 1040ez online filing free Employer identification number. 1040ez online filing free   The central organization must have an EIN before it submits a completed exemption or group exemption application. 1040ez online filing free Each subordinate must have its own EIN, even if it has no employees. 1040ez online filing free When submitting its group exemption application, the central organization must provide an EIN for each subordinate organization. 1040ez online filing free Information required for subordinate organizations. 1040ez online filing free   In addition to the information required to obtain recognition of its own exemption, the central organization must submit information for those subordinates to be included in the group exemption letter. 1040ez online filing free The information should be forwarded in a letter signed by a principal officer of the central organization setting forth or including as attachments the following. 1040ez online filing free Information verifying that the subordinates: Are affiliated with the central organization at the close of its annual accounting period; Are subject to its general supervision or control; Are all eligible to qualify for exemption under the same paragraph of section 501(c), though not necessarily the paragraph under which the central organization itself is exempt; Are not private foundations if the application for a group exemption letter involves section 501(c)(3); Are all on the same accounting period as the central organization if they are to be included in group returns; and Are organizations that have been formed within the 15-month period preceding the date of submission of the group exemption application if they are claiming section 501(c)(3) status and are subject to the requirements of section 508(a) and wish to be recognized as exempt from their dates of creation (a group exemption letter may be issued covering subordinates, one or more of which have not been organized within the 15-month period preceding the date of submission, if all subordinates are willing to be recognized as exempt only from the date of application). 1040ez online filing free A detailed description of the purposes and activities of the subordinates, including the sources of receipts and the nature of expenditures. 1040ez online filing free A sample copy of a uniform governing instrument (such as a charter or articles of association) adopted by the subordinates, or, in its absence, copies of representative instruments. 1040ez online filing free An affirmation to the effect that, to the best of the officer's knowledge, the purposes and activities of the subordinates are as stated in (2) and (3), above. 1040ez online filing free A statement that each of the subordinates has provided a written authorization to the central organization, signed by an authorized officer of the subordinate, agreeing to be included in the group exemption (see also New 501(c)(3) organizations that want to be included , later in this section). 1040ez online filing free A list of subordinates to be included in the group exemption letter to which the IRS has issued an outstanding ruling or determination letter relating to exemption. 1040ez online filing free If the application for a group exemption letter involves section 501(c)(3) and is subject to the provisions of the Code requiring that it give timely notice that it is not a private foundation (see Private Foundations in chapter 3), an affirmation to the effect that, to the best of the officer's knowledge and belief, no subordinate to be included in the group exemption letter is a private foundation as defined in section 509(a). 1040ez online filing free For each subordinate that is a school claiming exemption under section 501(c)(3), the information required by Revenue Ruling 71-447, 1971-2 C. 1040ez online filing free B. 1040ez online filing free 230 and Revenue Procedure 75-50, 1975-2 C. 1040ez online filing free B. 1040ez online filing free 587 (these requirements are fully described in chapter 3, under Private Schools ; see also Schedule B, Form 1023). 1040ez online filing free For any school affiliated with a church, the information to show that the provisions of Revenue Ruling 75-231, 1975-1 C. 1040ez online filing free B. 1040ez online filing free 158, have been met. 1040ez online filing free A list of the names, mailing addresses, actual addresses if different, and EINs of subordinates to be included in the group exemption letter. 1040ez online filing free A current directory of subordinates may be furnished instead of the list if it includes the required information and if the subordinates not to be included in the group exemption letter are identified. 1040ez online filing free New 501(c)(3) organizations that want to be included. 1040ez online filing free   A new organization, described in section 501(c)(3), that wants to be included in a group exemption letter must submit its authorization (as explained in item number 5, earlier, under Information required for subordinate organizations ) to the central organization before the end of the 15th month after it was formed in order to satisfy the requirement of section 508(a). 1040ez online filing free The central organization must also include this subordinate in its next annual submission of information, as discussed later, under Information Required Annually . 1040ez online filing free Keeping the Group Exemption Letter in Force Continued effectiveness of a group exemption letter is based on the following conditions. 1040ez online filing free The continued existence of the central organization. 1040ez online filing free The continued qualification of the central organization for exemption under section 501(c). 1040ez online filing free The submission by the central organization of the information regarding its subordinate organizations that is required annually (described under Information Required Annually). 1040ez online filing free The annual filing of an information return (Form 990, for example) by the central organization if required. 1040ez online filing free The continued effectiveness of a group exemption letter as to a particular subordinate is based on these four conditions, as well as on the continued conformity by the subordinate to the requirements for inclusion in a group exemption letter, the authorization for inclusion, and the annual filing of any required information return for the subordinate. 1040ez online filing free Information Required Annually To maintain a group exemption letter, the central organization must submit annually, at least 90 days before the close of its annual accounting period, all of the following information. 1040ez online filing free Information about all changes in the purposes, character, or method of operation of the subordinates included in the group exemption letter. 1040ez online filing free A separate list (that includes the names, mailing addresses, actual addresses if different, and EINs of the affected subordinates) for each of the three following categories. 1040ez online filing free Subordinates that have changed their names or addresses during the year. 1040ez online filing free Subordinates no longer to be included in the group exemption letter because they no longer exist or have disaffiliated from or withdrawn their authorization to the central organization. 1040ez online filing free Subordinates to be added to the group exemption letter because they are newly organized or affiliated or because they have recently authorized the central organization to include them. 1040ez online filing free An annotated directory of subordinates will not be accepted for this purpose. 1040ez online filing free If there were none of the above changes, the central organization must submit a statement to that effect. 1040ez online filing free The same information about new subordinates that was required in the initial application for group exemption. 1040ez online filing free (This information is listed in items 1 through 10, under Information required for subordinate organizations. 1040ez online filing free , earlier. 1040ez online filing free ) If a new subordinate does not differ in any material respects from the subordinates included in the application for group exemption, however, a statement to this effect may be submitted in lieu of detailed information. 1040ez online filing free The organization should send this information to:   Ogden Service Center  Mail Stop 6271 Ogden, UT 84404-4749 Submitting the required information annually does not relieve the central organization or any of its subordinates of the duty to submit any other information that may be required by an EO area manager to determine whether the conditions for continued exemption are being met. 1040ez online filing free Events Causing Loss of Group Exemption A group exemption letter no longer has effect, for either a particular subordinate or the group as a whole, when: The central organization notifies the IRS that it is going out of existence, The central organization notifies the IRS, by its annual submission or otherwise, that any of its subordinates will no longer fulfill the conditions for continued effectiveness, explained earlier, or The IRS notifies the central organization or the affected subordinate that the group exemption letter will no longer have effect for some or all of the group because the conditions for continued effectiveness of a group exemption letter have not been fulfilled. 1040ez online filing free When notice is given under any of these three conditions, the IRS will no longer recognize the exempt status of the affected subordinates until they file separate applications on their own behalf or the central organization files complete supporting information for their reinclusion in the group exemption at the time of its annual submission. 1040ez online filing free However, when the notice is given by the IRS and the withdrawal of recognition is based on the failure of the organization to comply with the requirements for recognition of tax-exempt status under the particular subsection of section 501(c), the revocation will ordinarily take effect as of the date of that failure. 1040ez online filing free The notice, however, will be given only after the appeal procedures described earlier in this chapter are completed. 1040ez online filing free Prev  Up  Next   Home   More Online Publications