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2012 Income Tax Booklet

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2012 Income Tax Booklet

2012 income tax booklet 3. 2012 income tax booklet   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. 2012 income tax booklet Form 4797. 2012 income tax booklet Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. 2012 income tax booklet Granting the right to remove deposits. 2012 income tax booklet Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. 2012 income tax booklet You must report the income from all the different sources on your tax return, unless it is excluded by law. 2012 income tax booklet Where you report the income on your tax return depends on its source. 2012 income tax booklet This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. 2012 income tax booklet For information on where to report other income, see the Instructions for Form 1040, U. 2012 income tax booklet S. 2012 income tax booklet Individual Income Tax Return. 2012 income tax booklet Accounting method. 2012 income tax booklet   The rules discussed in this chapter assume you use the cash method of accounting. 2012 income tax booklet Under the cash method, you generally include an item of income in gross income in the year you receive it. 2012 income tax booklet See Cash Method in chapter 2. 2012 income tax booklet   If you use an accrual method of accounting, different rules may apply to your situation. 2012 income tax booklet See Accrual Method in chapter 2. 2012 income tax booklet Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. 2012 income tax booklet Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. 2012 income tax booklet Use this schedule to figure the net profit or loss from regular farming operations. 2012 income tax booklet Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. 2012 income tax booklet This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. 2012 income tax booklet It also includes income from the sale of crop shares if you materially participate in producing the crop. 2012 income tax booklet See Rents (Including Crop Shares) , later. 2012 income tax booklet Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. 2012 income tax booklet Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. 2012 income tax booklet Land. 2012 income tax booklet Depreciable farm equipment. 2012 income tax booklet Buildings and structures. 2012 income tax booklet Livestock held for draft, breeding, sport, or dairy purposes. 2012 income tax booklet Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. 2012 income tax booklet Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. 2012 income tax booklet Sales of Farm Products Where to report. 2012 income tax booklet    Table 3-1 shows where to report the sale of farm products on your tax return. 2012 income tax booklet Schedule F. 2012 income tax booklet   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. 2012 income tax booklet This includes money and the fair market value of any property or services you receive. 2012 income tax booklet When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). 2012 income tax booklet See chapter 6 for information on the basis of assets. 2012 income tax booklet You generally report these amounts on Schedule F for the year you receive payment. 2012 income tax booklet Example. 2012 income tax booklet In 2012, you bought 20 feeder calves for $11,000 for resale. 2012 income tax booklet You sold them in 2013 for $21,000. 2012 income tax booklet You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. 2012 income tax booklet Form 4797. 2012 income tax booklet   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. 2012 income tax booklet In either case, you should always report these sales on Form 4797 instead of Schedule F. 2012 income tax booklet See Livestock under Ordinary or Capital Gain or Loss in chapter 8. 2012 income tax booklet Animals you do not hold primarily for sale are considered business assets of your farm. 2012 income tax booklet Table 3-1. 2012 income tax booklet Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. 2012 income tax booklet   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. 2012 income tax booklet This applies even if your agent pays you in a later year. 2012 income tax booklet For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. 2012 income tax booklet Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. 2012 income tax booklet You must meet all the following conditions to qualify. 2012 income tax booklet Your principal trade or business is farming. 2012 income tax booklet You use the cash method of accounting. 2012 income tax booklet You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. 2012 income tax booklet The weather-related condition caused an area to be designated as eligible for assistance by the federal government. 2012 income tax booklet Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. 2012 income tax booklet The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. 2012 income tax booklet A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. 2012 income tax booklet See Other Involuntary Conversions in chapter 11. 2012 income tax booklet Usual business practice. 2012 income tax booklet   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. 2012 income tax booklet Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. 2012 income tax booklet If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. 2012 income tax booklet Connection with affected area. 2012 income tax booklet   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. 2012 income tax booklet However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. 2012 income tax booklet This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. 2012 income tax booklet Classes of livestock. 2012 income tax booklet   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. 2012 income tax booklet Do not separate animals into classes based on age, sex, or breed. 2012 income tax booklet Amount to be postponed. 2012 income tax booklet   Follow these steps to figure the amount of gain to be postponed for each class of animals. 2012 income tax booklet Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. 2012 income tax booklet For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. 2012 income tax booklet Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. 2012 income tax booklet Example. 2012 income tax booklet You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. 2012 income tax booklet As a result of drought, you sold 135 head during 2012. 2012 income tax booklet You realized $70,200 from the sale. 2012 income tax booklet On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. 2012 income tax booklet The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. 2012 income tax booklet How to postpone gain. 2012 income tax booklet   To postpone gain, attach a statement to your tax return for the year of the sale. 2012 income tax booklet The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. 2012 income tax booklet A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). 2012 income tax booklet Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. 2012 income tax booklet A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. 2012 income tax booklet The number of animals sold in each of the 3 preceding years. 2012 income tax booklet The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. 2012 income tax booklet The total number of animals sold and the number sold because of weather-related conditions during the tax year. 2012 income tax booklet A computation, as described above, of the income to be postponed for each class of livestock. 2012 income tax booklet   Generally, you must file the statement and the return by the due date of the return, including extensions. 2012 income tax booklet However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. 2012 income tax booklet For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). 2012 income tax booklet Attach the statement to the amended return and write “Filed pursuant to section 301. 2012 income tax booklet 9100-2” at the top of the amended return. 2012 income tax booklet File the amended return at the same address you filed the original return. 2012 income tax booklet Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. 2012 income tax booklet Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. 2012 income tax booklet However, if you materially participate in farming operations on the land, the rent is farm income. 2012 income tax booklet See Landlord Participation in Farming in chapter 12. 2012 income tax booklet Pasture income and rental. 2012 income tax booklet   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. 2012 income tax booklet You must enter it as Other income on Schedule F. 2012 income tax booklet If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. 2012 income tax booklet Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. 2012 income tax booklet It does not matter whether you use the cash method of accounting or an accrual method of accounting. 2012 income tax booklet If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. 2012 income tax booklet See Landlord Participation in Farming in chapter 12. 2012 income tax booklet Report the rental income on Schedule F. 2012 income tax booklet If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). 2012 income tax booklet The income is not included in self-employment income. 2012 income tax booklet Crop shares you use to feed livestock. 2012 income tax booklet   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. 2012 income tax booklet You must include the fair market value of the crop shares in income at that time. 2012 income tax booklet You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. 2012 income tax booklet Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. 2012 income tax booklet See  chapter 12. 2012 income tax booklet Crop shares you give to others (gift). 2012 income tax booklet   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. 2012 income tax booklet You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. 2012 income tax booklet Example. 2012 income tax booklet A tenant farmed part of your land under a crop-share arrangement. 2012 income tax booklet The tenant harvested and delivered the crop in your name to an elevator company. 2012 income tax booklet Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. 2012 income tax booklet They sell their crop shares in the following year and the elevator company makes payments directly to your children. 2012 income tax booklet In this situation, you are considered to have received rental income and then made a gift of that income. 2012 income tax booklet You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. 2012 income tax booklet Crop share loss. 2012 income tax booklet   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. 2012 income tax booklet See Publication 925 for information on these rules. 2012 income tax booklet Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. 2012 income tax booklet However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. 2012 income tax booklet See Cost-Sharing Exclusion (Improvements) , later. 2012 income tax booklet Report the agricultural program payment on the appropriate line of Schedule F, Part I. 2012 income tax booklet Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. 2012 income tax booklet However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. 2012 income tax booklet Claim the deduction on Schedule F for the year of repayment or reduction. 2012 income tax booklet Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. 2012 income tax booklet However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. 2012 income tax booklet You do not need approval from the IRS to adopt this method of reporting CCC loans. 2012 income tax booklet Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. 2012 income tax booklet However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. 2012 income tax booklet For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. 2012 income tax booklet Revenue Procedure 2008-52, 2008-36 I. 2012 income tax booklet R. 2012 income tax booklet B. 2012 income tax booklet 587, is available at  www. 2012 income tax booklet irs. 2012 income tax booklet gov/irb/2008-36_IRB/ar09. 2012 income tax booklet html. 2012 income tax booklet You can request income tax withholding from CCC loan payments you receive. 2012 income tax booklet Use Form W-4V, Voluntary Withholding Request. 2012 income tax booklet See chapter 16 for information about ordering the form. 2012 income tax booklet To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. 2012 income tax booklet Attach a statement to your return showing the details of the loan. 2012 income tax booklet You must file the statement and the return by the due date of the return, including extensions. 2012 income tax booklet If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). 2012 income tax booklet Attach the statement to the amended return and write “Filed pursuant to section 301. 2012 income tax booklet 9100-2” at the top of the return. 2012 income tax booklet File the amended return at the same address you filed the original return. 2012 income tax booklet When you make this election, the amount you report as income becomes your basis in the commodity. 2012 income tax booklet See chapter 6 for information on the basis of assets. 2012 income tax booklet If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. 2012 income tax booklet If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. 2012 income tax booklet If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. 2012 income tax booklet If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. 2012 income tax booklet Form 1099-A. 2012 income tax booklet   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. 2012 income tax booklet “CCC” should be shown in box 6. 2012 income tax booklet The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. 2012 income tax booklet Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. 2012 income tax booklet If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. 2012 income tax booklet Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. 2012 income tax booklet Market gain should be reported as follows. 2012 income tax booklet If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. 2012 income tax booklet However, adjust the basis of the commodity for the amount of the market gain. 2012 income tax booklet If you did not include the CCC loan in income in the year received, include the market gain in your income. 2012 income tax booklet The following examples show how to report market gain. 2012 income tax booklet Example 1. 2012 income tax booklet Mike Green is a cotton farmer. 2012 income tax booklet He uses the cash method of accounting and files his tax return on a calendar year basis. 2012 income tax booklet He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. 2012 income tax booklet In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. 2012 income tax booklet 00 per pound). 2012 income tax booklet In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. 2012 income tax booklet 50 per pound (lower than the loan amount). 2012 income tax booklet Later in 2013, he sold the cotton for $2,500. 2012 income tax booklet The market gain on the redemption was $. 2012 income tax booklet 50 ($2. 2012 income tax booklet 00 – $1. 2012 income tax booklet 50) per pound. 2012 income tax booklet Mike realized total market gain of $500 ($. 2012 income tax booklet 50 x 1,000 pounds). 2012 income tax booklet How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. 2012 income tax booklet Included CCC loan. 2012 income tax booklet   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. 2012 income tax booklet The $500 market gain is not recognized on the redemption. 2012 income tax booklet He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. 2012 income tax booklet   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. 2012 income tax booklet His gain from the sale is $1,000 ($2,500 – $1,500). 2012 income tax booklet He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. 2012 income tax booklet Excluded CCC loan. 2012 income tax booklet   Mike has income of $500 from market gain in 2013. 2012 income tax booklet He reports it on Schedule F, lines 4a and 4b. 2012 income tax booklet His basis in the cotton is zero, so his gain from its sale is $2,500. 2012 income tax booklet He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. 2012 income tax booklet Example 2. 2012 income tax booklet The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. 2012 income tax booklet Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. 2012 income tax booklet In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. 2012 income tax booklet How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. 2012 income tax booklet Included CCC loan. 2012 income tax booklet   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. 2012 income tax booklet The $500 market gain is not recognized on the redemption. 2012 income tax booklet Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. 2012 income tax booklet   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. 2012 income tax booklet Mike has no gain or loss on its sale to the cotton buyer for that amount. 2012 income tax booklet Excluded CCC loan. 2012 income tax booklet   As in Example 1, Mike has income of $500 from market gain in 2013. 2012 income tax booklet He reports it on Schedule F, lines 4a and 4b. 2012 income tax booklet His basis in the cotton is zero, so his gain from its sale is $1,500. 2012 income tax booklet He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. 2012 income tax booklet Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. 2012 income tax booklet You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. 2012 income tax booklet Cost-share payments you receive may qualify for the cost-sharing exclusion. 2012 income tax booklet See Cost-Sharing Exclusion (Improvements) , later. 2012 income tax booklet CRP payments are reported to you on Form 1099-G. 2012 income tax booklet Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. 2012 income tax booklet See the instructions for Schedule SE (Form 1040). 2012 income tax booklet Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. 2012 income tax booklet You generally include them in the year you receive them. 2012 income tax booklet Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. 2012 income tax booklet You can request income tax withholding from crop disaster payments you receive from the federal government. 2012 income tax booklet Use Form W-4V, Voluntary Withholding Request. 2012 income tax booklet See chapter 16 for information about ordering the form. 2012 income tax booklet Election to postpone reporting until the following year. 2012 income tax booklet   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. 2012 income tax booklet You use the cash method of accounting. 2012 income tax booklet You receive the crop insurance proceeds in the same tax year the crops are damaged. 2012 income tax booklet You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. 2012 income tax booklet   Deferral is not permitted for proceeds received from revenue insurance policies. 2012 income tax booklet   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. 2012 income tax booklet Check the box on line 8c and attach a statement to your tax return. 2012 income tax booklet The statement must include your name and address and contain the following information. 2012 income tax booklet A statement that you are making an election under IRC section 451(d) and Regulations section 1. 2012 income tax booklet 451-6. 2012 income tax booklet The specific crop or crops physically destroyed or damaged. 2012 income tax booklet A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. 2012 income tax booklet The cause of the physical destruction or damage and the date or dates it occurred. 2012 income tax booklet The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. 2012 income tax booklet The name of each insurance carrier from whom you received payments. 2012 income tax booklet   One election covers all crops representing a single trade or business. 2012 income tax booklet If you have more than one farming business, make a separate election for each one. 2012 income tax booklet For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. 2012 income tax booklet   An election is binding for the year unless the IRS approves your request to change it. 2012 income tax booklet To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. 2012 income tax booklet Ogden Submission Processing Center P. 2012 income tax booklet O. 2012 income tax booklet Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. 2012 income tax booklet These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. 2012 income tax booklet They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. 2012 income tax booklet Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. 2012 income tax booklet You must include these benefits in income in the year you receive them. 2012 income tax booklet You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. 2012 income tax booklet Report the benefits on Schedule F, Part I, as agricultural program payments. 2012 income tax booklet You can usually take a current deduction for the same amount as a feed expense. 2012 income tax booklet Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. 2012 income tax booklet A payment is any economic benefit you get as a result of an improvement. 2012 income tax booklet However, this exclusion applies only to that part of a payment that meets all three of the following tests. 2012 income tax booklet It was for a capital expense. 2012 income tax booklet You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. 2012 income tax booklet You must include the payment for a deductible expense in income, and you can take any offsetting deduction. 2012 income tax booklet See chapter 5 for information on deducting soil and water conservation expenses. 2012 income tax booklet It does not substantially increase your annual income from the property for which it is made. 2012 income tax booklet An increase in annual income is substantial if it is more than the greater of the following amounts. 2012 income tax booklet 10% of the average annual income derived from the affected property before receiving the improvement. 2012 income tax booklet $2. 2012 income tax booklet 50 times the number of affected acres. 2012 income tax booklet The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. 2012 income tax booklet Qualifying programs. 2012 income tax booklet   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. 2012 income tax booklet The rural clean water program authorized by the Federal Water Pollution Control Act. 2012 income tax booklet The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. 2012 income tax booklet The water bank program authorized by the Water Bank Act. 2012 income tax booklet The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. 2012 income tax booklet The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. 2012 income tax booklet The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. 2012 income tax booklet The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. 2012 income tax booklet Certain small watershed programs, listed later. 2012 income tax booklet Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. 2012 income tax booklet Several state programs have been approved. 2012 income tax booklet For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). 2012 income tax booklet Small watershed programs. 2012 income tax booklet   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. 2012 income tax booklet The programs under the Watershed Protection and Flood Prevention Act. 2012 income tax booklet The flood prevention projects under the Flood Control Act of 1944. 2012 income tax booklet The Emergency Watershed Protection Program under the Flood Control Act of 1950. 2012 income tax booklet Certain programs under the Colorado River Basin Salinity Control Act. 2012 income tax booklet The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. 2012 income tax booklet The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. 2012 income tax booklet The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. 2012 income tax booklet The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. 2012 income tax booklet The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. 2012 income tax booklet The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. 2012 income tax booklet The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. 2012 income tax booklet The Conservation Security Program authorized by the Food Security Act of 1985. 2012 income tax booklet The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. 2012 income tax booklet Income realized. 2012 income tax booklet   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). 2012 income tax booklet Value of the improvement. 2012 income tax booklet   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. 2012 income tax booklet The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. 2012 income tax booklet Any government payments under a program not listed earlier. 2012 income tax booklet Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. 2012 income tax booklet Any government payment to you for rent or for your services. 2012 income tax booklet The denominator of the fraction is the total cost of the improvement. 2012 income tax booklet Excludable portion. 2012 income tax booklet   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. 2012 income tax booklet 10% of the prior average annual income from the affected acreage. 2012 income tax booklet The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. 2012 income tax booklet $2. 2012 income tax booklet 50 times the number of affected acres. 2012 income tax booklet The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. 2012 income tax booklet You may need to consult your tax advisor for assistance. 2012 income tax booklet Example. 2012 income tax booklet One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. 2012 income tax booklet The total cost of the improvement was $500,000. 2012 income tax booklet The USDA paid $490,000. 2012 income tax booklet You paid $10,000. 2012 income tax booklet The value of the cost-sharing improvement is $15,000. 2012 income tax booklet The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. 2012 income tax booklet The excludable portion is the greater amount, $1,550. 2012 income tax booklet You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. 2012 income tax booklet   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. 2012 income tax booklet Any payment excluded from income is not part of your basis. 2012 income tax booklet In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. 2012 income tax booklet   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. 2012 income tax booklet How to report the exclusion. 2012 income tax booklet   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. 2012 income tax booklet The statement must include the following information. 2012 income tax booklet The dollar amount of the cost funded by the government payment. 2012 income tax booklet The value of the improvement. 2012 income tax booklet The amount you are excluding. 2012 income tax booklet   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. 2012 income tax booklet Recapture. 2012 income tax booklet   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. 2012 income tax booklet In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. 2012 income tax booklet You must report the recapture on Form 4797. 2012 income tax booklet See Section 1255 property under Other Gains in chapter 9. 2012 income tax booklet Electing not to exclude payments. 2012 income tax booklet   You can elect not to exclude all or part of any payments you receive under these programs. 2012 income tax booklet If you make this election for all of these payments, none of the above restrictions and rules apply. 2012 income tax booklet You must make this election by the due date, including extensions, for filing your return. 2012 income tax booklet In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. 2012 income tax booklet If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). 2012 income tax booklet Write “Filed pursuant to section 301. 2012 income tax booklet 9100-2” at the top of the amended return and file it at the same address you filed the original return. 2012 income tax booklet Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. 2012 income tax booklet You must include these payments on Schedule F, lines 4a and 4b. 2012 income tax booklet The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. 2012 income tax booklet You must include these payments on Schedule F, lines 6a and 6b. 2012 income tax booklet The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. 2012 income tax booklet Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. 2012 income tax booklet As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. 2012 income tax booklet If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. 2012 income tax booklet If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. 2012 income tax booklet Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. 2012 income tax booklet Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. 2012 income tax booklet The gain or loss is capital or ordinary depending on how you used the quota. 2012 income tax booklet See Capital or ordinary gain or loss , later. 2012 income tax booklet Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. 2012 income tax booklet Adjusted basis. 2012 income tax booklet   The adjusted basis of your quota is determined differently depending on how you obtained the quota. 2012 income tax booklet The basis of a quota derived from an original grant by the federal government is zero. 2012 income tax booklet The basis of a purchased quota is the purchase price. 2012 income tax booklet The basis of a quota received as a gift is generally the same as the donor's basis. 2012 income tax booklet However, under certain circumstances, the basis is increased by the amount of gift taxes paid. 2012 income tax booklet If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. 2012 income tax booklet The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. 2012 income tax booklet Reduction of basis. 2012 income tax booklet   You are required to reduce the basis of your tobacco quota by the following amounts. 2012 income tax booklet Deductions you took for amortization, depletion, or depreciation. 2012 income tax booklet Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. 2012 income tax booklet The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). 2012 income tax booklet Amount treated as interest. 2012 income tax booklet   You must reduce your tobacco quota buyout program payment by the amount treated as interest. 2012 income tax booklet The interest is reportable as ordinary income. 2012 income tax booklet If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. 2012 income tax booklet   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. 2012 income tax booklet You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. 2012 income tax booklet For more information, see Notice 2005-57, 2005-32 I. 2012 income tax booklet R. 2012 income tax booklet B. 2012 income tax booklet 267, available at www. 2012 income tax booklet irs. 2012 income tax booklet gov/irb/2005-32_IRB/ar13. 2012 income tax booklet html. 2012 income tax booklet Installment method. 2012 income tax booklet   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. 2012 income tax booklet Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. 2012 income tax booklet See chapter 10 for more information. 2012 income tax booklet Capital or ordinary gain or loss. 2012 income tax booklet   Whether your gain or loss is ordinary or capital depends on how you used the quota. 2012 income tax booklet Quota used in the trade or business of farming. 2012 income tax booklet   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. 2012 income tax booklet See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. 2012 income tax booklet Quota held for investment. 2012 income tax booklet   If you held the quota for investment purposes, any gain or loss is capital gain or loss. 2012 income tax booklet The same result also applies if you held the quota for the production of income, though not connected with a trade or business. 2012 income tax booklet Gain treated as ordinary income. 2012 income tax booklet   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. 2012 income tax booklet Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. 2012 income tax booklet The cost of acquiring a quota. 2012 income tax booklet Amounts for amortization, depletion, or depreciation. 2012 income tax booklet Amounts to reflect a reduction in the quota pounds. 2012 income tax booklet   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. 2012 income tax booklet Self-employment income. 2012 income tax booklet   The tobacco quota buyout payments are not self-employment income. 2012 income tax booklet Income averaging for farmers. 2012 income tax booklet   The gain or loss resulting from the quota payments does not qualify for income averaging. 2012 income tax booklet A tobacco quota is considered an interest in land. 2012 income tax booklet Income averaging is not available for gain or loss arising from the sale or other disposition of land. 2012 income tax booklet Involuntary conversion. 2012 income tax booklet   The buyout of the tobacco quota is not an involuntary conversion. 2012 income tax booklet Form 1099-S. 2012 income tax booklet   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. 2012 income tax booklet The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. 2012 income tax booklet Like-kind exchange of quota. 2012 income tax booklet   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. 2012 income tax booklet See Notice 2005-57 for more information. 2012 income tax booklet Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. 2012 income tax booklet Taxation of payments to tobacco growers. 2012 income tax booklet   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. 2012 income tax booklet Individuals will generally report the payments as an Agricultural program payment on Schedule F. 2012 income tax booklet If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. 2012 income tax booklet Self-employment income. 2012 income tax booklet   Payments to growers generally represent self-employment income. 2012 income tax booklet If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. 2012 income tax booklet Income averaging for farmers. 2012 income tax booklet   Payments to growers who are individuals qualify for farm income averaging. 2012 income tax booklet Form 1099-G. 2012 income tax booklet   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. 2012 income tax booklet Other Payments You must include most other government program payments in income. 2012 income tax booklet Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. 2012 income tax booklet How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. 2012 income tax booklet Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. 2012 income tax booklet You must also capitalize the full cost of the improvement. 2012 income tax booklet Since you have included the payments in income, they do not reduce your basis. 2012 income tax booklet However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. 2012 income tax booklet National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. 2012 income tax booklet You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. 2012 income tax booklet If you produce a tobacco crop, report the payments as income from farming on your Schedule F. 2012 income tax booklet If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. 2012 income tax booklet Payment to More Than One Person The USDA reports program payments to the IRS. 2012 income tax booklet It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). 2012 income tax booklet If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. 2012 income tax booklet You should file Form 1099-G to report the identity of the actual recipient to the IRS. 2012 income tax booklet You should also give this information to the recipient. 2012 income tax booklet You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. 2012 income tax booklet Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. 2012 income tax booklet However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. 2012 income tax booklet See chapter 16 for information about ordering Form 1099-G. 2012 income tax booklet Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). 2012 income tax booklet If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. 2012 income tax booklet Form 1099-PATR. 2012 income tax booklet   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. 2012 income tax booklet Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. 2012 income tax booklet For information on the alternative minimum tax, see the Instructions for Form 6251. 2012 income tax booklet Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. 2012 income tax booklet They include the following items. 2012 income tax booklet Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). 2012 income tax booklet The stated dollar value of qualified written notices of allocation. 2012 income tax booklet The fair market value of other property. 2012 income tax booklet Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. 2012 income tax booklet You must reduce the cost or other basis of these items by the amount of such patronage dividends received. 2012 income tax booklet Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. 2012 income tax booklet If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. 2012 income tax booklet Qualified written notice of allocation. 2012 income tax booklet   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. 2012 income tax booklet A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. 2012 income tax booklet The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. 2012 income tax booklet You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. 2012 income tax booklet Signing and giving a written agreement to the cooperative. 2012 income tax booklet Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. 2012 income tax booklet The cooperative must notify you in writing of this bylaw and give you a copy. 2012 income tax booklet Endorsing and cashing a qualified check paid as part of the same patronage dividend. 2012 income tax booklet You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. 2012 income tax booklet Qualified check. 2012 income tax booklet   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. 2012 income tax booklet It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. 2012 income tax booklet It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. 2012 income tax booklet Loss on redemption. 2012 income tax booklet   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. 2012 income tax booklet The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. 2012 income tax booklet Nonqualified notice of allocation. 2012 income tax booklet   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. 2012 income tax booklet Your basis in the notice is zero. 2012 income tax booklet You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. 2012 income tax booklet Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. 2012 income tax booklet However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. 2012 income tax booklet   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. 2012 income tax booklet For example, if it represents interest income, report it on your return as interest. 2012 income tax booklet Buying or selling capital assets or depreciable property. 2012 income tax booklet   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. 2012 income tax booklet You must, however, reduce the basis of these assets by the dividends. 2012 income tax booklet This reduction is taken into account as of the first day of the tax year in which the dividends are received. 2012 income tax booklet If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. 2012 income tax booklet   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. 2012 income tax booklet Example. 2012 income tax booklet On July 1, 2012, Mr. 2012 income tax booklet Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. 2012 income tax booklet The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). 2012 income tax booklet Mr. 2012 income tax booklet Brown files his return on a calendar year basis. 2012 income tax booklet For 2012, he claimed a depreciation deduction of $311, using the 10. 2012 income tax booklet 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). 2012 income tax booklet On July 2, 2013, the cooperative association paid Mr. 2012 income tax booklet Brown a $300 cash patronage dividend for buying the machine. 2012 income tax booklet Mr. 2012 income tax booklet Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. 2012 income tax booklet Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. 2012 income tax booklet 38% × 1. 2012 income tax booklet 5 = 23. 2012 income tax booklet 07% Depreciation deduction for 2013 ($2,289 × 23. 2012 income tax booklet 07%) $528 Exceptions. 2012 income tax booklet   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. 2012 income tax booklet If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. 2012 income tax booklet If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). 2012 income tax booklet   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. 2012 income tax booklet Personal purchases. 2012 income tax booklet   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). 2012 income tax booklet This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. 2012 income tax booklet Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. 2012 income tax booklet A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. 2012 income tax booklet These allocations can be paid in money, other property, or qualified certificates. 2012 income tax booklet Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. 2012 income tax booklet Qualified certificates. 2012 income tax booklet   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. 2012 income tax booklet The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. 2012 income tax booklet If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. 2012 income tax booklet Nonqualified certificates. 2012 income tax booklet   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. 2012 income tax booklet Your basis in the certificate is zero. 2012 income tax booklet You must include in income any amount you receive from its sale, redemption, or other disposition. 2012 income tax booklet Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. 2012 income tax booklet Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. 2012 income tax booklet For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. 2012 income tax booklet General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. 2012 income tax booklet Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. 2012 income tax booklet It is excluded from taxable income (see Exclusions , later). 2012 income tax booklet Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. 2012 income tax booklet If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. 2012 income tax booklet Election to defer income from discharge of indebtedness. 2012 income tax booklet   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. 2012 income tax booklet Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. 2012 income tax booklet See IRC section 108(i) and Publication 4681 for details. 2012 income tax booklet Form 1099-C. 2012 income tax booklet   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. 2012 income tax booklet The amount of debt canceled is shown in box 2. 2012 income tax booklet Exceptions The following discussion covers some exceptions to the general rule for canceled debt. 2012 income tax booklet These exceptions apply before the exclusions discussed below. 2012 income tax booklet Price reduced after purchase. 2012 income tax booklet   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. 2012 income tax booklet Reduce your basis in the property by the amount of the reduction in the debt. 2012 income tax booklet The rules that apply to bankruptcy and insolvency are explained below under Exclusions . 2012 income tax booklet Deductible debt. 2012 income tax booklet   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. 2012 income tax booklet This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. 2012 income tax booklet Example. 2012 income tax booklet You get accounting services for your farm on credit. 2012 income tax booklet Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. 2012 income tax booklet Your accountant forgives part of the amount you owe for the accounting services. 2012 income tax booklet How you treat the canceled debt depends on your method of accounting. 2012 income tax booklet Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. 2012 income tax booklet Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. 2012 income tax booklet Exclusions Do not include canceled debt in income in the following situations. 2012 income tax booklet The cancellation takes place in a bankruptcy case under title 11 of the U. 2012 income tax booklet S. 2012 income tax booklet Code. 2012 income tax booklet The cancellation takes place when you are insolvent. 2012 income tax booklet The canceled debt is a qualified farm debt. 2012 income tax booklet The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). 2012 income tax booklet See Publication 334, Tax Guide for Small Business, chapter 5. 2012 income tax booklet The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. 2012 income tax booklet The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. 2012 income tax booklet If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. 2012 income tax booklet If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. 2012 income tax booklet See Form 982 , later, for information on how to claim an exclusion for a canceled debt. 2012 income tax booklet Debt. 2012 income tax booklet   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. 2012 income tax booklet Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. 2012 income tax booklet Bankruptcy. 2012 income tax booklet   A bankruptcy case is a case under title 11 of the U. 2012 income tax booklet S. 2012 income tax booklet Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. 2012 income tax booklet   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. 2012 income tax booklet Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . 2012 income tax booklet Insolvency. 2012 income tax booklet   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. 2012 income tax booklet   You can exclude canceled debt from gross income up to the amount by which you are insolvent. 2012 income tax booklet If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. 2012 income tax booklet Otherwise, you include the difference in gross income. 2012 income tax booklet Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . 2012 income tax booklet You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. 2012 income tax booklet Example. 2012 income tax booklet You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. 2012 income tax booklet Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. 2012 income tax booklet Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). 2012 income tax booklet You can exclude this amount from income. 2012 income tax booklet The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. 2012 income tax booklet If not, you must include it in income. 2012 income tax booklet Reduction of tax attributes. 2012 income tax booklet   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. 2012 income tax booklet Order of reduction. 2012 income tax booklet   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. 2012 income tax booklet Net operating loss (NOL). 2012 income tax booklet Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. 2012 income tax booklet Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. 2012 income tax booklet General business credit carryover. 2012 income tax booklet Reduce the credit carryover to or from the tax year of the debt cancellation. 2012 income tax booklet Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. 2012 income tax booklet Minimum tax credit. 2012 income tax booklet Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. 2012 income tax booklet Reduce the credit 331/3 cents for each dollar of excluded canceled debt. 2012 income tax booklet Capital loss. 2012 income tax booklet Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. 2012 income tax booklet Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. 2012 income tax booklet Basis. 2012 income tax booklet Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. 2012 income tax booklet Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. 2012 income tax booklet Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. 2012 income tax booklet Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. 2012 income tax booklet Inventory and accounts and notes receivable. 2012 income tax booklet Other property. 2012 income tax booklet Reduce the basis one dollar for each dollar of excluded canceled debt. 2012 income tax booklet However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. 2012 income tax booklet For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. 2012 income tax booklet 1017-1(b)(2). 2012 income tax booklet Also see Electing to reduce the basis of depreciable property
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Estimated Taxes

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Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

How to Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder and/or a self-employed individual, you should use Form 1040-ES, Estimated Tax for Individuals (PDF), to figure and pay your estimated tax. For additional information on filing for a sole proprietor, partners, and/or S corporation shareholder, refer to Publication 505, Tax Withholding and Estimated Tax.

If you are filing as a corporation you should use Form 1120-W, Estimated Tax for Corporations (PDF), to figure the estimated tax. You must deposit the payments. For additional information on filing for a corporation, refer to Publication 542, Corporations.

Who Must Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

If you had a tax liability for the prior year, you may have to pay estimated tax for the current year. See the worksheet in Form 1040-ES (PDF) for more details on who must pay estimated tax.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.

You do not have to pay estimated tax for the current year if you meet all three of the following conditions.

  • You had no tax liability for the prior year
  • You were a U.S. citizen or resident for the whole year
  • Your prior tax year covered a 12 month period

You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return. For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for prior year as a starting point. Use your prior year's federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. You will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated tax for the next quarter. You want to estimate your income as accurately as you can to avoid penalties.

You must make adjustments both for changes in your own situation and for recent changes in the tax law.

When To Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return, see underpayment of tax below for more information.

Using the EFTPS system is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using Electronic Federal Tax Payment System (EFTPS). If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you have paid enough in by the end of the quarter. Using EFTPS, you can access a history of your payments, so you know how much and when you made your estimated tax payments.

Underpayment of Estimated Tax

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505 Tax Withholding and Estimated Tax, for additional information.

However, if your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. Use Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you owe a penalty for underpaying your estimated tax. Please refer to the Form 1040 Instructions (PDF) or the Form 1040A Instructions for where to report the estimated tax penalty on your return.

The penalty may also be waived if:

  1. The failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
  2. You retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.

You should also use Form 2210 (PDF) to request a waiver of the penalty for the reasons shown above.

Page Last Reviewed or Updated: 31-Oct-2013

The 2012 Income Tax Booklet

2012 income tax booklet 7. 2012 income tax booklet   How To Get Tax Help Table of Contents Outside the U. 2012 income tax booklet S. 2012 income tax booklet Low Income Taxpayer Clinics Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 2012 income tax booklet Free help with your tax return. 2012 income tax booklet   You can get free help preparing your return nationwide from IRS-certified volunteers. 2012 income tax booklet The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 2012 income tax booklet The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2012 income tax booklet Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 2012 income tax booklet In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 2012 income tax booklet To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 2012 income tax booklet gov, download the IRS2Go app, or call 1-800-906-9887. 2012 income tax booklet   As part of the TCE program, AARP offers the Tax-Aide counseling program. 2012 income tax booklet To find the nearest AARP Tax-Aide site, visit AARP's website at www. 2012 income tax booklet aarp. 2012 income tax booklet org/money/taxaide or call 1-888-227-7669. 2012 income tax booklet For more information on these programs, go to IRS. 2012 income tax booklet gov and enter “VITA” in the search box. 2012 income tax booklet Internet. 2012 income tax booklet    IRS. 2012 income tax booklet gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 2012 income tax booklet Download the free IRS2Go app from the iTunes app store or from Google Play. 2012 income tax booklet Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 2012 income tax booklet Check the status of your 2013 refund with the Where's My Refund? application on IRS. 2012 income tax booklet gov or download the IRS2Go app and select the Refund Status option. 2012 income tax booklet The IRS issues more than 9 out of 10 refunds in less than 21 days. 2012 income tax booklet Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 2012 income tax booklet You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2012 income tax booklet The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2012 income tax booklet Use the Interactive Tax Assistant (ITA) to research your tax questions. 2012 income tax booklet No need to wait on the phone or stand in line. 2012 income tax booklet The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 2012 income tax booklet When you reach the response screen, you can print the entire interview and the final response for your records. 2012 income tax booklet New subject areas are added on a regular basis. 2012 income tax booklet  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 2012 income tax booklet gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 2012 income tax booklet You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 2012 income tax booklet The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 2012 income tax booklet When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 2012 income tax booklet Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 2012 income tax booklet You can also ask the IRS to mail a return or an account transcript to you. 2012 income tax booklet Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 2012 income tax booklet gov or by calling 1-800-908-9946. 2012 income tax booklet Tax return and tax account transcripts are generally available for the current year and the past three years. 2012 income tax booklet Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 2012 income tax booklet Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 2012 income tax booklet If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 2012 income tax booklet Check the status of your amended return using Where's My Amended Return? Go to IRS. 2012 income tax booklet gov and enter Where's My Amended Return? in the search box. 2012 income tax booklet You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2012 income tax booklet It can take up to 3 weeks from the date you mailed it to show up in our system. 2012 income tax booklet Make a payment using one of several safe and convenient electronic payment options available on IRS. 2012 income tax booklet gov. 2012 income tax booklet Select the Payment tab on the front page of IRS. 2012 income tax booklet gov for more information. 2012 income tax booklet Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 2012 income tax booklet Figure your income tax withholding with the IRS Withholding Calculator on IRS. 2012 income tax booklet gov. 2012 income tax booklet Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 2012 income tax booklet Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 2012 income tax booklet gov. 2012 income tax booklet Request an Electronic Filing PIN by going to IRS. 2012 income tax booklet gov and entering Electronic Filing PIN in the search box. 2012 income tax booklet Download forms, instructions and publications, including accessible versions for people with disabilities. 2012 income tax booklet Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 2012 income tax booklet gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 2012 income tax booklet An employee can answer questions about your tax account or help you set up a payment plan. 2012 income tax booklet Before you visit, check the Office Locator on IRS. 2012 income tax booklet gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 2012 income tax booklet If you have a special need, such as a disability, you can request an appointment. 2012 income tax booklet Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 2012 income tax booklet Apply for an Employer Identification Number (EIN). 2012 income tax booklet Go to IRS. 2012 income tax booklet gov and enter Apply for an EIN in the search box. 2012 income tax booklet Read the Internal Revenue Code, regulations, or other official guidance. 2012 income tax booklet Read Internal Revenue Bulletins. 2012 income tax booklet Sign up to receive local and national tax news and more by email. 2012 income tax booklet Just click on “subscriptions” above the search box on IRS. 2012 income tax booklet gov and choose from a variety of options. 2012 income tax booklet Phone. 2012 income tax booklet    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 2012 income tax booklet Download the free IRS2Go app from the iTunes app store or from Google Play. 2012 income tax booklet Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 2012 income tax booklet gov, or download the IRS2Go app. 2012 income tax booklet Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 2012 income tax booklet The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 2012 income tax booklet Most VITA and TCE sites offer free electronic filing. 2012 income tax booklet Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 2012 income tax booklet Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 2012 income tax booklet Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 2012 income tax booklet If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 2012 income tax booklet The IRS issues more than 9 out of 10 refunds in less than 21 days. 2012 income tax booklet Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 2012 income tax booklet Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 2012 income tax booklet The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 2012 income tax booklet Note, the above information is for our automated hotline. 2012 income tax booklet Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 2012 income tax booklet Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 2012 income tax booklet You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 2012 income tax booklet It can take up to 3 weeks from the date you mailed it to show up in our system. 2012 income tax booklet Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 2012 income tax booklet You should receive your order within 10 business days. 2012 income tax booklet Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 2012 income tax booklet If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 2012 income tax booklet Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 2012 income tax booklet The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 2012 income tax booklet These individuals can also contact the IRS through relay services such as the Federal Relay Service. 2012 income tax booklet    Outside the U. 2012 income tax booklet S. 2012 income tax booklet If you are outside the United States, taxpayer assistance is available by calling the following U. 2012 income tax booklet S Embassies or consulates. 2012 income tax booklet    Beijing, China (86) (10) 8531-3983 Frankfurt, Germany (49) (69) 7535-3823 London, England (44) (20) 7894-0477 Paris, France (33) (1) 4312-2555   If you cannot contact one of these offices, taxpayer assistance is also available at (267) 941-1000 (not a toll free call). 2012 income tax booklet   If you are in a U. 2012 income tax booklet S. 2012 income tax booklet territory (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U. 2012 income tax booklet S. 2012 income tax booklet Virgin Islands) and have a tax question, you can call 1-800-829-1040. 2012 income tax booklet Walk-in. 2012 income tax booklet   You can find a selection of forms, publications and services — in-person. 2012 income tax booklet Products. 2012 income tax booklet You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 2012 income tax booklet Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 2012 income tax booklet Services. 2012 income tax booklet You can walk in to your local TAC for face-to-face tax help. 2012 income tax booklet An employee can answer questions about your tax account or help you set up a payment plan. 2012 income tax booklet Before visiting, use the Office Locator tool on IRS. 2012 income tax booklet gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 2012 income tax booklet    Outside the U. 2012 income tax booklet S. 2012 income tax booklet If you are outside the United States during the filing period (January to mid-June), you can get the necessary federal tax forms and publications from most U. 2012 income tax booklet S. 2012 income tax booklet Embassies and consulates. 2012 income tax booklet   Walk-in taxpayer assistance is available at the following U. 2012 income tax booklet S. 2012 income tax booklet Embassies or consulates. 2012 income tax booklet    Beijing, China (86) (10) 8531-3983 Frankfurt, Germany (49) (69) 7535-3811 London, England (44) (20) 7894-0477 Paris, France (33) (1) 4312-2555   Please contact the office for times when assistance will be available. 2012 income tax booklet Mail. 2012 income tax booklet   You can send your order for forms, instructions, and publications to the address below. 2012 income tax booklet You should receive a response within 10 business days after your request is received. 2012 income tax booklet Internal Revenue Service 1201 N. 2012 income tax booklet Mitsubishi Motorway Bloomington, IL 61705-6613      Outside the U. 2012 income tax booklet S. 2012 income tax booklet If you are outside the United States, you can get tax assistance by writing to the address below. 2012 income tax booklet  Internal Revenue Service International Accounts Philadelphia, PA 19255-0725 Taxpayer Advocate Service. 2012 income tax booklet   The Taxpayer Advocate Service Is Here to Help You. 2012 income tax booklet The Taxpayer Advocate Service (TAS) is your voice at the IRS. 2012 income tax booklet Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 2012 income tax booklet   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 2012 income tax booklet We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 2012 income tax booklet You face (or your business is facing) an immediate threat of adverse action. 2012 income tax booklet You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 2012 income tax booklet   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 2012 income tax booklet Here's why we can help: TAS is an independent organization within the IRS. 2012 income tax booklet Our advocates know how to work with the IRS. 2012 income tax booklet Our services are free and tailored to meet your needs. 2012 income tax booklet We have offices in every state, the District of Columbia, and Puerto Rico. 2012 income tax booklet   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 2012 income tax booklet  How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 2012 income tax booklet If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 2012 income tax booklet Outside the U. 2012 income tax booklet S. 2012 income tax booklet   If you live outside of the United States, you can call the Taxpayer Advocate at (787) 522-8601 in English or (787) 522-8600 in Spanish. 2012 income tax booklet You can contact the Taxpayer Advocate at: Internal Revenue Service Taxpayer Advocate Service City View Plaza, 48 Carr 165, Guaynabo, P. 2012 income tax booklet R. 2012 income tax booklet 00968-8000 Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. 2012 income tax booklet Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 2012 income tax booklet Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. 2012 income tax booklet Prev  Up  Next   Home   More Online Publications