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Auto fill 1040x Publication 3920 - Main Contents Table of Contents Tax ForgivenessYears Eligible for Tax Forgiveness Amount of Tax Forgiven Refund of Taxes Paid How To Claim Tax Forgiveness Payments to SurvivorsSeptember 11th Victim Compensation Fund of 2001 Qualified Disaster Relief Payments Disability Payments Death Benefits Canceled Debt Payments to Survivors of Public Safety Officers Postponed Tax DeadlinesCovered area. Auto fill 1040x Disaster Area Losses Estate Tax Reduction Structured Settlement Factoring Transactions Illustrated Worksheets B and C Additional Worksheets How To Get Tax Help Tax Forgiveness The IRS will forgive the federal income tax liabilities of decedents who died as a result of the Oklahoma City attack, September 11 attacks, and anthrax attacks. Auto fill 1040x Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. Auto fill 1040x Any forgiven tax liability owed to the IRS will not have to be paid. Auto fill 1040x Any forgiven tax liability that has already been paid will be refunded. Auto fill 1040x (See Refund of Taxes Paid, later. Auto fill 1040x ) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. Auto fill 1040x Then read Amount of Tax Forgiven. Auto fill 1040x Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. Auto fill 1040x Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. Auto fill 1040x See Minimum Amount of Relief later under Amount of Tax Forgiven. Auto fill 1040x Years Eligible for Tax Forgiveness The following paragraphs explain which years are eligible for tax forgiveness. Auto fill 1040x Oklahoma City attack. Auto fill 1040x   For those who died from this attack, income tax is forgiven for 1994 and all later years up to and including the year of death. Auto fill 1040x Example 1. Auto fill 1040x A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. Auto fill 1040x His income tax is forgiven for 1994 and 1995. Auto fill 1040x Example 2. Auto fill 1040x A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. Auto fill 1040x She subsequently died of her wounds in 1996. Auto fill 1040x Her income tax is forgiven for 1994, 1995, and 1996. Auto fill 1040x September 11 attacks and anthrax attacks. Auto fill 1040x   For those who die from these attacks, income tax is forgiven for 2000 and all later years up to and including the year of death. Auto fill 1040x Example 1. Auto fill 1040x A Pentagon employee died in the September 11 attack. Auto fill 1040x Her income tax is forgiven for 2000 and 2001. Auto fill 1040x Example 2. Auto fill 1040x A visitor to the World Trade Center died in 2002 of wounds he sustained in the September 11 attack. Auto fill 1040x His income tax liability is forgiven for 2000, 2001, and 2002. Auto fill 1040x Amount of Tax Forgiven The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. Auto fill 1040x On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness. Auto fill 1040x To figure the tax to be forgiven, use the following worksheets. Auto fill 1040x Use Worksheet A for any eligible year the decedent filed a return as single, married filing separately, head of household, or qualifying widow(er). Auto fill 1040x Use Worksheet B for any eligible year the decedent filed a joint return. Auto fill 1040x See the illustrated Worksheet B near the end of this publication. Auto fill 1040x Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. Auto fill 1040x Instead, complete Worksheet C and file a return for the decedent's last tax year. Auto fill 1040x See Minimum Amount of Relief, later. Auto fill 1040x If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times. Auto fill 1040x In English–7 a. Auto fill 1040x m. Auto fill 1040x to 10 p. Auto fill 1040x m. Auto fill 1040x local time. Auto fill 1040x In Spanish–8 a. Auto fill 1040x m. Auto fill 1040x to 9:30 p. Auto fill 1040x m. Auto fill 1040x local time. Auto fill 1040x Both spouses died. Auto fill 1040x   If both spouses died as a result of a terrorist attack and they filed a joint return for an eligible tax year, fill out Worksheet B for each spouse for that year. Auto fill 1040x Do this to determine if each spouse qualifies for the minimum relief of $10,000 (discussed later under Minimum Amount of Relief). Auto fill 1040x If you are certain that neither spouse's total forgiven tax liability for all eligible years is less than $10,000, skip Worksheet B. Auto fill 1040x However, attach a computation of the forgiven tax liability to the final income tax return or amended tax return for each eligible year. Auto fill 1040x The forgiven tax liability is the total tax shown on the joint return minus the taxes listed in the instructions for line 4 of Worksheet B. Auto fill 1040x Residents of community property states. Auto fill 1040x   If the decedent was domiciled in a community property state and the spouse reported half the community income on a separate return, the surviving spouse can get a refund of taxes paid on his or her share of the decedent's income for the eligible years. Auto fill 1040x Also, all of the decedent's income taxes paid for the eligible years will be refunded to either the executor or administrator of the estate, or to the surviving spouse if there is no legal representative. Auto fill 1040x Worksheet B. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Auto fill 1040x 1       2 Enter the decedent's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 2       3 Enter the decedent's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Auto fill 1040x See the instructions. Auto fill 1040x 4       5 Subtract line 4 from line 3. Auto fill 1040x 5       6 Enter the surviving spouse's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 6       7 Enter the surviving spouse's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Auto fill 1040x 8       9 Subtract line 8 from line 7. Auto fill 1040x 9       10 Add lines 5 and 9. Auto fill 1040x 10       11 Enter the total tax from the joint return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 11       12 Add lines 4 and 8. Auto fill 1040x 12       13 Subtract line 12 from line 11. Auto fill 1040x 13       14 Divide line 5 by line 10. Auto fill 1040x Enter the result as a decimal. Auto fill 1040x 14       15 Tax to be forgiven. Auto fill 1040x Multiply line 13 by line 14 and enter the result. Auto fill 1040x 15       Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Worksheet B. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Auto fill 1040x 1       2 Enter the decedent's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 2       3 Enter the decedent's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Auto fill 1040x See the instructions. Auto fill 1040x 4       5 Subtract line 4 from line 3. Auto fill 1040x 5       6 Enter the surviving spouse's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 6       7 Enter the surviving spouse's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Auto fill 1040x 8       9 Subtract line 8 from line 7. Auto fill 1040x 9       10 Add lines 5 and 9. Auto fill 1040x 10       11 Enter the total tax from the joint return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 11       12 Add lines 4 and 8. Auto fill 1040x 12       13 Subtract line 12 from line 11. Auto fill 1040x 13       14 Divide line 5 by line 10. Auto fill 1040x Enter the result as a decimal. Auto fill 1040x 14       15 Tax to be forgiven. Auto fill 1040x Multiply line 13 by line 14 and enter the result. Auto fill 1040x 15       Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Instructions for Worksheet B Table 1. Auto fill 1040x Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. Auto fill 1040x * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. Auto fill 1040x ** File Form 4506 to get a transcript of the decedent's account. Auto fill 1040x Table 1. Auto fill 1040x Total Tax Line on Decedent's Return Note: Use this table to find the total tax line on the decedent's income tax return. Auto fill 1040x * Form 1994 1995 1996 2000 2001 1040 Line 53 Line 54 Line 51 Line 57 Line 58 1040A Line 27 Line 28 Line 28 Line 35 File Form 1040 1040EZ Line 9 Line 10 Line 10 Line 10 TeleFile Tax Record ** Line E Line J Line K 1040NR Line 51 Line 52 Line 49 Line 54 Line 54 1040NR–EZ N/A Line 17 Line 17 Line 18 File Form 1040NR * Line numbers for the 2002 forms were not available when this publication went to print. Auto fill 1040x ** File Form 4506 to get a transcript of the decedent's account. Auto fill 1040x Lines 2 and 6. Auto fill 1040x   Allocate income and deductions in the same manner they would have been allocated if the spouses had filed separate returns. Auto fill 1040x   Allocate wages and salaries to the spouse who performed the services and received the Form W-2. Auto fill 1040x Business and investment income (including capital gains) are generally allocated to the spouse who owned the business or investment that produced the income. Auto fill 1040x Income from a jointly owned business or investment should be allocated equally between the spouses unless there is evidence that shows a different allocation is appropriate. Auto fill 1040x   Allocate business deductions to the owner of the business. Auto fill 1040x Allocate personal deductions (such as itemized deductions for mortgage interest and taxes) equally between the spouses unless there is evidence that shows a different allocation is appropriate. Auto fill 1040x Lines 3 and 7. Auto fill 1040x   Figure the total tax as if a separate return had been filed. Auto fill 1040x The total tax is the tax that would have been entered on the tax return line shown in Table 1 if a separate return had been filed. Auto fill 1040x When figuring the tax using the Tax Table or Tax Rate Schedule, use the “Married filing separately” column in the Tax Table or Tax Rate Schedule Y-2. Auto fill 1040x   When figuring the total tax, allocate credits and other taxes, if any, in the same manner as they would have been allocated if the spouses had filed separate returns. Auto fill 1040x If a credit would not have been allowed on a separate return, allocate the credit shown on the joint return between the spouses. Auto fill 1040x Examples of credits generally not allowed on a separate return are the child and dependent care credit, credit for the elderly, adoption credit, education credits, and earned income credit. Auto fill 1040x Line 4. Auto fill 1040x   Enter the total, if any, of the following taxes. Auto fill 1040x Self-employment tax. Auto fill 1040x Social security and Medicare tax on tip income not reported to employer. Auto fill 1040x Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Auto fill 1040x Tax on excess accumulation in qualified retirement plans. Auto fill 1040x Household employment taxes. Auto fill 1040x Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Auto fill 1040x Tax on golden parachute payments. Auto fill 1040x Minimum Amount of Relief The minimum amount of relief is $10,000. Auto fill 1040x If the decedent's total forgiven tax liability for all eligible years is less than $10,000, the difference between $10,000 and the total forgiven tax liability for those years will be treated as a tax payment for the decedent's last tax year. Auto fill 1040x The IRS will refund the difference as explained under Refund of Taxes Paid. Auto fill 1040x Use Worksheet C to figure the additional tax payment. Auto fill 1040x But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years. Auto fill 1040x Example 1. Auto fill 1040x An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. Auto fill 1040x The $6,400 is eligible for forgiveness. Auto fill 1040x The IRS will forgive $6,400 and treat the difference between $10,000 and $6,400 ($3,600) as a tax payment for 2001. Auto fill 1040x Example 2. Auto fill 1040x A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. Auto fill 1040x The IRS will treat $10,000 as a tax payment for 2001. Auto fill 1040x Income received after date of death. Auto fill 1040x   Generally, income of the decedent received after the date of death must be reported on Form 1041 if the estate has gross income for the tax year of $600 or more. Auto fill 1040x Examples are the final paycheck or dividends on stock owned by the decedent. Auto fill 1040x However, this income is exempt from income tax and is not included on Form 1041 if it is received: After the date of the decedent's death, and Before the end of the decedent's tax year (determined without regard to death). Auto fill 1040x Nonqualifying income. Auto fill 1040x   The following income is not exempt from tax. Auto fill 1040x The tax on it is not eligible for forgiveness. Auto fill 1040x Deferred compensation that would have been payable if the death had occurred because of an event other than these attacks. Auto fill 1040x Amounts that would not have been payable but for an action taken after September 11, 2001. Auto fill 1040x The following are examples of nonqualifying income. Auto fill 1040x Amounts payable from a qualified retirement plan or IRA to the beneficiary or estate of the decedent. Auto fill 1040x Amounts payable only as death or survivor's benefits from pre-existing arrangements that would have been paid if the death had occurred for another reason. Auto fill 1040x Income received as a result of adjustments made by the decedent's employer to a plan or arrangement to accelerate the vesting of restricted property or the payment of nonqualified deferred compensation after the date of the attack. Auto fill 1040x Interest on savings bonds cashed by the beneficiary of the decedent. Auto fill 1040x If you are responsible for the estate of a decedent, see Publication 559. Auto fill 1040x Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due. Auto fill 1040x Instructions for lines 2–9 of Worksheet C. Auto fill 1040x   The tax that would have been payable on the exempt income (discussed earlier) must be considered when determining whether a decedent is entitled to the $10,000 minimum relief. Auto fill 1040x To figure the tax that would have been payable, you can use lines 2 through 9 of Worksheet C. Auto fill 1040x Or, if special requirements are met, you can use the alternative computation instead. Auto fill 1040x See Alternative computation, later. Auto fill 1040x   You have to use lines 2–9 (or the alternative computation) to figure the tax that would have been payable even if Form 1041 was not required to be filed. Auto fill 1040x Use Form 1041 to figure what the taxable income would be without including the exempt income. Auto fill 1040x Then enter that taxable income (even if a negative number) on line 2 of Worksheet C (or line 1 of Worksheet D, Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)). Auto fill 1040x Alternative computation. Auto fill 1040x   Instead of using lines 2–8 of Worksheet C to figure the tax on exempt income (line 9 of Worksheet C), you may be able to use Worksheet D. Auto fill 1040x You can use Worksheet D to figure the tax on the exempt income payable by the estate and its beneficiaries only if both of the following requirements are met. Auto fill 1040x The estate claimed an income distribution deduction on line 18 (Form 1041). Auto fill 1040x Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate. Auto fill 1040x If requirement (2) is met but requirement (1) is not, you can still use Worksheet D if: Form 1041 was not required because exempt income was received, and The estate would have claimed an income distribution deduction if the exempt income were taxable. Auto fill 1040x If you use this alternative computation, skip lines 2–8 of Worksheet C and enter the amount from line 8 of Worksheet D on line 9 of Worksheet C. Auto fill 1040x Complete the rest of Worksheet C to determine the additional payment allowed. Auto fill 1040x Worksheet C. Auto fill 1040x Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Auto fill 1040x Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Auto fill 1040x 1 Minimum relief amount. Auto fill 1040x Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Auto fill 1040x 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Auto fill 1040x 3       4 Add lines 2 and 3. Auto fill 1040x 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 5       6 Add lines 4 and 5. Auto fill 1040x 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Auto fill 1040x 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Auto fill 1040x 8       9 Tax on exempt income. Auto fill 1040x Subtract line 8 from line 7. Auto fill 1040x 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Auto fill 1040x If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Auto fill 1040x 10       11 Add lines 9 and 10. Auto fill 1040x 11   12 Additional payment allowed. Auto fill 1040x If line 11 is $10,000 or more, enter -0- and stop here. Auto fill 1040x No additional amount is allowed as a tax payment. Auto fill 1040x Otherwise, subtract line 11 from line 1 and enter the result. Auto fill 1040x 12   Note. Auto fill 1040x The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Auto fill 1040x Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Auto fill 1040x If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Auto fill 1040x Write "Sec. Auto fill 1040x 692(d)(2) Payment" and the amount to the right of the entry space. Auto fill 1040x Also indicate whether a Form 1041 is being filed for the decedent's estate. Auto fill 1040x If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Auto fill 1040x Write “Sec. Auto fill 1040x 692(d)(2) Payment” on the dotted line to the left of the entry space. Auto fill 1040x Worksheet C. Auto fill 1040x Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Auto fill 1040x Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Auto fill 1040x 1 Minimum relief amount. Auto fill 1040x Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Auto fill 1040x 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Auto fill 1040x 3       4 Add lines 2 and 3. Auto fill 1040x 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 5       6 Add lines 4 and 5. Auto fill 1040x 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Auto fill 1040x 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Auto fill 1040x 8       9 Tax on exempt income. Auto fill 1040x Subtract line 8 from line 7. Auto fill 1040x 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Auto fill 1040x If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Auto fill 1040x 10       11 Add lines 9 and 10. Auto fill 1040x 11   12 Additional payment allowed. Auto fill 1040x If line 11 is $10,000 or more, enter -0- and stop here. Auto fill 1040x No additional amount is allowed as a tax payment. Auto fill 1040x Otherwise, subtract line 11 from line 1 and enter the result. Auto fill 1040x 12   Note. Auto fill 1040x The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Auto fill 1040x Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Auto fill 1040x If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Auto fill 1040x Write "Sec. Auto fill 1040x 692(d)(2) Payment" and the amount to the right of the entry space. Auto fill 1040x Also indicate whether a Form 1041 is being filed for the decedent's estate. Auto fill 1040x If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Auto fill 1040x Write “Sec. Auto fill 1040x 692(d)(2) Payment” on the dotted line to the left of the entry space. Auto fill 1040x Worksheet D. Auto fill 1040x Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Auto fill 1040x 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Auto fill 1040x 5   6 Estate's tax on exempt income. Auto fill 1040x Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Auto fill 1040x Figure the total tax that would have been payable by all beneficiaries. Auto fill 1040x Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Auto fill 1040x Add the amounts by which each beneficiary's income tax is increased. Auto fill 1040x 7   8 Add lines 6 and 7. Auto fill 1040x Enter this amount on line 9 of Worksheet C. Auto fill 1040x 8   Worksheet D. Auto fill 1040x Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C) 1 Enter the taxable income from line 22 (Form 1041) 1   2 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 2   3 Add lines 1 and 2 3   4 Figure the tax on line 3 using Schedule G (Form 1041). Auto fill 1040x 4   5 Figure the tax on line 1 using Schedule G (Form 1041). Auto fill 1040x 5   6 Estate's tax on exempt income. Auto fill 1040x Subtract line 5 from line 4 6   7 Beneficiaries' tax on exempt income. Auto fill 1040x Figure the total tax that would have been payable by all beneficiaries. Auto fill 1040x Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Auto fill 1040x Add the amounts by which each beneficiary's income tax is increased. Auto fill 1040x 7   8 Add lines 6 and 7. Auto fill 1040x Enter this amount on line 9 of Worksheet C. Auto fill 1040x 8   Refund of Taxes Paid The IRS will refund the following forgiven income tax liabilities. Auto fill 1040x Income tax liabilities that have been paid. Auto fill 1040x Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. Auto fill 1040x See Minimum Amount of Relief, earlier. Auto fill 1040x Example 1. Auto fill 1040x A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. Auto fill 1040x The total, $14,000, is eligible for tax forgiveness. Auto fill 1040x However, he paid only $13,000 of that amount. Auto fill 1040x The IRS will refund the $13,000 paid. Auto fill 1040x Example 2. Auto fill 1040x A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. Auto fill 1040x The child qualifies for the minimum relief of $10,000. Auto fill 1040x The $10,000 is treated as a tax payment for 2001 and will be refunded. Auto fill 1040x Period for filing a claim for credit or refund. Auto fill 1040x   To obtain a tax refund on a previously filed income tax return, file an amended return (Form 1040X or an amended Form 1041) within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. Auto fill 1040x For example, you have until April 15, 2004, to file an amended return on a 2000 Form 1040, 1040A, or 1040EZ that was filed by April 16, 2001, and for which the tax was paid when due. Auto fill 1040x To obtain a refund on a return that has not been filed, file the return within 3 years of the original due date of the return. Auto fill 1040x Extension of time for victims of Oklahoma City attack. Auto fill 1040x   The period described above has been extended for victims of the Oklahoma City attack. Auto fill 1040x Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return. Auto fill 1040x How To Claim Tax Forgiveness Use the following procedures to claim income tax forgiveness. Auto fill 1040x Which Form To Use The form you use depends on whether an income tax return for the eligible year was already filed for the decedent. Auto fill 1040x Return required but not yet filed. Auto fill 1040x   File Form 1040 if the decedent was a U. Auto fill 1040x S. Auto fill 1040x citizen or resident. Auto fill 1040x File Form 1040NR if the decedent was a nonresident alien. Auto fill 1040x A nonresident alien is someone who is not a U. Auto fill 1040x S. Auto fill 1040x citizen or resident. Auto fill 1040x Return required and already filed. Auto fill 1040x   File a separate Form 1040X for each year you are claiming tax relief. Auto fill 1040x Return not required and not filed. Auto fill 1040x   File Form 1040 only for the year of death if the decedent was a U. Auto fill 1040x S. Auto fill 1040x citizen or resident. Auto fill 1040x File Form 1040NR if the decedent was a nonresident alien. Auto fill 1040x Return not required but already filed. Auto fill 1040x   File Form 1040X only for the year of death. Auto fill 1040x How to complete the returns. Auto fill 1040x   Fill out Form 1040 or 1040NR according to its instructions but do not reduce the decedent's tax liability by any taxes that will be forgiven. Auto fill 1040x Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. Auto fill 1040x If filing Form 1040 or Form 1040NR, also attach any Forms W–2. Auto fill 1040x If the total forgiven tax liability for all eligible years is less than $10,000, attach to the decedent's final return a computation of the additional tax payment allowed or a copy of Worksheet C. Auto fill 1040x Also, please write one of the following across the top of page 1 of each return. Auto fill 1040x KITA—Oklahoma City KITA—9/11 KITA—Anthrax “KITA” means “killed in terrorist attack. Auto fill 1040x ” Need a copy of a previously filed return?   You will find it easier to prepare Form 1040X if you have a copy of the decedent's previously filed tax return. Auto fill 1040x If you need a copy, use Form 4506. Auto fill 1040x The IRS will provide a free copy of the tax return if you write “DISASTER” in the top margin of Form 4506. Auto fill 1040x Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. Auto fill 1040x Send Form 4506 to the address shown in the form instructions. Auto fill 1040x Taxpayer identification number. Auto fill 1040x   A taxpayer identification number must be furnished on the decedent's returns. Auto fill 1040x This is usually the decedent's social security number (SSN). Auto fill 1040x However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). Auto fill 1040x If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U. Auto fill 1040x S. Auto fill 1040x income tax return for any tax year, do not apply for an ITIN. Auto fill 1040x You may claim a refund by filing Form 1040NR without an SSN or ITIN. Auto fill 1040x Necessary Documents Please attach the following documents to the return or amended return. Auto fill 1040x Proof of death. Auto fill 1040x   Attach a copy of the death certificate. Auto fill 1040x If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate. Auto fill 1040x Form 1310. Auto fill 1040x   You must send Form 1310 with all returns and claims for refund, unless either of the following applies. Auto fill 1040x You are a surviving spouse filing an original or amended joint return with the decedent. Auto fill 1040x You are a personal representative filing an original Form 1040 or Form 1040NR for the decedent and a court certificate showing your appointment is attached to the return. Auto fill 1040x A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. Auto fill 1040x A copy of the decedent's will cannot be accepted as evidence that you are the personal representative. Auto fill 1040x      If you have proof of death but do not have enough tax information to file a timely claim for a refund, file Form 1040X with Form 1310. Auto fill 1040x Include a statement saying an amended return will be filed as soon as the necessary tax information is available. Auto fill 1040x Where To File The IRS has set up a special office for processing returns and claims for tax forgiveness. Auto fill 1040x Use one of the addresses shown below. Auto fill 1040x Where you file the returns or claims depends on whether you use the U. Auto fill 1040x S. Auto fill 1040x Postal Service or a private delivery service. Auto fill 1040x Please do not send these returns or claims to any of the addresses shown in the tax form instructions. Auto fill 1040x U. Auto fill 1040x S. Auto fill 1040x Postal Service. Auto fill 1040x   If you use the U. Auto fill 1040x S. Auto fill 1040x Postal Service, file these returns and claims at the following address. Auto fill 1040x Internal Revenue Service P. Auto fill 1040x O. Auto fill 1040x Box 4053 Woburn, MA 01888 Private delivery service. Auto fill 1040x   Private delivery services cannot deliver items to P. Auto fill 1040x O. Auto fill 1040x boxes. Auto fill 1040x If you use a private delivery service, file these returns and claims at the following address. Auto fill 1040x Internal Revenue Service Stop 661 310 Lowell St. Auto fill 1040x Andover, MA 01810 Designated private delivery services. Auto fill 1040x   You can use the following private delivery services to file these returns and claims. Auto fill 1040x Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service. Auto fill 1040x DHL Worldwide Express (DHL): DHL “Same Day” Service, and DHL USA Overnight. Auto fill 1040x Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day. Auto fill 1040x United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Auto fill 1040x M. Auto fill 1040x , UPS Worldwide Express Plus, and UPS Worldwide Express. Auto fill 1040x The private delivery service can tell you how to get written proof of the mailing date. Auto fill 1040x Payments to Survivors The following section discusses the tax treatment of certain amounts received by survivors. Auto fill 1040x September 11th Victim Compensation Fund of 2001 Payments from the September 11th Victim Compensation Fund of 2001 are not included in income. Auto fill 1040x Qualified Disaster Relief Payments Qualified disaster relief payments are not included in income. Auto fill 1040x These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Auto fill 1040x No withholding applies to these payments. Auto fill 1040x Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses. Auto fill 1040x Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack. Auto fill 1040x Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. Auto fill 1040x (A personal residence can be a rented residence or one you own. Auto fill 1040x ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack. Auto fill 1040x Qualified disaster relief payments also include the following. Auto fill 1040x Payments made by common carriers (for example, American Airlines and United Airlines regarding the September 11 attacks) because of death or physical injury incurred as a result of a terrorist attack. Auto fill 1040x Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack. Auto fill 1040x Qualified disaster relief payments do not include: Insurance or other reimbursements for expenses, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Auto fill 1040x Disability Payments For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income. Auto fill 1040x Death Benefits Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. Auto fill 1040x Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. Auto fill 1040x However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack. Auto fill 1040x If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. Auto fill 1040x For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. Auto fill 1040x If that period has expired, you are granted an extension. Auto fill 1040x You have until January 22, 2003, to file Form 1040X to exclude the death benefits. Auto fill 1040x On top of page 1 of Form 1040X, write “Extension of Limitations Under PL 107–134, sec. Auto fill 1040x 102(b)(2). Auto fill 1040x ” Canceled Debt Canceled debt is not included in your income (or the income of the estate) if: You (or the estate) were liable, or became liable, for the debt of a decedent, and The debt was canceled after September 10, 2001, and before January 1, 2002, because the decedent died as a result of the September 11 attacks or anthrax attacks. Auto fill 1040x The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt. Auto fill 1040x Payments to Survivors of Public Safety Officers If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income. Auto fill 1040x Bureau of Justice Assistance payments. Auto fill 1040x   If you are a surviving dependent of a public safety officer (law enforcement officer or firefighter) who died in the line of duty, do not include in your income the death benefit paid to you by the Bureau of Justice Assistance. Auto fill 1040x Government plan annuity. Auto fill 1040x   If you receive a survivor annuity as the child or spouse (or former spouse) of a public safety officer who was killed in the line of duty, you generally do not have to include it in income. Auto fill 1040x This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer. Auto fill 1040x For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews. Auto fill 1040x More information. Auto fill 1040x   For more information, see Publication 559. Auto fill 1040x Postponed Tax Deadlines The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a terrorist attack. Auto fill 1040x The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. Auto fill 1040x If any tax deadline is postponed, the IRS will publicize the postponement in the affected area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Auto fill 1040x Affected taxpayers. Auto fill 1040x   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Auto fill 1040x Any individual whose main home is located in a covered area (defined later). Auto fill 1040x Any business entity or sole proprietor whose principal place of business is located in a covered area. Auto fill 1040x Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained in a covered area. Auto fill 1040x The main home or principal place of business does not have to be located in the covered area. Auto fill 1040x Any estate or trust whose tax records necessary to meet a postponed tax deadline are maintained in a covered area. Auto fill 1040x Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered area. Auto fill 1040x The spouse on a joint return with a taxpayer who is eligible for postponements. Auto fill 1040x Any other person determined by the IRS to be affected by a terrorist attack. Auto fill 1040x Covered area. Auto fill 1040x   This is an area in which a terrorist attack took place and in which the IRS has decided to postpone tax deadlines for up to 1 year. Auto fill 1040x Abatement of interest. Auto fill 1040x   The IRS may abate (forgive) the interest on any underpaid income tax for the length of any postponement. Auto fill 1040x Disaster Area Losses If your property was damaged or destroyed as a result of the September 11 attacks, you can choose to deduct your disaster loss on your 2000 return (or amended return) rather than on your 2001 return. Auto fill 1040x You must make this choice to deduct your loss on your 2000 return by the later of the following dates. Auto fill 1040x The due date (without extensions) for filing your 2001 income tax return (April 15, 2002, if you are a calendar year taxpayer). Auto fill 1040x The due date (with extensions) for the 2000 return. Auto fill 1040x For more information about disaster area losses, see Publication 547. Auto fill 1040x Estate Tax Reduction The federal estate tax is reduced for taxable estates of individuals who died as a result of the Oklahoma City attack, the September 11 attacks, and the anthrax attacks. Auto fill 1040x The estate tax is computed using a new rate schedule on page 25 of the November 2001 revision of the instructions for Form 706. Auto fill 1040x The estate tax is reduced by credits against the estate tax, including the unified credit and the state death tax credit. Auto fill 1040x These credits may reduce or eliminate the estate tax due. Auto fill 1040x A special rule extends until January 22, 2003, the period of time allowed to file a claim for a refund of estate taxes that have been paid. Auto fill 1040x Recovery from the September 11th Victim Compensation Fund. Auto fill 1040x   The value of claims for a decedent's pain and suffering is normally included in the gross estate. Auto fill 1040x However, if the estate chooses to seek recovery from this fund, the IRS has determined that, in view of the unique circumstances of this situation and the high likelihood that such claims will be valued at a nominal or zero amount, the claims will be valued at zero for estate tax purposes. Auto fill 1040x Thus, there are no federal estate tax consequences if an estate or beneficiary receives a recovery from this fund. Auto fill 1040x Which estates must file a return. Auto fill 1040x   For decedents dying in 2001, Form 706 must be filed by the executor for the estate of every U. Auto fill 1040x S. Auto fill 1040x citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $675,000. Auto fill 1040x Form 706 must be filed within 9 months after the date of decedent's death unless you receive an extension of time to file. Auto fill 1040x Use Form 4768, Application for Extension of Time To File a Return and/or Pay U. Auto fill 1040x S. Auto fill 1040x Estate (and Generation-Skipping Transfer) Taxes, to apply for an extension. Auto fill 1040x Where to file. Auto fill 1040x   Returns on which the new rate schedule is used should be sent to the following address, which was not available when Form 706 went to print. Auto fill 1040x Internal Revenue Service E & G Department/Stop 824T 201 W. Auto fill 1040x Rivercenter Blvd. Auto fill 1040x Covington, KY 41011 More information. Auto fill 1040x   For more information on the federal estate tax, see the instructions for Form 706. Auto fill 1040x Structured Settlement Factoring Transactions A person who acquires payment rights in a structured settlement arrangement after February 21, 2002, may be subject to a 40% excise tax unless the transfer of the payment rights was approved in advance in a qualified order. Auto fill 1040x The excise tax is figured on the excess of the undiscounted amount of the payments being acquired over the total amount actually paid to acquire them. Auto fill 1040x However, this tax will not apply to transactions entered into from February 22, 2002, to July 1, 2002, if certain requirements are met. Auto fill 1040x For information about these requirements, see Internal Revenue Code section 5891. Auto fill 1040x Worksheet B Illustrated. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Auto fill 1040x 1 2000 2001   2 Enter the decedent's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 2 $17,259 $14,295   3 Enter the decedent's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Auto fill 1040x See the instructions. Auto fill 1040x 4 3,532 3,109   5 Subtract line 4 from line 3. Auto fill 1040x 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions for line 2. Auto fill 1040x 6 29,025 29,850   7 Enter the surviving spouse's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Auto fill 1040x 8 0 0   9 Subtract line 8 from line 7. Auto fill 1040x 9 5,277 5,391   10 Add lines 5 and 9. Auto fill 1040x 10 7,868 7,532   11 Enter the total tax from the joint return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 11 10,789 9,728   12 Add lines 4 and 8. Auto fill 1040x 12 3,532 3,109   13 Subtract line 12 from line 11. Auto fill 1040x 13 7,257 6,619   14 Divide line 5 by line 10. Auto fill 1040x Enter the result as a decimal. Auto fill 1040x 14 . Auto fill 1040x 329 . Auto fill 1040x 284   15 Tax to be forgiven. Auto fill 1040x Multiply line 13 by line 14 and enter the result. Auto fill 1040x 15 $2,388 $1,880   Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Worksheet B Illustrated. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Auto fill 1040x 1 2000 2001   2 Enter the decedent's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 2 $17,259 $14,295   3 Enter the decedent's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 3 6,123 5,250   4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Auto fill 1040x See the instructions. Auto fill 1040x 4 3,532 3,109   5 Subtract line 4 from line 3. Auto fill 1040x 5 2,591 2,141   6 Enter the surviving spouse's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions for line 2. Auto fill 1040x 6 29,025 29,850   7 Enter the surviving spouse's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 7 5,277 5,391   8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Auto fill 1040x 8 0 0   9 Subtract line 8 from line 7. Auto fill 1040x 9 5,277 5,391   10 Add lines 5 and 9. Auto fill 1040x 10 7,868 7,532   11 Enter the total tax from the joint return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 11 10,789 9,728   12 Add lines 4 and 8. Auto fill 1040x 12 3,532 3,109   13 Subtract line 12 from line 11. Auto fill 1040x 13 7,257 6,619   14 Divide line 5 by line 10. Auto fill 1040x Enter the result as a decimal. Auto fill 1040x 14 . Auto fill 1040x 329 . Auto fill 1040x 284   15 Tax to be forgiven. Auto fill 1040x Multiply line 13 by line 14 and enter the result. Auto fill 1040x 15 $2,388 $1,880   Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Illustrated Worksheets B and C A wife lost her husband in the September 11 attack on the World Trade Center. Auto fill 1040x They filed a joint return for 2000 and the wife chose to file a joint return as a surviving spouse for 2001. Auto fill 1040x The returns for 2000 and 2001 showed the following income, deductions, and tax liabilities. Auto fill 1040x After the husband died, his estate received income of $4,000. Auto fill 1040x Of that amount, $1,000 is net profit from Schedule C received before the end of 2001. Auto fill 1040x This net profit is exempt from income tax as explained earlier under Income received after date of death. Auto fill 1040x The wife files Form 1041 because the gross income of the estate for the tax year ($3,000) is $600 or more. Auto fill 1040x To determine how much of the husband's tax liability for 2000 and 2001 is to be forgiven, the wife completes Worksheet B. Auto fill 1040x She also completes Worksheet C because the forgiven tax liabilities for 2000 and 2001 (line 15 of Worksheet B) total less than $10,000. Auto fill 1040x To claim tax relief for 2000, the wife files Form 1040X and attaches a copy of Worksheet B. Auto fill 1040x To claim tax relief for 2001, she files Form 1040 and attaches copies of Worksheets B and C. Auto fill 1040x   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728   2000 2001 Wages (wife) $35,000 $36,000 Net profit from Schedule C, Profit or Loss From Business (husband) 25,000 22,000 Interest income (joint account) 1,000 1,100 Deduction for ½ of self-employment tax (husband) (1,766) (1,555) Standard deduction (7,350) (7,600) Personal exemptions (2) (5,600) (5,800) Taxable income $46,284 $44,145 Joint income tax liability $7,257 $6,619 Plus: Self-employment tax (husband) 3,532 3,109 Total tax liability $10,789 $9,728 Worksheet C Illustrated. Auto fill 1040x Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Auto fill 1040x Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Auto fill 1040x 1 Minimum relief amount. Auto fill 1040x Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Auto fill 1040x 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . Auto fill 1040x 3 0     4 Add lines 2 and 3. Auto fill 1040x 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 5 1,000     6 Add lines 4 and 5. Auto fill 1040x 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Auto fill 1040x 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Auto fill 1040x 8 435     9 Tax on exempt income. Auto fill 1040x Subtract line 8 from line 7. Auto fill 1040x 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Auto fill 1040x If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Auto fill 1040x 10 4,268     11 Add lines 9 and 10. Auto fill 1040x 11 $4,543 12 Additional payment allowed. Auto fill 1040x If line 11 is $10,000 or more, enter -0- and stop here. Auto fill 1040x No additional amount is allowed as a tax payment. Auto fill 1040x Otherwise, subtract line 11 from line 1 and enter the result. Auto fill 1040x 12 $5,457 Note. Auto fill 1040x The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Auto fill 1040x Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Auto fill 1040x If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Auto fill 1040x Write "Sec. Auto fill 1040x 692(d)(2) Payment" and the amount to the right of the entry space. Auto fill 1040x Also indicate whether a Form 1041 is being filed for the decedent's estate. Auto fill 1040x If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Auto fill 1040x Write “Sec. Auto fill 1040x 692(d)(2) Payment” on the dotted line to the left of the entry space. Auto fill 1040x Worksheet C Illustrated. Auto fill 1040x Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum relief of $10,000. Auto fill 1040x Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Auto fill 1040x 1 Minimum relief amount. Auto fill 1040x Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Auto fill 1040x 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2 2,400     3 Enter the distribution deduction from line 18 (Form 1041) . Auto fill 1040x 3 0     4 Add lines 2 and 3. Auto fill 1040x 4 2,400     5 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 5 1,000     6 Add lines 4 and 5. Auto fill 1040x 6 3,400     7 Figure the tax on line 6 using Schedule G (Form 1041). Auto fill 1040x 7 710     8 Figure the tax on line 4 using Schedule G (Form 1041). Auto fill 1040x 8 435     9 Tax on exempt income. Auto fill 1040x Subtract line 8 from line 7. Auto fill 1040x 9 275     10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Auto fill 1040x If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Auto fill 1040x 10 4,268     11 Add lines 9 and 10. Auto fill 1040x 11 $4,543 12 Additional payment allowed. Auto fill 1040x If line 11 is $10,000 or more, enter -0- and stop here. Auto fill 1040x No additional amount is allowed as a tax payment. Auto fill 1040x Otherwise, subtract line 11 from line 1 and enter the result. Auto fill 1040x 12 $5,457 Note. Auto fill 1040x The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Auto fill 1040x Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Auto fill 1040x If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Auto fill 1040x Write "Sec. Auto fill 1040x 692(d)(2) Payment" and the amount to the right of the entry space. Auto fill 1040x Also indicate whether a Form 1041 is being filed for the decedent's estate. Auto fill 1040x If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Auto fill 1040x Write “Sec. Auto fill 1040x 692(d)(2) Payment” on the dotted line to the left of the entry space. Auto fill 1040x Additional Worksheets The following additional worksheets are provided for your convenience. Auto fill 1040x Worksheet A. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. Auto fill 1040x 1       2 Enter the total tax from the decedent's income tax return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Auto fill 1040x (These taxes are not eligible for forgiveness. Auto fill 1040x )           a Self-employment tax. Auto fill 1040x 3a         b Social security and Medicare tax on tip income not reported to employer. Auto fill 1040x 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Auto fill 1040x 3c         d Tax on excess accumulation in qualified retirement plans. Auto fill 1040x 3d         e Household employment taxes. Auto fill 1040x 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Auto fill 1040x 3f         g Tax on golden parachute payments. Auto fill 1040x 3g       4 Add lines 3a through 3g. Auto fill 1040x 4       5 Tax to be forgiven. Auto fill 1040x Subtract line 4 from line 2. Auto fill 1040x 5       Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Worksheet A. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. Auto fill 1040x 1       2 Enter the total tax from the decedent's income tax return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. Auto fill 1040x (These taxes are not eligible for forgiveness. Auto fill 1040x )           a Self-employment tax. Auto fill 1040x 3a         b Social security and Medicare tax on tip income not reported to employer. Auto fill 1040x 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). Auto fill 1040x 3c         d Tax on excess accumulation in qualified retirement plans. Auto fill 1040x 3d         e Household employment taxes. Auto fill 1040x 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. Auto fill 1040x 3f         g Tax on golden parachute payments. Auto fill 1040x 3g       4 Add lines 3a through 3g. Auto fill 1040x 4       5 Tax to be forgiven. Auto fill 1040x Subtract line 4 from line 2. Auto fill 1040x 5       Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Worksheet B. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Auto fill 1040x 1       2 Enter the decedent's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 2       3 Enter the decedent's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Auto fill 1040x See the instructions. Auto fill 1040x 4       5 Subtract line 4 from line 3. Auto fill 1040x 5       6 Enter the surviving spouse's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 6       7 Enter the surviving spouse's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Auto fill 1040x 8       9 Subtract line 8 from line 7. Auto fill 1040x 9       10 Add lines 5 and 9. Auto fill 1040x 10       11 Enter the total tax from the joint return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 11       12 Add lines 4 and 8. Auto fill 1040x 12       13 Subtract line 12 from line 11. Auto fill 1040x 13       14 Divide line 5 by line 10. Auto fill 1040x Enter the result as a decimal. Auto fill 1040x 14       15 Tax to be forgiven. Auto fill 1040x Multiply line 13 by line 14 and enter the result. Auto fill 1040x 15       Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Worksheet B. Auto fill 1040x Figuring the Tax To Be Forgiven (For Decedents Who Filed a Joint Return)       (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for forgiveness. Auto fill 1040x 1       2 Enter the decedent's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 2       3 Enter the decedent's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 3       4 Enter the total, if any, of the decedent's taxes not eligible for forgiveness. Auto fill 1040x See the instructions. Auto fill 1040x 4       5 Subtract line 4 from line 3. Auto fill 1040x 5       6 Enter the surviving spouse's taxable income. Auto fill 1040x Figure taxable income as if a separate return had been filed. Auto fill 1040x See the instructions. Auto fill 1040x 6       7 Enter the surviving spouse's total tax. Auto fill 1040x See the instructions. Auto fill 1040x 7       8 Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. Auto fill 1040x 8       9 Subtract line 8 from line 7. Auto fill 1040x 9       10 Add lines 5 and 9. Auto fill 1040x 10       11 Enter the total tax from the joint return. Auto fill 1040x See Table 1 on page 5 for the line number for years before 2002. Auto fill 1040x 11       12 Add lines 4 and 8. Auto fill 1040x 12       13 Subtract line 12 from line 11. Auto fill 1040x 13       14 Divide line 5 by line 10. Auto fill 1040x Enter the result as a decimal. Auto fill 1040x 14       15 Tax to be forgiven. Auto fill 1040x Multiply line 13 by line 14 and enter the result. Auto fill 1040x 15       Note. Auto fill 1040x If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on line 5 of Worksheet A) is less than $10,000, also complete Worksheet C. Auto fill 1040x Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. Auto fill 1040x If filing Form 1040X for an eligible year, enter the amount from line 15 above on Form 1040X in column B of line 10 as a decrease in tax. Auto fill 1040x The IRS will determine the amount to be refunded. Auto fill 1040x Worksheet C. Auto fill 1040x Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Auto fill 1040x Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Auto fill 1040x 1 Minimum tax forgiveness. Auto fill 1040x Note. Auto fill 1040x Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Auto fill 1040x 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Auto fill 1040x 3       4 Add lines 2 and 3. Auto fill 1040x 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 5       6 Add lines 4 and 5. Auto fill 1040x 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Auto fill 1040x 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Auto fill 1040x 8       9 Tax on exempt income. Auto fill 1040x Subtract line 8 from line 7. Auto fill 1040x 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Auto fill 1040x If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Auto fill 1040x 10       11 Add lines 9 and 10. Auto fill 1040x 11   12 Additional payment allowed. Auto fill 1040x If line 11 is $10,000 or more, enter -0- and stop here. Auto fill 1040x No additional amount is allowed as a tax payment. Auto fill 1040x Otherwise, subtract line 11 from line 1 and enter the result. Auto fill 1040x 12   Note. Auto fill 1040x The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Auto fill 1040x Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Auto fill 1040x If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Auto fill 1040x Write "Sec. Auto fill 1040x 692(d)(2) Payment" and the amount to the right of the entry space. Auto fill 1040x Also indicate whether a Form 1041 is being filed for the decedent's estate. Auto fill 1040x If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Auto fill 1040x Write “Sec. Auto fill 1040x 692(d)(2) Payment” on the dotted line to the left of the entry space. Auto fill 1040x Worksheet C. Auto fill 1040x Amount Treated as Tax Payment for Decedent's Last Tax Year Caution: The decedent is entitled to minimum tax forgiveness of $10,000. Auto fill 1040x Complete this worksheet only if the total tax forgiven for all eligible years is less than $10,000. Auto fill 1040x 1 Minimum tax forgiveness. Auto fill 1040x Note. Auto fill 1040x Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. Auto fill 1040x 1 $10,000 2 Enter the taxable income from line 22 (Form 1041) 2       3 Enter the distribution deduction from line 18 (Form 1041) . Auto fill 1040x 3       4 Add lines 2 and 3. Auto fill 1040x 4       5 Enter exempt income received after death minus expenses allocable to exempt income. Auto fill 1040x (See Income received after date of death on page 5. Auto fill 1040x ) 5       6 Add lines 4 and 5. Auto fill 1040x 6       7 Figure the tax on line 6 using Schedule G (Form 1041). Auto fill 1040x 7       8 Figure the tax on line 4 using Schedule G (Form 1041). Auto fill 1040x 8       9 Tax on exempt income. Auto fill 1040x Subtract line 8 from line 7. Auto fill 1040x 9       10 Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. Auto fill 1040x If the decedent was not required to file tax returns for the eligible tax years, enter -0-. Auto fill 1040x 10       11 Add lines 9 and 10. Auto fill 1040x 11   12 Additional payment allowed. Auto fill 1040x If line 11 is $10,000 or more, enter -0- and stop here. Auto fill 1040x No additional amount is allowed as a tax payment. Auto fill 1040x Otherwise, subtract line 11 from line 1 and enter the result. Auto fill 1040x 12   Note. Auto fill 1040x The amount on line 12 is allowed as a tax payment for the decedent's last tax year (usually 1995 or 2001). Auto fill 1040x Attach the computation of the additional payment allowed or a copy of this worksheet to the original or amended income tax return for the decedent's last tax year. Auto fill 1040x If filing Form 1040, include the amount from line 12 above on the “Other payments” line of the form. Auto fill 1040x Write "Sec. Auto fill 1040x 692(d)(2) Payment" and the amount to the right of the entry space. Auto fill 1040x Also indicate whether a Form 1041 is being filed for the decedent's estate. Auto fill 1040x If filing Form 1040X, include the amount from line 12 above on Form 1040X on line 15, columns (B) and (C). Auto fill 1040x Write “Sec. Auto fill 1040x 692(d)(2) Payment” on the dotted line to the left of the entry space. Auto fill 1040x How To Get Tax Help Special IRS assistance. Auto fill 1040x   The IRS is providing special help for those affected by the terrorist attacks, as well as survivors and personal representatives of the victims. Auto fill 1040x We have set up a special toll-free number for people who may have trouble filing or paying their taxes because they were affected by the terrorist attacks, or who have other tax issues related to the attacks. Auto fill 1040x Call 1–866–562–5227 Monday through Friday In English–7 a. Auto fill 1040x m. Auto fill 1040x to 10 p. Auto fill 1040x m. Auto fill 1040x local time In Spanish–8 a. Auto fill 1040x m. Auto fill 1040x to 9:30 p. Auto fill 1040x m. Auto fill 1040x local time   The IRS web site at www. Auto fill 1040x irs. Auto fill 1040x gov has notices and other tax relief information. Auto fill 1040x Check it periodically for any new guidance or to see if Congress has enacted new legislation. Auto fill 1040x   Business taxpayers affected by the attacks can e-mail their questions to corp. Auto fill 1040x disaster. Auto fill 1040x relief@irs. Auto fill 1040x gov. Auto fill 1040x   For current information on Presidentially declared disaster areas, check the Federal Emergency Management Agency Web site at www. Auto fill 1040x fema. Auto fill 1040x gov. Auto fill 1040x Other help from the IRS. Auto fill 1040x   You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. Auto fill 1040x By selecting the method that is best for you, you will have quick and easy access to tax help. Auto fill 1040x Contacting your Taxpayer Advocate. Auto fill 1040x   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Auto fill 1040x   The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Auto fill 1040x While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Auto fill 1040x   To contact your Taxpayer Advocate: Call the Taxpayer Advocate at 1–877–777–4778. Auto fill 1040x Call the IRS at 1–800–829–1040. Auto fill 1040x Call, write, or fax the Taxpayer Advocate office in your area. Auto fill 1040x Call 1–800–829–4059 if you are a TTY/TDD user. Auto fill 1040x   For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS. Auto fill 1040x Free tax services. Auto fill 1040x   To find out what services are available, get Publication 910, Guide to Free Tax Services. Auto fill 1040x It contains a list of free tax publications and an index of tax topics. Auto fill 1040x It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Auto fill 1040x Personal computer. Auto fill 1040x With your personal computer and modem, you can access the IRS on the Internet at www. Auto fill 1040x irs. Auto fill 1040x gov. Auto fill 1040x While visiting our web site, you can: Find answers to questions you may have. Auto fill 1040x Download forms and publications or search for forms and pub
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Online Scams that Impersonate the IRS

Video: Phishing-Malware:  English

FS-2010-9, January 2010

WASHINGTON — Consumers should protect themselves against online identity theft and other scams that increase during and linger after the filing season. Such scams may appropriate the name, logo or other appurtenances of the IRS or U.S. Department of the Treasury to mislead taxpayers into believing that the scam is legitimate.
    
Scams involving the impersonation of the IRS usually take the form of e-mails, tweets or other online messages to consumers. Scammers may also use phones and faxes to reach intended victims. Some scammers set up phony Web sites.

The IRS and E-mail

Generally, the IRS does not send unsolicited e-mails to taxpayers. Further, the IRS does not discuss tax account information with taxpayers via e-mail or use e-mail to solicit sensitive financial and personal information from taxpayers. The IRS does not request financial account security information, such as PIN numbers, from taxpayers.     

Object of Scams

Most scams impersonating the IRS are identity theft schemes. In this type of scam, the scammer poses as a legitimate institution to trick consumers into revealing personal and financial information — such as passwords and Social Security, PIN, bank account and credit card numbers — that can be used to gain access to and steal their bank, credit card or other financial accounts. Attempted identity theft scams that take place via e-mail are known as phishing. Other scams may try to persuade a victim to advance sums of money in the hope of realizing a larger gain. These are known as advance fee scams. 

Who Is Targeted

Anyone with a computer, phone or fax machine could receive a scam message or unknowingly visit a phony or misleading Web site. Individuals, businesses, educators, charities and others have been targeted by e-mails that claim to come from the IRS or Treasury Department. Scam e-mails are generally sent out in bulk, based on e-mail addresses (urls), similar to spam.

How an Identity Theft Scam Works

Most of the scams that impersonate the IRS are identity theft scams. Typically, a consumer will receive an e-mail that claims to come from the IRS or Treasury Department. The message will contain an enticing or intimidating subject line, such as tax refund, inherited funds or IRS notice. Usually, the message will state that the recipient needs to provide the IRS with information to obtain the refund or avoid some penalty. The message will instruct the consumer to open an attachment or click on a link in the e-mail. This may lead to an official-looking form to be filled out online or send the taxpayer to a seemingly genuine but bogus IRS Web site. The look-alike site will then contain a phony but genuine-looking online form or interactive application that requires the personal and financial information the scammer can use to commit identity theft. 

Alternatively, the clicked link may secretly download malware to the consumer’s computer. Malware is malicious code that can take over the computer’s hard drive, giving the scammer remote access to the computer, or it could look for passwords and other information and send them to the scammer.

Phony Web or Commercial Sites

In many IRS-impersonation scams, the scammer sends the consumer to a phony Web site that mimics the appearance of the genuine IRS Web site, IRS.gov. This allows the scammer to steer victims to phony interactive forms or applications that appear genuine but require the targeted victim to enter personal and financial information that will be used to commit identity theft.  

The official Web site for the Internal Revenue Service is IRS.gov, and all IRS.gov Web page addresses begin with http://www.irs.gov/

In addition to Web sites established by scammers, there are commercial Internet sites that often resemble the authentic IRS site or contain some form of the IRS name in the address but end with a .com, .net, .org or other designation instead of .gov. These sites have no connection to the IRS. Consumers may unknowingly visit these sites when searching the Internet to retrieve tax forms, publications and other information from the IRS.

Frequent or Recent Scams

There are a number of scams that impersonate the IRS. Some of them appear with great frequency, particularly during and right after filing season, and recur annually. Others are new.   

  • Refund Scam — This is the most frequent IRS-impersonation scam seen by the IRS. In this phishing scam, a bogus e-mail claiming to come from the IRS tells the consumer that he or she is eligible to receive a tax refund for a specified amount. It may use the phrase “last annual calculations of your fiscal activity.” To claim the tax refund, the consumer must open an attachment or click on a link contained in the e-mail to access and complete a claim form. The form requires the entry of personal and financial information. Several variations on the refund scam have claimed to come from the Exempt Organizations area of the IRS or the name and signature of a genuine or made-up IRS executive. In reality, taxpayers do not complete a special form to obtain their federal tax refund — refunds are triggered by the tax return they submitted to the IRS.
  • Lottery winnings or cash consignment — These advance fee scam e-mails claim to come from the Treasury Department to notify recipients that they’ll receive millions of dollars in recovered funds or lottery winnings or cash consignment if they provide certain personal information, including phone numbers, via return e-mail. The e-mail may be just the first step in a multi-step scheme, in which the victim is later contacted by telephone or further e-mail and instructed to deposit taxes on the funds or winnings before they can receive any of it. Alternatively, they may be sent a phony check of the funds or winnings and told to deposit it but pay 10 percent in taxes or fees. Thinking that the check must have cleared the bank and is genuine, some people comply. However, the scammers, not the Treasury Department, will get the taxes or fees. In reality, the Treasury Department does not become involved in notification of inheritances or lottery or other winnings.
  • Beneficial Owner Form — This fax-based phishing scam, which generally targets foreign nationals, recurs periodically. It’s based on a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. The scammer, though, invents his or her own number and name for the form. The scammer modifies the form to request passport numbers, information that is often used for account security purposes (such as mother’s maiden name) and similar detailed personal and financial information, and states that the recipient may have to pay additional tax if he or she fails to immediately fax back the completed form. In reality, the real W-8BEN is completed by banks, not individuals.

Other Known Scams

The contents of other IRS-impersonation scams vary but may claim that the recipient will be paid for participating in an online survey or is under investigation or audit. Some scam e-mails have referenced Recovery-related tax provisions, such as Making Work Pay, or solicited for charitable donations to victims of natural disasters. Taxpayers should beware of an e-mail scam that references underreported income and the recipient’s “tax statement,” since clicking on a link or opening an attachment is known to download malware onto the recipient’s computer.

How to Spot a Scam

Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:

  •  Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother’s maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
  • Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
  • Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient’s funds.
  • Gets the Internal Revenue Service or other federal agency names wrong.
  • Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
  • Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (http://www.irs.gov). The actual link’s address, or url, is revealed by moving the mouse over the link included in the text of the e-mail.

What to Do

Taxpayers who receive a suspicious e-mail claiming to come from the IRS should take the following steps:

  • Avoid opening any attachments to the e-mail, in case they contain malicious code that will infect your computer.
  • Avoid clicking on any links, for the same reason. Alternatively, the links may connect to a phony IRS Web site that appears authentic and then prompts for personal identifiers, bank or credit card account numbers or PINs.
  • Visit the IRS Web site, www.irs.gov, to use the “Where’s My Refund?” interactive tool to determine if they are really getting a refund, rather than responding to the e-mail message.
  • Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from their inbox.

Consumers who believe they are or may be victims of identity theft or other scams may visit the U.S. Federal Trade Commission’s Web site for identity theft, www.OnGuardOnline.gov, for guidance in what to do. The IRS is one of the sponsors of this site.

More information on IRS-impersonation scams, identity theft and suspicious e-mail is available on IRS.gov.

 

Page Last Reviewed or Updated: 08-Jan-2014

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