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File 1040ez for free Publication 926 - Main Content Table of Contents Do You Have a Household Employee? Can Your Employee Legally Work in the United States? Do You Need To Pay Employment Taxes?Social Security and Medicare Taxes Federal Unemployment (FUTA) Tax Do You Need To Withhold Federal Income Tax? What Do You Need To Know About the Earned Income Credit? How Do You Make Tax Payments? What Forms Must You File?Employee who leaves during the year. File 1040ez for free Filing options when no return is required. File 1040ez for free What Records Must You Keep? Can You Claim a Credit for Child and Dependent Care Expenses? How Can You Correct Schedule H?Adjust the overpayment. File 1040ez for free Claim for refund process. File 1040ez for free How To Get Tax HelpLow Income Taxpayer Clinics Do You Have a Household Employee? You have a household employee if you hired someone to do household work and that worker is your employee. File 1040ez for free The worker is your employee if you can control not only what work is done, but how it is done. File 1040ez for free If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. File 1040ez for free It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job. File 1040ez for free Example. File 1040ez for free You pay Betty Shore to babysit your child and do light housework 4 days a week in your home. File 1040ez for free Betty follows your specific instructions about household and child care duties. File 1040ez for free You provide the household equipment and supplies that Betty needs to do her work. File 1040ez for free Betty is your household employee. File 1040ez for free Household work. File 1040ez for free   Household work is work done in or around your home. File 1040ez for free Some examples of workers who do household work are: Babysitters, Caretakers, House cleaning workers, Domestic workers, Drivers, Health aides, Housekeepers, Maids, Nannies, Private nurses, and Yard workers. File 1040ez for free Workers who are not your employees. File 1040ez for free   If only the worker can control how the work is done, the worker is not your employee but is self-employed. File 1040ez for free A self-employed worker usually provides his or her own tools and offers services to the general public in an independent business. File 1040ez for free   A worker who performs child care services for you in his or her home generally is not your employee. File 1040ez for free   If an agency provides the worker and controls what work is done and how it is done, the worker is not your employee. File 1040ez for free Example. File 1040ez for free You made an agreement with John Peters to care for your lawn. File 1040ez for free John runs a lawn care business and offers his services to the general public. File 1040ez for free He provides his own tools and supplies, and he hires and pays any helpers he needs. File 1040ez for free Neither John nor his helpers are your household employees. File 1040ez for free More information. File 1040ez for free   More information about who is an employee is in Publication 15-A, Employer's Supplemental Tax Guide. File 1040ez for free Can Your Employee Legally Work in the United States? It is unlawful for you knowingly to hire or continue to employ an alien who cannot legally work in the United States. File 1040ez for free When you hire a household employee to work for you on a regular basis, you and the employee must complete the U. File 1040ez for free S. File 1040ez for free Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. File 1040ez for free No later than the first day of work, the employee must complete the employee section of the form by providing certain required information and attesting to his or her current work eligibility status in the United States. File 1040ez for free You must complete the employer section by examining documents presented by the employee as evidence of his or her identity and employment eligibility. File 1040ez for free Acceptable documents to establish identity and employment eligibility are listed on Form I-9. File 1040ez for free You should keep the completed Form I-9 in your own records. File 1040ez for free Do not submit it to the IRS, the USCIS, or any other government or other entity. File 1040ez for free The form must be kept available for review upon notice by an authorized U. File 1040ez for free S. File 1040ez for free Government official. File 1040ez for free Two copies of Form I-9 are contained in the Handbook for Employers (Form M-274) published by the USCIS. File 1040ez for free Call the USCIS at 1-800-870-3676 to order the Handbook for Employers; or you may download the handbook at www. File 1040ez for free uscis. File 1040ez for free gov. File 1040ez for free If you have questions about the employment eligibility verification process or other immigration-related employment matters, contact the USCIS Office of Business Liaison at 1-800-357-2099. File 1040ez for free You also can visit the USCIS website at www. File 1040ez for free uscis. File 1040ez for free gov to get Form I-9. File 1040ez for free For more information, see Employee's Social Security Number (SSN) in Publication 15 (Circular E), Employer's Tax Guide. File 1040ez for free Do You Need To Pay Employment Taxes? If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both. File 1040ez for free To find out, read Table 1. File 1040ez for free You do not need to withhold federal income tax from your household employee's wages. File 1040ez for free But if your employee asks you to withhold it, you can. File 1040ez for free See Do You Need To Withhold Federal Income Tax, later. File 1040ez for free If you need to pay social security, Medicare, or federal unemployment tax or choose to withhold federal income tax, read Table 2 for an overview of what you may need to do. File 1040ez for free If you do not need to pay social security, Medicare, or federal unemployment tax and do not choose to withhold federal income tax, read State employment taxes, next. File 1040ez for free The rest of this publication does not apply to you. File 1040ez for free State employment taxes. File 1040ez for free   You should contact your state unemployment tax agency to find out whether you need to pay state unemployment tax for your household employee. File 1040ez for free For a list of state unemployment tax agencies, visit the U. File 1040ez for free S. File 1040ez for free Department of Labor's website at www. File 1040ez for free workforcesecurity. File 1040ez for free doleta. File 1040ez for free gov/unemploy/agencies. File 1040ez for free asp. File 1040ez for free You should also determine if you need to pay or collect other state employment taxes or carry workers' compensation insurance. File 1040ez for free    Table 1. File 1040ez for free Do You Need To Pay Employment Taxes? IF you . File 1040ez for free . File 1040ez for free . File 1040ez for free THEN you need to . File 1040ez for free . File 1040ez for free . File 1040ez for free A– Pay cash wages of $1,900 or more in 2014 to any one household employee. File 1040ez for free Withhold and pay social security and Medicare taxes. File 1040ez for free The taxes are 15. File 1040ez for free 3%1 of cash wages. File 1040ez for free Your employee's share is 7. File 1040ez for free 65%1. File 1040ez for free   (You can choose to pay it yourself and not withhold it. File 1040ez for free ) Your share is 7. File 1040ez for free 65%. File 1040ez for free   Do not count wages you pay to— Your spouse, Your child under the age of 21, Your parent (see Wages not counted, later, for an exception), or Any employee under the age of 18 at any time in 2014 (see Wages not counted, later, for an exception). File 1040ez for free B– Pay total cash wages of $1,000 or more in any calendar quarter of 2013 or 2014 to household employees. File 1040ez for free Pay federal unemployment tax. File 1040ez for free The tax is 6% of cash wages. File 1040ez for free Wages over $7,000 a year per employee are not taxed. File 1040ez for free You also may owe state unemployment tax. File 1040ez for free   Do not count wages you pay to— Your spouse, Your child under the age of 21, or Your parent. File 1040ez for free 1In addition to withholding Medicare tax at 1. File 1040ez for free 45%, you must withhold a 0. File 1040ez for free 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 1040ez for free You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. File 1040ez for free Additional Medicare Tax is only imposed on the employee. File 1040ez for free There is no employer share of Additional Medicare Tax. File 1040ez for free All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. File 1040ez for free Note. File 1040ez for free If neither A nor B above applies, you do not need to pay any federal employment taxes. File 1040ez for free But you may still need to pay state employment taxes. File 1040ez for free Table 2. File 1040ez for free Household Employer's Checklist You may need to do the following things when you have a household employee. File 1040ez for free   When you hire a household employee: □ Find out if the person can legally work in the United States. File 1040ez for free  □ Find out if you need to pay state taxes. File 1040ez for free When you pay your household employee: □ Withhold social security and Medicare taxes. File 1040ez for free  □ Withhold federal income tax. File 1040ez for free  □ Decide how you will make tax payments. File 1040ez for free  □ Keep records. File 1040ez for free By February 2, 2015: □ Get an employer identification number (EIN). File 1040ez for free  □ Give your employee Copies B, C, and 2 of Form W-2, Wage and Tax Statement. File 1040ez for free By March 2, 2015 (March 31, 2015, if you file Form W-2 electronically): □ Send Copy A of Form W-2 to the Social Security Administration (SSA). File 1040ez for free By April 15, 2015: □ File Schedule H (Form 1040), Household Employment Taxes, with your 2014 federal income tax return (Form 1040, 1040NR, 1040-SS, or Form 1041). File 1040ez for free  If you do not have to file a return, file Schedule H by itself. File 1040ez for free Social Security and Medicare Taxes The social security tax pays for old-age, survivors, and disability benefits for workers and their families. File 1040ez for free The Medicare tax pays for hospital insurance. File 1040ez for free Both you and your household employee may owe social security and Medicare taxes. File 1040ez for free Your share is 7. File 1040ez for free 65% (6. File 1040ez for free 2% for social security tax and 1. File 1040ez for free 45% for Medicare tax) of the employee's social security and Medicare wages. File 1040ez for free Your employee's share is also 7. File 1040ez for free 65% (6. File 1040ez for free 2% for social security tax and 1. File 1040ez for free 45% for Medicare tax). File 1040ez for free In addition to withholding Medicare tax at 1. File 1040ez for free 45%, you must withhold a 0. File 1040ez for free 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 1040ez for free You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. File 1040ez for free Additional Medicare Tax is only imposed on the employee. File 1040ez for free There is no employer share of Additional Medicare Tax. File 1040ez for free All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. File 1040ez for free For more information on Additional Medicare Tax, visit IRS. File 1040ez for free gov and enter “Additional Medicare Tax” in the search box. File 1040ez for free Generally, you can use Table 3 to figure the amount of social security and Medicare taxes to withhold from each wage payment. File 1040ez for free You are responsible for payment of your employee's share of the taxes as well as your own. File 1040ez for free You can either withhold your employee's share from the employee's wages or pay it from your own funds. File 1040ez for free If you decide to pay the employee's share from your own funds, see Not withholding the employee's share, later. File 1040ez for free Pay the taxes as discussed under How Do You Make Tax Payments, later. File 1040ez for free Also, see What Forms Must You File, later. File 1040ez for free Social security and Medicare wages. File 1040ez for free   You figure social security and Medicare taxes on the social security and Medicare wages you pay your employee. File 1040ez for free   If you pay your household employee cash wages of $1,900 or more in 2014, all cash wages you pay to that employee in 2014 (regardless of when the wages were earned) up to $117,000 are social security wages and all cash wages are Medicare wages. File 1040ez for free However, any noncash wages you pay do not count as social security and Medicare wages. File 1040ez for free   If you pay the employee less than $1,900 in cash wages in 2014, none of the wages you pay the employee are social security or Medicare wages and neither you nor your employee will owe social security or Medicare tax on those wages. File 1040ez for free Cash wages. File 1040ez for free   Cash wages include wages you pay by check, money order, etc. File 1040ez for free Cash wages do not include the value of food, lodging, clothing, and other noncash items you give your household employee. File 1040ez for free However, cash you give your employee in place of these items is included in cash wages. File 1040ez for free State disability payments treated as wages. File 1040ez for free   Certain state disability plan payments that your household employee may receive are treated as social security and Medicare wages. File 1040ez for free For more information about these payments, see the Instructions for Schedule H (Form 1040) and the notice issued by the state. File 1040ez for free Wages not counted. File 1040ez for free   Do not count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $1,900 or more during the year. File 1040ez for free Your spouse. File 1040ez for free Your child who is under the age of 21. File 1040ez for free Your parent. File 1040ez for free Exception: Count these wages if both the following conditions apply. File 1040ez for free Your parent cares for your child who is either of the following. File 1040ez for free Under the age of 18, or Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed. File 1040ez for free Your marital status is one of the following. File 1040ez for free You are divorced and have not remarried, You are a widow or widower, or You are living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in the calendar quarter services were performed. File 1040ez for free An employee who is under the age of 18 at any time during the year. File 1040ez for free Exception: Count these wages if providing household services is the employee's principal occupation. File 1040ez for free If the employee is a student, providing household services is not considered to be his or her principal occupation. File 1040ez for free Also, if your employee's cash wages reach $117,000 (maximum wages subject to social security tax) in 2014, do not count any wages you pay that employee during the rest of the year as social security wages to figure social security tax. File 1040ez for free Continue to count the employee's cash wages as Medicare wages to figure Medicare tax. File 1040ez for free If you provide your employee transit passes to commute to your home, do not count the value of the transit passes (up to $130 per month for 2014) as wages. File 1040ez for free A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on mass transit, such as a bus or train. File 1040ez for free If you provide your employee parking at or near your home or at or near a location from which your employee commutes to your home, do not count the value of parking (up to $250 per month for 2014) as wages. File 1040ez for free If you reimburse your employee for transit passes or parking, you may be able to exclude the reimbursement amounts. File 1040ez for free See Publication 15-B, Employer's Tax Guide to Fringe Benefits, for special requirements for this exclusion. File 1040ez for free Withholding the employee's share. File 1040ez for free   You should withhold the employee's share of social security and Medicare taxes if you expect to pay your household employee cash wages of $1,900 or more in 2014. File 1040ez for free However, if you prefer to pay the employee's share yourself, see Not withholding the employee's share, later. File 1040ez for free   You can withhold the employee's share of the taxes even if you are not sure your employee's cash wages will be $1,900 or more in 2014. File 1040ez for free If you withhold the taxes but then actually pay the employee less than $1,900 in cash wages for the year, you should repay the employee. File 1040ez for free   Withhold 7. File 1040ez for free 65% (6. File 1040ez for free 2% for social security tax and 1. File 1040ez for free 45% for Medicare tax) from each payment of social security and Medicare wages. File 1040ez for free Generally, you can use Table 3 to figure the proper amount to withhold. File 1040ez for free You will pay the amount withheld to the IRS with your share of the taxes. File 1040ez for free Do not withhold any social security tax after your employee's social security wages for the year reach $117,000. File 1040ez for free Table 3. File 1040ez for free Employee Social Security (6. File 1040ez for free 2%) and Medicare (1. File 1040ez for free 45%1) Tax Withholding Table (See Publication 15 (Circular E) for income tax withholding tables. File 1040ez for free ) Use this table to figure the amount of social security and Medicare taxes to withhold from each wage payment. File 1040ez for free For example, on a wage payment of $180, the employee social security tax is $11. File 1040ez for free 16 ($6. File 1040ez for free 20 tax on $100 plus $4. File 1040ez for free 96 on $80 wages). File 1040ez for free The employee Medicare tax is $2. File 1040ez for free 61 ($1. File 1040ez for free 45 tax on $100 plus $1. File 1040ez for free 16 on $80 wages). File 1040ez for free If wage payment is: The social security tax to be withheld is: The Medicare tax to be withheld is: If wage payment is: The social security tax to be withheld is: The Medicare tax to be withheld is: $ 1. File 1040ez for free 00 . File 1040ez for free $ . File 1040ez for free 06 $ . File 1040ez for free 01 $ 51. File 1040ez for free 00 . File 1040ez for free $ 3. File 1040ez for free 16 $ . File 1040ez for free 74 2. File 1040ez for free 00 . File 1040ez for free . File 1040ez for free 12 . File 1040ez for free 03 52. File 1040ez for free 00 . File 1040ez for free 3. File 1040ez for free 22 . File 1040ez for free 75 3. File 1040ez for free 00 . File 1040ez for free . 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File 1040ez for free 20 1. File 1040ez for free 45 1In addition to withholding Medicare tax at 1. File 1040ez for free 45%, you must withhold a 0. File 1040ez for free 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 1040ez for free You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. File 1040ez for free Additional Medicare Tax is only imposed on the employee. File 1040ez for free There is no employer share of Additional Medicare Tax. File 1040ez for free All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. File 1040ez for free   If you make an error by withholding too little, you should withhold additional taxes from a later payment. File 1040ez for free If you withhold too much, you should repay the employee. File 1040ez for free    In addition to withholding Medicare tax at 1. File 1040ez for free 45%, you must withhold a 0. File 1040ez for free 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. File 1040ez for free You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. File 1040ez for free Additional Medicare Tax is only imposed on the employee. File 1040ez for free There is no employer share of Additional Medicare Tax. File 1040ez for free All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. File 1040ez for free For more information on Additional Medicare Tax, visit IRS. File 1040ez for free gov and enter “Additional Medicare Tax” in the search box. File 1040ez for free Example. File 1040ez for free On February 13, 2014, Mary Brown hired Jane R. File 1040ez for free Oak (who is an unrelated individual over age 18) to care for her child and agreed to pay cash wages of $50 every Friday. File 1040ez for free Jane worked for the remainder of the year (a total of 46 weeks). File 1040ez for free Mary did not give Jane a Form W-4 to request federal or state tax withholding. File 1040ez for free The following is the information Mary will need to complete Schedule H, Form W-2, and Form W-3. File 1040ez for free See the completed examples of Form W-2 and Form W-3 for 2014 at the end of this publication. File 1040ez for free Total cash wages paid to Jane $2,300. File 1040ez for free 00 ($50 x 46 weeks)       Jane's share of:     Social security tax $142. File 1040ez for free 60 ($2,300 x 6. File 1040ez for free 2% (. File 1040ez for free 062))         Medicare tax $33. File 1040ez for free 35       ($2,300 x 1. File 1040ez for free 45% (. File 1040ez for free 0145)) Mary's share of:     Social security tax $142. File 1040ez for free 60  ($2,300 x 6. File 1040ez for free 2% (. File 1040ez for free 062))           Medicare tax $33. File 1040ez for free 35  ($2,300 x 1. File 1040ez for free 45% (. File 1040ez for free 0145)) Amount reported on Form W-2 and Form W-3:   Box 1:Wages, tips $2,300. File 1040ez for free 00   Box 4: Social security tax withheld 142. File 1040ez for free 60   Box 6: Medicare tax withheld 33. File 1040ez for free 35 For information on withholding and reporting federal income taxes, see Publication 15 (Circular E). File 1040ez for free Not withholding the employee's share. File 1040ez for free   If you prefer to pay your employee's social security and Medicare taxes from your own funds, do not withhold them from your employee's wages. File 1040ez for free The social security and Medicare taxes you pay to cover your employee's share must be included in the employee's wages for income tax purposes. File 1040ez for free However, they are not counted as social security and Medicare wages or as federal unemployment (FUTA) wages. File 1040ez for free Example. File 1040ez for free In 2014 you hire a household employee (who is an unrelated individual over age 18) to care for your child and agree to pay cash wages of $100 every Friday. File 1040ez for free You expect to pay your employee $1,900 or more for the year. File 1040ez for free You decide to pay your employee's share of social security and Medicare taxes from your own funds. File 1040ez for free You pay your employee $100 every Friday without withholding any social security or Medicare taxes. File 1040ez for free For social security and Medicare tax purposes, your employee's wages each payday are $100. File 1040ez for free For each wage payment, you will pay $15. File 1040ez for free 30 when you pay the taxes. File 1040ez for free This is $7. File 1040ez for free 65 ($6. File 1040ez for free 20 for social security tax + $1. File 1040ez for free 45 for Medicare tax) to cover your employee's share plus $7. File 1040ez for free 65 ($6. File 1040ez for free 20 for social security tax + $1. File 1040ez for free 45 for Medicare tax) for your share. File 1040ez for free For income tax purposes, your employee's wages each payday are $107. File 1040ez for free 65 ($100 + the $7. File 1040ez for free 65 you will pay to cover your employee's share of social security and Medicare taxes). File 1040ez for free Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. File 1040ez for free Like most employers, you may owe both the federal unemployment tax (the FUTA tax) and a state unemployment tax. File 1040ez for free Or, you may owe only the FUTA tax or only the state unemployment tax. File 1040ez for free To find out whether you will owe state unemployment tax, contact your state's unemployment tax agency. File 1040ez for free For a list of state unemployment tax agencies, visit the U. File 1040ez for free S. File 1040ez for free Department of Labor's website at www. File 1040ez for free workforcesecurity. File 1040ez for free doleta. File 1040ez for free gov/unemploy/agencies. File 1040ez for free asp. File 1040ez for free You should also find out if you need to pay or collect other state employment taxes or carry workers' compensation insurance. File 1040ez for free The FUTA tax is 6. File 1040ez for free 0% of your employee's FUTA wages. File 1040ez for free However, you may be able to take a credit of up to 5. File 1040ez for free 4% against the FUTA tax, resulting in a net tax rate of 0. File 1040ez for free 6%. File 1040ez for free Your credit for 2014 is limited unless you pay all the required contributions for 2014 to your state unemployment fund by April 15, 2015. File 1040ez for free The credit you can take for any contributions for 2014 that you pay after April 15, 2015, is limited to 90% of the credit that would have been allowable if the contributions were paid by April 15, 2015. File 1040ez for free (If you did not pay all the required contributions for 2013 by April 15, 2014, see Credit for 2013, later. File 1040ez for free ) Note. File 1040ez for free   If a due date falls on a Saturday, Sunday, or legal holiday, payments are considered timely if made by the next business day. File 1040ez for free The term “legal holiday” means any legal holiday in the District of Columbia. File 1040ez for free Pay the tax as discussed under How Do You Make Tax Payments, later. File 1040ez for free Also, see What Forms Must You File, later. File 1040ez for free Note. File 1040ez for free   The 5. File 1040ez for free 4% credit is reduced for wages paid in a credit reduction state. File 1040ez for free See the Instructions for Schedule H (Form 1040). File 1040ez for free Do not withhold the FUTA tax from your employee's wages. File 1040ez for free You must pay it from your own funds. File 1040ez for free FUTA wages. File 1040ez for free   Figure the FUTA tax on the FUTA wages you pay. File 1040ez for free If you pay cash wages to all of your household employees totaling $1,000 or more in any calendar quarter of 2013 or 2014, the first $7,000 of cash wages you pay to each household employee in 2014 is FUTA wages. File 1040ez for free (A calendar quarter is January through March, April through June, July through September, or October through December. File 1040ez for free ) If your employee's cash wages reach $7,000 during the year, do not figure the FUTA tax on any wages you pay that employee during the rest of the year. File 1040ez for free For an explanation of cash wages, see the discussion on Social security and Medicare wages under Social Security and Medicare Taxes, earlier. File 1040ez for free Wages not counted. File 1040ez for free   Do not count wages you pay to any of the following individuals as FUTA wages. File 1040ez for free Your spouse. File 1040ez for free Your child who is under the age of 21. File 1040ez for free Your parent. File 1040ez for free Credit for 2013. File 1040ez for free   The credit you can take for any state unemployment fund contributions for 2013 that you pay after April 15, 2014, is limited to 90% of the credit that would have been allowable if the contributions were paid on or before April 15, 2014. File 1040ez for free Use Worksheet A to figure the credit for late contributions if you paid any state contributions after the due date for filing  Form 1040. File 1040ez for free Worksheet A. File 1040ez for free Worksheet for Credit for Late Contributions 1. File 1040ez for free Enter the amount from Schedule H, line 22   2. File 1040ez for free Enter the amount from Schedule H, line 19   3. File 1040ez for free Subtract line 2 from line 1. File 1040ez for free If zero or less, enter -0-   4. File 1040ez for free Enter total contributions paid to the state(s) after the Form 1040 due date   5. File 1040ez for free Enter the smaller of line 3 or line 4   6. File 1040ez for free Multiply line 5 by . File 1040ez for free 90 (90%)   7. File 1040ez for free Add lines 2 and 6   8. File 1040ez for free Enter the smaller of the amount on line 1 or line 7 here and on Schedule H, line 23   Do You Need To Withhold Federal Income Tax? You are not required to withhold federal income tax from wages you pay a household employee. File 1040ez for free You should withhold federal income tax only if your household employee asks you to withhold it and you agree. File 1040ez for free The employee must give you a completed Form W-4, Employee's Withholding Allowance Certificate. File 1040ez for free If you and your employee have agreed to withholding, either of you may end the agreement by letting the other know in writing. File 1040ez for free If you agree to withhold federal income tax, you are responsible for paying it to the IRS. File 1040ez for free Pay the tax as discussed under How Do You Make Tax Payments, later. File 1040ez for free Also, see What Forms Must You File, later. File 1040ez for free Use the income tax withholding tables in Publication 15 (Circular E) to find out how much to withhold. File 1040ez for free Figure federal income tax withholding on wages before you deduct any amounts for other withheld taxes. File 1040ez for free Withhold federal income tax from each payment of wages based on the filing status and exemptions shown on your employee's Form W-4. File 1040ez for free Publication 15 (Circular E) contains detailed instructions. File 1040ez for free Wages. File 1040ez for free   Figure federal income tax withholding on both cash and noncash wages you pay. File 1040ez for free Measure wages you pay in any form other than cash by the fair market value of the noncash item. File 1040ez for free   Do not count as wages any of the following items. File 1040ez for free Meals provided to your employee at your home for your convenience. File 1040ez for free Lodging provided to your employee at your home for your convenience and as a condition of employment. File 1040ez for free Up to $130 per month for 2014 for transit passes you give your employee (or for any cash reimbursement you make for the amount your employee pays for transit passes used to commute to your home if you qualify for this exclusion). File 1040ez for free A transit pass includes any pass, token, fare card, voucher, or similar item entitling a person to ride on mass transit, such as a bus or train. File 1040ez for free See Publication 15-B for special requirements for this exclusion. File 1040ez for free Up to $250 per month for 2014 for the value of parking you provide your employee or for any cash reimbursement you make for the amount your employee pays and substantiates for parking at or near your home or at or near a location from which your employee commutes to your home. File 1040ez for free   See Publication 15 (Circular E) for more information on cash and noncash wages. File 1040ez for free Paying tax without withholding. File 1040ez for free   Any income tax you pay for your employee without withholding it from the employee's wages must be included in the employee's wages for federal income tax purposes. File 1040ez for free It also must be included in social security and Medicare wages and in federal unemployment (FUTA) wages. File 1040ez for free What Do You Need To Know About the Earned Income Credit? Certain workers can take the earned income credit (EIC) on their federal income tax return. File 1040ez for free This credit reduces their tax or allows them to receive a payment from the IRS. File 1040ez for free You also may have to give your employee a notice about the EIC. File 1040ez for free Notice about the EIC. File 1040ez for free   Copy B of the 2014 Form W-2 has a statement about the EIC on the back. File 1040ez for free If you give your employee that copy by February 2, 2015 (as discussed under Form W-2 under What Forms Must You File, later), you do not have to give the employee any other notice about the EIC. File 1040ez for free   If you do not give your employee Copy B of the Form W-2, your notice about the EIC can be any of the following items. File 1040ez for free A substitute Form W-2 with the same EIC information on the back of the employee's copy that is on Copy B of the Form W-2. File 1040ez for free Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). File 1040ez for free Your own written statement with the same wording as in Notice 797. File 1040ez for free If a substitute Form W-2 is given on time but does not have the required EIC information, you must notify the employee within one week of the date the substitute Form W-2 is given. File 1040ez for free If Form W-2 is required but is not given on time, you must give the employee Notice 797 or your written statement about the 2014 EIC by February 2, 2015. File 1040ez for free If Form W-2 is not required, you must notify the employee by February 7, 2015. File 1040ez for free   You must give your household employee a notice about the EIC if you agree to withhold federal income tax from the employee's wages (as discussed earlier under Do You Need To Withhold Federal Income Tax?) and the income tax withholding tables show that no tax should be withheld. File 1040ez for free Even if not required, you are encouraged to give the employee a notice about the EIC if his or her 2014 wages are less than $46,997 ($52,427 if married filing jointly). File 1040ez for free How Do You Make Tax Payments? When you file your 2014 federal income tax return in 2015, attach Schedule H (Form 1040) to your Form 1040, 1040NR, 1040-SS, or 1041. File 1040ez for free Use Schedule H to figure your total household employment taxes (social security, Medicare, FUTA, and withheld federal income taxes). File 1040ez for free Add these household employment taxes to your income tax. File 1040ez for free Pay the amount due by April 15, 2015. File 1040ez for free For more information about using Schedule H, see Schedule H under What Forms Must You File, later. File 1040ez for free You can avoid owing tax with your return if you pay enough tax during the year to cover your household employment taxes, as well as your income tax. File 1040ez for free You can pay the additional tax in any of the following ways. File 1040ez for free Ask your employer to withhold more federal income tax from your wages in 2014. File 1040ez for free Ask the payer of your pension or annuity to withhold more federal income tax from your benefits. File 1040ez for free Make estimated tax payments for 2014 to the IRS. File 1040ez for free Increase your payments if you already make estimated tax payments. File 1040ez for free You may be subject to the estimated tax underpayment penalty if you did not pay enough income and household employment taxes during the year. File 1040ez for free (See Publication 505, Tax Withholding and Estimated Tax, for information about the underpayment penalty. File 1040ez for free ) However, you will not be subject to the penalty if both of the following situations apply to you. File 1040ez for free You will not have federal income tax withheld from wages, pensions, or any other payments you receive. File 1040ez for free Your income taxes, excluding your household employment taxes, would not be enough to require payment of estimated taxes. File 1040ez for free Asking for more federal income tax withholding. File 1040ez for free   If you are employed and want more federal income tax withheld from your wages to cover your household employment taxes, give your employer a new Form W-4. File 1040ez for free Complete it as before, but show the additional amount you want withheld from each paycheck on line 6. File 1040ez for free   If you receive a pension or annuity and want more federal income tax withheld to cover household employment taxes, give the payer a new Form W-4P, Withholding Certificate for Pension or Annuity Payments (or a similar form provided by the payer). File 1040ez for free Complete it as before, but show the additional amount you want withheld from each benefit payment on line 3. File 1040ez for free   See Publication 505 to make sure you will have the right amount withheld. File 1040ez for free It will help you compare your total expected withholding for 2014 with the combined income tax and employment taxes that you can expect to figure on your 2014 tax return. File 1040ez for free Paying estimated tax. File 1040ez for free   If you want to make estimated tax payments to cover household employment taxes, get Form 1040-ES, Estimated Tax for Individuals. File 1040ez for free You can use its payment vouchers to make your payments by check or money order. File 1040ez for free You may be able to pay by Electronic Funds Withdrawal (EFW) or credit card. File 1040ez for free For details, see the form instructions and visit IRS. File 1040ez for free gov. File 1040ez for free    You can pay all the employment taxes at once or you can pay them in installments. File 1040ez for free If you have already made estimated tax payments for 2014, you can increase your remaining payments to cover the employment taxes. File 1040ez for free Estimated tax payments for 2014 are due April 15, June 16, and September 15, 2014, and January 15, 2015. File 1040ez for free Payment option for business employers. File 1040ez for free   If you own a business as a sole proprietor or your home is on a farm operated for profit, you can choose either of two ways to pay your 2014 household employment taxes. File 1040ez for free You can pay them with your federal income tax as previously described, or you can include them with your federal employment tax deposits or other payments for your business or farm employees. File 1040ez for free For information on depositing employment taxes, see Publication 15 (Circular E). File 1040ez for free   If you pay your household employment taxes with your business or farm employment taxes, you must report your household employment taxes with those other employment taxes on Form 941, Employer's QUARTERLY Federal Tax Return, Form 944, Employer's ANNUAL Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. File 1040ez for free See Business employment tax returns, later. File 1040ez for free    The deduction that can be taken on Schedules C and F (Form 1040) for wages and employment taxes applies only to wages and taxes paid for business and farm employees. File 1040ez for free You cannot deduct the wages and employment taxes paid for your household employees on your Schedule C or F. File 1040ez for free More information. File 1040ez for free   For more information about paying taxes through federal income tax withholding and estimated tax payments, and figuring the estimated tax penalty, see Publication 505. File 1040ez for free What Forms Must You File? You must file certain forms to report your household employee's wages and the federal employment taxes for the employee if you pay any of the following wages to the employee. File 1040ez for free Social security and Medicare wages. File 1040ez for free FUTA wages. File 1040ez for free Wages from which you withhold federal income tax. File 1040ez for free For information on ordering employment tax forms, see How To Get Tax Help, later. File 1040ez for free Employer identification number (EIN). File 1040ez for free   You must include your employer identification number (EIN) on the forms you file for your household employee. File 1040ez for free An EIN is a nine-digit number issued by the IRS. File 1040ez for free It is not the same as a social security number. File 1040ez for free    You ordinarily will have an EIN if you previously paid taxes for employees, either as a household employer or as a sole proprietor of a business you own. File 1040ez for free If you already have an EIN, use that number. File 1040ez for free   If you do not have an EIN, you may apply for one online. File 1040ez for free Go to IRS. File 1040ez for free gov and click on the Apply for an EIN Online link under Tools. File 1040ez for free You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. File 1040ez for free Form W-2. File 1040ez for free   File a separate 2014 Form W-2, for each household employee to whom you pay either of the following wages during the year. File 1040ez for free Social security and Medicare wages of $1,900 or more. File 1040ez for free Wages from which you withhold federal income tax. File 1040ez for free You must complete Form W-2 and give Copies B, C, and 2 to your employee by February 2, 2015. File 1040ez for free You must send Copy A of Form W-2 with Form W-3, Transmittal of Wage and Tax Statements, to the SSA by March 2, 2015 (March 31, 2015, if you file your Form W-2 electronically). File 1040ez for free Electronic filing is available to all employers and is free, fast, secure, and offers a later filing deadline. File 1040ez for free Visit the SSA's Employer W-2 Filing Instructions & Information website at www. File 1040ez for free socialsecurity. File 1040ez for free gov/employer for guidelines on filing electronically. File 1040ez for free Employee who leaves during the year. File 1040ez for free   If an employee stops working for you before the end of 2014, you can file Form W-2 and provide copies to your employee immediately after you make your final payment of wages. File 1040ez for free You do not need to wait until 2015. File 1040ez for free If the employee asks you for Form W-2, give it to him or her within 30 days after the request or the last wage payment, whichever is later. File 1040ez for free Schedule H. File 1040ez for free   Use Schedule H to report household employment taxes if you pay any of the following wages to the employee. File 1040ez for free Social security and Medicare wages of $1,900 or more. File 1040ez for free FUTA wages. File 1040ez for free Wages from which you withhold federal income tax. File 1040ez for free File Schedule H with your 2014 federal income tax return by April 15, 2015. File 1040ez for free If you get an extension to file your return, the extension also will apply to your Schedule H. File 1040ez for free Filing options when no return is required. File 1040ez for free   If you are not required to file a 2014 tax return, you have the following two options. File 1040ez for free You can file Schedule H by itself. File 1040ez for free See the Schedule H instructions for details. File 1040ez for free If, besides your household employee, you have other employees for whom you report employment taxes on Form 941, Form 944, or Form 943 and on Form 940, you can include your taxes for your household employee on those forms. File 1040ez for free See Business employment tax returns, next. File 1040ez for free   Employers having the options listed above include certain tax-exempt organizations that do not have to file a tax return, such as churches that pay a household worker to take care of a minister's home. File 1040ez for free Business employment tax returns. File 1040ez for free   Do not use Schedule H if you choose to pay the employment taxes for your household employee with business or farm employment taxes. File 1040ez for free (See Payment option for business employers, earlier. File 1040ez for free ) Instead, include the social security, Medicare, and withheld federal income taxes for the employee on the Form 941 or Form 944 you file for your business or on the Form 943 you file for your farm. File 1040ez for free Include the FUTA tax for the employee on your Form 940. File 1040ez for free   If you report the employment taxes for your household employee on Form 941, Form 944, or Form 943, file Form W-2 for that employee with the Forms W-2 and Form W-3 for your business or farm employees. File 1040ez for free   For information on filing Form 941 or Form 944, see Publication 15 (Circular E). File 1040ez for free For information on filing Form 943, see Publication 51 (Circular A), Agricultural Employer's Tax Guide. File 1040ez for free Both of these publications also provide information about filing Form 940. File 1040ez for free What Records Must You Keep? Keep your copies of Schedule H or other employment tax forms you file and related Forms W-2, W-3, and W-4. File 1040ez for free You must also keep records to support the information you enter on the forms you file. File 1040ez for free If you must file Form W-2, you will need to keep a record of your employee's name, address, and social security number. File 1040ez for free Wage and tax records. File 1040ez for free   On each payday, you should record the date and amounts of all the following items. File 1040ez for free Your employee's cash and noncash wages. File 1040ez for free Any employee social security tax you withhold or agree to pay for your employee. File 1040ez for free Any employee Medicare tax you withhold or agree to pay for your employee. File 1040ez for free Any federal income tax you withhold. File 1040ez for free Any state employment taxes you withhold. File 1040ez for free Employee's social security number. File 1040ez for free   You must keep a record of your employee's name and social security number exactly as they appear on his or her social security card if you pay the employee either of the following. File 1040ez for free Social security and Medicare wages of $1,900 or more. File 1040ez for free Wages from which you withhold federal income tax. File 1040ez for free You must ask for your employee's social security number no later than the first day on which you pay the wages. File 1040ez for free You may wish to ask for it when you hire your employee. File 1040ez for free You should ask your employee to show you his or her social security card. File 1040ez for free The employee may show the card if it is available. File 1040ez for free You may, but are not required to, photocopy the card if the employee provides it. File 1040ez for free   An employee who does not have a social security number must apply for one on Form SS-5, Application for a Social Security Card. File 1040ez for free An employee who has lost his or her social security card or whose name is not correctly shown on the card may apply for a replacement card. File 1040ez for free    Employees can get Form SS-5 from any Social Security Administration office or by calling 1-800-772-1213. File 1040ez for free    You also can download Form SS-5 from the Social Security Administration website at  www. File 1040ez for free socialsecurity. File 1040ez for free gov/online/ss-5. File 1040ez for free pdf. File 1040ez for free How long to keep records. File 1040ez for free   Keep your employment tax records for at least 4 years after the due date of the return on which you report the taxes or the date the taxes were paid, whichever is later. File 1040ez for free Can You Claim a Credit for Child and Dependent Care Expenses? If your household employee cares for your dependent who is under age 13 or for your spouse or dependent who is not capable of self-care, you may be able to take an income tax credit against some of your expenses. File 1040ez for free To qualify, you must pay these expenses so you can work or look for work. File 1040ez for free If you can take the credit, you can include in your qualifying expenses your share of the federal and state employment taxes you pay, as well as the employee's wages. File 1040ez for free For information about the credit, see Publication 503, Child and Dependent Care Expenses. File 1040ez for free How Can You Correct Schedule H? If you discover that you made an error on a Schedule H (or Anexo H-PR), the forms used to correct the error depend on whether the Schedule H was attached to another form or whether it was filed by itself. File 1040ez for free Schedule H attached to another form. File 1040ez for free    If you discover an error on a Schedule H that you previously filed with Form 1040, Form 1040NR, or Form 1040-SS, file Form 1040X, Amended U. File 1040ez for free S. File 1040ez for free Individual Income Tax Return, and attach a corrected Schedule H. File 1040ez for free If you filed Formulario 1040-PR, file a Form 1040X and attach a corrected Anexo H-PR. File 1040ez for free If you discover an error on a Schedule H that you previously filed with Form 1041, U. File 1040ez for free S. File 1040ez for free Income Tax Return for Estates and Trusts, file an “amended” Form 1041 and attach a corrected Schedule H. File 1040ez for free You discovered (that is, ascertained) the error when you had enough information to be able to correct the error. File 1040ez for free Write “CORRECTED” (or “CORREGIDO”) and the date you discovered the error in the top margin of your corrected Schedule H (or Anexo H-PR), in dark, bold letters. File 1040ez for free In addition, explain the reason for your correction and the date the error was discovered in Part III of Form 1040X or in a statement attached to the amended Form 1041. File 1040ez for free Schedule H filed by itself. File 1040ez for free   If you discover an error on a Schedule H (or Anexo H-PR) that you filed as a stand-alone return, file another stand-alone Schedule H with the corrected information. File 1040ez for free You discovered (that is, ascertained) the error when you had enough information to be able to correct the error. File 1040ez for free Write “CORRECTED” (or “CORREGIDO”) and the date you discovered the error in the top margin of your corrected Schedule H (or Anexo H-PR), in dark, bold letters. File 1040ez for free In addition, explain the reason for your correction and the date the error was discovered in a statement attached to the corrected Schedule H. File 1040ez for free If you have an overpayment, also write “ADJUSTED” (or “CORREGIDO”) or “REFUND” (or “REEMBOLSO”) in the top margin, depending on whether you want to adjust your overpayment or claim a refund. File 1040ez for free (See Overpayment of tax, later. File 1040ez for free ) When to file. File 1040ez for free   File a corrected Schedule H when you discover an error on a previously filed Schedule H. File 1040ez for free If you are correcting an underpayment, file a corrected Schedule H no later than the due date of your next tax return (generally, April 15 of the following calendar year) after you discover the error. File 1040ez for free If you are correcting an overpayment, file a corrected Schedule H within the refund period of limitations (generally 3 years from the date your original form was filed or within 2 years from the date you paid the tax, whichever is later). File 1040ez for free Underpayment of tax. File 1040ez for free   You must pay any underpayment of social security and Medicare taxes by the time you file the corrected Schedule H. File 1040ez for free Generally, by filing on time and paying by the time you file the return, you will not be charged interest (and will not be subject to failure-to-pay or estimated tax penalties) on the balance due. File 1040ez for free However, underreported FUTA taxes will be subject to interest. File 1040ez for free Overpayment of tax. File 1040ez for free    You may either adjust or claim a refund of an overpayment of social security and Medicare taxes on a previously filed Schedule H. File 1040ez for free However, if you are correcting an overpayment and are filing the corrected Schedule H within 90 days of the expiration of the period of limitations, you can only claim a refund of the overpayment. File 1040ez for free Adjust the overpayment. File 1040ez for free   If the corrected Schedule H is filed with a Form 1040X or an amended Form 1041, adjust your return by indicating on line 22 of the Form 1040X or on line 29a of the Form 1041 that you would like the overpayment applied to your estimated taxes on Form 1040, Form 1040NR, Form 1040-PR, Form 1040-SS, or Form 1041 for the year in which you are filing the corrected Schedule H. File 1040ez for free If the corrected Schedule H is filed as a stand-alone return, adjust your return by writing “ADJUSTED” (or “CORREGIDO”) in the top margin (in dark, bold letters). File 1040ez for free If you adjust your return, you will not receive interest on your overpayment. File 1040ez for free If the corrected Schedule H will be filed within 90 days of the expiration of the refund period of limitations, you may not adjust the return and must claim a refund for the overpayment. File 1040ez for free You may not adjust your return to correct overpayments of FUTA tax. File 1040ez for free Claim for refund process. File 1040ez for free   If the corrected Schedule H is filed with a Form 1040X or an amended Form 1041, claim a refund by indicating that you would like the overpayment refunded to you on line 21 of the Form 1040X or line 29b of the Form 1041. File 1040ez for free If the corrected Schedule H is filed as a stand-alone return, claim a refund by writing “REFUND” (or “REEMBOLSO”) in the top margin (in dark, bold letters). File 1040ez for free You will receive interest on any overpayment refunded, unless the overpayment is for FUTA tax because you were entitled to increased credits for state contributions. File 1040ez for free Required repayment or consent. File 1040ez for free   If you previously overreported social security and Medicare taxes, you may adjust your overpayment only after you have repaid or reimbursed your employees in the amount of the overcollection of employee tax. File 1040ez for free You reimburse your employees by applying the overwithheld amount against taxes to be withheld on future wages. File 1040ez for free You may claim a refund for the overpayment only after you have repaid or reimbursed your employees in the amount of the overcollection or you have obtained consents from your employees to file the claim for refund for the employee tax. File 1040ez for free Include a statement that you repaid or reimbursed your employees, or obtained their written consents in the case of a claim for refund, in Part III of Form 1040X or in a statement attached to the amended Form 1041 or the stand-alone corrected Schedule H. File 1040ez for free Filing required Forms W-2 or Forms W-2c. File 1040ez for free   Whether you previously underreported tax or overreported tax, you will generally be required to file Form W-2, or their territorial equivalents (if none was previously filed), or Form W-2c, Corrected Wage and Tax Statement, to reflect the changes reported on your corrected Schedule H. File 1040ez for free Additional Medicare Tax. File 1040ez for free   Generally, you may not correct an error in Additional Medicare Tax withholding for wages paid to employees in a prior year unless it is an administrative error. File 1040ez for free An administrative error occurs if the amount you entered on Schedule H is not the amount you actually withheld. File 1040ez for free For example, if the Additional Medicare Tax actually withheld was incorrectly reported on Schedule H due to a mathematical or transposition error, this would be an administrative error. File 1040ez for free   Any underwithheld Additional Medicare Tax must be recovered from employees on or before the last day of the calendar year in which the underwithholding occurred. File 1040ez for free Any excess Additional Medicare Tax withholding must be repaid or reimbursed to employees before the end of the calendar year in which it was withheld. File 1040ez for free Additional information. File 1040ez for free   For more information about correcting errors on a previously filed Schedule H, see page 4 of Form 944-X, Form 944-X: Which process should you use? (substitute “Schedule H” for “Form 944-X”) and the Instructions for Form 944-X (or Formulario 944-X (PR)). File 1040ez for free Also, visit IRS. File 1040ez for free gov. File 1040ez for free How To Get Tax Help 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. File 1040ez for free Free help with your tax return. File 1040ez for free   You can get free help preparing your return nationwide from IRS-certified volunteers. File 1040ez for free The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. File 1040ez for free The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File 1040ez for free 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. File 1040ez for free In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. File 1040ez for free To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. File 1040ez for free gov, download the IRS2Go app, or call 1-800-906-9887. File 1040ez for free   As part of the TCE program, AARP offers the Tax-Aide counseling program. File 1040ez for free To find the nearest AARP Tax-Aide site, visit AARP's website at www. File 1040ez for free aarp. File 1040ez for free org/money/taxaide or call 1-888-227-7669. File 1040ez for free For more information on these programs, go to IRS. File 1040ez for free gov and enter “VITA” in the search box. File 1040ez for free Internet. File 1040ez for free    IRS. File 1040ez for free gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. File 1040ez for free Download the free IRS2Go app from the iTunes app store or from Google Play. File 1040ez for free 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. File 1040ez for free Check the status of your 2013 refund with the Where's My Refund? application on IRS. File 1040ez for free gov or download the IRS2Go app and select the Refund Status option. File 1040ez for free The IRS issues more than 9 out of 10 refunds in less than 21 days. File 1040ez for free 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. File 1040ez for free You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 1040ez for free The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File 1040ez for free Use the Interactive Tax Assistant (ITA) to research your tax questions. File 1040ez for free No need to wait on the phone or stand in line. File 1040ez for free 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. File 1040ez for free When you reach the response screen, you can print the entire interview and the final response for your records. File 1040ez for free New subject areas are added on a regular basis. File 1040ez for free  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. File 1040ez for free gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. File 1040ez for free You can use the IRS Tax Map, to search publications and instructions by topic or keyword. File 1040ez for free The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. File 1040ez for free 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. File 1040ez for free 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. File 1040ez for free You can also ask the IRS to mail a return or an account transcript to you. File 1040ez for free Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. File 1040ez for free gov or by calling 1-800-908-9946. File 1040ez for free Tax return and tax account transcripts are generally available for the current year and the past three years. File 1040ez for free Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. File 1040ez for free Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. File 1040ez for free 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. File 1040ez for free Check the status of your amended return using Where's My Amended Return? Go to IRS. File 1040ez for free gov and enter Where's My Amended Return? in the search box. File 1040ez for free You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File 1040ez for free It can take up to 3 weeks from the date you mailed it to show up in our system. File 1040ez for free Make a payment using one of several safe and convenient electronic payment options available on IRS. File 1040ez for free gov. File 1040ez for free Select the Payment tab on the front page of IRS. File 1040ez for free gov for more information. File 1040ez for free Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. File 1040ez for free Figure your income tax withholding with the IRS Withholding Calculator on IRS. File 1040ez for free gov. File 1040ez for free 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. File 1040ez for free Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File 1040ez for free gov. File 1040ez for free Request an Electronic Filing PIN by going to IRS. File 1040ez for free gov and entering Electronic Filing PIN in the search box. File 1040ez for free Download forms, instructions and publications, including accessible versions for people with disabilities. File 1040ez for free Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. File 1040ez for free gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. File 1040ez for free An employee can answer questions about your tax account or help you set up a payment plan. File 1040ez for free Before you visit, check the Office Locator on IRS. File 1040ez for free gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. File 1040ez for free If you have a special need, such as a disability, you can request an appointment. File 1040ez for free Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File 1040ez for free Apply for an Employer Identification Number (EIN). File 1040ez for free Go to IRS. File 1040ez for free gov and enter Apply for an EIN in the search box. File 1040ez for free Read the Internal Revenue Code, regulations, or other official guidance. File 1040ez for free Read Internal Revenue Bulletins. File 1040ez for free Sign up to receive local and national tax news and more by email. File 1040ez for free Just click on “subscriptions” above the search box on IRS. File 1040ez for free gov and choose from a variety of options. File 1040ez for free Phone. File 1040ez for free    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File 1040ez for free Download the free IRS2Go app from the iTunes app store or from Google Play. File 1040ez for free Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. File 1040ez for free gov, or download the IRS2Go app. File 1040ez for free 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. File 1040ez for free The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File 1040ez for free Most VITA and TCE sites offer free electronic filing. File 1040ez for free Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File 1040ez for free Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File 1040ez for free 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. File 1040ez for free 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. File 1040ez for free The IRS issues more than 9 out of 10 refunds in less than 21 days. File 1040ez for free Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 1040ez for free 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. File 1040ez for free The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File 1040ez for free Note, the above information is for our automated hotline. File 1040ez for free 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. File 1040ez for free Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File 1040ez for free You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File 1040ez for free It can take up to 3 weeks from the date you mailed it to show up in our system. File 1040ez for free 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). File 1040ez for free You should receive your order within 10 business days. File 1040ez for free Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. File 1040ez for free 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. File 1040ez for free Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File 1040ez for free The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File 1040ez for free These individuals can also contact the IRS through relay services such as the Federal Relay Service. File 1040ez for free Walk-in. File 1040ez for free   You can find a selection of forms, publications and services — in-person. File 1040ez for free Products. File 1040ez for free You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File 1040ez for free Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. File 1040ez for free Services. File 1040ez for free You can walk in to your local TAC for face-to-face tax help. File 1040ez for free An employee can answer questions about your tax account or help you set up a payment plan. File 1040ez for free Before visiting, use the Office Locator tool on IRS. File 1040ez for free gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. File 1040ez for free Mail. File 1040ez for free   You can send your order for forms, instructions, and publications to the address below. File 1040ez for free You should receive a response within 10 business days after your request is received. File 1040ez for free Internal Revenue Service 1201 N. File 1040ez for free Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. File 1040ez for free The Taxpayer Advocate Service (TAS) is your voice at the IRS. File 1040ez for free Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File 1040ez for free   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. File 1040ez for free 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. File 1040ez for free You face (or your business is facing) an immediate threat of adverse action. File 1040ez for free You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File 1040ez for free   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. File 1040ez for free Here's why we can help: TAS is an independent organization within the IRS. File 1040ez for free Our advocates know how to work with the IRS. File 1040ez for free Our services are free and tailored to meet your needs. File 1040ez for free We have offices in every state, the District of Columbia, and Puerto Rico. File 1040ez for free   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. File 1040ez for free   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File 1040ez for free If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. File 1040ez for free 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. File 1040ez for free Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. File 1040ez for free Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. File 1040ez for free Sample W-2 Form This image is too large to be displayed in the current screen. File 1040ez for free Please click the link to view the image. File 1040ez for free Webtitle: Form W-2 Wage and Tax Statement and Form W-3 Transmitttal of Wage and Tax Statemtents Prev  Up  Next   Home   More Online Publications
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The Denali Commission is an independent federal agency designed to provide critical utilities, infrastructure, and economic support throughout Alaska.

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Website: Denali Commission

Address: 510 L St
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Anchorage, AK 99501

Phone Number: (907) 271-1414

Toll-free: (888) 480-4321

The File 1040ez For Free

File 1040ez for free 6. File 1040ez for free   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. File 1040ez for free Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. File 1040ez for free Also use basis to figure depreciation, amortization, depletion, and casualty losses. File 1040ez for free If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. File 1040ez for free Only the basis allocated to the business or investment use of the property can be depreciated. File 1040ez for free Your original basis in property is adjusted (increased or decreased) by certain events. File 1040ez for free For example, if you make improvements to the property, increase your basis. File 1040ez for free If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. File 1040ez for free Keep accurate records of all items that affect the basis of your assets. File 1040ez for free For information on keeping records, see chapter 1. File 1040ez for free Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. File 1040ez for free Cost Basis The basis of property you buy is usually its cost. File 1040ez for free Cost is the amount you pay in cash, debt obligations, other property, or services. File 1040ez for free Your cost includes amounts you pay for sales tax, freight, installation, and testing. File 1040ez for free The basis of real estate and business assets will include other items, discussed later. File 1040ez for free Basis generally does not include interest payments. File 1040ez for free However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. File 1040ez for free You also may have to capitalize (add to basis) certain other costs related to buying or producing property. File 1040ez for free Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. File 1040ez for free Loans with low or no interest. File 1040ez for free   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus the amount considered to be unstated interest. File 1040ez for free You generally have unstated interest if your interest rate is less than the applicable federal rate. File 1040ez for free See the discussion of unstated interest in Publication 537, Installment Sales. File 1040ez for free Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. File 1040ez for free If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. File 1040ez for free Some of these expenses are discussed next. File 1040ez for free Lump sum purchase. File 1040ez for free   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. File 1040ez for free Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. File 1040ez for free Figure the basis of each asset by multiplying the lump sum by a fraction. File 1040ez for free The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. File 1040ez for free Fair market value (FMV). File 1040ez for free   FMV is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. File 1040ez for free Sales of similar property on or about the same date may help in figuring the FMV of the property. File 1040ez for free If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. File 1040ez for free Real estate taxes. File 1040ez for free   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. File 1040ez for free   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. File 1040ez for free Whether or not you reimburse the seller, do not include that amount in the basis of your property. File 1040ez for free Settlement costs. File 1040ez for free   Your basis includes the settlement fees and closing costs for buying the property. File 1040ez for free See Publication 551 for a detailed list of items you can and cannot include in basis. File 1040ez for free   Do not include fees and costs for getting a loan on the property. File 1040ez for free Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. File 1040ez for free Points. File 1040ez for free   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. File 1040ez for free You may be able to deduct the points currently or over the term of the loan. File 1040ez for free For more information about deducting points, see Points in chapter 4 of Publication 535. File 1040ez for free Assumption of a mortgage. File 1040ez for free   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. File 1040ez for free Example. File 1040ez for free If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. File 1040ez for free Constructing assets. File 1040ez for free   If you build property or have assets built for you, your expenses for this construction are part of your basis. File 1040ez for free Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. File 1040ez for free   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. File 1040ez for free You must capitalize them (include them in the asset's basis). File 1040ez for free Employee wages paid for the construction work, reduced by any employment credits allowed. File 1040ez for free Depreciation on equipment you own while it is used in the construction. File 1040ez for free Operating and maintenance costs for equipment used in the construction. File 1040ez for free The cost of business supplies and materials used in the construction. File 1040ez for free    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. File 1040ez for free Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. File 1040ez for free To determine the basis of these assets or separate items, there must be an allocation of basis. File 1040ez for free Group of assets acquired. File 1040ez for free   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. File 1040ez for free Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. File 1040ez for free You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. File 1040ez for free If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. File 1040ez for free Farming business acquired. File 1040ez for free   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. File 1040ez for free Generally, reduce the purchase price by any cash received. File 1040ez for free Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. File 1040ez for free See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. File 1040ez for free Transplanted embryo. File 1040ez for free   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. File 1040ez for free Allocate the rest of the purchase price to the basis of the calf. File 1040ez for free Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. File 1040ez for free Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. File 1040ez for free You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. File 1040ez for free Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. File 1040ez for free However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. File 1040ez for free You produce property if you construct, build, install, manufacture, develop, improve, or create the property. File 1040ez for free You are not subject to the uniform capitalization rules if the property is produced for personal use. File 1040ez for free In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. File 1040ez for free Plants. File 1040ez for free   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. File 1040ez for free Animals. File 1040ez for free   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. File 1040ez for free The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. File 1040ez for free Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. File 1040ez for free For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. File 1040ez for free For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. File 1040ez for free Exceptions. File 1040ez for free   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. File 1040ez for free   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. File 1040ez for free See Accrual Method Required under Accounting Methods in chapter 2. File 1040ez for free   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. File 1040ez for free If you make this election, special rules apply. File 1040ez for free This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. File 1040ez for free This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. File 1040ez for free    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. File 1040ez for free See chapter 7, for additional information on depreciation. File 1040ez for free Example. File 1040ez for free You grow trees that have a preproductive period of more than 2 years. File 1040ez for free The trees produce an annual crop. File 1040ez for free You are an individual and the uniform capitalization rules apply to your farming business. File 1040ez for free You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. File 1040ez for free You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. File 1040ez for free Preproductive period of more than 2 years. File 1040ez for free   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. File 1040ez for free Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. File 1040ez for free Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. File 1040ez for free More information. File 1040ez for free   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. File 1040ez for free 263A-4. File 1040ez for free Table 6-1. File 1040ez for free Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. File 1040ez for free Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. File 1040ez for free The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. File 1040ez for free Increases to Basis Increase the basis of any property by all items properly added to a capital account. File 1040ez for free These include the cost of any improvements having a useful life of more than 1 year. File 1040ez for free The following costs increase the basis of property. File 1040ez for free The cost of extending utility service lines to property. File 1040ez for free Legal fees, such as the cost of defending and perfecting title. File 1040ez for free Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. File 1040ez for free Assessments for items such as paving roads and building ditches that increase the value of the property assessed. File 1040ez for free Do not deduct these expenses as taxes. File 1040ez for free However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. File 1040ez for free If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. File 1040ez for free See chapter 7. File 1040ez for free Deducting vs. File 1040ez for free capitalizing costs. File 1040ez for free   Do not add to your basis costs you can deduct as current expenses. File 1040ez for free For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. File 1040ez for free However, you can elect either to deduct or to capitalize certain other costs. File 1040ez for free See chapter 7 in Publication 535. File 1040ez for free Decreases to Basis The following are some items that reduce the basis of property. File 1040ez for free Section 179 deduction. File 1040ez for free Deductions previously allowed or allowable for amortization, depreciation, and depletion. File 1040ez for free Alternative motor vehicle credit. File 1040ez for free See Form 8910. File 1040ez for free Alternative fuel vehicle refueling property credit. File 1040ez for free See Form 8911. File 1040ez for free Residential energy efficient property credits. File 1040ez for free See Form 5695. File 1040ez for free Investment credit (part or all) taken. File 1040ez for free Casualty and theft losses and insurance reimbursements. File 1040ez for free Payments you receive for granting an easement. File 1040ez for free Exclusion from income of subsidies for energy conservation measures. File 1040ez for free Certain canceled debt excluded from income. File 1040ez for free Rebates from a manufacturer or seller. File 1040ez for free Patronage dividends received from a cooperative association as a result of a purchase of property. File 1040ez for free See Patronage Dividends in chapter 3. File 1040ez for free Gas-guzzler tax. File 1040ez for free See Form 6197. File 1040ez for free Some of these items are discussed next. File 1040ez for free For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. File 1040ez for free Depreciation and section 179 deduction. File 1040ez for free   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. File 1040ez for free For more information on these deductions, see chapter 7. File 1040ez for free Section 179 deduction. File 1040ez for free   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. File 1040ez for free Depreciation. File 1040ez for free   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. File 1040ez for free If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. File 1040ez for free If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. File 1040ez for free   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. File 1040ez for free   See chapter 7 for information on figuring the depreciation you should have claimed. File 1040ez for free   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. File 1040ez for free Casualty and theft losses. File 1040ez for free   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. File 1040ez for free Also, decrease it by any deductible loss not covered by insurance. File 1040ez for free See chapter 11 for information about figuring your casualty or theft loss. File 1040ez for free   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. File 1040ez for free To make this determination, compare the repaired property to the property before the casualty. File 1040ez for free Easements. File 1040ez for free   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. File 1040ez for free It reduces the basis of the affected part of the property. File 1040ez for free If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. File 1040ez for free See Easements and rights-of-way in chapter 3. File 1040ez for free Exclusion from income of subsidies for energy conservation measures. File 1040ez for free   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. File 1040ez for free Reduce the basis of the property by the excluded amount. File 1040ez for free Canceled debt excluded from income. File 1040ez for free   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. File 1040ez for free A debt includes any indebtedness for which you are liable or which attaches to property you hold. File 1040ez for free   You can exclude your canceled debt from income if the debt is any of the following. File 1040ez for free Debt canceled in a bankruptcy case or when you are insolvent. File 1040ez for free Qualified farm debt. File 1040ez for free Qualified real property business debt (provided you are not a C corporation). File 1040ez for free Qualified principal residence indebtedness. File 1040ez for free Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. File 1040ez for free If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. File 1040ez for free If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. File 1040ez for free   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. File 1040ez for free For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. File 1040ez for free For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. File 1040ez for free For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. File 1040ez for free Basis Other Than Cost There are times when you cannot use cost as basis. File 1040ez for free In these situations, the fair market value or the adjusted basis of property may be used. File 1040ez for free Examples are discussed next. File 1040ez for free Property changed from personal to business or rental use. File 1040ez for free   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. File 1040ez for free An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. File 1040ez for free   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. File 1040ez for free   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. File 1040ez for free The basis for figuring a gain is your adjusted basis in the property when you sell the property. File 1040ez for free Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. File 1040ez for free Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . File 1040ez for free Property received for services. File 1040ez for free   If you receive property for services, include the property's FMV in income. File 1040ez for free The amount you include in income becomes your basis. File 1040ez for free If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. File 1040ez for free Example. File 1040ez for free George Smith is an accountant and also operates a farming business. File 1040ez for free George agreed to do some accounting work for his neighbor in exchange for a dairy cow. File 1040ez for free The accounting work and the cow are each worth $1,500. File 1040ez for free George must include $1,500 in income for his accounting services. File 1040ez for free George's basis in the cow is $1,500. File 1040ez for free Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. File 1040ez for free A taxable gain or deductible loss also is known as a recognized gain or loss. File 1040ez for free A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. File 1040ez for free If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. File 1040ez for free Example. File 1040ez for free You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. File 1040ez for free You must report a taxable gain of $4,000 for the land. File 1040ez for free The tractor has a basis of $6,000. File 1040ez for free Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. File 1040ez for free Similar or related property. File 1040ez for free   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. File 1040ez for free However, make the following adjustments. File 1040ez for free Decrease the basis by the following amounts. File 1040ez for free Any loss you recognize on the involuntary conversion. File 1040ez for free Any money you receive that you do not spend on similar property. File 1040ez for free Increase the basis by the following amounts. File 1040ez for free Any gain you recognize on the involuntary conversion. File 1040ez for free Any cost of acquiring the replacement property. File 1040ez for free Money or property not similar or related. File 1040ez for free   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. File 1040ez for free Allocating the basis. File 1040ez for free   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. File 1040ez for free Basis for depreciation. File 1040ez for free   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. File 1040ez for free For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. File 1040ez for free For more information about involuntary conversions, see chapter 11. File 1040ez for free Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. File 1040ez for free A nontaxable gain or loss also is known as an unrecognized gain or loss. File 1040ez for free If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. File 1040ez for free Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. File 1040ez for free For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. File 1040ez for free There must also be an exchange of like-kind property. File 1040ez for free For more information, see Like-Kind Exchanges in  chapter 8. File 1040ez for free The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. File 1040ez for free Example 1. File 1040ez for free You traded a truck you used in your farming business for a new smaller truck to use in farming. File 1040ez for free The adjusted basis of the old truck was $10,000. File 1040ez for free The FMV of the new truck is $30,000. File 1040ez for free Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. File 1040ez for free Example 2. File 1040ez for free You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). File 1040ez for free You use both the field cultivator and the planter in your farming business. File 1040ez for free The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. File 1040ez for free   Exchange expenses generally are the closing costs that you pay. File 1040ez for free They include such items as brokerage commissions, attorney fees, and deed preparation fees. File 1040ez for free Add them to the basis of the like-kind property you receive. File 1040ez for free Property plus cash. File 1040ez for free   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. File 1040ez for free Example. File 1040ez for free You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. File 1040ez for free Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). File 1040ez for free Special rules for related persons. File 1040ez for free   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. File 1040ez for free Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. File 1040ez for free Each person reports it on the tax return filed for the year in which the later disposition occurred. File 1040ez for free If this rule applies, the basis of the property received in the original exchange will be its FMV. File 1040ez for free For more information, see chapter 8. File 1040ez for free Exchange of business property. File 1040ez for free   Exchanging the property of one business for the property of another business generally is a multiple property exchange. File 1040ez for free For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. File 1040ez for free Basis for depreciation. File 1040ez for free   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. File 1040ez for free For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. File 1040ez for free Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. File 1040ez for free The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. File 1040ez for free Decrease the basis by the following amounts. File 1040ez for free Any money you receive. File 1040ez for free Any loss you recognize on the exchange. File 1040ez for free Increase the basis by the following amounts. File 1040ez for free Any additional costs you incur. File 1040ez for free Any gain you recognize on the exchange. File 1040ez for free If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. File 1040ez for free Example 1. File 1040ez for free You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. File 1040ez for free You realize a gain of $40,000. File 1040ez for free This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). File 1040ez for free Include your gain in income (recognize gain) only to the extent of the cash received. File 1040ez for free Your basis in the land you received is figured as follows. File 1040ez for free Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. File 1040ez for free You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. File 1040ez for free You realize a gain of $7,250. File 1040ez for free This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). File 1040ez for free You include all the gain in your income (recognize gain) because the gain is less than the cash you received. File 1040ez for free Your basis in the truck you received is figured as follows. File 1040ez for free Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. File 1040ez for free   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. File 1040ez for free The rest is the basis of the like-kind property. File 1040ez for free Example. File 1040ez for free You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. File 1040ez for free You also received $1,000 cash and a truck that had an FMV of $3,000. File 1040ez for free The truck is unlike property. File 1040ez for free You realized a gain of $1,500. File 1040ez for free This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). File 1040ez for free You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. File 1040ez for free Your basis in the properties you received is figured as follows. File 1040ez for free Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). File 1040ez for free This is the truck's FMV. File 1040ez for free The rest ($12,500) is the basis of the tractor. File 1040ez for free Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. File 1040ez for free Example. File 1040ez for free You used a tractor on your farm for 3 years. File 1040ez for free Its adjusted basis is $22,000 and its FMV is $40,000. File 1040ez for free You are interested in a new tractor, which sells for $60,000. File 1040ez for free Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. File 1040ez for free Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). File 1040ez for free However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. File 1040ez for free Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). File 1040ez for free Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. File 1040ez for free Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. File 1040ez for free You also must know its FMV at the time it was given to you and any gift tax paid on it. File 1040ez for free FMV equal to or greater than donor's adjusted basis. File 1040ez for free   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. File 1040ez for free Increase your basis by all or part of any gift tax paid, depending on the date of the gift. File 1040ez for free   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. File 1040ez for free See Adjusted Basis , earlier. File 1040ez for free   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. File 1040ez for free Figure the increase by multiplying the gift tax paid by the following fraction. File 1040ez for free Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. File 1040ez for free The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. File 1040ez for free Example. File 1040ez for free In 2013, you received a gift of property from your mother that had an FMV of $50,000. File 1040ez for free Her adjusted basis was $20,000. File 1040ez for free The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). File 1040ez for free She paid a gift tax of $7,320. File 1040ez for free Your basis, $26,076, is figured as follows. File 1040ez for free Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . File 1040ez for free 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. File 1040ez for free If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. File 1040ez for free However, your basis cannot exceed the FMV of the gift when it was given to you. File 1040ez for free FMV less than donor's adjusted basis. File 1040ez for free   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. File 1040ez for free Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. File 1040ez for free Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. File 1040ez for free (See Adjusted Basis , earlier. File 1040ez for free )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. File 1040ez for free Example. File 1040ez for free You received farmland as a gift from your parents when they retired from farming. File 1040ez for free At the time of the gift, the land had an FMV of $80,000. File 1040ez for free Your parents' adjusted basis was $100,000. File 1040ez for free After you received the land, no events occurred that would increase or decrease your basis. File 1040ez for free If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. File 1040ez for free If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. File 1040ez for free If the sales price is between $80,000 and $100,000, you have neither gain nor loss. File 1040ez for free For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. File 1040ez for free If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. File 1040ez for free Business property. File 1040ez for free   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. File 1040ez for free Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. File 1040ez for free The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. File 1040ez for free However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. File 1040ez for free The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. File 1040ez for free For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. File 1040ez for free Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. File 1040ez for free If a federal estate return is filed, you can use its appraised value. File 1040ez for free The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. File 1040ez for free For information on the alternate valuation, see the Instructions for Form 706. File 1040ez for free The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. File 1040ez for free If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. File 1040ez for free Special-use valuation method. File 1040ez for free   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. File 1040ez for free If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. File 1040ez for free If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. File 1040ez for free The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. File 1040ez for free   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. File 1040ez for free Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. File 1040ez for free Figure all FMVs without regard to the special-use valuation. File 1040ez for free   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. File 1040ez for free This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. File 1040ez for free The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. File 1040ez for free   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. File 1040ez for free To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. File 1040ez for free If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. File 1040ez for free The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. File 1040ez for free   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. File 1040ez for free   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. File 1040ez for free Property inherited from a decedent who died in 2010. File 1040ez for free   If you inherited property from a decedent who died in 2010, different rules may apply. File 1040ez for free See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. File 1040ez for free Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. File 1040ez for free Partner's basis. File 1040ez for free   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. File 1040ez for free However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. File 1040ez for free For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. File 1040ez for free Shareholder's basis. File 1040ez for free   The basis of property distributed by a corporation to a shareholder is its fair market value. File 1040ez for free For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. File 1040ez for free Prev  Up  Next   Home   More Online Publications