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File 1040ez online irs Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. File 1040ez online irs Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. File 1040ez online irs The care must be for one or more qualifying persons who are identified on Form 2441. File 1040ez online irs (See Qualifying Person Test. File 1040ez online irs ) You (and your spouse if filing jointly) must have earned income during the year. File 1040ez online irs (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. File 1040ez online irs ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. File 1040ez online irs (See Work-Related Expense Test, later. File 1040ez online irs ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. File 1040ez online irs If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. File 1040ez online irs You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. File 1040ez online irs See Payments to Relatives or Dependents under Work-Related Expense Test, later. File 1040ez online irs Your filing status may be single, head of household, or qualifying widow(er) with dependent child. File 1040ez online irs If you are married, you must file a joint return, unless an exception applies to you. File 1040ez online irs See Joint Return Test, later. File 1040ez online irs You must identify the care provider on your tax return. File 1040ez online irs (See Provider Identification Test, later. File 1040ez online irs ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). File 1040ez online irs (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. File 1040ez online irs See Reduced Dollar Limit under How To Figure the Credit, later. File 1040ez online irs ) These tests are presented in Figure A and are also explained in detail in this publication. File 1040ez online irs Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. File 1040ez online irs A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. File 1040ez online irs Dependent defined. File 1040ez online irs   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. File 1040ez online irs To be your dependent, a person must be your qualifying child (or your qualifying relative). File 1040ez online irs Qualifying child. File 1040ez online irs   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. File 1040ez online irs More information. File 1040ez online irs   For more information about who is a dependent or a qualifying child, see Publication 501. File 1040ez online irs Physically or mentally not able to care for oneself. File 1040ez online irs   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. File 1040ez online irs Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. File 1040ez online irs Person qualifying for part of year. File 1040ez online irs   You determine a person's qualifying status each day. File 1040ez online irs For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. File 1040ez online irs Also see Yearly limit under Dollar Limit, later. File 1040ez online irs Birth or death of otherwise qualifying person. File 1040ez online irs   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. File 1040ez online irs Taxpayer identification number. File 1040ez online irs   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). File 1040ez online irs If the correct information is not shown, the credit may be reduced or disallowed. File 1040ez online irs Individual taxpayer identification number (ITIN) for aliens. File 1040ez online irs   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. File 1040ez online irs The ITIN is entered wherever an SSN is requested on a tax return. File 1040ez online irs If the alien does not have an ITIN, he or she must apply for one. File 1040ez online irs See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. File 1040ez online irs   An ITIN is for tax use only. File 1040ez online irs It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. File 1040ez online irs S. File 1040ez online irs law. File 1040ez online irs Adoption taxpayer identification number (ATIN). File 1040ez online irs   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. File 1040ez online irs File Form W-7A, Application for Taxpayer Identification Number for Pending U. File 1040ez online irs S. File 1040ez online irs Adoptions. File 1040ez online irs Child of divorced or separated parents or parents living apart. File 1040ez online irs   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. File 1040ez online irs   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. File 1040ez online irs If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. File 1040ez online irs For details and an exception for a parent who works at night, see Publication 501. File 1040ez online irs   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. File 1040ez online irs Please click here for the text description of the image. File 1040ez online irs Figure a. File 1040ez online irs Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. File 1040ez online irs Earned income. File 1040ez online irs   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. File 1040ez online irs A net loss from self-employment reduces earned income. File 1040ez online irs Earned income also includes strike benefits and any disability pay you report as wages. File 1040ez online irs   Generally, only taxable compensation is included. File 1040ez online irs However, you can elect to include nontaxable combat pay in earned income. File 1040ez online irs If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. File 1040ez online irs (In other words, if one of you makes the election, the other one can also make it but does not have to. File 1040ez online irs ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. File 1040ez online irs You should figure your credit both ways and make the election if it gives you a greater tax benefit. File 1040ez online irs    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. File 1040ez online irs Members of certain religious faiths opposed to social security. File 1040ez online irs   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. File 1040ez online irs These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. File 1040ez online irs   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. File 1040ez online irs For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. File 1040ez online irs Form 4361. File 1040ez online irs   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. File 1040ez online irs This includes wages, salaries, tips, and other taxable employee compensation. File 1040ez online irs   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. File 1040ez online irs Examples include fees for performing marriages and honoraria for delivering speeches. File 1040ez online irs   Any amount you received for work that is not related to your ministerial duties is earned income. File 1040ez online irs Form 4029. File 1040ez online irs   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. File 1040ez online irs   However, amounts you received as a self-employed individual do not count as earned income. File 1040ez online irs What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. File 1040ez online irs S. File 1040ez online irs trade or business, or Any amount received for work while an inmate in a penal institution. File 1040ez online irs Rule for student-spouse or spouse not able to care for self. File 1040ez online irs   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. File 1040ez online irs (Your spouse also must live with you for more than half the year. File 1040ez online irs )   If you are filing a joint return, this rule also applies to you. File 1040ez online irs You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. File 1040ez online irs   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. File 1040ez online irs   This rule applies to only one spouse for any one month. File 1040ez online irs If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. File 1040ez online irs Full-time student. File 1040ez online irs    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. File 1040ez online irs You must have been a full-time student for some part of each of 5 calendar months during the year. File 1040ez online irs (The months need not be consecutive. File 1040ez online irs ) School. File 1040ez online irs   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. File 1040ez online irs A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. File 1040ez online irs Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. File 1040ez online irs Expenses are considered work-related only if both of the following are true. File 1040ez online irs They allow you (and your spouse if filing jointly) to work or look for work. File 1040ez online irs They are for a qualifying person's care. File 1040ez online irs Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. File 1040ez online irs If you are married, generally both you and your spouse must work or look for work. File 1040ez online irs One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. File 1040ez online irs Your work can be for others or in your own business or partnership. File 1040ez online irs It can be either full time or part time. File 1040ez online irs Work also includes actively looking for work. File 1040ez online irs However, if you do not find a job and have no earned income for the year, you cannot take this credit. File 1040ez online irs See Earned Income Test, earlier. File 1040ez online irs An expense is not considered work-related merely because you had it while you were working. File 1040ez online irs The purpose of the expense must be to allow you to work. File 1040ez online irs Whether your expenses allow you to work or look for work depends on the facts. File 1040ez online irs Example 1. File 1040ez online irs The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. File 1040ez online irs Example 2. File 1040ez online irs You work during the day. File 1040ez online irs Your spouse works at night and sleeps during the day. File 1040ez online irs You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. File 1040ez online irs Your expenses are considered work-related. File 1040ez online irs Volunteer work. File 1040ez online irs   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. File 1040ez online irs Work for part of year. File 1040ez online irs   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. File 1040ez online irs For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. File 1040ez online irs However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). File 1040ez online irs Temporary absence from work. File 1040ez online irs   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. File 1040ez online irs Instead, you can figure your credit including the expenses you paid for the period of absence. File 1040ez online irs   An absence of 2 weeks or less is a short, temporary absence. File 1040ez online irs An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. File 1040ez online irs Example. File 1040ez online irs You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. File 1040ez online irs You become ill and miss 4 months of work but receive sick pay. File 1040ez online irs You continue to pay the nanny to care for the children while you are ill. File 1040ez online irs Your absence is not a short, temporary absence, and your expenses are not considered work-related. File 1040ez online irs Part-time work. File 1040ez online irs   If you work part-time, you generally must figure your expenses for each day. File 1040ez online irs However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. File 1040ez online irs Any day when you work at least 1 hour is a day of work. File 1040ez online irs Example 1. File 1040ez online irs You work 3 days a week. File 1040ez online irs While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. File 1040ez online irs You can pay the center $150 for any 3 days a week or $250 for 5 days a week. File 1040ez online irs Your child attends the center 5 days a week. File 1040ez online irs Your work-related expenses are limited to $150 a week. File 1040ez online irs Example 2. File 1040ez online irs The facts are the same as in Example 1 except the center does not offer a 3-day option. File 1040ez online irs The entire $250 weekly fee may be a work-related expense. File 1040ez online irs Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. File 1040ez online irs You do not have to choose the least expensive way of providing the care. File 1040ez online irs The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. File 1040ez online irs Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. File 1040ez online irs Expenses for household services qualify if part of the services is for the care of qualifying persons. File 1040ez online irs See Household Services, later. File 1040ez online irs Expenses not for care. File 1040ez online irs   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. File 1040ez online irs However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. File 1040ez online irs Otherwise, see the discussion of Expenses partly work-related, later. File 1040ez online irs   Child support payments are not for care and do not qualify for the credit. File 1040ez online irs Education. File 1040ez online irs   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. File 1040ez online irs   Expenses to attend kindergarten or a higher grade are not expenses for care. File 1040ez online irs Do not use these expenses to figure your credit. File 1040ez online irs   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. File 1040ez online irs   Summer school and tutoring programs are not for care. File 1040ez online irs Example 1. File 1040ez online irs You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. File 1040ez online irs The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. File 1040ez online irs You can count the total cost when you figure the credit. File 1040ez online irs Example 2. File 1040ez online irs You place your 10-year-old child in a boarding school so you can work full time. File 1040ez online irs Only the part of the boarding school expense that is for the care of your child is a work-related expense. File 1040ez online irs You can count that part of the expense in figuring your credit if it can be separated from the cost of education. File 1040ez online irs You cannot count any part of the amount you pay the school for your child's education. File 1040ez online irs Care outside your home. File 1040ez online irs   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. File 1040ez online irs Dependent care center. File 1040ez online irs   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. File 1040ez online irs   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. File 1040ez online irs Camp. File 1040ez online irs   The cost of sending your child to an overnight camp is not considered a work-related expense. File 1040ez online irs    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. File 1040ez online irs Transportation. File 1040ez online irs   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. File 1040ez online irs This includes transportation by bus, subway, taxi, or private car. File 1040ez online irs However, transportation not provided by a care provider is not for the care of a qualifying person. File 1040ez online irs Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. File 1040ez online irs Fees and deposits. File 1040ez online irs   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. File 1040ez online irs However, a forfeited deposit is not for the care of a qualifying person if care is not provided. File 1040ez online irs Example 1. File 1040ez online irs You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. File 1040ez online irs The fee you paid is a work-related expense. File 1040ez online irs Example 2. File 1040ez online irs You placed a deposit with a preschool to reserve a place for your 3-year-old child. File 1040ez online irs You later sent your child to a different preschool and forfeited the deposit. File 1040ez online irs The forfeited deposit is not for care and so is not a work-related expense. File 1040ez online irs Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. File 1040ez online irs Definition. File 1040ez online irs   Household services are ordinary and usual services done in and around your home that are necessary to run your home. File 1040ez online irs They include the services of a housekeeper, maid, or cook. File 1040ez online irs However, they do not include the services of a chauffeur, bartender, or gardener. File 1040ez online irs Housekeeper. File 1040ez online irs   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. File 1040ez online irs Expenses partly work-related. File 1040ez online irs   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. File 1040ez online irs To figure your credit, count only the part that is work-related. File 1040ez online irs However, you do not have to divide the expense if only a small part is for other purposes. File 1040ez online irs Example. File 1040ez online irs You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. File 1040ez online irs The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. File 1040ez online irs You do not have to divide the expenses. File 1040ez online irs You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. File 1040ez online irs Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. File 1040ez online irs However, the dollar limit (discussed later) is based on one qualifying person, not two. File 1040ez online irs Meals and lodging provided for housekeeper. File 1040ez online irs   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. File 1040ez online irs If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. File 1040ez online irs Example. File 1040ez online irs To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. File 1040ez online irs You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. File 1040ez online irs However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. File 1040ez online irs Taxes paid on wages. File 1040ez online irs   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. File 1040ez online irs For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. File 1040ez online irs Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. File 1040ez online irs However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. File 1040ez online irs Joint Return Test Generally, married couples must file a joint return to take the credit. File 1040ez online irs However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. File 1040ez online irs Legally separated. File 1040ez online irs   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. File 1040ez online irs You may be eligible to take the credit on your return using head of household filing status. File 1040ez online irs Married and living apart. File 1040ez online irs   You are not considered married and are eligible to take the credit if all the following apply. File 1040ez online irs You file a return apart from your spouse. File 1040ez online irs Your home is the home of a qualifying person for more than half the year. File 1040ez online irs You pay more than half the cost of keeping up your home for the year. File 1040ez online irs Your spouse does not live in your home for the last 6 months of the year. File 1040ez online irs Costs of keeping up a home. File 1040ez online irs   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. File 1040ez online irs   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. File 1040ez online irs   They also do not include the purchase, permanent improvement, or replacement of property. File 1040ez online irs For example, you cannot include the cost of replacing a water heater. File 1040ez online irs However, you can include the cost of repairing a water heater. File 1040ez online irs Death of spouse. File 1040ez online irs   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. File 1040ez online irs If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. File 1040ez online irs Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. File 1040ez online irs Use Form 2441, Part I, to show the information. File 1040ez online irs If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). File 1040ez online irs Information needed. File 1040ez online irs   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. File 1040ez online irs    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. File 1040ez online irs If the care provider is an organization, then it is the employer identification number (EIN). File 1040ez online irs   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). File 1040ez online irs In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. File 1040ez online irs   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. File 1040ez online irs Getting the information. File 1040ez online irs    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. File 1040ez online irs If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. File 1040ez online irs    You should keep this information with your tax records. File 1040ez online irs Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. File 1040ez online irs Due diligence. File 1040ez online irs   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. File 1040ez online irs However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. File 1040ez online irs   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. File 1040ez online irs Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. File 1040ez online irs Provider refusal. File 1040ez online irs    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). File 1040ez online irs Enter “See Attached Statement” in the columns calling for the information you do not have. File 1040ez online irs Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. File 1040ez online irs Be sure to write your name and social security number on this statement. File 1040ez online irs The statement will show that you used due diligence in trying to furnish the necessary information. File 1040ez online irs U. File 1040ez online irs S. File 1040ez online irs citizens and resident aliens living abroad. File 1040ez online irs   If you are living abroad, your care provider may not have, and may not be required to get, a U. File 1040ez online irs S. File 1040ez online irs taxpayer identification number (for example, an SSN or an EIN). File 1040ez online irs If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. File 1040ez online irs How To Figure the Credit Your credit is a percentage of your work-related expenses. File 1040ez online irs Your expenses are subject to the earned income limit and the dollar limit. File 1040ez online irs The percentage is based on your adjusted gross income. File 1040ez online irs Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. File 1040ez online irs Expenses prepaid in an earlier year. File 1040ez online irs   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. File 1040ez online irs Claim the expenses for the later year as if they were actually paid in that later year. File 1040ez online irs Expenses not paid until the following year. File 1040ez online irs   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. File 1040ez online irs You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. File 1040ez online irs See Payments for prior year's expenses under Amount of Credit, later. File 1040ez online irs If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. File 1040ez online irs You may be able to claim a credit for them on your 2014 return. File 1040ez online irs Expenses reimbursed. File 1040ez online irs   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. File 1040ez online irs Example. File 1040ez online irs You paid work-related expenses of $3,000. File 1040ez online irs You are reimbursed $2,000 by a state social services agency. File 1040ez online irs You can use only $1,000 to figure your credit. File 1040ez online irs Medical expenses. File 1040ez online irs   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. File 1040ez online irs You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. File 1040ez online irs   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. File 1040ez online irs However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. File 1040ez online irs For information on medical expenses, see Publication 502, Medical and Dental Expenses. File 1040ez online irs    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. File 1040ez online irs Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. File 1040ez online irs See Reduced Dollar Limit, later. File 1040ez online irs But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. File 1040ez online irs Dependent care benefits. File 1040ez online irs    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. File 1040ez online irs Your salary may have been reduced to pay for these benefits. File 1040ez online irs If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. File 1040ez online irs See Statement for employee, later. File 1040ez online irs Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. File 1040ez online irs   Enter the amount of these benefits on Form 2441, Part III, line 12. File 1040ez online irs Exclusion or deduction. File 1040ez online irs   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. File 1040ez online irs Your employer can tell you whether your benefit plan qualifies. File 1040ez online irs To claim the exclusion, you must complete Part III of Form 2441. File 1040ez online irs You cannot use Form 1040EZ. File 1040ez online irs   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. File 1040ez online irs Therefore, you would not get an exclusion from wages. File 1040ez online irs Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. File 1040ez online irs To claim the deduction, you must use Form 2441. File 1040ez online irs   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). File 1040ez online irs   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. File 1040ez online irs    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. File 1040ez online irs Statement for employee. File 1040ez online irs   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. File 1040ez online irs Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. File 1040ez online irs Effect of exclusion on credit. File 1040ez online irs   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. File 1040ez online irs Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. File 1040ez online irs Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. File 1040ez online irs For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. File 1040ez online irs Example. File 1040ez online irs You remarried on December 3. File 1040ez online irs Your earned income for the year was $18,000. File 1040ez online irs Your new spouse's earned income for the year was $2,000. File 1040ez online irs You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. File 1040ez online irs The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). File 1040ez online irs Separated spouse. File 1040ez online irs   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. File 1040ez online irs Use only your income in figuring the earned income limit. File 1040ez online irs Surviving spouse. File 1040ez online irs   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. File 1040ez online irs Community property laws. File 1040ez online irs   Disregard community property laws when you figure earned income for this credit. File 1040ez online irs Self-employment earnings. File 1040ez online irs   If you are self-employed, include your net earnings in earned income. File 1040ez online irs For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. File 1040ez online irs Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. File 1040ez online irs Clergy or church employee. File 1040ez online irs   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. File 1040ez online irs Statutory employee. File 1040ez online irs   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). File 1040ez online irs Net loss. File 1040ez online irs   You must reduce your earned income by any net loss from self-employment. File 1040ez online irs Optional method if earnings are low or a net loss. File 1040ez online irs   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. File 1040ez online irs Get Publication 334, Tax Guide for Small Business, for details. File 1040ez online irs If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. File 1040ez online irs In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. File 1040ez online irs You or your spouse is a student or not able to care for self. File 1040ez online irs   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. File 1040ez online irs His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. File 1040ez online irs Spouse works. File 1040ez online irs   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. File 1040ez online irs Spouse qualifies for part of month. File 1040ez online irs   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. File 1040ez online irs You are a student or not able to care for self. File 1040ez online irs   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. File 1040ez online irs For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). File 1040ez online irs If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. File 1040ez online irs Both spouses qualify. File 1040ez online irs   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. File 1040ez online irs Example. File 1040ez online irs Jim works and keeps up a home for himself and his wife Sharon. File 1040ez online irs Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. File 1040ez online irs During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. File 1040ez online irs These expenses also qualify as medical expenses. File 1040ez online irs Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. File 1040ez online irs Jim and Sharon's earned income limit is the smallest of the following amounts. File 1040ez online irs   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. File 1040ez online irs However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. File 1040ez online irs Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. File 1040ez online irs This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. File 1040ez online irs If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. File 1040ez online irs This limit does not need to be divided equally among them. File 1040ez online irs For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. File 1040ez online irs Yearly limit. File 1040ez online irs   The dollar limit is a yearly limit. File 1040ez online irs The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. File 1040ez online irs Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. File 1040ez online irs Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. File 1040ez online irs Example 1. File 1040ez online irs You pay $500 a month for after-school care for your son. File 1040ez online irs He turned 13 on May 1 and is no longer a qualifying person. File 1040ez online irs You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. File 1040ez online irs Example 2. File 1040ez online irs In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. File 1040ez online irs You paid $300 per month for the childcare. File 1040ez online irs You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. File 1040ez online irs Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. File 1040ez online irs Your reduced dollar limit is figured on Form 2441, Part III. File 1040ez online irs See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. File 1040ez online irs Example 1. File 1040ez online irs George is a widower with one child and earns $24,000 a year. File 1040ez online irs He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. File 1040ez online irs His employer pays an additional $1,000 under a qualified dependent care benefit plan. File 1040ez online irs This $1,000 is excluded from George's income. File 1040ez online irs Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. File 1040ez online irs This is because his dollar limit is reduced as shown next. File 1040ez online irs   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. File 1040ez online irs Randall is married and both he and his wife are employed. File 1040ez online irs Each has earned income in excess of $6,000. File 1040ez online irs They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. File 1040ez online irs Randall's work-related expenses are $6,000 for the year. File 1040ez online irs Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. File 1040ez online irs Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. File 1040ez online irs Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. File 1040ez online irs This is because his dollar limit is reduced as shown next. File 1040ez online irs   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. File 1040ez online irs This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. File 1040ez online irs The following table shows the percentage to use based on adjusted gross income. File 1040ez online irs   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. File 1040ez online irs You should show the expenses for each person on Form 2441, line 2, column (c). File 1040ez online irs However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. File 1040ez online irs You should list -0- for the one person and the actual amount for the second person. File 1040ez online irs The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. File 1040ez online irs Example. File 1040ez online irs Roger and Megan Paris have two qualifying children. File 1040ez online irs They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. File 1040ez online irs They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). File 1040ez online irs Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. File 1040ez online irs Line 30 tells them to complete line 2 without including any dependent care benefits. File 1040ez online irs They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. File 1040ez online irs Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. File 1040ez online irs 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. File 1040ez online irs However, their son James has special needs and they paid $18,500 for his care. File 1040ez online irs Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. File 1040ez online irs Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. File 1040ez online irs Payments for prior year's expenses. File 1040ez online irs   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. File 1040ez online irs Attach a statement to your form showing how you figured the additional amount from 2012. File 1040ez online irs Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. File 1040ez online irs Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. File 1040ez online irs Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. File 1040ez online irs See Worksheet A. File 1040ez online irs Example. File 1040ez online irs In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. File 1040ez online irs Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. File 1040ez online irs Their adjusted gross income for 2012 was $30,000. File 1040ez online irs Sam's earned income of $14,000 was less than Kate's earned income. File 1040ez online irs A credit for their 2012 expenses paid in 2013 is not allowed in 2012. File 1040ez online irs It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. File 1040ez online irs The filled-in Worksheet A they used to figure this credit is shown later. File 1040ez online irs Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. File 1040ez online irs They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. File 1040ez online irs Worksheet A. File 1040ez online irs Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. File 1040ez online irs 1. File 1040ez online irs   Enter your 2012 qualified expenses paid in 2012 1. File 1040ez online irs     2. File 1040ez online irs   Enter your 2012 qualified expenses paid in 2013 2. File 1040ez online irs     3. File 1040ez online irs   Add the amounts on lines 1 and 2 3. File 1040ez online irs     4. File 1040ez online irs   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. File 1040ez online irs     5. File 1040ez online irs   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. File 1040ez online irs     6. File 1040ez online irs   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. File 1040ez online irs     7. File 1040ez online irs   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. File 1040ez online irs     8. File 1040ez online irs   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. File 1040ez online irs     9. File 1040ez online irs   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. File 1040ez online irs     10. File 1040ez online irs   Subtract the amount on line 9 from the amount on line 8 and enter the result. File 1040ez online irs If zero or less, stop here. File 1040ez online irs You cannot increase your 2013 credit by any previous year's expenses 10. File 1040ez online irs     11. File 1040ez online irs   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. File 1040ez online irs     12. File 1040ez online irs   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. File 1040ez online irs             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . File 1040ez online irs 35                 15,000 — 17,000     . File 1040ez online irs 34                 17,000 — 19,000     . File 1040ez online irs 33                 19,000 — 21,000     . File 1040ez online irs 32                 21,000 — 23,000     . File 1040ez online irs 31                 23,000 — 25,000     . File 1040ez online irs 30                 25,000 — 27,000     . File 1040ez online irs 29                 27,000 — 29,000     . File 1040ez online irs 28                 29,000 — 31,000     . File 1040ez online irs 27                 31,000 — 33,000     . File 1040ez online irs 26                 33,000 — 35,000     . File 1040ez online irs 25                 35,000 — 37,000     . File 1040ez online irs 24                 37,000 — 39,000     . File 1040ez online irs 23                 39,000 — 41,000     . File 1040ez online irs 22                 41,000 — 43,000     . File 1040ez online irs 21                 43,000 — No limit     . File 1040ez online irs 20           13. File 1040ez online irs   Multiply line 10 by line 12. File 1040ez online irs Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. File 1040ez online irs Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. File 1040ez online irs       Worksheet A. File 1040ez online irs Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. File 1040ez online irs 1. File 1040ez online irs   Enter your 2012 qualified expenses paid in 2012 1. File 1040ez online irs   $2,000 2. File 1040ez online irs   Enter your 2012 qualified expenses paid in 2013 2. File 1040ez online irs   600 3. File 1040ez online irs   Add the amounts on lines 1 and 2 3. File 1040ez online irs   2,600 4. File 1040ez online irs   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. File 1040ez online irs   3,000 5. File 1040ez online irs   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. File 1040ez online irs   0 6. File 1040ez online irs   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. File 1040ez online irs   3,000 7. File 1040ez online irs   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. File 1040ez online irs   14,000 8. File 1040ez online irs   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. File 1040ez online irs   2,600 9. File 1040ez online irs   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. File 1040ez online irs   2,000 10. File 1040ez online irs   Subtract the amount on line 9 from the amount on line 8 and enter the result. File 1040ez online irs If zero or less, stop here. File 1040ez online irs You cannot increase your 2013 credit by any previous year's expenses 10. File 1040ez online irs   600 11. File 1040ez online irs   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. File 1040ez online irs   30,000 12. File 1040ez online irs   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. File 1040ez online irs   . File 1040ez online irs 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . File 1040ez online irs 35                 15,000 — 17,000     . File 1040ez online irs 34                 17,000 — 19,000     . File 1040ez online irs 33                 19,000 — 21,000     . File 1040ez online irs 32                 21,000 — 23,000     . File 1040ez online irs 31                 23,000 — 25,000     . File 1040ez online irs 30                 25,000 — 27,000     . File 1040ez online irs 29                 27,000 — 29,000     . File 1040ez online irs 28                 29,000 — 31,000     . File 1040ez online irs 27                 31,000 — 33,000     . File 1040ez online irs 26                 33,000 — 35,000     . File 1040ez online irs 25                 35,000 — 37,000     . File 1040ez online irs 24                 37,000 — 39,000     . File 1040ez online irs 23                 39,000 — 41,000     . File 1040ez online irs 22                 41,000 — 43,000     . File 1040ez online irs 21                 43,000 — No limit     . File 1040ez online irs 20           13. File 1040ez online irs   Multiply line 10 by line 12. File 1040ez online irs Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. File 1040ez online irs Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. File 1040ez online irs   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. File 1040ez online irs You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. File 1040ez online irs Form 1040, Form 1040A, or Form 1040NR. File 1040ez online irs    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. File 1040ez online irs Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. File 1040ez online irs Limit on credit. File 1040ez online irs    The amount of credit you can claim is limited to your tax. File 1040ez online irs For more information, see the Instructions for Form 2441. File 1040ez online irs Tax credit not refundable. File 1040ez online irs   You cannot get a refund for any part of the credit that is more than this limit. File 1040ez online irs Recordkeeping. File 1040ez online irs You should keep records of your work-related expenses. File 1040ez online irs Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. File 1040ez online irs Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. File 1040ez online irs Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. File 1040ez online irs If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. File 1040ez online irs If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. File 1040ez online irs Self-employed persons who are in business for themselves are not household employees. File 1040ez online irs Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. File 1040ez online irs If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. File 1040ez online irs This control could include providing rules of conduct and appearance and requiring regular reports. File 1040ez online irs In this case, you do not have to pay employment taxes. File 1040ez online irs But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. File 1040ez online irs If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. File 1040ez online irs Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. File 1040ez online irs Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. File 1040ez online irs Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. File 1040ez online irs For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. File 1040ez online irs State employment tax. File 1040ez online irs   You may also have to pay state unemployment tax. File 1040ez online irs Contact your state unemployment tax office for information. File 1040ez online irs You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. File 1040ez online irs For a list of state unemployment tax agencies, visit the U. File 1040ez online irs S. File 1040ez online irs Department of Labor's website. File 1040ez online irs To find that website, use the link in Publication 926 or search online. File 1040ez online irs 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 online irs Free help with your tax return. File 1040ez online irs   You can get free help preparing your return nationwide from IRS-certified volunteers. File 1040ez online irs The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. File 1040ez online irs The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File 1040ez online irs 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 online irs 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 online irs To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. File 1040ez online irs gov, download the IRS2Go app, or call 1-800-906-9887. File 1040ez online irs   As part of the TCE program, AARP offers the Tax-Aide counseling program. File 1040ez online irs To find the nearest AARP Tax-Aide site, visit AARP's website at www. File 1040ez online irs aarp. File 1040ez online irs org/money/taxaide or call 1-888-227-7669. File 1040ez online irs For more information on these programs, go to IRS. File 1040ez online irs gov and enter “VITA” in the search box. File 1040ez online irs Internet. File 1040ez online irs    IRS. File 1040ez online irs gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. File 1040ez online irs Download the free IRS2Go app from the iTunes app store or from Google Play. File 1040ez online irs 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 online irs Check the status of your 2013 refund with the Where's My Refund? application on IRS. File 1040ez online irs gov or download the IRS2Go app and select the Refund Status option. File 1040ez online irs The IRS issues more than 9 out of 10 refunds in less than 21 days. File 1040ez online irs 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 online irs You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 1040ez online irs The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File 1040ez online irs Use the Interactive Tax Assistant (ITA) to research your tax questions. File 1040ez online irs No need to wait on the phone or stand in line. File 1040ez online irs 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 online irs When you reach the response screen, you can print the entire interview and the final response for your records. File 1040ez online irs New subject areas are added on a regular basis. File 1040ez online irs  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. File 1040ez online irs gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. File 1040ez online irs You can use the IRS Tax Map, to search publications and instructions by topic or keyword. File 1040ez online irs 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 online irs 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 online irs 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 online irs You can also ask the IRS to mail a return or an account transcript to you. File 1040ez online irs Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. File 1040ez online irs gov or by calling 1-800-908-9946. File 1040ez online irs Tax return and tax account transcripts are generally available for the current year and the past three years. File 1040ez online irs 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 online irs Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. File 1040ez online irs 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 online irs Check the status of your amended return using Where's My Amended Return? Go to IRS. File 1040ez online irs gov and enter Where's My Amended Return? in the search box. File 1040ez online irs You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File 1040ez online irs It can take up to 3 weeks from the date you mailed it to show up in our system. File 1040ez online irs Make a payment using one of several safe and convenient electronic payment options available on IRS. File 1040ez online irs gov. File 1040ez online irs Select the Payment tab on the front page of IRS. File 1040ez online irs gov for more information. File 1040ez online irs Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. File 1040ez online irs Figure your income tax withholding with the IRS Withholding Calculator on IRS. File 1040ez online irs gov. File 1040ez online irs 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 online irs Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File 1040ez online irs gov. File 1040ez online irs Request an Electronic Filing PIN by going to IRS. File 1040ez online irs gov and entering Electronic Filing PIN in the search box. File 1040ez online irs Download forms, instructions and publications, including accessible versions for people with disabilities. File 1040ez online irs Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. File 1040ez online irs gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. File 1040ez online irs An employee can answer questions about your tax account or help you set up a payment plan. File 1040ez online irs Before you visit, check the Office Locator on IRS. File 1040ez online irs 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 online irs If you have a special need, such as a disability, you can request an appointment. File 1040ez online irs Call the local number listed in the Office Locator, or look in the phone book under Unit
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Understanding your CP01 Notice

We received the information that you provided and have verified your claim of identity theft. We have placed an identity theft indicator on your account.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • You need take no further action except continue to file your federal income tax returns as required by law.

You may want to...


Answers to Common Questions

What effect does the Identity Theft Indicator have on my account?
The indicator assists the IRS in identifying you as the valid owner of the Social Security Number (SSN) that is shown on your tax return. The indicator has no effect on your ability to file your tax return, make payments, or receive a refund.

What happens if someone else uses my SSN to file a fraudulent tax return?
The indicator that was placed on your account will alert us to research to make sure that a tax return filed with your SSN is valid. If the tax return is found to be invalid, we won't process it.

How long does the indicator remain on my account?
Because you were a victim of identity theft, to protect your tax account, the indicator will remain on your account unless you specifically request that it be removed.

Who should I contact if I have more questions about my account related to identity theft?
The Identity Theft Specialized Unit can assist you with questions regarding identity theft related to your account. You may call them at 1-800-908-4490. The number can also be found on your notice. For all other tax account related questions contact the IRS help desk at 1-800-829-1040.

Where can I find more information on preventing identity theft?


Tips for next year

File your return as you normally would. If we find that someone is attempting to use your SSN for filing a tax return we will notify you and provide you with a PIN to use when filing your return.

 

Page Last Reviewed or Updated: 27-Feb-2014

The File 1040ez Online Irs

File 1040ez online irs 5. File 1040ez online irs   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. File 1040ez online irs Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. File 1040ez online irs When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. File 1040ez online irs Otherwise, these are capital expenses that must be added to the basis of the land. File 1040ez online irs (See chapter 6 for information on determining basis. File 1040ez online irs ) Conservation expenses for land in a foreign country do not qualify for this special treatment. File 1040ez online irs The deduction for conservation expenses cannot be more than 25% of your gross income from farming. File 1040ez online irs See 25% Limit on Deduction , later. File 1040ez online irs Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. File 1040ez online irs These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. File 1040ez online irs You must include in income most government payments for approved conservation practices. File 1040ez online irs However, you can exclude some payments you receive under certain cost-sharing conservation programs. File 1040ez online irs For more information, see Agricultural Program Payments in chapter 3. File 1040ez online irs To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. File 1040ez online irs Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. File 1040ez online irs You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. File 1040ez online irs You are not farming if you are engaged only in forestry or the growing of timber. File 1040ez online irs Farm defined. File 1040ez online irs   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. File 1040ez online irs It also includes plantations, ranches, ranges, and orchards. File 1040ez online irs A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. File 1040ez online irs It does not include an area where they are merely caught or harvested. File 1040ez online irs A plant nursery is a farm for purposes of deducting soil and water conservation expenses. File 1040ez online irs Farm rental. File 1040ez online irs   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. File 1040ez online irs If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. File 1040ez online irs   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. File 1040ez online irs Example. File 1040ez online irs You own a farm in Iowa and live in California. File 1040ez online irs You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. File 1040ez online irs You cannot deduct your soil conservation expenses for this farm. File 1040ez online irs You must capitalize the expenses and add them to the basis of the land. File 1040ez online irs     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. File 1040ez online irs Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. File 1040ez online irs If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. File 1040ez online irs Keep a copy of the plan with your books and records to support your deductions. File 1040ez online irs Conservation plan. File 1040ez online irs   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. File 1040ez online irs There are three types of approved plans. File 1040ez online irs NRCS individual site plans. File 1040ez online irs These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. File 1040ez online irs NRCS county plans. File 1040ez online irs These plans include a listing of farm conservation practices approved for the county where the farmland is located. File 1040ez online irs You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. File 1040ez online irs Comparable state agency plans. File 1040ez online irs These plans are approved by state agencies and can be approved individual site plans or county plans. File 1040ez online irs   A list of NRCS conservation programs is available at www. File 1040ez online irs nrcs. File 1040ez online irs usda. File 1040ez online irs gov/programs. File 1040ez online irs Individual site plans can be obtained from NRCS offices and the comparable state agencies. File 1040ez online irs Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. File 1040ez online irs These expenses include, but are not limited to, the following. File 1040ez online irs The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. File 1040ez online irs The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. File 1040ez online irs The eradication of brush. File 1040ez online irs The planting of windbreaks. File 1040ez online irs You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. File 1040ez online irs These expenses are added to the basis of the land. File 1040ez online irs If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. File 1040ez online irs See chapter 3 for information about payments eligible for the cost-sharing exclusion. File 1040ez online irs New farm or farmland. File 1040ez online irs   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. File 1040ez online irs You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. File 1040ez online irs The new farming activity does not have to be the same as the old farming activity. File 1040ez online irs For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. File 1040ez online irs Land not used for farming. File 1040ez online irs   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. File 1040ez online irs For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. File 1040ez online irs You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. File 1040ez online irs Depreciable conservation assets. File 1040ez online irs   You generally cannot deduct your expenses for depreciable conservation assets. File 1040ez online irs However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. File 1040ez online irs See Assessment for Depreciable Property , later. File 1040ez online irs   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. File 1040ez online irs These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. File 1040ez online irs You recover your capital investment through annual allowances for depreciation. File 1040ez online irs   You can deduct soil and water conservation expenses for nondepreciable earthen items. File 1040ez online irs Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. File 1040ez online irs Water well. File 1040ez online irs   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. File 1040ez online irs It is a capital expense. File 1040ez online irs You recover your cost through depreciation. File 1040ez online irs You also must capitalize your cost for drilling a test hole. File 1040ez online irs If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. File 1040ez online irs You can recover the total cost through depreciation deductions. File 1040ez online irs   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. File 1040ez online irs Abandonment means that all economic benefits from the well are terminated. File 1040ez online irs For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. File 1040ez online irs Endangered species recovery expenses. File 1040ez online irs   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. File 1040ez online irs Otherwise, these are capital expenses that must be added to the basis of the land. File 1040ez online irs   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. File 1040ez online irs See Internal Revenue Code section 175 for more information. File 1040ez online irs Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. File 1040ez online irs You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. File 1040ez online irs Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. File 1040ez online irs This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. File 1040ez online irs The depreciable property must be used in the district's soil and water conservation activities. File 1040ez online irs However, the following limits apply to these assessments. File 1040ez online irs The total assessment limit. File 1040ez online irs The yearly assessment limit. File 1040ez online irs After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. File 1040ez online irs The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. File 1040ez online irs See Table 5-1 for a brief summary of these limits. File 1040ez online irs Table 5-1. File 1040ez online irs Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. File 1040ez online irs Your deductible share of the cost to the district for the property. File 1040ez online irs Your gross income from farming. File 1040ez online irs No one taxpayer can deduct more than 10% of the total assessment. File 1040ez online irs Any amount over 10% is a capital expense and is added to the basis of your land. File 1040ez online irs If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. File 1040ez online irs If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. File 1040ez online irs You can deduct the remainder in equal amounts over the next 9 tax years. File 1040ez online irs Limit for all conservation expenses, including assessments for depreciable property. File 1040ez online irs Amounts greater than 25% can be carried to the following year and added to that year's expenses. File 1040ez online irs The total is then subject to the 25% of gross income from farming limit in that year. File 1040ez online irs To ensure your deduction is within the deduction limits, keep records to show the following. File 1040ez online irs The total assessment against all members of the district for the depreciable property. File 1040ez online irs Your deductible share of the cost to the district for the depreciable property. File 1040ez online irs Your gross income from farming. File 1040ez online irs Total assessment limit. File 1040ez online irs   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. File 1040ez online irs This applies whether you pay the assessment in one payment or in installments. File 1040ez online irs If your assessment is more than 10% of the total amount assessed, both the following rules apply. File 1040ez online irs The amount over 10% is a capital expense and is added to the basis of your land. File 1040ez online irs If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. File 1040ez online irs Yearly assessment limit. File 1040ez online irs   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. File 1040ez online irs If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. File 1040ez online irs If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. File 1040ez online irs You can deduct the remainder in equal amounts over the next 9 tax years. File 1040ez online irs Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. File 1040ez online irs Example 1. File 1040ez online irs This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. File 1040ez online irs Of the assessment, $1,500 is for digging drainage ditches. File 1040ez online irs You can deduct this part as a soil or conservation expense as if you had paid it directly. File 1040ez online irs The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. File 1040ez online irs The total amount assessed by the district against all its members for the depreciable equipment is $7,000. File 1040ez online irs The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. File 1040ez online irs The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. File 1040ez online irs To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. File 1040ez online irs Add $500 to the result for a total of $570. File 1040ez online irs Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). File 1040ez online irs You can deduct the balance at the rate of $70 a year over the next 9 years. File 1040ez online irs You add $70 to the $1,500 portion of the assessment for drainage ditches. File 1040ez online irs You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. File 1040ez online irs Example 2. File 1040ez online irs Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. File 1040ez online irs The total amount assessed by the district against all its members for depreciable equipment is $5,500. File 1040ez online irs The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. File 1040ez online irs The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). File 1040ez online irs Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. File 1040ez online irs You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. File 1040ez online irs Sale or other disposal of land during 9-year period. File 1040ez online irs   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. File 1040ez online irs Death of farmer during 9-year period. File 1040ez online irs   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. File 1040ez online irs 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. File 1040ez online irs Gross income from farming. File 1040ez online irs   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. File 1040ez online irs Gains from sales of draft, breeding, or dairy livestock are included. File 1040ez online irs Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. File 1040ez online irs Carryover of deduction. File 1040ez online irs   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. File 1040ez online irs However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. File 1040ez online irs Example. File 1040ez online irs In 2012, you have gross income of $32,000 from two farms. File 1040ez online irs During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. File 1040ez online irs However, your deduction is limited to 25% of $32,000, or $8,000. File 1040ez online irs The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. File 1040ez online irs The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. File 1040ez online irs Any expenses over the limit in that year are carried to 2014 and later years. File 1040ez online irs Net operating loss. File 1040ez online irs   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. File 1040ez online irs If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. File 1040ez online irs When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. File 1040ez online irs If you do not choose to deduct the expenses, you must capitalize them. File 1040ez online irs Change of method. File 1040ez online irs   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. File 1040ez online irs To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. File 1040ez online irs You or your authorized representative must sign the request. File 1040ez online irs   The request must include the following information. File 1040ez online irs Your name and address. File 1040ez online irs The first tax year the method or change of method is to apply. File 1040ez online irs Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. File 1040ez online irs If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. File 1040ez online irs The total expenses you paid or incurred in the first tax year the method or change of method is to apply. File 1040ez online irs A statement that you will account separately in your books for the expenses to which this method or change of method relates. File 1040ez online irs Send your request to the following  address. File 1040ez online irs  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. File 1040ez online irs Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). File 1040ez online irs However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. File 1040ez online irs Gain on sale of farmland. File 1040ez online irs   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. File 1040ez online irs If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. File 1040ez online irs See Section 1252 property under Other Gains in chapter 9. 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