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File state return only Publication 555 - Main Content Table of Contents Domicile Community or Separate Property and Income Identifying Income, Deductions, and CreditsIncome Exemptions Deductions Credits, Taxes, and Payments Community Property Laws DisregardedRequesting relief. File state return only Equitable relief. File state return only Earned income. File state return only Trade or business income. File state return only Partnership income or loss. File state return only Separate property income. File state return only Social security benefits. File state return only Other income. File state return only End of the Community Preparing a Federal Income Tax ReturnJoint Return Versus Separate Returns Separate Return Preparation How To Get Tax HelpLow Income Taxpayer Clinics Domicile Whether you have community property and community income depends on the state where you are domiciled. File state return only If you and your spouse (or your registered domestic partner) have different domiciles, check the laws of each to see whether you have community property or community income. File state return only You have only one domicile even if you have more than one home. File state return only Your domicile is a permanent legal home that you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. File state return only The question of your domicile is mainly a matter of your intention as indicated by your actions. File state return only You must be able to show that you intend a given place or state to be your permanent home. File state return only If you move into or out of a community property state during the year, you may or may not have community income. File state return only Factors considered in determining domicile include: Where you pay state income tax, Where you vote, Location of property you own, Your citizenship, Length of residence, and Business and social ties to the community. File state return only Amount of time spent. File state return only    The amount of time spent in one place does not always explain the difference between home and domicile. File state return only A temporary home or residence may continue for months or years while a domicile may be established the first moment you occupy the property. File state return only Your intent is the determining factor in proving where you have your domicile. File state return only    Note. File state return only When this publication refers to where you live, it means your domicile. File state return only Community or Separate Property and Income If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. File state return only Likewise, a registered domestic partner must report half of all community income and all of his or her separate income on his or her federal tax return. File state return only You each must attach your Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. File state return only Generally, the laws of the state in which you are domiciled govern whether you have community property and community income or separate property and separate income for federal tax purposes. File state return only The following is a summary of the general rules. File state return only These rules are also shown in Table 1. File state return only Community property. File state return only    Generally, community property is property: That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state. File state return only That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property. File state return only That cannot be identified as separate property. File state return only Community income. File state return only    Generally, community income is income from: Community property. File state return only Salaries, wages, and other pay received for the services performed by you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state. File state return only Real estate that is treated as community property under the laws of the state where the property is located. File state return only Note Separate property. File state return only    Generally, separate property is: Property that you or your spouse (or your registered domestic partner) owned separately before your marriage (or registered domestic partnership). File state return only Money earned while domiciled in a noncommunity property state. File state return only Property that you or your spouse (or your registered domestic partner) received separately as a gift or inheritance during your marriage (or registered domestic partnership). File state return only Property that you or your spouse (or your registered domestic partner) bought with separate funds, or acquired in exchange for separate property, during your marriage (or registered domestic partnership). File state return only Property that you and your spouse (or your registered domestic partner) converted from community property to separate property through an agreement valid under state law. File state return only The part of property bought with separate funds, if part was bought with community funds and part with separate funds. File state return only Separate income. File state return only    Generally, income from separate property is the separate income of the spouse (or the registered domestic partner) who owns the property. File state return only    In Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income. File state return only Table 1. File state return only General Rules — Property and Income: Community or Separate? Community property is property: That you, your spouse (or your registered domestic partner), or both acquire during your marriage (or registered domestic partnership) while you and your spouse (or your registered domestic partner) are domiciled in a community property state. File state return only (Includes the part of property bought with community property funds if part was bought with community funds and part with separate funds. File state return only ) That you and your spouse (or your registered domestic partner) agreed to convert from separate to community property. File state return only That cannot be identified as separate property. File state return only Separate property is: Property that you or your spouse (or your registered domestic partner) owned separately before your marriage (or registered domestic partnership). File state return only Money earned while domiciled in a noncommunity property state. File state return only Property either of you received as a gift or inherited separately during your marriage (or registered domestic partnership). File state return only Property bought with separate funds, or exchanged for separate property, during your marriage (or registered domestic partnership). File state return only Property that you and your spouse (or your registered domestic partner) agreed to convert from community to separate property through an agreement valid under state law. File state return only The part of property bought with separate funds, if part was bought with community funds and part with separate funds. File state return only Community income 1,2,3 is income from: Community property. File state return only Salaries, wages, or pay for services of you, your spouse (or your registered domestic partner), or both during your marriage (or registered domestic partnership) while domiciled in a community property state. File state return only Real estate that is treated as community property under the laws of the state where the property is located. File state return only Separate income 1,2 is income from: Separate property which belongs to the spouse (or registered domestic partner) who owns the property. File state return only 1In Idaho, Louisiana, Texas, and Wisconsin, income from most separate property is community income. File state return only 2Check your state law if you are separated but do not meet the conditions discussed in Spouses living apart all year , later. File state return only In some states, the income you earn after you are separated and before a divorce decree is issued continues to be community income. File state return only In other states, it is separate income. File state return only 3Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. File state return only See Community Property Laws Disregarded , later. File state return only Identifying Income, Deductions, and Credits If you file separate returns, you and your spouse (or your registered domestic partner) each must attach your Form 8958 to your Form 1040 to identify your community and separate income, deductions, credits, and other return amounts according to the laws of your state. File state return only Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. File state return only See Community Property Laws Disregarded, later. File state return only Check your state law if you are separated but do not meet the conditions discussed in Spouses living apart all year, later. File state return only In some states, the income you earn after you are separated and before a divorce decree is issued continues to be community income. File state return only In other states, it is separate income. File state return only Income The following is a discussion of the general effect of community property laws on the federal income tax treatment of certain items of income. File state return only Wages, earnings, and profits. File state return only    A spouse's (or your registered domestic partner's) wages, earnings, and net profits from a sole proprietorship are community income and must be evenly split. File state return only Dividends, interest, and rents. File state return only    Dividends, interest, and rents from community property are community income and must be evenly split. File state return only Dividends, interest, and rents from separate property are characterized in accordance with the discussion under Income from separate property , later. File state return only Example. File state return only If you and your spouse (or your registered domestic partner) buy a bond that is considered community property under your state laws, half the bond interest belongs to you and half belongs to your spouse. File state return only You each must show the bond interest and the split of that interest on your Form 8958, and report half the interest on your Form 1040. File state return only Attach your Form 8958 to your Form 1040. File state return only Alimony received. File state return only    Alimony or separate maintenance payments made prior to divorce are taxable to the payee spouse only to the extent they exceed 50% (his or her share) of the reportable community income. File state return only This is so because the payee spouse is already required to report half of the community income. File state return only See also Alimony paid , later. File state return only Gains and losses. File state return only    Gains and losses are classified as separate or community depending on how the property is held. File state return only For example, a loss on separate property, such as stock held separately, is a separate loss. File state return only On the other hand, a loss on community property, such as a casualty loss to your home held as community property, is a community loss. File state return only See Publication 544, Sales and Other Dispositions of Assets, for information on gains and losses. File state return only See Publication 547, Casualties, Disasters, and Thefts, for information on losses due to a casualty or theft. File state return only Withdrawals from individual retirement arrangements (IRAs) and Coverdell Education Savings Accounts (ESAs). File state return only    There are several kinds of individual retirement arrangements (IRAs). File state return only They are traditional IRAs (including SEP-IRAs), SIMPLE IRAs, and Roth IRAs. File state return only IRAs and ESAs by law are deemed to be separate property. File state return only Therefore, taxable IRA and ESA distributions are separate property, even if the funds in the account would otherwise be community property. File state return only These distributions are wholly taxable to the spouse (or registered domestic partner) whose name is on the account. File state return only That spouse (or registered domestic partner) is also liable for any penalties and additional taxes on the distributions. File state return only Pensions. File state return only    Generally, distributions from pensions will be characterized as community or separate income depending on the respective periods of participation in the pension while married (or during the registered domestic partnership) and domiciled in a community property state or in a noncommunity property state during the total period of participation in the pension. File state return only See the example under Civil service retirement , later. File state return only These rules may vary between states. File state return only Check your state law. File state return only Lump-sum distributions. File state return only    If you were born before January 2, 1936, and receive a lump-sum distribution from a qualified retirement plan, you may be able to choose an optional method of figuring the tax on the distribution. File state return only For the 10-year tax option, you must disregard community property laws. File state return only For more information, see Publication 575, Pension and Annuity Income, and Form 4972, Tax on Lump-Sum Distributions. File state return only Civil service retirement. File state return only    For income tax purposes, community property laws apply to annuities payable under the Civil Service Retirement Act (CSRS) or Federal Employee Retirement System (FERS). File state return only   Whether a civil service annuity is separate or community income depends on your marital status (or your status as a registered domestic partner) and domicile of the employee when the services were performed for which the annuity is paid. File state return only Even if you now live in a noncommunity property state and you receive a civil service annuity, it may be community income if it is based on services you performed while married (or during the registered domestic partnership) and domiciled in a community property state. File state return only   If a civil service annuity is a mixture of community income and separate income, it must be divided between the two kinds of income. File state return only The division is based on the employee's domicile and marital status (or registered domestic partnership) in community and noncommunity property states during his or her periods of service. File state return only Example. File state return only Henry Wright retired this year after 30 years of civil service. File state return only He and his wife were domiciled in a community property state during the past 15 years. File state return only Since half the service was performed while the Wrights were married and domiciled in a community property state, half the civil service retirement pay is considered to be community income. File state return only If Mr. File state return only Wright receives $1,000 a month in retirement pay, $500 is considered community income—half ($250) is his income and half ($250) is his wife's. File state return only Military retirement pay. File state return only    State community property laws apply to military retirement pay. File state return only Generally, the pay is either separate or community income based on the marital status and domicile of the couple while the member of the Armed Forces was in active military service. File state return only For example, military retirement pay for services performed during marriage and domicile in a community property state is community income. File state return only   Active military pay earned while married and domiciled in a community property state is also community income. File state return only This income is considered to be received half by the member of the Armed Forces and half by the spouse. File state return only Partnership income. File state return only    If an interest is held in a partnership, and income from the partnership is attributable to the efforts of either spouse (or registered domestic partner), the partnership income is community property. File state return only If it is merely a passive investment in a separate property partnership, the partnership income will be characterized in accordance with the discussion under Income from separate property , later. File state return only Tax-exempt income. File state return only    For spouses, community income exempt from federal tax generally keeps its exempt status for both spouses. File state return only For example, under certain circumstances, income earned outside the United States is tax exempt. File state return only If you earned income and met the conditions that made it exempt, the income is also exempt for your spouse even though he or she may not have met the conditions. File state return only Registered domestic partners should consult the particular exclusion provision to see if the exempt status applies to both. File state return only Income from separate property. File state return only    In some states, income from separate property is separate income. File state return only These states include Arizona, California, Nevada, New Mexico, and Washington. File state return only Other states characterize income from separate property as community income. File state return only These states include Idaho, Louisiana, Texas, and Wisconsin. File state return only Exemptions When you file separate returns, you must claim your own exemption amount for that year. File state return only (See your tax return instructions. File state return only ) You cannot divide the amount allowed as an exemption for a dependent between you and your spouse (or your registered domestic partner). File state return only When community funds provide support for more than one person, each of whom otherwise qualifies as a dependent, you and your spouse (or your registered domestic partner) may divide the number of dependency exemptions as explained in the following example. File state return only Example. File state return only Ron and Diane White have three dependent children and live in Nevada. File state return only If Ron and Diane file separately, only Ron can claim his own exemption, and only Diane can claim her own exemption. File state return only Ron and Diane can agree that one of them will claim the exemption for one, two, or all of their children and the other will claim any remaining exemptions. File state return only They cannot each claim half of the total exemption amount for their three children. File state return only Deductions If you file separate returns, your deductions generally depend on whether the expenses involve community or separate income. File state return only Business and investment expenses. File state return only    If you file separate returns, expenses incurred to earn or produce community business or investment income are generally divided equally between you and your spouse (or your registered domestic partner). File state return only Each of you is entitled to deduct one-half of the expenses on your separate returns. File state return only Expenses incurred by a spouse (or registered domestic partner) to produce separate business or investment income is deductible by the spouse (or the registered domestic partner) who earns the corresponding separate business or investment income. File state return only    Other limits may also apply to business and investment expenses. File state return only For more information, see Publication 535, Business Expenses, and Publication 550, Investment Income and Expenses. File state return only Alimony paid. File state return only    Payments that may otherwise qualify as alimony are not deductible by the payer if they are the recipient spouse's part of community income. File state return only They are deductible as alimony only to the extent they are more than that spouse's part of community income. File state return only Example. File state return only You live in a community property state. File state return only You are separated but the special rules explained later under Spouses living apart all year do not apply. File state return only Under a written agreement, you pay your spouse $12,000 of your $20,000 total yearly community income. File state return only Your spouse receives no other community income. File state return only Under your state law, earnings of a spouse living separately and apart from the other spouse continue as community property. File state return only On your separate returns, each of you must report $10,000 of the total community income. File state return only In addition, your spouse must report $2,000 as alimony received. File state return only You can deduct $2,000 as alimony paid. File state return only IRA deduction. File state return only    Deductions for IRA contributions cannot be split between spouses (or registered domestic partners). File state return only The deduction for each spouse (or each registered domestic partner) is figured separately and without regard to community property laws. File state return only Personal expenses. File state return only   Expenses that are paid out of separate funds, such as medical expenses, are deductible by the spouse who pays them. File state return only If these expenses are paid from community funds, divide the deduction equally between you and your spouse. File state return only Credits, Taxes, and Payments The following is a discussion of the general effect of community property laws on the treatment of certain credits, taxes, and payments on your separate return. File state return only Child tax credit. File state return only    You may be entitled to a child tax credit for each of your qualifying children. File state return only You must provide the name and identification number (usually the social security number) of each qualifying child on your return. File state return only See your tax return instructions for the maximum amount of the credit you can claim for each qualifying child. File state return only Limit on credit. File state return only    The credit is limited if your modified adjusted gross income (modified AGI) is above a certain amount. File state return only The amount at which the limitation (phaseout) begins depends on your filing status. File state return only Generally, your credit is limited to your tax liability unless you have three or more qualifying children. File state return only See your tax return instructions for more information. File state return only Self-employment tax. File state return only    For the effect of community property laws on the income tax treatment of income from a sole proprietorship and partnerships, see Wages, earnings, and profits and Partnership income , earlier. File state return only The following rules only apply to persons married for federal tax purposes. File state return only Registered domestic partners report community income for self-employment tax purposes the same way they do for income tax purposes. File state return only Sole proprietorship. File state return only    With regard to net income from a trade or business (other than a partnership) that is community income, self-employment tax is imposed on the spouse carrying on the trade or business. File state return only Partnerships. File state return only    All of the distributive share of a married partner's income or loss from a partnership trade or business is attributable to the partner for computing any self-employment tax, even if a portion of the partner's distributive share of income or loss is community income or loss that is otherwise attributable to the partner's spouse for income tax purposes. File state return only If both spouses are partners, any self-employment tax is allocated based on their distributive shares. File state return only Federal income tax withheld. File state return only    Report the credit for federal income tax withheld on community wages in the same manner as your wages. File state return only If you and your spouse file separate returns on which each of you reports half the community wages, each of you is entitled to credit for half the income tax withheld on those wages. File state return only Likewise, each registered domestic partner is entitled to credit for half the income tax withheld on those wages. File state return only Estimated tax payments. File state return only    In determining whether you must pay estimated tax, apply the estimated tax rules to your estimated income. File state return only These rules are explained in Publication 505. File state return only   If you think you may owe estimated tax and want to pay the tax separately (registered domestic partners must pay the tax separately), determine whether you must pay it by taking into account: Half the community income and deductions, All of your separate income and deductions, and Your own exemption and any exemptions for dependents that you may claim. File state return only   Whether you and your spouse pay estimated tax jointly or separately will not affect your choice of filing joint or separate income tax returns. File state return only   If you and your spouse paid estimated tax jointly but file separate income tax returns, either of you can claim all of the estimated tax paid, or you may divide it between you in any way that you agree upon. File state return only   If you cannot agree on how to divide it, the estimated tax you can claim equals the total estimated tax paid times the tax shown on your separate return, divided by the total of the tax shown on your return and your spouse's return. File state return only   If you paid your estimated taxes separately, you get credit for only the estimated taxes you paid. File state return only Earned income credit. File state return only    You may be entitled to an earned income credit (EIC). File state return only You cannot claim this credit if your filing status is married filing separately. File state return only   If you are married, but qualify to file as head of household under rules for married taxpayers living apart (see Publication 501, Exemptions, Standard Deduction, and Filing Information), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under community property laws. File state return only That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. File state return only Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. File state return only The same rule applies to registered domestic partners. File state return only    This rule does not apply when determining your adjusted gross income (AGI) for the EIC. File state return only Your AGI includes that part of both your and your spouse's (or your registered domestic partner's) wages that you are required to include in gross income shown on your tax return. File state return only   For more information about the EIC, see Publication 596, Earned Income Credit (EIC). File state return only Overpayments. File state return only    The amount of an overpayment on a joint return is allocated under the community property laws of the state in which you are domiciled. File state return only If, under the laws of your state, community property is subject to premarital or other separate debts of either spouse, the full joint overpayment may be used to offset the obligation. File state return only If, under the laws of your state, community property is not subject to premarital or other separate debts of either spouse, only the portion of the joint overpayment allocated to the spouse liable for the obligation can be used to offset that liability. File state return only The portion allocated to the other spouse can be refunded. File state return only Community Property Laws Disregarded The following discussions are situations where special rules apply to community property and community income for spouses. File state return only These rules do not apply to registered domestic partners. File state return only Certain community income not treated as community income by one spouse. File state return only    Community property laws may not apply to an item of community income that you received but did not treat as community income. File state return only You are responsible for reporting all of that income item if: You treat the item as if only you are entitled to the income, and You do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions). File state return only Relief from liability arising from community property law. File state return only    You are not responsible for the tax relating to an item of community income if all the following conditions are met. File state return only You did not file a joint return for the tax year. File state return only You did not include an item of community income in gross income. File state return only The item of community income you did not include is one of the following: Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee. File state return only Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. File state return only Your spouse's (or former spouse's) distributive share of partnership income. File state return only Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). File state return only Use the appropriate community property law to determine what is separate property. File state return only Any other income that belongs to your spouse (or former spouse) under community property law. File state return only You establish that you did not know of, and had no reason to know of, that community income. File state return only Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. File state return only Requesting relief. File state return only    For information on how and when to request relief from liabilities arising from community property laws, see Community Property Laws in Publication 971, Innocent Spouse Relief. File state return only Equitable relief. File state return only    If you do not qualify for the relief discussed earlier under Relief from liability arising from community property law and are now liable for an underpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief. File state return only To request equitable relief, you must file Form 8857, Request for Innocent Spouse Relief. File state return only Also see Publication 971. File state return only Spousal agreements. File state return only    In some states a married couple may enter into an agreement that affects the status of property or income as community or separate property. File state return only Check your state law to determine how it affects you. File state return only Nonresident alien spouse. File state return only    If you are a U. File state return only S. File state return only citizen or resident alien and you choose to treat your nonresident alien spouse as a U. File state return only S. File state return only resident for tax purposes and you are domiciled in a community property state or country, use the community property rules. File state return only You must file a joint return for the year you make the choice. File state return only You can file separate returns in later years. File state return only For details on making this choice, see Publication 519, U. File state return only S. File state return only Tax Guide for Aliens. File state return only   If you are a U. File state return only S. File state return only citizen or resident alien and do not choose to treat your nonresident alien spouse as a U. File state return only S. File state return only resident for tax purposes, treat your community income as explained next under Spouses living apart all year. File state return only However, you do not have to meet the four conditions discussed there. File state return only Spouses living apart all year. File state return only    If you are married at any time during the calendar year, special rules apply for reporting certain community income. File state return only You must meet all the following conditions for these special rules to apply. File state return only You and your spouse lived apart all year. File state return only You and your spouse did not file a joint return for a tax year beginning or ending in the calendar year. File state return only You and/or your spouse had earned income for the calendar year that is community income. File state return only You and your spouse have not transferred, directly or indirectly, any of the earned income in condition (3) above between yourselves before the end of the year. File state return only Do not take into account transfers satisfying child support obligations or transfers of very small amounts or value. File state return only If all these conditions are met, you and your spouse must report your community income as discussed next. File state return only See also Certain community income not treated as community income by one spouse , earlier. File state return only Earned income. File state return only    Treat earned income that is not trade or business or partnership income as the income of the spouse who performed the services to earn the income. File state return only Earned income is wages, salaries, professional fees, and other pay for personal services. File state return only   Earned income does not include amounts paid by a corporation that are a distribution of earnings and profits rather than a reasonable allowance for personal services rendered. File state return only Trade or business income. File state return only    Treat income and related deductions from a trade or business that is not a partnership as those of the spouse carrying on the trade or business. File state return only Partnership income or loss. File state return only    Treat income or loss from a trade or business carried on by a partnership as the income or loss of the spouse who is the partner. File state return only Separate property income. File state return only    Treat income from the separate property of one spouse as the income of that spouse. File state return only Social security benefits. File state return only    Treat social security and equivalent railroad retirement benefits as the income of the spouse who receives the benefits. File state return only Other income. File state return only    Treat all other community income, such as dividends, interest, rents, royalties, or gains, as provided under your state's community property law. File state return only Example. File state return only George and Sharon were married throughout the year but did not live together at any time during the year. File state return only Both domiciles were in a community property state. File state return only They did not file a joint return or transfer any of their earned income between themselves. File state return only During the year their incomes were as follows:   George Sharon Wages $20,000 $22,000 Consulting business 5,000   Partnership   10,000 Dividends from separate property 1,000 2,000 Interest from community property 500 500 Total $26,500 $34,500 Under the community property law of their state, all the income is considered community income. File state return only (Some states treat income from separate property as separate income—check your state law. File state return only ) Sharon did not take part in George's consulting business. File state return only Ordinarily, on their separate returns they would each report $30,500, half the total community income of $61,000 ($26,500 + $34,500). File state return only But because they meet the four conditions listed earlier under Spouses living apart all year , they must disregard community property law in reporting all their income (except the interest income) from community property. File state return only They each report on their returns only their own earnings and other income, and their share of the interest income from community property. File state return only George reports $26,500 and Sharon reports $34,500. File state return only Other separated spouses. File state return only    If you and your spouse are separated but do not meet the four conditions discussed earlier under Spouses living apart all year , you must treat your income according to the laws of your state. File state return only In some states, income earned after separation but before a decree of divorce continues to be community income. File state return only In other states, it is separate income. File state return only End of the Community The marital community may end in several ways. File state return only When the marital community ends, the community assets (money and property) are divided between the spouses. File state return only Similarly, a registered domestic partnership may end in several ways and the community assets must be divided between the registered domestic partners. File state return only Death of spouse. File state return only    If you own community property and your spouse dies, the total fair market value (FMV) of the community property, including the part that belongs to you, generally becomes the basis of the entire property. File state return only For this rule to apply, at least half the value of the community property interest must be includible in your spouse's gross estate, whether or not the estate must file a return (this rule does not apply to registered domestic partners). File state return only Example. File state return only Bob and Ann owned community property that had a basis of $80,000. File state return only When Bob died, his and Ann's community property had an FMV of $100,000. File state return only One-half of the FMV of their community interest was includible in Bob's estate. File state return only The basis of Ann's half of the property is $50,000 after Bob died (half of the $100,000 FMV). File state return only The basis of the other half to Bob's heirs is also $50,000. File state return only   For more information about the basis of assets, see Publication 551, Basis of Assets. File state return only    The above basis rule does not apply if your spouse died in 2010 and the spouse's executor elected out of the estate tax, in which case section 1022 will apply. File state return only See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for additional information. File state return only Divorce or separation. File state return only    If spouses divorce or separate, the (equal or unequal) division of community property in connection with the divorce or property settlement does not result in a gain or loss. File state return only For registered domestic partners, an unequal division of community property in a property settlement may result in a gain or loss. File state return only For information on the tax consequences of the division of property under a property settlement or divorce decree, see Publication 504. File state return only   Each spouse (or each registered domestic partner) is taxed on half the community income for the part of the year before the community ends. File state return only However, see Spouses living apart all year , earlier. File state return only Any income received after the community ends is separate income. File state return only This separate income is taxable only to the spouse (or the registered domestic partner) to whom it belongs. File state return only   An absolute decree of divorce or annulment ends the marital community in all community property states. File state return only A decree of annulment, even though it holds that no valid marriage ever existed, usually does not nullify community property rights arising during the “marriage. File state return only ” However, you should check your state law for exceptions. File state return only   A decree of legal separation or of separate maintenance may or may not end the marital community. File state return only The court issuing the decree may terminate the marital community and divide the property between the spouses. File state return only   A separation agreement may divide the community property between you and your spouse. File state return only It may provide that this property, along with future earnings and property acquired, will be separate property. File state return only This agreement may end the community. File state return only   In some states, the marital community ends when the spouses permanently separate, even if there is no formal agreement. File state return only Check your state law. File state return only   If you are a registered domestic partner, you should check your state law to determine when the community ends. File state return only Preparing a Federal Income Tax Return The following discussion does not apply to spouses who meet the conditions under Spouses living apart all year , discussed earlier. File state return only Those spouses must report their community income as explained in that discussion. File state return only Joint Return Versus Separate Returns Ordinarily, filing a joint return will give you a greater tax advantage than filing a separate return. File state return only But in some cases, your combined income tax on separate returns may be less than it would be on a joint return. File state return only This discussion concerning joint versus separate returns does not apply to registered domestic partners. File state return only The following rules apply if your filing status is married filing separately. File state return only You should itemize deductions if your spouse itemizes deductions, because you cannot claim the standard deduction. File state return only You cannot take the credit for child and dependent care expenses in most instances. File state return only You cannot take the earned income credit. File state return only You cannot exclude any interest income from qualified U. File state return only S. File state return only savings bonds that you used for higher education expenses. File state return only You cannot take the credit for the elderly or the disabled unless you lived apart from your spouse all year. File state return only You may have to include in income more of any social security benefits (including any equivalent railroad retirement benefits) you received during the year than you would on a joint return. File state return only You cannot deduct interest paid on a qualified student loan. File state return only You cannot take the education credits. File state return only You may have a smaller child tax credit than you would on a joint return. File state return only You cannot take the exclusion or credit for adoption expenses in most instances. File state return only Figure your tax both on a joint return and on separate returns under the community property laws of your state. File state return only You can then compare the tax figured under both methods and use the one that results in less tax. File state return only Separate Return Preparation If you file separate returns, you and your spouse must each report half of your combined community income and deductions in addition to your separate income and deductions. File state return only Each of you must complete and attach Form 8958 to your Form 1040 showing how you figured the amount you are reporting on your return. File state return only On the appropriate lines of your separate Form 1040, list only your share of the income and deductions on the appropriate lines of your separate tax returns (wages, interest, dividends, etc. File state return only ). File state return only The same reporting rule applies to registered domestic partners. File state return only For a discussion of the effect of community property laws on certain items of income, deductions, credits, and other return amounts, see Identifying Income, Deductions, and Credits , earlier. File state return only Attach your Form 8958 to your separate return showing how you figured the income, deductions, and federal income tax withheld that each of you reported. File state return only Form 8958 is used for married spouses in community property states who choose to file married filing separately. File state return only Form 8958 is also used for registered domestic partners who are domiciled in Nevada, Washington, or California. File state return only A registered domestic partner in Nevada, Washington, or California must follow state community property laws and report half the combined community income of the individual and his or her registered domestic partner. File state return only Extension of time to file. File state return only    An extension of time for filing your separate return does not extend the time for filing your spouse's (or your registered domestic partner's) separate return. File state return only If you and your spouse file a joint return, you cannot file separate returns after the due date for filing either separate return has passed. File state return only 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 state return only Free help with your tax return. File state return only    You can get free help preparing your return nationwide from IRS-certified volunteers. File state return only The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. File state return only The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File state return only 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 state return only In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. File state return only To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. File state return only gov, download the IRS2Go app, or call 1-800-906-9887. File state return only   As part of the TCE program, AARP offers the Tax-Aide counseling program. File state return only To find the nearest AARP Tax-Aide site, visit AARP's website at www. File state return only aarp. File state return only org/money/taxaide or call 1-888-227-7669. File state return only For more information on these programs, go to IRS. File state return only gov and enter “VITA” in the search box. File state return only Internet. File state return only    IRS. File state return only gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. File state return only Download the free IRS2Go app from the iTunes app store or from Google Play. File state return only 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 state return only Check the status of your 2013 refund with the Where's My Refund? application on IRS. File state return only gov or download the IRS2Go app and select the Refund Status option. File state return only The IRS issues more than 9 out of 10 refunds in less than 21 days. File state return only 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 state return only You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. File state return only The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File state return only Use the Interactive Tax Assistant (ITA) to research your tax questions. File state return only No need to wait on the phone or stand in line. File state return only 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 state return only When you reach the response screen, you can print the entire interview and the final response for your records. File state return only New subject areas are added on a regular basis. File state return only  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. File state return only gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. File state return only You can use the IRS Tax Map, to search publications and instructions by topic or keyword. File state return only The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. File state return only 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 state return only 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 state return only You can also ask the IRS to mail a return or an account transcript to you. File state return only Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. File state return only gov or by calling 1-800-908-9946. File state return only Tax return and tax account transcripts are generally available for the current year and the past three years. File state return only Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. File state return only Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. File state return only 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 state return only Check the status of your amended return using Where's My Amended Return? Go to IRS. File state return only gov and enter Where's My Amended Return? in the search box. File state return only You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File state return only It can take up to 3 weeks from the date you mailed it to show up in our system. File state return only Make a payment using one of several safe and convenient electronic payment options available on IRS. File state return only gov. File state return only Select the Payment tab on the front page of IRS. File state return only gov for more information. File state return only Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. File state return only Figure your income tax withholding with the IRS Withholding Calculator on IRS. File state return only gov. File state return only 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 state return only Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File state return only gov. File state return only Request an Electronic Filing PIN by going to IRS. File state return only gov and entering Electronic Filing PIN in the search box. File state return only Download forms, instructions and publications, including accessible versions for people with disabilities. File state return only Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. File state return only gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. File state return only An employee can answer questions about your tax account or help you set up a payment plan. File state return only Before you visit, check the Office Locator on IRS. File state return only 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 state return only If you have a special need, such as a disability, you can request an appointment. File state return only Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File state return only Apply for an Employer Identification Number (EIN). File state return only Go to IRS. File state return only gov and enter Apply for an EIN in the search box. File state return only Read the Internal Revenue Code, regulations, or other official guidance. File state return only Read Internal Revenue Bulletins. File state return only Sign up to receive local and national tax news and more by email. File state return only Just click on “subscriptions” above the search box on IRS. File state return only gov and choose from a variety of options. File state return only    Phone. File state return only You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File state return only Download the free IRS2Go app from the iTunes app store or from Google Play. File state return only Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. File state return only gov, or download the IRS2Go app. File state return only Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File state return only The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File state return only Most VITA and TCE sites offer free electronic filing. File state return only Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File state return only Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File state return only Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. File state return only If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File state return only The IRS issues more than 9 out of 10 refunds in less than 21 days. File state return only Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File state return only Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. File state return only The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File state return only Note, the above information is for our automated hotline. File state return only Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. File state return only Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File state return only You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File state return only It can take up to 3 weeks from the date you mailed it to show up in our system. File state return only Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). File state return only You should receive your order within 10 business days. File state return only Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. File state return only If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. File state return only Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File state return only The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File state return only These individuals can also contact the IRS through relay services such as the Federal Relay Service. File state return only    Walk-in. File state return only You can find a selection of forms, publications and services — in-person. File state return only Products. File state return only You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File state return only Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. File state return only Services. File state return only You can walk in to your local TAC for face-to-face tax help. File state return only An employee can answer questions about your tax account or help you set up a payment plan. File state return only Before visiting, use the Office Locator tool on IRS. File state return only gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. File state return only    Mail. File state return only You can send your order for forms, instructions, and publications to the address below. File state return only You should receive a response within 10 business days after your request is received. File state return only Internal Revenue Service 1201 N. File state return only Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. File state return only The Taxpayer Advocate Service (TAS) is your voice at the IRS. File state return only Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File state return only   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. File state return only We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. File state return only You face (or your business is facing) an immediate threat of adverse action. File state return only You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File state return only   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. File state return only Here's why we can help: TAS is an independent organization within the IRS. File state return only Our advocates know how to work with the IRS. File state return only Our services are free and tailored to meet your needs. File state return only We have offices in every state, the District of Columbia, and Puerto Rico. File state return only   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. File state return only irs. File state return only gov/advocate, or call us toll-free at 1-877-777-4778. File state return only   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File state return only If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. File state return only irs. File state return only gov/sams. File state return only Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. File state return only Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. File state return only Visit www. File state return only irs. File state return only gov/litc or see IRS Publication 4134, Low Income Taxpayer Clinic List. File state return only Prev  Up  Next   Home   More Online Publications
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Understanding your CP565 Notice

We gave you an Individual Taxpayer Identification Number (ITIN).

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Effective June 22, 2012, the IRS has made interim changes that affect the Individual Taxpayer Identification Number (ITIN) application process. Some of the information below, including the documentation requirements for individuals seeking an ITIN, has been superseded by these changes. Taxpayers and their representatives should review these changes, which are further explained in these Frequently Asked Questions, before requesting an ITIN.


What you need to do

  • Read your notice carefully. Make sure the name and date of birth we have on record for you is right.
  • You don't have to answer the notice.
  • Use your ITIN in place of a Social Security Number to file a federal tax return or a tax reporting document.

You may want to...


Answers to Common Questions

What is an ITIN?
It is a number for you to use on federal tax documents.

Who needs an ITIN?
A non-citizen who has to file a federal tax return or a tax reporting document and does not qualify for an SSN needs an ITIN.

Can I use an ITIN for identification?
No. It is only for tax purposes. It is not for non-tax purposes.

Can I use my ITIN like a Social Security number (SSN)?
You can use an ITIN like an SSN on federal tax documents. It doesn't, however, allow you to collect Social Security benefits. It doesn't change your immigration status.

Can I claim the Earned Income Tax Credit (EITC) when I file my tax return?
No, individuals filing a tax return with an ITIN can't claim the EITC.

What happens to my ITIN if I become a U.S. citizen?
You can get an SSN when you become a U.S. citizen.

What should I do if I get a Social Security number?
Use your SSN. Stop using your ITIN. Let us know you have an SSN so we can change our records. We will give you credit for taxes withheld under your old ITIN.

I sent you documents when I applied for an ITIN. When will you return them?
We will return your documents within 60 days from your notice's date. Call us at the number on your notice if you don't receive your documents by then.


Tips for next year

Use your ITIN and the name shown on your notice when you file your federal taxes next year. Do the same when you contact us by mail.

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP565, Page 1

Notice CP565, Page 2

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.
 

Page Last Reviewed or Updated: 14-Mar-2014

The File State Return Only

File state return only Publication 595 - Main Contents Table of Contents Capital Construction FundCCF Accounts Types of Accounts You Must Maintain Within a CCF Tax Treatment of CCF Deposits Tax Treatment of CCF Earnings Tax Treatment of CCF Withdrawals More Information How To Get Tax Help Capital Construction Fund The following sections discuss CCF accounts and the types of bookkeeping accounts you must maintain when you invest in a CCF account. File state return only They also discuss the income tax treatment of CCF deposits, earnings, and withdrawals. File state return only CCF Accounts This section explains who can open a CCF account and how to use the account to defer income tax. File state return only Opening a CCF account. File state return only   If you are a U. File state return only S. File state return only citizen and you own or lease one or more eligible vessels (defined later), you can open a CCF account. File state return only However, before you open your CCF account, you must enter into an agreement with the Secretary of Commerce through the NMFS. File state return only This agreement will establish the following. File state return only Agreement vessels. File state return only Eligible vessels named in the agreement that will be the basis for the deferral of income tax. File state return only Planned use of withdrawals. File state return only Use of CCF funds to acquire, build, or rebuild a vessel. File state return only CCF depository. File state return only Where your CCF funds will be held. File state return only    You can request an application kit or get additional information from NMFS at the following address. File state return only NOAA/NMFS, Financial Services Division, F/MB5 Capital Construction Fund Program 1315 East-West Highway Silver Spring, MD 20910-3282    You can obtain information on the Capital Construction Fund Program at the following website: www. File state return only nmfs. File state return only noaa. File state return only gov/mb/financial_services/ccf. File state return only htm. File state return only    You can call NMFS to request an application kit or get additional information at (301) 713-2393 (ext. File state return only 204). File state return only Their fax number is (301) 713-1939. File state return only Eligible vessels. File state return only   There are two types of vessels that may be considered eligible, those weighing 5 tons or more and those weighing less than 5 tons. File state return only For each type, certain requirements must be met. File state return only Vessel weighing 5 tons or more. File state return only   To be considered eligible, the vessel must meet all the following requirements. File state return only Be built or rebuilt in the United States. File state return only Be documented under the laws of the United States. File state return only Be used commercially in the fisheries of the United States. File state return only Be operated in the foreign or domestic commerce of the United States. File state return only Vessel weighing less than 5 tons. File state return only   A small vessel, weighing at least 2 net tons but less than 5 net tons, must meet all the following requirements to be considered eligible. File state return only Be built or rebuilt in the United States. File state return only Be owned by a U. File state return only S. File state return only citizen. File state return only Have a home port in the United States. File state return only Be used commercially in the fisheries of the United States. File state return only Deferring tax on CCF deposits and earnings. File state return only   You can use a CCF account to defer income tax by taking the following actions. File state return only Making deposits to your CCF account from taxable income. File state return only Excluding from income deposits assigned to certain accounts (discussed later). File state return only Making withdrawals from your CCF account when you acquire, build, or rebuild fishing vessels. File state return only Reducing the basis of fishing vessels you acquire, build, or rebuild to recapture amounts previously excluded from tax. File state return only    Reporting requirements. File state return only Beginning with the tax year in which you establish your agreement, you must report annual deposit and withdrawal activity to the NMFS on NOAA Form 34-82. File state return only This form is due within 30 days after you file your federal income tax return even if no deposits or withdrawals are made. File state return only For more information, contact the NMFS at the address or phone number given earlier. File state return only Types of Accounts You Must Maintain Within a CCF This section discusses the three types of bookkeeping accounts you must maintain when you invest in a CCF account. File state return only Your total CCF deposits and earnings for any given year are limited to the amount attributed to these three accounts for that year. File state return only Capital account. File state return only   The capital account consists primarily of amounts attributable to the following items. File state return only Allowable depreciation deductions for agreement vessels. File state return only Any nontaxable return of capital from either (a) or (b), below. File state return only The sale or other disposition of agreement vessels. File state return only Insurance or indemnity proceeds attributable to agreement vessels. File state return only Any tax-exempt interest earned on state or local bonds in your CCF account. File state return only Capital gain account. File state return only   The capital gain account consists of amounts attributable to the following items reduced by any capital losses from assets held in your CCF account for more than 6 months. File state return only Any capital gain from either of the following sources. File state return only The sale or other disposition of agreement vessels held for more than 6 months. File state return only Insurance or indemnity proceeds attributable to agreement vessels held for more than 6 months. File state return only Any capital gain from assets held in your CCF account for more than 6 months. File state return only Ordinary income account. File state return only   The ordinary income account consists of amounts attributable to the following items. File state return only Any earnings (without regard to the carryback of any net operating or net capital loss) from the operation of agreement vessels in the fisheries of the United States or in the foreign or domestic commerce of the United States. File state return only Any capital gain from the following sources reduced by any capital losses from assets held in your CCF account for 6 months or less. File state return only The sale or other disposition of agreement vessels held for 6 months or less. File state return only Insurance or indemnity proceeds attributable to agreement vessels held for 6 months or less. File state return only Any capital gain from assets held in your CCF account for 6 months or less. File state return only Any ordinary income (such as depreciation recapture) from either of the following sources. File state return only The sale or other disposition of agreement vessels. File state return only Insurance or indemnity proceeds attributable to agreement vessels. File state return only Any interest (not including tax-exempt interest from state and local bonds), most dividends, and other ordinary income earned on the assets in your CCF account. File state return only Tax Treatment of CCF Deposits This section explains the tax treatment of income used as the basis for CCF deposits. File state return only Capital gains. File state return only   Do not report any transaction that produces a capital gain if you deposit the net proceeds into your CCF account. File state return only This treatment applies to either of the following transactions. File state return only The sale or other disposition of an agreement vessel. File state return only The receipt of insurance or indemnity proceeds attributable to an agreement vessel. File state return only Depreciation recapture. File state return only   Do not report any transaction that produces depreciation recapture if you deposit the net proceeds into your CCF account. File state return only This treatment applies to either of the following transactions. File state return only The sale or other disposition of an agreement vessel. File state return only The receipt of insurance or indemnity proceeds attributable to an agreement vessel. File state return only Earnings from operations. File state return only   Report earnings from the operation of agreement vessels on your Schedule C or C-EZ (Form 1040) even if you deposit part of these earnings into your CCF account. File state return only You subtract any part of the earnings you deposited into your CCF account from the amount you would otherwise enter as taxable income on Form 1040, line 43 (for 2005). File state return only Next to line 43, write “CCF” and the amount of the deposits. File state return only Do not deduct these CCF deposits on Schedule C or C-EZ (Form 1040). File state return only If you deposit earnings from operations into your CCF account and you must complete other forms such as Form 6251, Alternative Minimum Tax (Individuals), or a worksheet for Schedule D (Form 1040), you will need to make an extra computation. File state return only When the other form instructs you to use the amount from Form 1040, line 41 (for 2005), do not use that amount. File state return only Instead, add Form 1040, lines 42 and 43 (for 2005), and use that amount. File state return only Self-employment tax. File state return only   You must use your net profit or loss from your fishing business to figure your self-employment tax. File state return only Do not reduce your net profit or loss by any earnings from operations you deposit into your CCF account. File state return only    Partnerships and S corporations. File state return only The deduction for partnership earnings from operations deposited into a CCF account is separately stated on Schedule K (Form 1065), line 13d, and allocated to the partners on Schedule K-1 (Form 1065), box 13 (for 2005). File state return only   The deduction for S corporation earnings deposited into a CCF account is separately stated on Schedule K (Form 1120S), line 12d, and allocated to the shareholders on Schedule K-1 (Form 1120S), box 12 (for 2005). File state return only Tax Treatment of CCF Earnings This section explains the tax treatment of the earnings from the assets in your CCF account when the earnings are redeposited or left in your account. File state return only However, if you choose to withdraw the earnings in the year earned, you must generally pay income tax on them. File state return only Capital gains. File state return only   Do not report any capital gains from the sale of capital assets held in your CCF account. File state return only This includes capital gain distributions reported to you on Form 1099-DIV or a substitute statement. File state return only However, you should attach a statement to your tax return to list the payers and the amounts and to identify the capital gains as “CCF account earnings. File state return only ” Interest and dividends. File state return only   Do not report any ordinary income (such as interest and dividends) you earn on the assets in your CCF account. File state return only However, you should attach a statement to your return to list the payers and the amounts and to identify them as “CCF account earnings. File state return only ”   If you are required to file Schedule B (Form 1040), you can add these earnings to the list of payers and amounts on line 1 or line 5 and identify them as “CCF earnings. File state return only ” Then, subtract the same amounts from the list and identify them as “CCF deposits. File state return only ” Tax-exempt interest. File state return only   Do not report tax-exempt interest from state or local bonds you held in your CCF account. File state return only You are not required to report this interest on Form 1040, line 8b. File state return only Tax Treatment of CCF Withdrawals This section discusses the tax treatment of amounts you withdraw from your CCF account during the year. File state return only Qualified Withdrawals A qualified withdrawal from a CCF account is one that is approved by NMFS for either of the following uses. File state return only Acquiring, building, or rebuilding qualified vessels (defined next). File state return only Making principal payments on the mortgage of a qualified vessel. File state return only NMFS will not approve amounts withdrawn to purchase nets not continuously attached to the vessel, such as seine nets, gill set-nets, and gill drift-nets. File state return only NMFS will approve amounts withdrawn to purchase trawl nets. File state return only Qualified vessel. File state return only   This is any vessel that meets all of the following requirements. File state return only The vessel was built or rebuilt in the United States. File state return only The vessel is documented under the laws of the United States. File state return only The person maintaining the CCF account agrees with the Secretary of Commerce that the vessel will be operated in United States foreign trade, Great Lakes trade, noncontiguous domestic trade, or the fisheries of the United States. File state return only How to determine the source of qualified withdrawals. File state return only   When you make a qualified withdrawal, the amount is treated as being withdrawn in the following order from the accounts listed below. File state return only The capital account. File state return only The capital gain account. File state return only The ordinary income account. File state return only Excluding qualified withdrawals from tax. File state return only   Do not report on your income tax return any qualified withdrawals from your CCF account. File state return only Reduce the depreciable basis of fishing vessels you acquire, build, or rebuild when you make a qualified withdrawal from either the capital gain or the ordinary income account. File state return only Nonqualified Withdrawals A nonqualified withdrawal from a CCF account is generally any withdrawal that is not a qualified withdrawal. File state return only Qualified withdrawals are defined under Qualified Withdrawals, earlier. File state return only Examples. File state return only   Examples of nonqualified withdrawals include the following amounts from either the ordinary income account or the capital gain account. File state return only Amounts remaining in a CCF account upon termination of your agreement with NMFS. File state return only Amounts you withdraw and use to make principal payments on the mortgage of a vessel if the basis of that vessel and the bases of other vessels you own have already been reduced to zero. File state return only Amounts determined by the IRS to cause your CCF account balance to exceed the amount appropriate to meet your planned use of withdrawals. File state return only You will generally be given 3 years to revise your plans to cover this excess balance. File state return only Amounts you leave in your account for more than 25 years. File state return only There is a graduated schedule under which the percentage applied to determine the amount of the nonqualified withdrawal increases from 20% in the 26th year to 100% in the 30th year. File state return only How to determine the source of nonqualified withdrawals. File state return only    When you make a nonqualified withdrawal from your CCF account, the amount is treated as being withdrawn in the following order from the accounts listed below. File state return only The ordinary income account. File state return only The capital gain account. File state return only The capital account. File state return only Paying tax on nonqualified withdrawals. File state return only   In general, nonqualified withdrawals are taxed separately from your other gross income and at the highest marginal tax rate in effect for the year of withdrawal. File state return only However, nonqualified withdrawals treated as made from the capital gain account are taxed at a rate that cannot exceed 15% for individuals and 34% for corporations. File state return only    Partnerships and S corporations. File state return only Taxable nonqualified partnership withdrawals are separately stated on Schedule K (Form 1065), line 20c, and allocated to the partners on Schedule K-1 (Form 1065), box 20 (for 2005). File state return only Taxable nonqualified withdrawals by an S corporation are separately stated on Schedule K (Form 1120S), line 17d, and allocated to the shareholders on Schedule K-1 (Form 1120S), box 17. File state return only Interest. File state return only   You must pay interest on the additional tax due to nonqualified withdrawals that are treated as made from either the ordinary income or the capital gain account. File state return only The interest period begins on the last date for paying tax for the year for which you deposited the amount you withdrew from your CCF account. File state return only The period ends on the last date for paying tax for the year in which you make the nonqualified withdrawal. File state return only The interest rate on the nonqualified withdrawal is simple interest. File state return only The rate is subject to change annually and is published in the Federal Register. File state return only    You also can call NMFS at (301) 713-2393 (ext. File state return only 204) to get the current interest rate. File state return only Interest deduction. File state return only   You can deduct the interest you pay on a nonqualified withdrawal as a trade or business expense. File state return only Reporting the additional tax and interest. File state return only   Attach a statement to your income tax return showing your computation of the tax and the interest on a nonqualified withdrawal. File state return only Include the tax and interest on Form 1040, line 63 (for 2005). File state return only To the left of line 63, write in the amount of tax and interest and “CCF. File state return only ” Tax benefit rule. File state return only   If any portion of your nonqualified withdrawal is properly attributable to contributions (not earnings on the contributions) you made to the CCF account that did not reduce your tax liability for any tax year prior to the withdrawal year, the following tax treatment applies. File state return only The part that did not reduce your tax liability for any year prior to the withdrawal year is not taxed. File state return only That part is allowed as a net operating loss deduction. File state return only More Information This section briefly discussed the CCF program. File state return only For more detailed information, see the following legislative authorities. File state return only Section 607 of the Merchant Marine Act of 1936, as amended (46 U. File state return only S. File state return only C. File state return only 1177). File state return only Chapter 2, Part 259 of title 50 of the Code of Federal Regulations (50 C. File state return only F. File state return only R. File state return only , Part 259). File state return only Subchapter A, Part 3 of title 26 of the Code of Federal Regulations (26 C. File state return only F. File state return only R. File state return only , Part 3). File state return only Section 7518 of the Internal Revenue Code (IRC 7518). File state return only The application kit you can obtain from NMFS at the address or phone number given earlier may contain copies of some of these sources of additional information. File state return only Also, see their web page at www. File state return only nmfs. File state return only noaa. File state return only gov/mb/financial_services/ccf. File state return only htm. File state return only How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. File state return only By selecting the method that is best for you, you will have quick and easy access to tax help. File state return only Contacting your Taxpayer Advocate. File state return only   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. File state return only   The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. File state return only While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. File state return only   To contact your Taxpayer Advocate: Call the Taxpayer Advocate toll free at 1-877-777-4778, Call, write, or fax the Taxpayer Advocate office in your area, Call 1-800-829-4059 if you are a TTY/TDD user, or Visit www. File state return only irs. File state return only gov/advocate. File state return only   For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish). File state return only Free tax services. File state return only   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. File state return only It contains a list of free tax publications and an index of tax topics. File state return only It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. File state return only Internet. File state return only You can access the IRS website 24 hours a day, 7 days a week, at www. File state return only irs. File state return only gov to: E-file your return. File state return only Find out about commercial tax preparation and e-file services available free to eligible taxpayers. File state return only Check the status of your refund. File state return only Click on Where's My Refund. File state return only Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). File state return only Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. File state return only Download forms, instructions, and publications. File state return only Order IRS products online. File state return only Research your tax questions online. File state return only Search publications online by topic or keyword. File state return only View Internal Revenue Bulletins (IRBs) published in the last few years. File state return only Figure your withholding allowances using our Form W-4 calculator. File state return only Sign up to receive local and national tax news by email. File state return only Get information on starting and operating a small business. File state return only Phone. File state return only Many services are available by phone. File state return only Ordering forms, instructions, and publications. File state return only Call 1-800-829-3676 to order current-year forms, instructions, and publications and prior-year forms and instructions. File state return only You should receive your order within 10 days. File state return only Asking tax questions. File state return only Call the IRS with your tax questions at 1-800-829-1040. File state return only Solving problems. File state return only You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. File state return only An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. File state return only Call your local Taxpayer Assistance Center for an appointment. File state return only To find the number, go to www. File state return only irs. File state return only gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. File state return only TTY/TDD equipment. File state return only If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. File state return only TeleTax topics. File state return only Call 1-800-829-4477 and press 2 to listen to pre-recorded messages covering various tax topics. File state return only Refund information. File state return only If you would like to check the status of your refund, call 1-800-829-4477 and press 1 for automated refund information and follow the recorded instructions or call 1-800-829-1954. File state return only Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). File state return only Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. File state return only Evaluating the quality of our telephone services. File state return only To ensure that IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. File state return only One method is for a second IRS representative to sometimes listen in on or record telephone calls. File state return only Another is to ask some callers to complete a short survey at the end of the call. File state return only Walk-in. File state return only Many products and services are available on a walk-in basis. File state return only Products. File state return only You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File state return only Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. File state return only Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. File state return only Services. File state return only You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. File state return only An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. File state return only If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. File state return only No appointment is necessary, but if you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. File state return only A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. File state return only To find the number, go to www. File state return only irs. File state return only gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. File state return only Mail. File state return only You can send your order for forms, instructions, and publications to the address below and receive a response within 10 business days after your request is received. File state return only National Distribution Center P. File state return only O. File state return only Box 8903 Bloomington, IL 61702-8903 CD-ROM for tax products. File state return only You can order Publication 1796, IRS Tax Products on CD-ROM, and obtain: A CD that is released twice so you have the latest products. File state return only The first release ships in late December and the final release ships in late February. File state return only Current-year forms, instructions, and publications. File state return only Prior-year forms, instructions, and publications. File state return only Tax Map: an electronic research tool and finding aid. File state return only Tax law frequently asked questions (FAQs). File state return only Tax Topics from the IRS telephone response system. File state return only Fill-in, print, and save features for most tax forms. File state return only Internal Revenue Bulletins. File state return only Toll-free and email technical support. File state return only Buy the CD-ROM from National Technical Information Service (NTIS) at www. File state return only irs. File state return only gov/cdorders for $25 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $25 (plus a $5 handling fee). File state return only CD-ROM for small businesses. File state return only Publication 3207, Small Business Resource Guide CD-ROM, has a new look and enhanced navigation features. File state return only This CD includes: Helpful information, such as how to prepare a business plan, find financing for your business, and much more. File state return only All the business tax forms, instructions, and publications needed to successfully manage a business. File state return only Tax law changes. File state return only IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword or topic. File state return only Web links to various government agencies, business associations, and IRS organizations. File state return only “Rate the Product” survey—your opportunity to suggest changes for future editions. File state return only An updated version of this CD is available each year in early April. File state return only You can get a free copy by calling 1-800-829-3676 or by visiting www. File state return only irs. File state return only gov/smallbiz. File state return only Prev  Up  Next   Home   More Online Publications