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

Filing back taxes online free 4. Filing back taxes online free   Underpayment Penalty for 2013 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: General RuleFarmers and fishermen. Filing back taxes online free Higher income taxpayers. Filing back taxes online free Minimum required for higher income taxpayers. Filing back taxes online free Estate or trust payments of estimated tax. Filing back taxes online free Lowering or eliminating the penalty. Filing back taxes online free ExceptionsLess Than $1,000 Due No Tax Liability Last Year Figuring Your Required Annual Payment (Part I) Short Method for Figuring the Penalty (Part III) Regular Method for Figuring the Penalty (Part IV)Figuring Your Underpayment (Part IV, Section A) Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Annualized Income Installment Method (Schedule AI) Farmers and Fishermen Waiver of PenaltyFarmers and fishermen. Filing back taxes online free Introduction If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty. Filing back taxes online free You may understand this chapter better if you can refer to a copy of your latest federal income tax return. Filing back taxes online free No penalty. Filing back taxes online free   Generally, you will not have to pay a penalty for 2013 if any of the following apply. Filing back taxes online free The total of your withholding and timely estimated tax payments was at least as much as your 2012 tax. Filing back taxes online free (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen. Filing back taxes online free ) The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Filing back taxes online free Your total tax for 2013 (defined later) minus your withholding is less than $1,000. Filing back taxes online free You did not have a tax liability for 2012. Filing back taxes online free You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000. Filing back taxes online free IRS can figure the penalty for you. Filing back taxes online free   If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may not have to. Filing back taxes online free Generally, the IRS will figure the penalty for you and send you a bill. Filing back taxes online free   You only need to figure your penalty in the following three situations. Filing back taxes online free You are requesting a waiver of part, but not all, of the penalty. Filing back taxes online free You are using the annualized income installment method to figure the penalty. Filing back taxes online free You are treating the federal income tax withheld from your income as paid on the dates actually withheld. Filing back taxes online free However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210 or Form 2210-F and attach it to your return. Filing back taxes online free See Form 2210 , later. Filing back taxes online free Topics - This chapter discusses: The general rule for the underpayment penalty, Special rules for certain individuals, Exceptions to the underpayment penalty, How to figure your underpayment and the amount of your penalty on Form 2210, and How to ask the IRS to waive the penalty. Filing back taxes online free Useful Items - You may want to see: Form (and Instructions) 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 5 for information about getting these forms. Filing back taxes online free General Rule In general, you may owe a penalty for 2013 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of: 90% of your 2013 tax, or 100% of your 2012 tax. Filing back taxes online free (Your 2012 tax return must cover a 12-month period. Filing back taxes online free ) Your 2013 tax, for this purpose, is defined under Total tax for 2013 , later. Filing back taxes online free Special rules for certain individuals. Filing back taxes online free   There are special rules for farmers and fishermen and certain higher income taxpayers. Filing back taxes online free Farmers and fishermen. Filing back taxes online free   If at least two-thirds of your gross income for 2012 or 2013 is from farming or fishing, substitute  662/3% for 90% in (1) above. Filing back taxes online free   See Farmers and Fishermen , later. Filing back taxes online free Higher income taxpayers. Filing back taxes online free   If your AGI for 2012 was more than $150,000 ($75,000 if your 2013 filing status is married filing a separate return), substitute 110% for 100% in (2) under General Rule . Filing back taxes online free This rule does not apply to farmers or fishermen. Filing back taxes online free   For 2012, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Filing back taxes online free Penalty figured separately for each period. Filing back taxes online free   Because the penalty is figured separately for each payment period, you may owe a penalty for an earlier payment period even if you later paid enough to make up the underpayment. Filing back taxes online free This is true even if you are due a refund when you file your income tax return. Filing back taxes online free Example. Filing back taxes online free You did not make estimated tax payments for 2013 because you thought you had enough tax withheld from your wages. Filing back taxes online free Early in January 2014, you made an estimate of your total 2013 tax. Filing back taxes online free Then you realized that your withholding was $2,000 less than the amount needed to avoid a penalty for underpayment of estimated tax. Filing back taxes online free On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate of your total tax. Filing back taxes online free Your final return shows your total tax to be $50 less than your estimate, so you are due a refund. Filing back taxes online free You do not owe a penalty for your payment due January 15, 2014. Filing back taxes online free However, you may owe a penalty through January 10, 2014, the day you made the $3,000 payment, for your underpayments for the earlier payment periods. Filing back taxes online free Minimum required each period. Filing back taxes online free   You will owe a penalty for any 2013 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of: 22. Filing back taxes online free 5% of your 2013 tax, or 25% of your 2012 tax. Filing back taxes online free (Your 2012 tax return must cover a 12-month period. Filing back taxes online free ) Minimum required for higher income taxpayers. Filing back taxes online free   If you are subject to the rule for higher income taxpayers, discussed above, substitute 27. Filing back taxes online free 5% for 25% in (2) under General Rule . Filing back taxes online free When penalty is charged. Filing back taxes online free   If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty from the date the amount was due to the date the payment is made. Filing back taxes online free If a payment is mailed, the date of the U. Filing back taxes online free S. Filing back taxes online free postmark is considered the date of payment. Filing back taxes online free   If a payment is made electronically, the date the payment is shown on your payment account (checking, savings, etc. Filing back taxes online free ) is considered to be the date of payment. Filing back taxes online free Estate or trust payments of estimated tax. Filing back taxes online free   If you have estimated taxes credited to you from an estate or trust (Schedule K-1 (Form 1041)), treat the payment as made by you on January 15, 2014. Filing back taxes online free Amended returns. Filing back taxes online free    If you file an amended return by the due date of your original return, use the tax shown on your amended return to figure your required estimated tax payments. Filing back taxes online free If you file an amended return after the due date of the original return, use the tax shown on the original return. Filing back taxes online free   However, if you and your spouse file a joint return after the due date to replace separate returns you originally filed by the due date, use the tax shown on the joint return to figure your required estimated tax payments. Filing back taxes online free This rule applies only if both original separate returns were filed on time. Filing back taxes online free 2012 separate returns and 2013 joint return. Filing back taxes online free    If you file a joint return with your spouse for 2013, but you filed separate returns for 2012, your 2012 tax is the total of the tax shown on your separate returns. Filing back taxes online free You filed a separate return if you filed as single, head of household, or married filing separately. Filing back taxes online free 2012 joint return and 2013 separate returns. Filing back taxes online free    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, your 2012 tax is your share of the tax on the joint return. Filing back taxes online free You are filing a separate return if you file as single, head of household, or married filing separately. Filing back taxes online free   To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2012 using the same filing status as for 2013. Filing back taxes online free Then multiply the tax on the joint return by the following fraction. Filing back taxes online free   The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Filing back taxes online free Lisa and Paul filed a joint return for 2012 showing taxable income of $49,000 and a tax of $6,484. Filing back taxes online free Of the $49,000 taxable income, $41,000 was Lisa's and the rest was Paul's. Filing back taxes online free For 2013, they file married filing separately. Filing back taxes online free Lisa figures her share of the tax on the 2012 joint return as follows. Filing back taxes online free 2012 tax on $41,000 based on a separate return $ 6,286 2012 tax on $8,000 based on a  separate return 803 Total $ 7,089 Lisa's percentage of total tax  ($6,286 ÷ $ 7,089) 88. Filing back taxes online free 67% Lisa's part of tax on joint return ($6,484 × 88. Filing back taxes online free 67%) $ 5,749 Form 2210. Filing back taxes online free   In most cases, you do not need to file Form 2210. Filing back taxes online free The IRS will figure the penalty for you and send you a bill. Filing back taxes online free If you want us to figure the penalty for you, leave the penalty line on your return blank. Filing back taxes online free Do not file Form 2210. Filing back taxes online free   To determine if you should file Form 2210, see Part II of Form 2210. Filing back taxes online free If you decide to figure your penalty, complete Part I, Part II, and either Part III or Part IV of the form and the Penalty Worksheet in the Instructions for Form 2210. Filing back taxes online free If you use Form 2210, you cannot file Form 1040EZ. Filing back taxes online free   On Form 1040, enter the amount of your penalty on line 77. Filing back taxes online free If you owe tax on line 76, add the penalty to your tax due and show your total payment on line 76. Filing back taxes online free If you are due a refund, subtract the penalty from the overpayment and enter the result on line 73. Filing back taxes online free   On Form 1040A, enter the amount of your penalty on line 46. Filing back taxes online free If you owe tax on line 45, add the penalty to your tax due and show your total payment on line 45. Filing back taxes online free If you are due a refund, subtract the penalty from the overpayment and enter the result on line 42. Filing back taxes online free Lowering or eliminating the penalty. Filing back taxes online free    You may be able to lower or eliminate your penalty if you file Form 2210. Filing back taxes online free You must file Form 2210 with your return if any of the following applies. Filing back taxes online free You request a waiver. Filing back taxes online free See Waiver of Penalty , later. Filing back taxes online free You use the annualized income installment method. Filing back taxes online free See the explanation of this method under Annualized Income Installment Method (Schedule AI) . Filing back taxes online free You use your actual withholding for each payment period for estimated tax purposes. Filing back taxes online free See Actual withholding method under Figuring Your Underpayment (Part IV, Section A). Filing back taxes online free You base any of your required installments on the tax shown on your 2012 return and you filed or are filing a joint return for either 2012 or 2013, but not for both years. Filing back taxes online free Exceptions Generally, you do not have to pay an underpayment penalty if either: Your total tax is less than $1,000, or You had no tax liability last year. Filing back taxes online free Less Than $1,000 Due You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess social security and tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000. Filing back taxes online free Total tax for 2013. Filing back taxes online free   For 2013, your total tax on Form 1040 is the amount on line 61 reduced by the following. Filing back taxes online free    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Filing back taxes online free Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Filing back taxes online free The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Filing back taxes online free Any refundable credit amounts listed on lines 64a, 65, 66, 70, and any credit from Form 8885 included on line 71. Filing back taxes online free   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Filing back taxes online free   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Filing back taxes online free Note. Filing back taxes online free When figuring the amount on line 60, include household employment taxes only if you had federal income tax withheld from your income or you would owe the penalty even if you did not include those taxes. Filing back taxes online free Paid through withholding. Filing back taxes online free    For 2013, the amount you paid through withholding on Form 1040 is the amount on line 62 plus any excess social security or tier 1 RRTA tax withholding on line 69. Filing back taxes online free Add to that any write-in amount on line 72 identified as “Form 8689. Filing back taxes online free ” On Form 1040A, the amount you paid through withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included on line 41. Filing back taxes online free On Form 1040EZ, it is the amount on line 7. Filing back taxes online free No Tax Liability Last Year You do not owe a penalty if you had no tax liability last year and you were a U. Filing back taxes online free S. Filing back taxes online free citizen or resident for the whole year. Filing back taxes online free For this rule to apply, your tax year must have included all 12 months of the year. Filing back taxes online free You had no tax liability for 2012 if your total tax was zero or you were not required to file an income tax return. Filing back taxes online free Example. Filing back taxes online free Ray, who is single and 22 years old, was unemployed for a few months during 2012. Filing back taxes online free He earned $6,700 in wages before he was laid off, and he received $1,400 in unemployment compensation afterwards. Filing back taxes online free He had no other income. Filing back taxes online free Even though he had gross income of $8,100, he did not have to pay income tax because his gross income was less than the filing requirement for a single person under age 65 ($9,750 for 2012). Filing back taxes online free He filed a return only to have his withheld income tax refunded to him. Filing back taxes online free In 2013, Ray began regular work as an independent contractor. Filing back taxes online free Ray made no estimated tax payments in 2013. Filing back taxes online free Even though he did owe tax at the end of the year, Ray does not owe the underpayment penalty for 2013 because he had no tax liability in 2012. Filing back taxes online free Total tax for 2012. Filing back taxes online free   For 2012, your total tax on Form 1040 is the amount on line 61 reduced by the following. Filing back taxes online free    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Filing back taxes online free Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Filing back taxes online free The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Filing back taxes online free Any refundable credit amounts listed on lines 64a, 65, 66, 70, and credits from Forms 8801 (line 27 only), and 8885 included on line 71. Filing back taxes online free   If you filed Form 1040A, your 2012 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Filing back taxes online free   If you filed Form 1040EZ, your 2012 total tax is the amount on line 11 reduced by the amount on line 8a. Filing back taxes online free Figuring Your Required Annual Payment (Part I) Figure your required annual payment in Part I of Form 2210, following the line-by-line instructions. Filing back taxes online free If you rounded the entries on your tax return to whole dollars, you can round on Form 2210. Filing back taxes online free Example. Filing back taxes online free The tax on Lori Lane's 2012 return was $12,400. Filing back taxes online free Her AGI was not more than $150,000 for either 2012 or 2013. Filing back taxes online free The tax on her 2013 return (Form 1040, line 55) is $13,044. Filing back taxes online free Line 56 (self-employment tax) is $8,902. Filing back taxes online free Her 2013 total tax is $21,946. Filing back taxes online free For 2013, Lori had $1,600 income tax withheld and made four equal estimated tax payments ($1,000 each). Filing back taxes online free 90% of her 2013 tax is $19,751. Filing back taxes online free Because she paid less than her 2012 tax ($12,400) and less than 90% of her 2013 tax ($19,751), and does not meet an exception, Lori knows that she owes a penalty for underpayment of estimated tax. Filing back taxes online free The IRS will figure the penalty for Lori, but she decides to figure it herself on Form 2210 and pay it with her taxes when she files her tax return. Filing back taxes online free Lori's required annual payment is $12,400 (100% of 2012 tax) because that is smaller than 90% of her 2013 tax. Filing back taxes online free Different 2012 filing status. Filing back taxes online free    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, see 2012 joint return and 2013 separate returns , earlier, to figure the amount to enter as your 2012 tax on line 8 of Form 2210. Filing back taxes online free Short Method for Figuring the Penalty (Part III) You may be able to use the short method in Part III of Form 2210 to figure your penalty for underpayment of estimated tax. Filing back taxes online free If you qualify to use this method, it will result in the same penalty amount as the regular method. Filing back taxes online free However, either the annualized income installment method or the actual withholding method, explained later, may result in a smaller penalty. Filing back taxes online free You can use the short method only if you meet one of the following requirements. Filing back taxes online free You made no estimated tax payments for 2013 (it does not matter whether you had income tax withholding). Filing back taxes online free You paid the same amount of estimated tax on each of the four payment due dates. Filing back taxes online free If you do not meet either requirement, figure your penalty using the regular method in Part IV of Form 2210 and the Penalty Worksheet in the instructions. Filing back taxes online free Note. Filing back taxes online free If any payment was made before the due date, you can use the short method, but the penalty may be less if you use the regular method. Filing back taxes online free However, if the payment was only a few days early, the difference is likely to be small. Filing back taxes online free You cannot use the short method if any of the following apply. Filing back taxes online free You made any estimated tax payments late. Filing back taxes online free You checked box C or D in Part II of Form 2210. Filing back taxes online free You are filing Form 1040NR or 1040NR-EZ and you did not receive wages as an employee subject to U. Filing back taxes online free S. Filing back taxes online free income tax withholding. Filing back taxes online free If you use the short method, you cannot use the annualized income installment method to figure your underpayment for each payment period. Filing back taxes online free Also, you cannot use your actual withholding during each period to figure your payments for each period. Filing back taxes online free These methods, which may give you a smaller penalty amount, are explained under Figuring Your Underpayment (Part IV, Section A). Filing back taxes online free Complete Part III of Form 2210 following the line-by-line instructions in the Instructions for Form 2210. Filing back taxes online free Regular Method for Figuring the Penalty (Part IV) You can use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid one or more estimated tax payments earlier than the due date. Filing back taxes online free You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of the following apply to you. Filing back taxes online free You paid one or more estimated tax payments on a date after the due date. Filing back taxes online free You paid at least one, but less than four, installments of estimated tax. Filing back taxes online free You paid estimated tax payments in un- equal amounts. Filing back taxes online free You use the annualized income installment method to figure your underpayment for each payment period. Filing back taxes online free You use your actual withholding during each payment period to figure your payments. Filing back taxes online free Under the regular method, figure your underpayment for each payment period in Section A, then figure your penalty using the Penalty Worksheet in the Instructions for Form 2210. Filing back taxes online free Enter the results on line 27 of Section B. Filing back taxes online free Figuring Your Underpayment (Part IV, Section A) Figure your underpayment of estimated tax for each payment period in Section A following the line-by-line instructions in the Instructions for Form 2210. Filing back taxes online free Complete lines 20 through 26 of the first column before going to line 20 of the next column. Filing back taxes online free Required installments—line 18. Filing back taxes online free   Your required payment for each payment period (line 18) is usually one-fourth of your required annual payment (Part I, line 9). Filing back taxes online free This method—the regular method—is the one to use if you received your income evenly throughout the year. Filing back taxes online free   However, if you did not receive your income evenly throughout the year, you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Filing back taxes online free First complete Schedule AI (Form 2210), then enter the amounts from line 25 of that schedule on line 18 of Form 2210, Part IV. Filing back taxes online free See Annualized Income Installment Method (Schedule AI), later. Filing back taxes online free Payments made—line 19. Filing back taxes online free   Enter in each column the total of: Your estimated tax paid after the due date for the previous column and by the due date shown at the top of the column, and One-fourth of your withholding. Filing back taxes online free For special rules for figuring your payments, see Form 2210 instructions for line 19. Filing back taxes online free   If you file Form 1040, your withholding is the amount on line 62, plus any excess social security or tier 1 RRTA tax withholding on line 69. Filing back taxes online free If you file Form 1040A, your withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included in line 41. Filing back taxes online free Actual withholding method. Filing back taxes online free    Instead of using one-fourth of your withholding for each quarter, you can choose to use the amounts actually withheld by each due date. Filing back taxes online free You can make this choice separately for the tax withheld from your wages and for all other withholding. Filing back taxes online free This includes any excess social security and tier 1 RRTA tax withheld. Filing back taxes online free   Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year. Filing back taxes online free   If you use your actual withholding, you must check box D in Form 2210, Part II. Filing back taxes online free Then complete Form 2210 using the regular method (Part IV) and file it with your return. Filing back taxes online free Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Figure the amount of your penalty for Section B using the Penalty Worksheet in the Form 2210 instructions. Filing back taxes online free The penalty is imposed on each underpayment amount shown on Form 2210, Section A, line 25, for the number of days that it remained unpaid. Filing back taxes online free For 2013, there are four rate periods—April 16 through June 30, July 1 through September 30, October 1 through December 31, and January 1, 2014 through April 15, 2014. Filing back taxes online free A 3% rate applies to all four periods. Filing back taxes online free Payments. Filing back taxes online free    Before completing the Penalty Worksheet, it may be helpful to make a list of the payments you made and income tax withheld after the due date (or the last day payments could be made on time) for the earliest payment period an underpayment occurred. Filing back taxes online free For example, if you had an underpayment for the first payment period, list your payments after April 15, 2013. Filing back taxes online free You can use the table in the Form 2210 instructions to make your list. Filing back taxes online free Follow those instructions for listing income tax withheld and payments made with your return. Filing back taxes online free Use the list to determine when each underpayment was paid. Filing back taxes online free   If you mail your estimated tax payments, use the date of the U. Filing back taxes online free S. Filing back taxes online free postmark as the date of payment. Filing back taxes online free Line 1b. Filing back taxes online free   Apply the payments listed to underpayment balance in the first column until it is fully paid. Filing back taxes online free Apply payments in the order made. Filing back taxes online free Figuring the penalty. Filing back taxes online free   If an underpayment was paid in two or more payments on different dates, you must figure the penalty separately for each payment. Filing back taxes online free On line 3 of the Penalty Worksheet enter the number of days between the due date (line 2) and the date of each payment on line 1b. Filing back taxes online free On line 4 figure the penalty for the amount of each payment applied on line 1b or the amount remaining unpaid. Filing back taxes online free If no payments are applied, figure the penalty on the amount on line 1a. Filing back taxes online free Aid for counting days. Filing back taxes online free    Table 4-1 provides a simple method for counting the number of days between a due date and a payment date. Filing back taxes online free Find the number for the date the payment was due by going across to the column of the month the payment was due and moving down the column to the due date. Filing back taxes online free In the same manner, find the number for the date the payment was made. Filing back taxes online free Subtract the due date “number” from the payment date “number. Filing back taxes online free ”   For example, if a payment was due on June 15 (61), but was not paid until September 1 (139), the payment was 78 (139 – 61) days late. Filing back taxes online free Table 4-1. Filing back taxes online free Calendar To Determine the Number of Days a Payment Is Late Instructions. Filing back taxes online free Use this table with Form 2210 if you are completing Part IV, Section B. Filing back taxes online free First, find the number for the payment due date by going across to the column of the month the payment was due and moving down the column to the due date. Filing back taxes online free Then, in the same manner, find the number for the date the payment was made. Filing back taxes online free Finally, subtract the due date number from the payment date number. Filing back taxes online free The result is the number of days the payment is late. Filing back taxes online free Example. Filing back taxes online free The payment due date is June 15 (61). Filing back taxes online free The payment was made on November 4 (203). Filing back taxes online free The payment is 142 days late (203 – 61). Filing back taxes online free Tax Year 2013 Day of 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 Month April May June July Aug. Filing back taxes online free Sept. Filing back taxes online free Oct. Filing back taxes online free Nov. Filing back taxes online free Dec. Filing back taxes online free Jan. Filing back taxes online free Feb. Filing back taxes online free Mar. Filing back taxes online free Apr. Filing back taxes online free 1   16 47 77 108 139 169 200 230 261 292 320 351 2   17 48 78 109 140 170 201 231 262 293 321 352 3   18 49 79 110 141 171 202 232 263 294 322 353 4   19 50 80 111 142 172 203 233 264 295 323 354 5   20 51 81 112 143 173 204 234 265 296 324 355 6   21 52 82 113 144 174 205 235 266 297 325 356 7   22 53 83 114 145 175 206 236 267 298 326 357 8   23 54 84 115 146 176 207 237 268 299 327 358 9   24 55 85 116 147 177 208 238 269 300 328 359 10   25 56 86 117 148 178 209 239 270 301 329 360 11   26 57 87 118 149 179 210 240 271 302 330 361 12   27 58 88 119 150 180 211 241 272 303 331 362 13   28 59 89 120 151 181 212 242 273 304 332 363 14   29 60 90 121 152 182 213 243 274 305 333 364 15 0 30 61 91 122 153 183 214 244 275 306 334 365 16 1 31 62 92 123 154 184 215 245 276 307 335   17 2 32 63 93 124 155 185 216 246 277 308 336   18 3 33 64 94 125 156 186 217 247 278 309 337   19 4 34 65 95 126 157 187 218 248 279 310 338   20 5 35 66 96 127 158 188 219 249 280 311 339   21 6 36 67 97 128 159 189 220 250 281 312 340   22 7 37 68 98 129 160 190 221 251 282 313 341   23 8 38 69 99 130 161 191 222 252 283 314 342   24 9 39 70 100 131 162 192 223 253 284 315 343   25 10 40 71 101 132 163 193 224 254 285 316 344   26 11 41 72 102 133 164 194 225 255 286 317 345   27 12 42 73 103 134 165 195 226 256 287 318 346   28 13 43 74 104 135 166 196 227 257 288 319 347   29 14 44 75 105 136 167 197 228 258 289   348   30 15 45 76 106 137 168 198 229 259 290   349   31   46   107 138   199   260 291   350   Annualized Income Installment Method (Schedule AI) If you did not receive your income evenly throughout the year (for example, your income from a shop you operated at a marina was much larger in the summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Filing back taxes online free Under this method, your required installment (Part IV, line 18) for one or more payment periods may be less than one-fourth of your required annual payment. Filing back taxes online free To figure your underpayment using this method, complete Form 2210, Schedule AI. Filing back taxes online free Schedule AI annualizes your tax at the end of each payment period based on your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Filing back taxes online free If you use the annualized income installment method, you must check box C in Part II of Form 2210. Filing back taxes online free Also, you must attach Form 2210 and Schedule AI to your return. Filing back taxes online free If you use Schedule AI for any payment due date, you must use it for all payment due dates. Filing back taxes online free Completing Schedule AI. Filing back taxes online free   Follow the Form 2210 instructions to complete Schedule AI. Filing back taxes online free For each period shown on Schedule AI, figure your income and deductions based on your method of accounting. Filing back taxes online free If you use the cash method of accounting (used by most people), include all income actually or constructively received during the period and all deductions actually paid during the period. Filing back taxes online free Note. Filing back taxes online free Each period includes amounts from the previous period(s). Filing back taxes online free Period (a) includes items for January 1 through March 31. Filing back taxes online free Period (b) includes items for January 1 through May 31. Filing back taxes online free Period (c) includes items for January 1 through August 31. Filing back taxes online free Period (d) includes items for the entire year. Filing back taxes online free Farmers and Fishermen If you are a farmer or fisherman, the following special rules for underpayment of estimated tax apply to you. Filing back taxes online free The penalty for underpaying your 2013 estimated tax will not apply if you file your return and pay all the tax due by March 3, 2014. Filing back taxes online free If you are a fiscal year taxpayer, the penalty will not apply if you file your return and pay the tax due by the first day of the third month after the end of your tax year. Filing back taxes online free Any penalty you owe for underpaying your 2013 estimated tax will be figured from one payment due date, January 15, 2014. Filing back taxes online free The underpayment penalty for 2013 is figured on the difference between the amount of 2013 withholding plus estimated tax paid by the due date and the smaller of: 662/3% (rather than 90%) of your 2013 tax, or 100% of the tax shown on your 2012 return. Filing back taxes online free Even if these special rules apply to you, you will not owe the penalty if you meet either of the two conditions discussed under Exceptions . Filing back taxes online free See Who Must Pay Estimated Tax in chapter 2 for the definition of a farmer or fisherman who is eligible for these special rules. Filing back taxes online free Form 2210-F. Filing back taxes online free   Use Form 2210-F to figure any underpayment penalty. Filing back taxes online free Do not attach it to your return unless you check a box in Part I. Filing back taxes online free However, if none of the boxes apply to you and you owe a penalty, you do not need to attach Form 2210-F. Filing back taxes online free Enter the amount from line 16 on Form 1040, line 77 and add the penalty to any balance due on your return or subtract it from your refund. Filing back taxes online free Keep your filled-in Form 2210-F for your records. Filing back taxes online free    If none of the boxes on Form 2210-F apply to you and you owe a penalty, the IRS can figure your penalty and send you a bill. Filing back taxes online free Waiver of Penalty The IRS can waive the penalty for underpayment if either of the following applies. Filing back taxes online free You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty. Filing back taxes online free You retired (after reaching age 62) or became disabled in 2012 or 2013 and both the following requirements are met. Filing back taxes online free You had a reasonable cause for not making the payment. Filing back taxes online free Your underpayment was not due to willful neglect. Filing back taxes online free How to request a waiver. Filing back taxes online free   To request a waiver, see the Instructions for Form 2210. Filing back taxes online free Farmers and fishermen. Filing back taxes online free   To request a waiver, see the Instructions for Form 2210-F. Filing back taxes online free Federally declared disaster. Filing back taxes online free   Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. Filing back taxes online free During the processing of your tax return, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief. Filing back taxes online free Do not file Form 2210 or 2210-F if your underpayment was due to a federally declared disaster. Filing back taxes online free If you still owe a penalty after the automatic waiver is applied, we will send you a bill. Filing back taxes online free   Individuals, estates, and trusts not in a covered disaster area but whose books, records, or tax professionals' offices are in a covered area are also entitled to relief. Filing back taxes online free Also eligible are relief workers affiliated with a recognized government or charitable organization assisting in the relief activities in a covered disaster area. Filing back taxes online free If you meet either of these eligibility requirements, you must call the IRS disaster hotline at 1-866-562-5227 and identify yourself as eligible for this relief. Filing back taxes online free   Details on the applicable disaster postponement period can be found at IRS. Filing back taxes online free gov. Filing back taxes online free Enter Tax Relief in Disaster Situations. Filing back taxes online free Select the federally declared disaster that affected you. Filing back taxes online free    Worksheet 4-1. Filing back taxes online free 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Note. Filing back taxes online free To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected amount for the period by the  annualization amount on line 2 of Schedule AI for the same period. Filing back taxes online free                   1. Filing back taxes online free Enter line 11 of your Schedule AI, or line 3 from Worksheet 4-2 1. Filing back taxes online free       2. Filing back taxes online free Enter your annualized qualified dividends for the period 2. Filing back taxes online free           3. Filing back taxes online free Are you filing Schedule D?               □ Yes. Filing back taxes online free Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. Filing back taxes online free If either line 15 or line 16 is blank or a loss, enter -0-. Filing back taxes online free 3. Filing back taxes online free             □ No. Filing back taxes online free Enter your annualized capital gain distributions from Form 1040, line 13             4. Filing back taxes online free Add lines 2 and 3   4. Filing back taxes online free           5. Filing back taxes online free If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of that form. Filing back taxes online free Otherwise, enter -0-   5. Filing back taxes online free           6. Filing back taxes online free Subtract line 5 from line 4. Filing back taxes online free If zero or less, enter -0- 6. Filing back taxes online free       7. Filing back taxes online free Subtract line 6 from line 1. Filing back taxes online free If zero or less, enter -0- 7. Filing back taxes online free       8. Filing back taxes online free Enter: $36,900 if single or married filing separately, $73,800 if married filing jointly or qualifying widow(er), $49,400 if head of household. Filing back taxes online free 8. Filing back taxes online free       9. Filing back taxes online free Enter the smaller of line 1 or line 8 9. Filing back taxes online free       10. Filing back taxes online free Enter the smaller of line 7 or line 9 10. Filing back taxes online free       11. Filing back taxes online free Subtract line 10 from line 9. Filing back taxes online free This amount is taxed at 0% 11. Filing back taxes online free       12. Filing back taxes online free Enter the smaller of line 1 or line 6 12. Filing back taxes online free       13. Filing back taxes online free Enter the amount from line 11 13. Filing back taxes online free       14. Filing back taxes online free Subtract line 13 from line 12 14. Filing back taxes online free       15. Filing back taxes online free Multiply line 14 by 15% (. Filing back taxes online free 15) 15. Filing back taxes online free   16. Filing back taxes online free Figure the tax on the amount on line 7. Filing back taxes online free If the amount on line 7 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Filing back taxes online free If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 16. Filing back taxes online free   17. Filing back taxes online free Add lines 15 and 16 17. Filing back taxes online free   18. Filing back taxes online free Figure the tax on the amount on line 1. Filing back taxes online free If the amount on line 1 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Filing back taxes online free If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 18. Filing back taxes online free   19. Filing back taxes online free Tax on all taxable income. Filing back taxes online free Enter the smaller of line 17 or line 18. Filing back taxes online free Also enter this amount on line 12 of Schedule AI in the appropriate column. Filing back taxes online free However, if you are using this worksheet to figure the tax on the amount on line 3 of Worksheet 4-2, enter the amount from line 19 on Worksheet 4-2, line 4 19. Filing back taxes online free   Worksheet 4-2. Filing back taxes online free 2013 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet Before you begin:If Schedule AI, line 11, is zero for the period, do not complete this worksheet. Filing back taxes online free             1. Filing back taxes online free Enter the amount from line 11 of Schedule AI for the period 1. Filing back taxes online free   2. Filing back taxes online free Enter the annualized amount* of foreign earned income and housing amount excluded or deducted (from  Form 2555, lines 45 and 50, or Form 2555-EZ, line 18) in figuring the amount entered for the period on line 1  of Schedule AI 2. Filing back taxes online free   3. Filing back taxes online free Add lines 1 and 2 3. Filing back taxes online free   4. Filing back taxes online free Tax on the amount on line 3. Filing back taxes online free Use the Tax Table, Tax Computation Worksheet, Form 8615**, Qualified Dividends and Capital Gain Tax Worksheet***, or Schedule D Tax Worksheet***, whichever applies. Filing back taxes online free See the 2013 Instructions for Form 1040, line 44, to find out which tax computation method to use. Filing back taxes online free (Note. Filing back taxes online free You do not have to use the same method for each period on Schedule AI. Filing back taxes online free ) 4. Filing back taxes online free   5. Filing back taxes online free Tax on the amount on line 2. Filing back taxes online free If the amount on line 2 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Filing back taxes online free If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 5. Filing back taxes online free   6. Filing back taxes online free Subtract line 5 from line 4. Filing back taxes online free Enter the result here and on line 12 of Schedule AI. Filing back taxes online free If zero or less,  enter -0- 6. Filing back taxes online free             * To figure the annualized amount for line 2, multiply the exclusion or deduction for the period by the annualization amount on line 2 of Schedule AI for the same period. Filing back taxes online free     ** If you use Form 8615 to figure the tax on line 4 above, enter the amount from line 3 above on line 4 of Form 8615. Filing back taxes online free If the child's parent files Form 2555 or 2555-EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Filing back taxes online free Complete the rest of Form 8615 according to its instructions. Filing back taxes online free Then complete lines 5 and 6 above. Filing back taxes online free     *** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or Worksheet 4-1 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on line 4 above. Filing back taxes online free Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Filing back taxes online free Next, determine if you have a capital gain excess. Filing back taxes online free     Figuring capital gain excess. Filing back taxes online free To find out if you have a capital gain excess for the appropriate period, subtract line 11 of Schedule AI from line 6 of Worksheet 4-1 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). Filing back taxes online free If the result is more than zero, that amount is your capital gain excess. Filing back taxes online free     No capital gain excess. Filing back taxes online free If you do not have a capital gain excess, complete the rest of Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax Worksheet according to the worksheet's instructions. Filing back taxes online free Then complete lines 5 and 6 above. Filing back taxes online free     Capital gain excess. Filing back taxes online free If you have a capital gain excess, complete a second Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Filing back taxes online free Then complete lines 5 and 6 above. Filing back taxes online free     Make the modifications below only for purposes of filling out Worksheet 4-2 above. Filing back taxes online free     a. Filing back taxes online free Reduce (but not below zero) the amount you otherwise would enter on line 3 of your Worksheet 4-1, line 3 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 9 of your Schedule D Tax Worksheet by your capital gain excess. Filing back taxes online free     b. Filing back taxes online free Reduce (but not below zero) the amount you otherwise would enter on line 2 of your Worksheet 4-1, line 2 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (a) above. Filing back taxes online free     c. Filing back taxes online free Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess. Filing back taxes online free     d. Filing back taxes online free Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the 2013 Instructions for Schedule D (Form 1040). Filing back taxes online free   Prev  Up  Next   Home   More Online Publications