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Free File Form 4868

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Free File Form 4868

Free file form 4868 5. Free file form 4868   Manufacturers Taxes Table of Contents Importer. Free file form 4868 Use considered sale. Free file form 4868 Lease considered sale. Free file form 4868 Bonus goods. Free file form 4868 Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. Free file form 4868 Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. Free file form 4868 CoalExported. Free file form 4868 Taxable TiresQualifying intercity or local bus. Free file form 4868 Qualifying school bus. Free file form 4868 Gas Guzzler TaxVehicles not subject to tax. Free file form 4868 Imported automobiles. Free file form 4868 VaccinesConditions to allowance. Free file form 4868 Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. Free file form 4868 Manufacturer. Free file form 4868   The term “manufacturer” includes a producer or importer. Free file form 4868 A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. Free file form 4868 If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. Free file form 4868   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. Free file form 4868 The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. Free file form 4868 Importer. Free file form 4868   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. Free file form 4868 Sale. Free file form 4868   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. Free file form 4868 Use considered sale. Free file form 4868   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. Free file form 4868 Lease considered sale. Free file form 4868   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. Free file form 4868 However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. Free file form 4868 Manufacturers taxes based on sale price. Free file form 4868   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. Free file form 4868 The taxes imposed on coal are based either on the sale price or the weight. Free file form 4868   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. Free file form 4868 However, you include certain charges made when a taxable article is sold and you exclude others. Free file form 4868 To figure the price on which you base the tax, use the following rules. Free file form 4868 Include both the following charges in the price. Free file form 4868 Any charge for coverings or containers (regardless of their nature). Free file form 4868 Any charge incident to placing the article in a condition packed ready for shipment. Free file form 4868 Exclude all the following amounts from the price. Free file form 4868 The manufacturers excise tax, whether or not it is stated as a separate charge. Free file form 4868 The transportation charges pursuant to the sale. Free file form 4868 The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. Free file form 4868 Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. Free file form 4868 Discounts, rebates, and similar allowances actually granted to the purchaser. Free file form 4868 Local advertising charges. Free file form 4868 A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. Free file form 4868 Charges for warranty paid at the purchaser's option. Free file form 4868 However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. Free file form 4868 Bonus goods. Free file form 4868   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. Free file form 4868 Figure the tax only on the sale price attributable to the taxable articles. Free file form 4868 Example. Free file form 4868 A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. Free file form 4868 The sale price of the shipment is $1,500. Free file form 4868 The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. Free file form 4868 Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). Free file form 4868 The remaining $375 is allocated to the nontaxable articles. Free file form 4868 Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. Free file form 4868 When the title passes depends on the intention of the parties as gathered from the contract of sale. Free file form 4868 In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. Free file form 4868 If the taxable article is used by the manufacturer, the tax attaches at the time use begins. Free file form 4868 The manufacturer is liable for the tax. Free file form 4868 Partial payments. Free file form 4868   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. Free file form 4868 To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. Free file form 4868 Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. Free file form 4868 Sale of an article to a state or local government for the exclusive use of the state or local government. Free file form 4868 This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Free file form 4868 State is defined in Definitions in chapter 1. Free file form 4868 Sale of an article to a nonprofit educational organization for its exclusive use. Free file form 4868 This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Free file form 4868 Nonprofit educational organization is defined under Communications Tax in chapter 4. Free file form 4868 Sale of an article to a qualified blood collector organization. Free file form 4868 This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Free file form 4868 Qualified blood collector organizations are defined under Communications Tax in chapter 4. Free file form 4868 Sale of an article for use by the purchaser as supplies for vessels. Free file form 4868 This exemption does not apply to the taxes on coal and vaccines. Free file form 4868 Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. Free file form 4868 Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. Free file form 4868 This exemption does not apply to the tax on coal and tires. Free file form 4868 Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. Free file form 4868 If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. Free file form 4868 Sale of an article for export or for resale by the purchaser to a second purchaser for export. Free file form 4868 The article may be exported to a foreign country or to a possession of the United States. Free file form 4868 A vaccine shipped to a possession of the United States is not considered to be exported. Free file form 4868 If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. Free file form 4868 Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. Free file form 4868 S. Free file form 4868 jurisdiction in Alaska. Free file form 4868 For tire exemptions, see section 4221(e)(2). Free file form 4868 Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. Free file form 4868 Registration requirements. Free file form 4868   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. Free file form 4868 See the Form 637 instructions for more information. Free file form 4868 Exceptions to registration requirements. Free file form 4868   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. Free file form 4868 Certification requirement. Free file form 4868   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. Free file form 4868 The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. Free file form 4868   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. Free file form 4868 See Regulations section 48. Free file form 4868 4221-5(c) for the certificate requirements. Free file form 4868   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. Free file form 4868 See Regulations section 48. Free file form 4868 4221-4(d) for the certificate requirements. Free file form 4868 Proof of export requirement. Free file form 4868   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. Free file form 4868 See Regulations section 48. Free file form 4868 4221-3(d) for evidence that qualifies as proof of exportation. Free file form 4868 Proof of resale for further manufacture requirement. Free file form 4868   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. Free file form 4868 See Regulations section 48. Free file form 4868 4221-2(c) for evidence that qualifies as proof of resale. Free file form 4868 Information to be furnished to purchaser. Free file form 4868   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. Free file form 4868 Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. Free file form 4868 The claim must set forth in detail the facts upon which the claim is based. Free file form 4868 Uses, sales, and exports. Free file form 4868   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). Free file form 4868 Export. Free file form 4868   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. Free file form 4868 In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. Free file form 4868 Price readjustments. Free file form 4868   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. Free file form 4868 Conditions to allowance. Free file form 4868   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. Free file form 4868 The claimant sold the article at a tax-excluded price. Free file form 4868 The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. Free file form 4868 The person has obtained the written consent of the ultimate vendor to make the claim. Free file form 4868 The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. Free file form 4868 Claim for further manufacture. Free file form 4868   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. Free file form 4868 The name and address of the manufacturer and the date of payment. Free file form 4868 An identification of the article for which the credit or refund is claimed. Free file form 4868 The amount of tax paid on the article and the date on which it was paid. Free file form 4868 Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. Free file form 4868 An identification of the second article. Free file form 4868   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. Free file form 4868 The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. Free file form 4868 Claim for price readjustment. Free file form 4868   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. Free file form 4868 A description of the circumstances that gave rise to the price readjustment. Free file form 4868 An identification of the article whose price was readjusted. Free file form 4868 The price at which the article was sold. Free file form 4868 The amount of tax paid on the article and the date on which it was paid. Free file form 4868 The name and address of the purchaser. Free file form 4868 The amount repaid to the purchaser or credited to the purchaser's account. Free file form 4868 Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. Free file form 4868 This includes any parts or accessories sold on or in connection with the sale of those articles. Free file form 4868 Pay this tax with Form 720. Free file form 4868 No tax deposits are required. Free file form 4868 Sport fishing equipment includes all the following items. Free file form 4868 Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. Free file form 4868 Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). Free file form 4868 The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. Free file form 4868 Fishing tip-ups and tilts. Free file form 4868 Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. Free file form 4868 See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. Free file form 4868 Fishing rods and fishing poles. Free file form 4868   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. Free file form 4868 The tax is paid by the manufacturer, producer, or importer. Free file form 4868 Fishing tackle boxes. Free file form 4868   The tax on fishing tackle boxes is 3% of the sales price. Free file form 4868 The tax is paid by the manufacturer, producer, or importer. Free file form 4868 Electric outboard boat motors. Free file form 4868   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. Free file form 4868 This includes any parts or accessories sold on or in connection with the sale of those articles. Free file form 4868 Certain equipment resale. Free file form 4868   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. Free file form 4868 If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. Free file form 4868 If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. Free file form 4868 The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. Free file form 4868   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. Free file form 4868 The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. Free file form 4868 Related person. Free file form 4868   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). Free file form 4868 Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. Free file form 4868 11) of the sales price. Free file form 4868 The tax is paid by the manufacturer, producer, or importer. Free file form 4868 It applies to bows having a peak draw weight of 30 pounds or more. Free file form 4868 The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. Free file form 4868 Pay this tax with Form 720. Free file form 4868 No tax deposits are required. Free file form 4868 Arrow Shafts The tax on arrow shafts is listed on Form 720. Free file form 4868 The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. Free file form 4868 It measures 18 inches or more in overall length. Free file form 4868 It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. Free file form 4868 Exemption for certain wooden arrows. Free file form 4868   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. Free file form 4868 It measures 5/16 of an inch or less in diameter. Free file form 4868 It is not suitable for use with a taxable bow, described earlier. Free file form 4868 Pay this tax with Form 720. Free file form 4868 No tax deposits are required. Free file form 4868 Coal A tax is imposed on the first sale of coal mined in the United States. Free file form 4868 The producer of the coal is liable for the tax. Free file form 4868 The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. Free file form 4868 Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. Free file form 4868 A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). Free file form 4868 The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. Free file form 4868 Tax rates. Free file form 4868   The tax on underground-mined coal is the lower of: $1. Free file form 4868 10 a ton, or 4. Free file form 4868 4% of the sale price. Free file form 4868   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. Free file form 4868 4% of the sale price. Free file form 4868   Coal will be taxed at the 4. Free file form 4868 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. Free file form 4868 50 a ton for surface-mined coal. Free file form 4868 Apply the tax proportionately if a sale or use includes a portion of a ton. Free file form 4868 Example. Free file form 4868 If you sell 21,000 pounds (10. Free file form 4868 5 tons) of coal from an underground mine for $525, the price per ton is $50. Free file form 4868 The tax is $1. Free file form 4868 10 × 10. Free file form 4868 5 tons ($11. Free file form 4868 55). Free file form 4868 Coal production. Free file form 4868   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. Free file form 4868 Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. Free file form 4868   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. Free file form 4868 In some cases, a single mine may yield coal from both surface mining and underground mining. Free file form 4868 Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. Free file form 4868 Determining tonnage or selling price. Free file form 4868   The producer pays the tax on coal at the time of sale or use. Free file form 4868 In figuring the selling price for applying the tax, the point of sale is f. Free file form 4868 o. Free file form 4868 b. Free file form 4868 (free on board) mine or f. Free file form 4868 o. Free file form 4868 b. Free file form 4868 cleaning plant if you clean the coal before selling it. Free file form 4868 This applies even if you sell the coal for a delivered price. Free file form 4868 The f. Free file form 4868 o. Free file form 4868 b. Free file form 4868 mine or f. Free file form 4868 o. Free file form 4868 b. Free file form 4868 cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. Free file form 4868 4% rate. Free file form 4868   The tax applies to the full amount of coal sold. Free file form 4868 However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. Free file form 4868 Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. Free file form 4868   Do not include in the sales price the excise tax imposed on coal. Free file form 4868 Coal used by the producer. Free file form 4868   The tax on coal applies if the coal is used by the producer in other than a mining process. Free file form 4868 A mining process means the same for this purpose as for percentage depletion. Free file form 4868 For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. Free file form 4868 In this case, the tax applies only when you sell the coal. Free file form 4868 The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. Free file form 4868 However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. Free file form 4868   You must use a constructive sale price to figure the tax under the 4. Free file form 4868 4% rate if you use the coal in other than a mining process. Free file form 4868 Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. Free file form 4868 o. Free file form 4868 b. Free file form 4868 mine or cleaning plant. Free file form 4868 Normally, you use the same constructive price used to figure your percentage depletion deduction. Free file form 4868 Blending. Free file form 4868   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. Free file form 4868 Figure the tax separately for each type of coal in the blend. Free file form 4868 Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. Free file form 4868 Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. Free file form 4868 However, the tax is limited to 4. Free file form 4868 4% of the sale price per ton of the blended coal. Free file form 4868 Exemption from tax. Free file form 4868   The tax does not apply to sales of lignite and imported coal. Free file form 4868 The only other exemption from the tax on the sale of coal is for coal exported as discussed next. Free file form 4868 Exported. Free file form 4868   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. Free file form 4868   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. Free file form 4868 For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. Free file form 4868   Proof of export includes any of the following items. Free file form 4868 A copy of the export bill of lading issued by the delivering carrier. Free file form 4868 A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. Free file form 4868 A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. Free file form 4868 If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. Free file form 4868 Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. Free file form 4868 A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. Free file form 4868 0945 ($. Free file form 4868 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. Free file form 4868 The three categories for reporting the tax and the tax rate are listed below. Free file form 4868 Taxable tires other than biasply or super single tires at $. Free file form 4868 0945. Free file form 4868 Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. Free file form 4868 04725. Free file form 4868 Taxable tires, super single tires designed for steering at $. Free file form 4868 0945. Free file form 4868 A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. Free file form 4868 A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. Free file form 4868 A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. Free file form 4868 Special rule, manufacturer's retail stores. Free file form 4868   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. Free file form 4868 Tires on imported articles. Free file form 4868   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). Free file form 4868 Tires exempt from tax. Free file form 4868   The tax on taxable tires does not apply to the following items. Free file form 4868 Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. Free file form 4868 Tire carcasses not suitable for commercial use. Free file form 4868 Tires for use on qualifying intercity, local, and school buses. Free file form 4868 For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. Free file form 4868 Tires sold for the exclusive use of the Department of Defense or the Coast Guard. Free file form 4868 Tires of a type used exclusively on mobile machinery. Free file form 4868 A taxable tire used on mobile machinery is not exempt from tax. Free file form 4868 Qualifying intercity or local bus. Free file form 4868   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). Free file form 4868 Qualifying school bus. Free file form 4868   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. Free file form 4868 Credit or refund. Free file form 4868   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. Free file form 4868   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. Free file form 4868   The person who paid the tax is eligible to make the claim. Free file form 4868 Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. Free file form 4868 5 miles per gallon. Free file form 4868 If you import an automobile for personal use, you may be liable for this tax. Free file form 4868 Figure the tax on Form 6197, as discussed later. Free file form 4868 The tax rate is based on fuel economy rating. Free file form 4868 The tax rates for the gas guzzler tax are shown on Form 6197. Free file form 4868 A person that lengthens an existing automobile is the manufacturer of an automobile. Free file form 4868 Automobiles. Free file form 4868   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. Free file form 4868 Vehicles not subject to tax. Free file form 4868   For the gas guzzler tax, the following vehicles are not considered automobiles. Free file form 4868 Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. Free file form 4868 Vehicles operated exclusively on a rail or rails. Free file form 4868 Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. Free file form 4868 Vehicles treated under 49 U. Free file form 4868 S. Free file form 4868 C. Free file form 4868 32901 (1978) as non-passenger automobiles. Free file form 4868 This includes limousines manufactured primarily to transport more than 10 persons. Free file form 4868   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. Free file form 4868   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. Free file form 4868 Model type. Free file form 4868   Model type is a particular class of automobile as determined by EPA regulations. Free file form 4868 Fuel economy. Free file form 4868   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. Free file form 4868 1 mile as figured by the EPA. Free file form 4868 Imported automobiles. Free file form 4868   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. Free file form 4868 An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. Free file form 4868   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. Free file form 4868   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. Free file form 4868 A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). Free file form 4868   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. Free file form 4868 Exemptions. Free file form 4868   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. Free file form 4868 However, see Vehicles not subject to tax, earlier. Free file form 4868 Form 6197. Free file form 4868   Use Form 6197 to figure your tax liability for each quarter. Free file form 4868 Attach Form 6197 to your Form 720 for the quarter. Free file form 4868 See the Form 6197 instructions for more information and the one-time filing rules. Free file form 4868 Credit or refund. Free file form 4868   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. Free file form 4868 For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Free file form 4868 Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. Free file form 4868 A taxable vaccine means any of the following vaccines. Free file form 4868 Any vaccine containing diphtheria toxoid. Free file form 4868 Any vaccine containing tetanus toxoid. Free file form 4868 Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. Free file form 4868 Any vaccine containing polio virus. Free file form 4868 Any vaccine against measles. Free file form 4868 Any vaccine against mumps. Free file form 4868 Any vaccine against rubella. Free file form 4868 Any vaccine against hepatitis A. Free file form 4868 Any vaccine against hepatitis B. Free file form 4868 Any vaccine against chicken pox. Free file form 4868 Any vaccine against rotavirus gastroenteritis. Free file form 4868 Any HIB vaccine. Free file form 4868 Any conjugate vaccine against streptococcus pneumoniae. Free file form 4868 Any trivalent vaccine against influenza or any other vaccine against influenza. Free file form 4868 Any meningococcal vaccine. Free file form 4868 Any vaccine against the human papillomavirus. Free file form 4868 The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. Free file form 4868 The tax is $. Free file form 4868 75 per dose of each taxable vaccine. Free file form 4868 The tax per dose on a vaccine that contains more than one taxable vaccine is $. Free file form 4868 75 times the number of taxable vaccines. Free file form 4868 Taxable use. Free file form 4868   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. Free file form 4868 Credit or refund. Free file form 4868   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. Free file form 4868 The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. Free file form 4868 Conditions to allowance. Free file form 4868   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. Free file form 4868 Taxable Medical Devices Taxable medical devices. Free file form 4868   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. Free file form 4868 3% (. Free file form 4868 023) of the sales price. Free file form 4868 A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. Free file form 4868 There are specific exemptions for eyeglasses, contact lenses, and hearing aids. Free file form 4868 There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). Free file form 4868 See T. Free file form 4868 D. Free file form 4868 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. Free file form 4868 More information. Free file form 4868   For more information on the medical device tax, see section 4191, T. Free file form 4868 D. Free file form 4868 9604, and Notice 2012-77. Free file form 4868 You can find T. Free file form 4868 D. Free file form 4868 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. Free file form 4868 R. Free file form 4868 B. Free file form 4868 2012-52 at www. Free file form 4868 irs. Free file form 4868 gov/pub/irs-irbs/irb12-52. Free file form 4868 pdf. Free file form 4868 Prev  Up  Next   Home   More Online Publications
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The Free File Form 4868

Free file form 4868 22. Free file form 4868   Taxes Table of Contents IntroductionIndian tribal government. Free file form 4868 Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Free file form 4868 Real Estate TaxesReal estate taxes for prior years. Free file form 4868 Examples. Free file form 4868 Form 1099-S. Free file form 4868 Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Free file form 4868 It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Free file form 4868 This chapter covers the following topics. Free file form 4868 Income taxes (federal, state, local, and foreign). Free file form 4868 General sales taxes (state and local). Free file form 4868 Real estate taxes (state, local, and foreign). Free file form 4868 Personal property taxes (state and local). Free file form 4868 Taxes and fees you cannot deduct. Free file form 4868 Use Table 22-1 as a guide to determine which taxes you can deduct. Free file form 4868 The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Free file form 4868 Business taxes. Free file form 4868   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Free file form 4868 For information on these taxes, see Publication 535, Business Expenses. Free file form 4868 State or local taxes. Free file form 4868   These are taxes imposed by the 50 states, U. Free file form 4868 S. Free file form 4868 possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Free file form 4868 Indian tribal government. Free file form 4868   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Free file form 4868 Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Free file form 4868 General sales taxes. Free file form 4868   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Free file form 4868 Foreign taxes. Free file form 4868   These are taxes imposed by a foreign country or any of its political subdivisions. Free file form 4868 Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Free file form 4868 The tax must be imposed on you. Free file form 4868 You must pay the tax during your tax year. Free file form 4868 The tax must be imposed on you. Free file form 4868   In general, you can deduct only taxes imposed on you. Free file form 4868   Generally, you can deduct property taxes only if you are an owner of the property. Free file form 4868 If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Free file form 4868 You must pay the tax during your tax year. Free file form 4868   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Free file form 4868 If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Free file form 4868 If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Free file form 4868 If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Free file form 4868 See Publication 538, Accounting Periods and Methods, for details. Free file form 4868    If you use an accrual method of accounting, see Publication 538 for more information. Free file form 4868 Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Free file form 4868 State and Local Income Taxes You can deduct state and local income taxes. Free file form 4868 However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Free file form 4868 See General Sales Taxes , later. Free file form 4868 Exception. Free file form 4868    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Free file form 4868 For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Free file form 4868 What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Free file form 4868 Withheld taxes. Free file form 4868   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Free file form 4868 Your Form(s) W-2 will show these amounts. Free file form 4868 Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Free file form 4868 Estimated tax payments. Free file form 4868   You can deduct estimated tax payments you made during the year to a state or local government. Free file form 4868 However, you must have a reasonable basis for making the estimated tax payments. Free file form 4868 Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Free file form 4868 For example, you made an estimated state income tax payment. Free file form 4868 However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Free file form 4868 You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Free file form 4868 Refund applied to taxes. Free file form 4868   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Free file form 4868    Do not reduce your deduction by either of the following items. Free file form 4868 Any state or local income tax refund (or credit) you expect to receive for 2013. Free file form 4868 Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Free file form 4868   However, part or all of this refund (or credit) may be taxable. Free file form 4868 See Refund (or credit) of state or local income taxes , later. Free file form 4868 Separate federal returns. Free file form 4868   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Free file form 4868 Joint state and local returns. Free file form 4868   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Free file form 4868 You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Free file form 4868 However, you cannot deduct more than the amount you actually paid during the year. Free file form 4868 You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Free file form 4868 If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Free file form 4868 Joint federal return. Free file form 4868   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Free file form 4868 Contributions to state benefit funds. Free file form 4868    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Free file form 4868 For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Free file form 4868 Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Free file form 4868 Alaska Unemployment Compensation Fund. Free file form 4868 California Nonoccupational Disability Benefit Fund. Free file form 4868 New Jersey Nonoccupational Disability Benefit Fund. Free file form 4868 New Jersey Unemployment Compensation Fund. Free file form 4868 New York Nonoccupational Disability Benefit Fund. Free file form 4868 Pennsylvania Unemployment Compensation Fund. Free file form 4868 Rhode Island Temporary Disability Benefit Fund. Free file form 4868 Washington State Supplemental Workmen's Compensation Fund. Free file form 4868    Employee contributions to private or voluntary disability plans are not deductible. Free file form 4868 Refund (or credit) of state or local income taxes. Free file form 4868   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Free file form 4868 This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Free file form 4868 If you did not itemize your deductions in the previous year, do not include the refund in income. Free file form 4868 If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Free file form 4868 For a discussion of how much to include, see Recoveries in chapter 12. Free file form 4868 Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Free file form 4868 S. Free file form 4868 possession. Free file form 4868 However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Free file form 4868 S. Free file form 4868 tax under the foreign earned income exclusion or the foreign housing exclusion. Free file form 4868 For information on these exclusions, see Publication 54, Tax Guide for U. Free file form 4868 S. Free file form 4868 Citizens and Resident Aliens Abroad. Free file form 4868 For information on the foreign tax credit, see Publication 514. Free file form 4868 General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Free file form 4868 You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Free file form 4868 Actual expenses. Free file form 4868   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Free file form 4868 However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Free file form 4868 If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Free file form 4868 If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Free file form 4868 Do not include sales taxes paid on items used in your trade or business. Free file form 4868 Motor vehicles. Free file form 4868   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Free file form 4868 This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Free file form 4868 Optional sales tax tables. Free file form 4868   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Free file form 4868 You may also be able to add the state and local general sales taxes paid on certain specified items. Free file form 4868   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Free file form 4868 Your income is your adjusted gross income plus any nontaxable items such as the following. Free file form 4868 Tax-exempt interest. Free file form 4868 Veterans' benefits. Free file form 4868 Nontaxable combat pay. Free file form 4868 Workers' compensation. Free file form 4868 Nontaxable part of social security and railroad retirement benefits. Free file form 4868 Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Free file form 4868 Public assistance payments. Free file form 4868 If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Free file form 4868 See the Instructions for Schedule A (Form 1040), line 5, for details. Free file form 4868 Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Free file form 4868 You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Free file form 4868 Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Free file form 4868 They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Free file form 4868 For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Free file form 4868 Tenant-shareholders in a cooperative housing corporation. Free file form 4868   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Free file form 4868 The corporation should provide you with a statement showing your share of the taxes. Free file form 4868 For more information, see Special Rules for Cooperatives in Publication 530. Free file form 4868 Division of real estate taxes between buyers and sellers. Free file form 4868   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Free file form 4868   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Free file form 4868 The seller is treated as paying the taxes up to, but not including, the date of sale. Free file form 4868 The buyer is treated as paying the taxes beginning with the date of sale. Free file form 4868 This applies regardless of the lien dates under local law. Free file form 4868 Generally, this information is included on the settlement statement provided at the closing. Free file form 4868    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Free file form 4868 This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Free file form 4868 However, you must also include the amount of that tax in the selling price of the property. Free file form 4868 The buyer must include the same amount in his or her cost of the property. Free file form 4868   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Free file form 4868 Worksheet 22-1. Free file form 4868 Figuring Your Real Estate Tax Deduction 1. Free file form 4868 Enter the total real estate taxes for the real property tax year   2. Free file form 4868 Enter the number of days in the real property tax year that you owned the property   3. Free file form 4868 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free file form 4868 4. Free file form 4868 Multiply line 1 by line 3. Free file form 4868 This is your deduction. Free file form 4868 Enter it on Schedule A (Form 1040), line 6   Note. Free file form 4868 Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Free file form 4868 Your total deduction is the sum of the line 4 amounts for all of the properties. Free file form 4868 Real estate taxes for prior years. Free file form 4868   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Free file form 4868 Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Free file form 4868 The buyer must add them to the cost of the property. Free file form 4868 The seller can deduct these taxes paid by the buyer. Free file form 4868 However, the seller must include them in the selling price. Free file form 4868 Examples. Free file form 4868   The following examples illustrate how real estate taxes are divided between buyer and seller. Free file form 4868 Example 1. Free file form 4868 Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Free file form 4868 The tax on their old home, sold on May 7, was $620. Free file form 4868 The tax on their new home, bought on May 3, was $732. Free file form 4868 Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Free file form 4868 On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Free file form 4868 Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Free file form 4868 They figure their deduction for taxes on their old home as follows. Free file form 4868 Worksheet 22-1. Free file form 4868 Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Free file form 4868 Enter the total real estate taxes for the real property tax year $620 2. Free file form 4868 Enter the number of days in the real property tax year that you owned the property 126 3. Free file form 4868 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free file form 4868 3452 4. Free file form 4868 Multiply line 1 by line 3. Free file form 4868 This is your deduction. Free file form 4868 Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Free file form 4868 (The buyers add the $214 to their cost of the home. Free file form 4868 ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Free file form 4868 They figure their deduction for taxes on their new home as follows. Free file form 4868 Worksheet 22-1. Free file form 4868 Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Free file form 4868 Enter the total real estate taxes for the real property tax year $732 2. Free file form 4868 Enter the number of days in the real property tax year that you owned the property 243 3. Free file form 4868 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free file form 4868 6658 4. Free file form 4868 Multiply line 1 by line 3. Free file form 4868 This is your deduction. Free file form 4868 Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Free file form 4868 (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Free file form 4868 ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Free file form 4868 They will enter this amount on Schedule A (Form 1040), line 6. Free file form 4868 Example 2. Free file form 4868 George and Helen Brown bought a new home on May 3, 2013. Free file form 4868 Their real property tax year for the new home is the calendar year. Free file form 4868 Real estate taxes for 2012 were assessed in their state on January 1, 2013. Free file form 4868 The taxes became due on May 31, 2013, and October 31, 2013. Free file form 4868 The Browns agreed to pay all taxes due after the date of purchase. Free file form 4868 Real estate taxes for 2012 were $680. Free file form 4868 They paid $340 on May 31, 2013, and $340 on October 31, 2013. Free file form 4868 These taxes were for the 2012 real property tax year. Free file form 4868 The Browns cannot deduct them since they did not own the property until 2013. Free file form 4868 Instead, they must add $680 to the cost of their new home. Free file form 4868 In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Free file form 4868 The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Free file form 4868 They will figure their 2014 deduction for taxes as follows. Free file form 4868 Worksheet 22-1. Free file form 4868 Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Free file form 4868 Enter the total real estate taxes for the real property tax year $752 2. Free file form 4868 Enter the number of days in the real property tax year that you owned the property 243 3. Free file form 4868 Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free file form 4868 6658 4. Free file form 4868 Multiply line 1 by line 3. Free file form 4868 This is your deduction. Free file form 4868 Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Free file form 4868 Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Free file form 4868 This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Free file form 4868 The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Free file form 4868 The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Free file form 4868 Form 1099-S. Free file form 4868   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Free file form 4868 Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Free file form 4868 The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Free file form 4868   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Free file form 4868 The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Free file form 4868 See Refund (or rebate) , later. Free file form 4868 Taxes placed in escrow. Free file form 4868   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Free file form 4868 You can deduct only the real estate tax that the third party actually paid to the taxing authority. Free file form 4868 If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Free file form 4868 Tenants by the entirety. Free file form 4868   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Free file form 4868 Divorced individuals. Free file form 4868   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Free file form 4868 See Taxes and insurance in chapter 18 for more information. Free file form 4868 Ministers' and military housing allowances. Free file form 4868   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Free file form 4868 Refund (or rebate). Free file form 4868   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Free file form 4868 If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Free file form 4868 However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Free file form 4868 For more information, see Recoveries in chapter 12. Free file form 4868 Table 22-1. Free file form 4868 Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Free file form 4868 Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Free file form 4868     Fines and penalties. Free file form 4868 Income Taxes State and local income taxes. Free file form 4868 Federal income taxes. Free file form 4868   Foreign income taxes. Free file form 4868     Employee contributions to state funds listed under Contributions to state benefit funds . Free file form 4868 Employee contributions to private or voluntary disability plans. Free file form 4868     State and local general sales taxes if you choose to deduct state and local income taxes. Free file form 4868 General Sales Taxes State and local general sales taxes, including compensating use taxes. Free file form 4868 State and local income taxes if you choose to deduct state and local general sales taxes. Free file form 4868 Other Taxes Taxes that are expenses of your trade or business. Free file form 4868 Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Free file form 4868   Taxes on property producing rent or royalty income. Free file form 4868 Per capita taxes. Free file form 4868   Occupational taxes. Free file form 4868 See chapter 28. Free file form 4868     One-half of self-employment tax paid. Free file form 4868   Personal Property Taxes State and local personal property taxes. Free file form 4868 Customs duties that are not expenses of your trade or business or of producing income. Free file form 4868 Real Estate Taxes State and local real estate taxes. Free file form 4868 Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Free file form 4868   Foreign real estate taxes. Free file form 4868 Taxes for local benefits (with exceptions). Free file form 4868 See Real Estate-Related Items You Cannot Deduct . Free file form 4868   Tenant's share of real estate taxes paid by  cooperative housing corporation. Free file form 4868 Trash and garbage pickup fees (with exceptions). Free file form 4868 See Real Estate-Related Items You Cannot Deduct . Free file form 4868     Rent increase due to higher real estate taxes. Free file form 4868     Homeowners' association charges. Free file form 4868 Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Free file form 4868 Taxes for local benefits. Free file form 4868 Itemized charges for services (such as trash and garbage pickup fees). Free file form 4868 Transfer taxes (or stamp taxes). Free file form 4868 Rent increases due to higher real estate taxes. Free file form 4868 Homeowners' association charges. Free file form 4868 Taxes for local benefits. Free file form 4868   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Free file form 4868 These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Free file form 4868 You should increase the basis of your property by the amount of the assessment. Free file form 4868   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Free file form 4868 If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Free file form 4868 If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Free file form 4868    Taxes for local benefits may be included in your real estate tax bill. Free file form 4868 If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Free file form 4868 You should use the rules above to determine if the local benefit tax is deductible. Free file form 4868 Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Free file form 4868 Itemized charges for services. Free file form 4868    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Free file form 4868 For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Free file form 4868    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Free file form 4868 If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Free file form 4868 Exception. Free file form 4868   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Free file form 4868 Transfer taxes (or stamp taxes). Free file form 4868   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Free file form 4868 If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Free file form 4868 If paid by the buyer, they are included in the cost basis of the property. Free file form 4868 Rent increase due to higher real estate taxes. Free file form 4868   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Free file form 4868 Homeowners' association charges. Free file form 4868   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Free file form 4868 Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Free file form 4868 A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Free file form 4868 For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Free file form 4868 If the tax is partly based on value and partly based on other criteria, it may qualify in part. Free file form 4868 Example. Free file form 4868 Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Free file form 4868 You paid $32 based on the value ($1,500) and weight (3,400 lbs. Free file form 4868 ) of your car. Free file form 4868 You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Free file form 4868 The remaining $17 ($. Free file form 4868 50 × 34), based on the weight, is not deductible. Free file form 4868 Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Free file form 4868 Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Free file form 4868 See Table 22-1. Free file form 4868 Taxes and fees that are generally not deductible include the following items. Free file form 4868 Employment taxes. Free file form 4868 This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Free file form 4868 However, one-half of self-employment tax you pay is deductible. Free file form 4868 In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Free file form 4868 For more information, see chapters 21 and 32. Free file form 4868 Estate, inheritance, legacy, or succession taxes. Free file form 4868 However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Free file form 4868 In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Free file form 4868 For more information, see Publication 559, Survivors, Executors, and Administrators. Free file form 4868 Federal income taxes. Free file form 4868 This includes income taxes withheld from your pay. Free file form 4868 Fines and penalties. Free file form 4868 You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Free file form 4868 Gift taxes. Free file form 4868 License fees. Free file form 4868 You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Free file form 4868 Per capita taxes. Free file form 4868 You cannot deduct state or local per capita taxes. Free file form 4868 Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Free file form 4868 For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Free file form 4868 Where To Deduct You deduct taxes on the following schedules. Free file form 4868 State and local income taxes. Free file form 4868    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Free file form 4868 Check box a on line 5. Free file form 4868 General sales taxes. Free file form 4868   Sales taxes are deducted on Schedule A (Form 1040), line 5. Free file form 4868 You must check box b on line 5. Free file form 4868 If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Free file form 4868 Foreign income taxes. Free file form 4868   Generally, income taxes you pay to a foreign country or U. Free file form 4868 S. Free file form 4868 possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Free file form 4868 S. Free file form 4868 income tax on Form 1040, line 47. Free file form 4868 To claim the credit, you may have to complete and attach Form 1116. Free file form 4868 For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Free file form 4868 Real estate taxes and personal property taxes. Free file form 4868    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Free file form 4868 Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Free file form 4868 Self-employment tax. Free file form 4868    Deduct one-half of your self-employment tax on Form 1040, line 27. Free file form 4868 Other taxes. Free file form 4868    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Free file form 4868 Prev  Up  Next   Home   More Online Publications