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Free Online Tax 2010

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Free Online Tax 2010

Free online tax 2010 2. Free online tax 2010   Filing Status Table of Contents What's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Free online tax 2010 Divorce and remarriage. Free online tax 2010 Annulled marriages. Free online tax 2010 Head of household or qualifying widow(er) with dependent child. Free online tax 2010 Considered married. Free online tax 2010 Same-sex marriage. Free online tax 2010 Spouse died during the year. Free online tax 2010 Married persons living apart. Free online tax 2010 Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child What's New Filing status for same-sex married couples. Free online tax 2010  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free online tax 2010 See Same-sex marriage under Marital Status, later. Free online tax 2010 Introduction This chapter helps you determine which filing status to use. Free online tax 2010 There are five filing statuses. Free online tax 2010 Single. Free online tax 2010 Married Filing Jointly. Free online tax 2010 Married Filing Separately. Free online tax 2010 Head of Household. Free online tax 2010 Qualifying Widow(er) With Dependent Child. Free online tax 2010 If more than one filing status applies to you, choose the one that will give you the lowest tax. Free online tax 2010 You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 20), and your tax (chapter 30). Free online tax 2010 You also use your filing status to determine whether you are eligible to claim certain deductions and credits. Free online tax 2010 Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 519 U. Free online tax 2010 S. Free online tax 2010 Tax Guide for Aliens 555 Community Property Marital Status In general, your filing status depends on whether you are considered unmarried or married. Free online tax 2010 Unmarried persons. Free online tax 2010   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Free online tax 2010 State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Free online tax 2010 Divorced persons. Free online tax 2010   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Free online tax 2010 Divorce and remarriage. Free online tax 2010   If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Free online tax 2010 Annulled marriages. Free online tax 2010    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Free online tax 2010 You must file Form 1040X, Amended U. Free online tax 2010 S. Free online tax 2010 Individual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and are not closed by the statute of limitations for filing a tax return. Free online tax 2010 Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Free online tax 2010 If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). Free online tax 2010 However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Free online tax 2010 Head of household or qualifying widow(er) with dependent child. Free online tax 2010   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Free online tax 2010 See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Free online tax 2010 Married persons. Free online tax 2010   If you are considered married, you and your spouse can file a joint return or separate returns. Free online tax 2010 Considered married. Free online tax 2010   You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Free online tax 2010 You are married and living together as a married couple. Free online tax 2010 You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Free online tax 2010 You are married and living apart, but not legally separated under a decree of divorce or separate maintenance. Free online tax 2010 You are separated under an interlocutory (not final) decree of divorce. Free online tax 2010 Same-sex marriage. Free online tax 2010   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Free online tax 2010 The term “spouse” includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Free online tax 2010 However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. Free online tax 2010 For more details, see Publication 501. Free online tax 2010 Spouse died during the year. Free online tax 2010   If your spouse died during the year, you are considered married for the whole year for filing status purposes. Free online tax 2010   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Free online tax 2010 For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Free online tax 2010   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Free online tax 2010 Your deceased spouse's filing status is married filing separately for that year. Free online tax 2010 Married persons living apart. Free online tax 2010   If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Free online tax 2010 If you qualify to file as head of household instead of married filing separately, your standard deduction will be higher. Free online tax 2010 Also, your tax may be lower, and you may be able to claim the earned income credit. Free online tax 2010 See Head of Household , later. Free online tax 2010 Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Free online tax 2010 To determine your marital status, see Marital Status , earlier. Free online tax 2010 Widow(er). Free online tax 2010   Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Free online tax 2010 You may, however, be able to use another filing status that will give you a lower tax. Free online tax 2010 See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Free online tax 2010 How to file. Free online tax 2010   You can file Form 1040. Free online tax 2010 If you have taxable income of less than $100,000, you may be able to file Form 1040A. Free online tax 2010 If, in addition, you have no dependents, and are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Free online tax 2010 If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Free online tax 2010 Use the Single column of the Tax Table or Section A of the Tax Computation Worksheet to figure your tax. Free online tax 2010 Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Free online tax 2010 On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Free online tax 2010 You can file a joint return even if one of you had no income or deductions. Free online tax 2010 If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Free online tax 2010 Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Free online tax 2010 If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Free online tax 2010 You can choose the method that gives the two of you the lower combined tax. Free online tax 2010 How to file. Free online tax 2010   If you file as married filing jointly, you can use Form 1040. Free online tax 2010 If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Free online tax 2010 If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Free online tax 2010 If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Free online tax 2010 Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Free online tax 2010 Spouse died. Free online tax 2010   If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Free online tax 2010 See Spouse died during the year under Marital Status, earlier, for more information. Free online tax 2010   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Free online tax 2010 Divorced persons. Free online tax 2010   If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Free online tax 2010 Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Free online tax 2010 Accounting period. Free online tax 2010   Both of you must use the same accounting period, but you can use different accounting methods. Free online tax 2010 See Accounting Periods and Accounting Methods in chapter 1. Free online tax 2010 Joint responsibility. Free online tax 2010   Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Free online tax 2010 This means that if one spouse does not pay the tax due, the other may have to. Free online tax 2010 Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Free online tax 2010 One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Free online tax 2010 You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Free online tax 2010 Divorced taxpayer. Free online tax 2010   You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Free online tax 2010 This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Free online tax 2010 Relief from joint responsibility. Free online tax 2010   In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Free online tax 2010 You can ask for relief no matter how small the liability. Free online tax 2010   There are three types of relief available. Free online tax 2010 Innocent spouse relief. Free online tax 2010 Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or have not lived together for the 12 months ending on the date the election for this relief is filed). Free online tax 2010 Equitable relief. Free online tax 2010    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Free online tax 2010 Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. Free online tax 2010 Signing a joint return. Free online tax 2010   For a return to be considered a joint return, both spouses generally must sign the return. Free online tax 2010 Spouse died before signing. Free online tax 2010   If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Free online tax 2010 If neither you nor anyone else has yet been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Free online tax 2010 Spouse away from home. Free online tax 2010   If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so that it can be filed on time. Free online tax 2010 Injury or disease prevents signing. Free online tax 2010   If your spouse cannot sign because of disease or injury and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Free online tax 2010 ” Be sure to also sign in the space provided for your signature. Free online tax 2010 Attach a dated statement, signed by you, to the return. Free online tax 2010 The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Free online tax 2010 Signing as guardian of spouse. Free online tax 2010   If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Free online tax 2010 Spouse in combat zone. Free online tax 2010   You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Free online tax 2010 Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Free online tax 2010 For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Free online tax 2010 Other reasons spouse cannot sign. Free online tax 2010    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Free online tax 2010 Attach the power of attorney (or a copy of it) to your tax return. Free online tax 2010 You can use Form 2848, Power of Attorney and Declaration of Representative. Free online tax 2010 Nonresident alien or dual-status alien. Free online tax 2010   Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Free online tax 2010 However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Free online tax 2010 S. Free online tax 2010 citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Free online tax 2010 If you do file a joint return, you and your spouse are both treated as U. Free online tax 2010 S. Free online tax 2010 residents for the entire tax year. Free online tax 2010 See chapter 1 of Publication 519. Free online tax 2010 Married Filing Separately You can choose married filing separately as your filing status if you are married. Free online tax 2010 This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Free online tax 2010 If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Free online tax 2010 You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Free online tax 2010 This can apply to you even if you are not divorced or legally separated. Free online tax 2010 If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Free online tax 2010 The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Free online tax 2010 See Head of Household , later, for more information. Free online tax 2010 You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Free online tax 2010 However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Free online tax 2010 This way you can make sure you are using the filing status that results in the lowest combined tax. Free online tax 2010 When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Free online tax 2010 How to file. Free online tax 2010   If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Free online tax 2010 You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Free online tax 2010 You can file Form 1040. Free online tax 2010 If your taxable income is less than $100,000, you may be able to file Form 1040A. Free online tax 2010 Select this filing status by checking the box on line 3 of either form. Free online tax 2010 Enter your spouse's full name and SSN or ITIN in the spaces provided. Free online tax 2010 If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Free online tax 2010 Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Free online tax 2010 Special Rules If you choose married filing separately as your filing status, the following special rules apply. Free online tax 2010 Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Free online tax 2010   Your tax rate generally is higher than on a joint return. Free online tax 2010 Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Free online tax 2010 You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000). Free online tax 2010 If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Free online tax 2010 For more information about these expenses, the credit, and the exclusion, see chapter 32. Free online tax 2010 You cannot take the earned income credit. Free online tax 2010 You cannot take the exclusion or credit for adoption expenses in most cases. Free online tax 2010 You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Free online tax 2010 You cannot exclude any interest income from qualified U. Free online tax 2010 S. Free online tax 2010 savings bonds you used for higher education expenses. Free online tax 2010 If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Free online tax 2010 The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Free online tax 2010 Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Free online tax 2010 If your spouse itemizes deductions, you cannot claim the standard deduction. Free online tax 2010 If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Free online tax 2010 Adjusted gross income (AGI) limits. Free online tax 2010   If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Free online tax 2010 Individual retirement arrangements (IRAs). Free online tax 2010   You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Free online tax 2010 Your deduction is reduced or eliminated if your income is more than a certain amount. Free online tax 2010 This amount is much lower for married individuals who file separately and lived together at any time during the year. Free online tax 2010 For more information, see How Much Can You Deduct in chapter 17. Free online tax 2010 Rental activity losses. Free online tax 2010   If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income, up to $25,000. Free online tax 2010 This is called a special allowance. Free online tax 2010 However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Free online tax 2010 Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Free online tax 2010 See Limits on Rental Losses in chapter 9. Free online tax 2010 Community property states. Free online tax 2010   If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Free online tax 2010 See Publication 555. Free online tax 2010 Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Free online tax 2010 You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Free online tax 2010 This does not include any extensions. Free online tax 2010 A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Free online tax 2010 Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Free online tax 2010 Exception. Free online tax 2010   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Free online tax 2010 The personal representative has 1 year from the due date of the return (including extensions) to make the change. Free online tax 2010 See Publication 559, Survivors, Executors, and Administrators, for more information on filing a return for a decedent. Free online tax 2010 Head of Household You may be able to file as head of household if you meet all the following requirements. Free online tax 2010 You are unmarried or “considered unmarried” on the last day of the year. Free online tax 2010 See Marital Status , earlier, and Considered Unmarried , later. Free online tax 2010 You paid more than half the cost of keeping up a home for the year. Free online tax 2010 A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Free online tax 2010 However, if the qualifying person is your dependent parent, he or she does not have to live with you. Free online tax 2010 See Special rule for parent , later, under Qualifying Person. Free online tax 2010 If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Free online tax 2010 You will also receive a higher standard deduction than if you file as single or married filing separately. Free online tax 2010 Kidnapped child. Free online tax 2010   A child may qualify you to file as head of household even if the child has been kidnapped. Free online tax 2010 For more information, see Publication 501. Free online tax 2010 How to file. Free online tax 2010   If you file as head of household, you can use Form 1040. Free online tax 2010 If your taxable income is less than $100,000, you may be able to file Form 1040A. Free online tax 2010 Indicate your choice of this filing status by checking the box on line 4 of either form. Free online tax 2010 Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Free online tax 2010 Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Free online tax 2010 You are considered unmarried on the last day of the tax year if you meet all the following tests. Free online tax 2010 You file a separate return (defined earlier under Joint Return After Separate Returns ). Free online tax 2010 You paid more than half the cost of keeping up your home for the tax year. Free online tax 2010 Your spouse did not live in your home during the last 6 months of the tax year. Free online tax 2010 Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Free online tax 2010 See Temporary absences , under Qualifying Person, later. Free online tax 2010 Your home was the main home of your child, stepchild, or foster child for more than half the year. Free online tax 2010 (See Home of qualifying person , under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year. Free online tax 2010 ) You must be able to claim an exemption for the child. Free online tax 2010 However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3, or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chapter 3. Free online tax 2010 The general rules for claiming an exemption for a dependent are explained under Exemptions for Dependents in chapter 3. Free online tax 2010 If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Free online tax 2010 See Publication 555 for more information. Free online tax 2010 Nonresident alien spouse. Free online tax 2010   You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Free online tax 2010 However, your spouse is not a qualifying person for head of household purposes. Free online tax 2010 You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Free online tax 2010 Choice to treat spouse as resident. Free online tax 2010   You are considered married if you choose to treat your spouse as a resident alien. Free online tax 2010 See Publication 519. Free online tax 2010 Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Free online tax 2010 You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2–1. Free online tax 2010 Worksheet 2-1. Free online tax 2010 Cost of Keeping Up a Home   Amount You Paid Total Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $ Minus total amount you paid   () Amount others paid   $ If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Free online tax 2010 Costs you include. Free online tax 2010   Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Free online tax 2010   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Free online tax 2010 However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Free online tax 2010 Costs you do not include. Free online tax 2010   Do not include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. Free online tax 2010 Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Free online tax 2010 Qualifying Person See Table 2-1 to see who is a qualifying person. Free online tax 2010 Any person not described in Table 2-1 is not a qualifying person. Free online tax 2010 Table 2-1. Free online tax 2010 Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. Free online tax 2010 See the text of this chapter for the other requirements you must meet to claim head of household filing status. Free online tax 2010 IF the person is your . Free online tax 2010 . Free online tax 2010 . Free online tax 2010   AND . Free online tax 2010 . Free online tax 2010 . Free online tax 2010   THEN that person is . Free online tax 2010 . Free online tax 2010 . Free online tax 2010 qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Free online tax 2010   he or she is married and you can claim an exemption for him or her   a qualifying person. Free online tax 2010   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Free online tax 2010 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Free online tax 2010 6   you cannot claim an exemption for him or her   not a qualifying person. Free online tax 2010 qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and you can claim an exemption for him or her5   a qualifying person. Free online tax 2010   he or she did not live with you more than half the year   not a qualifying person. Free online tax 2010   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3 and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Free online tax 2010   you cannot claim an exemption for him or her   not a qualifying person. Free online tax 2010 1A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Free online tax 2010 2The term “qualifying child” is defined in chapter 3. Free online tax 2010 Note. Free online tax 2010 If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. Free online tax 2010 If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Free online tax 2010 3This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Free online tax 2010 4The term “ qualifying relative ” is defined in chapter 3. Free online tax 2010 5If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Free online tax 2010 See Multiple Support Agreement in chapter 3. Free online tax 2010 6See Special rule for parent . Free online tax 2010 Example 1—child. Free online tax 2010 Your unmarried son lived with you all year and was 18 years old at the end of the year. Free online tax 2010 He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Free online tax 2010 As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for you to claim head of household filing status. Free online tax 2010 Example 2—child who is not qualifying person. Free online tax 2010 The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Free online tax 2010 Because he does not meet the age test (explained under Qualifying Child in chapter 3), your son is not your qualifying child. Free online tax 2010 Because he does not meet the gross income test (explained later under Qualifying Relative in chapter 3), he is not your qualifying relative. Free online tax 2010 As a result, he is not your qualifying person for head of household purposes. Free online tax 2010 Example 3—girlfriend. Free online tax 2010 Your girlfriend lived with you all year. Free online tax 2010 Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you in chapter 3. Free online tax 2010 See Table 2-1. Free online tax 2010 Example 4—girlfriend's child. Free online tax 2010 The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Free online tax 2010 He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test in chapter 3). Free online tax 2010 As a result, he is not your qualifying person for head of household purposes. Free online tax 2010 Home of qualifying person. Free online tax 2010   Generally, the qualifying person must live with you for more than half of the year. Free online tax 2010 Special rule for parent. Free online tax 2010   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Free online tax 2010 However, you must be able to claim an exemption for your father or mother. Free online tax 2010 Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Free online tax 2010   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Free online tax 2010 Death or birth. Free online tax 2010   You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. Free online tax 2010 If the individual is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. Free online tax 2010 If the individual is anyone else, see Publication 501. Free online tax 2010 Temporary absences. Free online tax 2010   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Free online tax 2010 It must be reasonable to assume the absent person will return to the home after the temporary absence. Free online tax 2010 You must continue to keep up the home during the absence. Free online tax 2010 Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Free online tax 2010 The year of death is the last year for which you can file jointly with your deceased spouse. Free online tax 2010 See Married Filing Jointly , earlier. Free online tax 2010 You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Free online tax 2010 For example, if your spouse died in 2012, and you have not remarried, you may be able to use this filing status for 2013 and 2014. Free online tax 2010 This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Free online tax 2010 It does not entitle you to file a joint return. Free online tax 2010 How to file. Free online tax 2010   If you file as qualifying widow(er) with dependent child, you can use Form 1040. Free online tax 2010 If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Free online tax 2010 Check the box on line 5 of either form. Free online tax 2010 Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Free online tax 2010 Eligibility rules. Free online tax 2010   You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all of the following tests. Free online tax 2010 You were entitled to file a joint return with your spouse for the year your spouse died. Free online tax 2010 It does not matter whether you actually filed a joint return. Free online tax 2010 Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Free online tax 2010 You have a child or stepchild for whom you can claim an exemption. Free online tax 2010 This does not include a foster child. Free online tax 2010 This child lived in your home all year, except for temporary absences. Free online tax 2010 See Temporary absences , earlier, under Head of Household. Free online tax 2010 There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Free online tax 2010 You paid more than half the cost of keeping up a home for the year. Free online tax 2010 See Keeping Up a Home , earlier, under Head of Household. Free online tax 2010 Example. Free online tax 2010 John's wife died in 2011. Free online tax 2010 John has not remarried. Free online tax 2010 During 2012 and 2013, he continued to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Free online tax 2010 For 2011 he was entitled to file a joint return for himself and his deceased wife. Free online tax 2010 For 2012 and 2013, he can file as qualifying widower with a dependent child. Free online tax 2010 After 2013 he can file as head of household if he qualifies. Free online tax 2010 Death or birth. Free online tax 2010    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Free online tax 2010 You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Free online tax 2010 Kidnapped child. Free online tax 2010   A child may qualify you for qualifying widow(er) with dependent child, even if the child has been kidnapped. Free online tax 2010 See Publication 501. Free online tax 2010    As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Free online tax 2010 Prev  Up  Next   Home   More Online Publications

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IRS Wants You to Know About Schemes, Scams and Cons
"If it sounds too good to be true, it probably is!" Don't become a victim to any scheme that offers instant wealth or exemption from your obligation as a United States citizen to file tax returns and/or pay taxes. Some of these schemes can literally cost you your life savings. Others can result in your prosecution and imprisonment if you knowingly participate in them.

Abusive Return Preparer
Taxpayers should be very careful when choosing a tax preparer. While most preparers provide excellent service to their clients, a few unscrupulous return preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.

 

Abusive Tax Schemes
Abusive tax scheme originally took the structure of fraudulent domestic and foreign trust arrangements. However, these schemes have evolved into sophisticated arrangements to give the appearance that taxpayers are not in control of their money. However, the taxpayers receive their funds through debit/credit cards or fictitious loans. These schemes often involve offshore banking and sometimes establish scam corporations or entities.

 

Nonfiler Enforcement
There have always been individuals who, for a variety of reasons, argue taxes are voluntary or illegal.  The courts have repeatedly rejected their arguments as frivolous and routinely impose financial penalties for raising such frivolous arguments.  Take the time to learn the truth about frivolous tax arguments.

 

All Program and Emphasis Areas for Criminal Investigation
Criminal Investigation has categorized their investigative cases into specific program and emphasis areas of fraud. Examples of case summaries written from public record documents where cases were prosecuted can be viewed on the various program and emphasis area web pages.



Tax Scams - How to Report Them
To help the public recognize and avoid abusive tax schemes, the IRS offers an abundance of educational materials. Participating in an illegal scheme to avoid paying taxes can result in imprisonment and fines, as well as the repayment of taxes owed with penalties and interest. Education is the best way to avoid the pitfalls of these “too good to be true” tax scams.
 



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The Free Online Tax 2010

Free online tax 2010 2. Free online tax 2010   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Free online tax 2010 Amount realized on a nonrecourse debt. Free online tax 2010 If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Free online tax 2010 The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Free online tax 2010 This is true even if you voluntarily return the property to the lender. Free online tax 2010 If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Free online tax 2010 You must report this income on your return unless certain exceptions or exclusions apply. Free online tax 2010 See chapter 1 for more details. Free online tax 2010 Borrower's gain or loss. Free online tax 2010    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Free online tax 2010 The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Free online tax 2010 The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Free online tax 2010 For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Free online tax 2010 You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Free online tax 2010 Amount realized and ordinary income on a recourse debt. Free online tax 2010    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Free online tax 2010 The amount realized also includes any proceeds you received from the foreclosure sale. Free online tax 2010 If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Free online tax 2010 You must report this income on your return unless certain exceptions or exclusions apply. Free online tax 2010 See chapter 1 for more details. Free online tax 2010       Example 1. Free online tax 2010 Tara bought a new car for $15,000. Free online tax 2010 She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Free online tax 2010 Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Free online tax 2010 On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Free online tax 2010 The balance due after taking into account the payments Tara made was $10,000. Free online tax 2010 The FMV of the car when it was repossessed was $9,000. Free online tax 2010 On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Free online tax 2010 In this case, the amount Tara realizes is $9,000. Free online tax 2010 This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Free online tax 2010 Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Free online tax 2010 She has a $6,000 nondeductible loss. Free online tax 2010 After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Free online tax 2010 Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Free online tax 2010 Example 2. Free online tax 2010 Lili paid $200,000 for her home. Free online tax 2010 She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Free online tax 2010 Lili is personally liable for the mortgage loan and the house secures the loan. Free online tax 2010 In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Free online tax 2010 When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Free online tax 2010 At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Free online tax 2010 She remained personally liable for the $8,000 balance. Free online tax 2010 In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Free online tax 2010 The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Free online tax 2010 She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Free online tax 2010 Lili must also determine her gain or loss from the foreclosure. Free online tax 2010 In this case, the amount that she realizes is $170,000. Free online tax 2010 This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Free online tax 2010 Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Free online tax 2010 She has a $5,000 nondeductible loss. Free online tax 2010 Table 1-1. Free online tax 2010 Worksheet for Foreclosures and Repossessions Part 1. Free online tax 2010 Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free online tax 2010 Otherwise, go to Part 2. Free online tax 2010 1. Free online tax 2010 Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Free online tax 2010 Enter the fair market value of the transferred property   3. Free online tax 2010 Ordinary income from the cancellation of debt upon foreclosure or repossession. Free online tax 2010 * Subtract line 2 from line 1. Free online tax 2010 If less than zero, enter zero. Free online tax 2010 Next, go to Part 2   Part 2. Free online tax 2010 Gain or loss from foreclosure or repossession. Free online tax 2010   4. Free online tax 2010 Enter the smaller of line 1 or line 2. Free online tax 2010 If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Free online tax 2010 Enter any proceeds you received from the foreclosure sale   6. Free online tax 2010 Add line 4 and line 5   7. Free online tax 2010 Enter the adjusted basis of the transferred property   8. Free online tax 2010 Gain or loss from foreclosure or repossession. Free online tax 2010 Subtract line 7 from line 6   * The income may not be taxable. Free online tax 2010 See chapter 1 for more details. Free online tax 2010 Amount realized on a nonrecourse debt. Free online tax 2010    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Free online tax 2010 This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Free online tax 2010 Example 1. Free online tax 2010 Tara bought a new car for $15,000. Free online tax 2010 She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Free online tax 2010 Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Free online tax 2010 On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Free online tax 2010 The balance due after taking into account the payments Tara made was $10,000. Free online tax 2010 The FMV of the car when it was repossessed was $9,000. Free online tax 2010 The amount Tara realized on the repossession is $10,000. Free online tax 2010 That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Free online tax 2010 Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Free online tax 2010 Tara has a $5,000 nondeductible loss. Free online tax 2010 Example 2. Free online tax 2010 Lili paid $200,000 for her home. Free online tax 2010 She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Free online tax 2010 She is not personally liable for the loan, but grants the bank a mortgage. Free online tax 2010 The bank foreclosed on the mortgage because Lili stopped making payments. Free online tax 2010 When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Free online tax 2010 The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Free online tax 2010 She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Free online tax 2010 Lili has a $5,000 realized gain. Free online tax 2010 See Publication 523 to figure and report any taxable amount. Free online tax 2010 Forms 1099-A and 1099-C. Free online tax 2010    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Free online tax 2010 However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Free online tax 2010 The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Free online tax 2010 For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Free online tax 2010 Prev  Up  Next   Home   More Online Publications