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Free state tax filing only Publication 15-A - Additional Material Prev  Up  Next   Home   More Online Publications
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Uncertain Tax Positions - Schedule UTP

Third Year of Uncertain Tax Position Reporting

The IRS is currently reviewing its third year of returns filed with Schedule UTP. Beginning with Tax Year 2010, Schedule UTP was a new schedule that certain corporations  used to report uncertain tax positions. Additionally, with Announcement 2010-76, the IRS expanded its policy of restraint in connection with its decision to require certain corporations to file Schedule UTP. Directives to LB&I personnel have been issued setting forth the IRS’s planned treatment of these UTPs by examiners and other personnel.

Submit your questions, comments, or concerns regarding Schedule UTP to the IRS. Although individual responses will not be provided, the IRS will consider submissions in efforts to improve Schedule UTP.

Information about UTP Education and Outreach Efforts:

LB&I is undertaking an education and outreach effort regarding Schedule UTP. LB&I will mail letters to inform certain taxpayers that a review of their Schedule UTP determined that one or more of the concise descriptions they provided did not meet the requirements set forth in the Schedule UTP instructions. If the taxpayer has a valid Power of Attorney on file with the IRS, the Power of Attorney will also receive a copy of this letter.

While the letter requires no action by taxpayers regarding their Schedule UTP, taxpayers are advised to ensure that on any future filings of a Schedule UTP, the concise descriptions follow the Schedule UTP Instructions. All returns filed with a Schedule UTP will continue to be subject to a review in LB&I.

Taxpayers with questions about the letter or the concise descriptions are being referred to this WEB Site.

Related Documents:

Date

Document

Document Description or Originator

 

 

Forms

Instructions

2013 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
2012 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
2011 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
2010 Form 1120 Schedule UTP Instructions for Form 1120 Schedule UTP
 
IRS Pronouncements:
09-24-10 Announcement 2010-76, Policy of Restraint and Uncertain Tax Positions Impact of the Policy of Restraint on Uncertain Tax Positions. 
09-24-10 Announcement 2010-75, Reporting of Uncertain Tax Positions Reporting of Uncertain Tax Positions.
04-19-10 Announcement 2010-30 Schedule UTP draft form and instructions.
03-05-10 Announcement 2010-17 Extension for comment request for Uncertain Tax Position reporting requirements.
01-26-10 Announcement 2010-9 Comment request for Uncertain Tax Position reporting requirements.
 
IRS and LB&I Guidance Memorandums:
05-31-13 Guidance for Preparing UTP Concise Descriptions Specific Guidance
11-01-11

UTP Guidance and Procedures for the Field

Cover memo by Commissioner, LB&I    
11-01-11 LB&I Schedule UTP Guidance Specific guidance
08-31-11 UTP Guidance and Procedures for the Compliance Assurance Process (CAP) Program Commissioner, LB&I memo
05-11-11

Centralized Management of LB&I Returns with UTP Schedules

Commissioner, LB&I memo
03-23-11 Uncertain Tax Positions - Modified Policy of Restraint Commissioner, LB&I memo
09-24-10 Directive for LB&I: Reporting of Uncertain Tax Positions Deputy Commissioner, Services and Enforcement
 
Public Statements and Comments by IRS Executives:
03-26-12 IRS Deputy Commissioner, Service and Enforcement Remarks before Tax Executives Institute  Remarks of Steven T. Miller, Deputy Commissioner, Service and Enforcement Internal Revenue Service Before the Tax Executives Institute, Mid Year Conference
09-24-10 IRS Commissioner Shulman Remarks before the American Bar Association, 9/24/2010   
04-12-10 Remarks of IRS Commissioner Shulman at the Tax Executives Institute Mid-Year Meeting   
01-26-10 IR-2010-13 Remarks of IRS Commissioner Doug Shulman to the New York State Bar Association Taxation Section Annual Meeting
 
Other Documents:
02-04-14 UTP Filing Statistics  
03-14-13 Frequently Asked Questions  

 

Page Last Reviewed or Updated: 26-Feb-2014

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Free state tax filing only 1. Free state tax filing only   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). Free state tax filing only  You can set up and make contributions to an IRA if you receive taxable compensation. Free state tax filing only Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. Free state tax filing only For more information about IRAs, see Publication 590. Free state tax filing only Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. Free state tax filing only The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. Free state tax filing only Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. Free state tax filing only Many types of educational assistance are tax free if they meet the requirements discussed here. Free state tax filing only Special rules apply to U. Free state tax filing only S. Free state tax filing only citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. Free state tax filing only For information about these rules, see Publication 54, Tax Guide for U. Free state tax filing only S. Free state tax filing only Citizens and Resident Aliens Abroad. Free state tax filing only Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. Free state tax filing only A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Free state tax filing only Amount of scholarship or fellowship. Free state tax filing only   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. Free state tax filing only This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. Free state tax filing only The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. Free state tax filing only Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. Free state tax filing only Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. Free state tax filing only A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. Free state tax filing only (But for exceptions, see Payment for services,later. Free state tax filing only Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. Free state tax filing only Candidate for a degree. Free state tax filing only   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. Free state tax filing only Eligible educational institution. Free state tax filing only   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Free state tax filing only Qualified education expenses. Free state tax filing only   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Free state tax filing only These items must be required of all students in your course of instruction. Free state tax filing only Expenses that do not qualify. Free state tax filing only   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Free state tax filing only Payment for services. Free state tax filing only   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. Free state tax filing only This applies even if all candidates for a degree must perform the services to receive the degree. Free state tax filing only (See exceptions next. Free state tax filing only ) Exceptions. Free state tax filing only   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Free state tax filing only Example 1. Free state tax filing only You received a scholarship of $2,500. Free state tax filing only The scholarship was not received under either of the exceptions mentioned above. Free state tax filing only As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Free state tax filing only Of the $2,500 scholarship, $1,000 represents payment for teaching. Free state tax filing only The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Free state tax filing only Your qualified education expenses were at least $1,500. Free state tax filing only Assuming that all other conditions are met, $1,500 of your scholarship is tax free. Free state tax filing only The $1,000 you received for teaching is taxable. Free state tax filing only Example 2. Free state tax filing only You are a candidate for a degree at a medical school. Free state tax filing only You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. Free state tax filing only The terms of your scholarship require you to perform future services. Free state tax filing only A substantial penalty applies if you do not comply. Free state tax filing only The entire amount of your grant is taxable as payment for services in the year it is received. Free state tax filing only Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. Free state tax filing only Worksheet 1-1. Free state tax filing only    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. Free state tax filing only    Worksheet 1-1. Free state tax filing only Taxable Scholarship and Fellowship Income 1. Free state tax filing only Enter the total amount of any scholarship or fellowship for 2013. Free state tax filing only See Amount of scholarship or fellowship, earlier. Free state tax filing only 1. Free state tax filing only       If you are a degree candidate at an eligible educational institution, go to line 2. Free state tax filing only If you are not a degree candidate at an eligible educational institution, stop here. Free state tax filing only The entire amount is taxable. Free state tax filing only For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. Free state tax filing only       2. Free state tax filing only Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. Free state tax filing only (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. Free state tax filing only ) 2. Free state tax filing only     3. Free state tax filing only Subtract line 2 from line 1 3. Free state tax filing only     4. Free state tax filing only Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. Free state tax filing only     5. Free state tax filing only Subtract line 4 from line 3 5. Free state tax filing only     6. Free state tax filing only Enter the amount of your qualified education expenses 6. Free state tax filing only     7. Free state tax filing only Enter the smaller of line 5 or line 6. Free state tax filing only This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. Free state tax filing only     8. Free state tax filing only Subtract line 7 from line 5 8. Free state tax filing only     9. Free state tax filing only Taxable part. Free state tax filing only Add lines 2, 4, and 8. Free state tax filing only See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. Free state tax filing only     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. Free state tax filing only You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. Free state tax filing only Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. Free state tax filing only If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. Free state tax filing only If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. Free state tax filing only You must report the taxable amount whether or not you received a Form W-2. Free state tax filing only If you receive an incorrect Form W-2, ask the payer for a corrected one. Free state tax filing only For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. Free state tax filing only How To Report How you report any taxable scholarship or fellowship income depends on which return you file. Free state tax filing only Form 1040EZ. Free state tax filing only   If you file Form 1040EZ, include the taxable amount in the total on line 1. Free state tax filing only If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. Free state tax filing only Form 1040A. Free state tax filing only   If you file Form 1040A, include the taxable amount in the total on line 7. Free state tax filing only If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. Free state tax filing only Form 1040. Free state tax filing only   If you file Form 1040, include the taxable amount in the total on line 7. Free state tax filing only If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. Free state tax filing only Schedule SE (Form 1040). Free state tax filing only   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. Free state tax filing only If your net earnings are $400 or more, you must pay self-employment tax. Free state tax filing only Use Schedule SE, Self-Employment Tax, to figure this tax. Free state tax filing only Form 1040NR. Free state tax filing only   If you file Form 1040NR, report the taxable amount on line 12. Free state tax filing only Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. Free state tax filing only S. Free state tax filing only Source Income Subject to Withholding. Free state tax filing only See the Instructions for Form 1040NR for more information. Free state tax filing only Form 1040NR-EZ. Free state tax filing only   If you file Form 1040NR-EZ, report the taxable amount on line 5. Free state tax filing only Generally, you must report the amount shown in box 2 of Form(s) 1042-S. Free state tax filing only See the Instructions for Form 1040NR-EZ for more information. Free state tax filing only Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. Free state tax filing only Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. Free state tax filing only Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. Free state tax filing only They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. Free state tax filing only Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. Free state tax filing only Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. Free state tax filing only Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. Free state tax filing only Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Free state tax filing only Do not include these payments as income on your federal tax return. Free state tax filing only If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. Free state tax filing only This applies only to the part of your VA payments that is required to be used for education expenses. Free state tax filing only You may want to visit the Veteran's Administration website at www. Free state tax filing only gibill. Free state tax filing only va. Free state tax filing only gov for specific information about the various VA benefits for education. Free state tax filing only Example. Free state tax filing only You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. Free state tax filing only Neither of these benefits is taxable and you do not report them on your tax return. Free state tax filing only You also want to claim an American opportunity credit on your return. Free state tax filing only You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). Free state tax filing only To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. Free state tax filing only You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. Free state tax filing only Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. Free state tax filing only This is called a “tuition reduction. Free state tax filing only ” You do not have to include a qualified tuition reduction in your income. Free state tax filing only A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. Free state tax filing only You do not have to use the tuition reduction at the eligible educational institution from which you received it. Free state tax filing only In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. Free state tax filing only The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. Free state tax filing only You must include in your income any tuition reduction you receive that is payment for your services. Free state tax filing only Eligible educational institution. Free state tax filing only   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Free state tax filing only Officers, owners, and highly compensated employees. Free state tax filing only   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. Free state tax filing only This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. Free state tax filing only The group must be defined under a reasonable classification set up by the employer. Free state tax filing only The classification must not discriminate in favor of owners, officers, or highly compensated employees. Free state tax filing only Payment for services. Free state tax filing only   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. Free state tax filing only This applies even if all candidates for a degree must perform the services to receive the degree. Free state tax filing only (See below for exceptions. Free state tax filing only ) Exceptions. Free state tax filing only   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Free state tax filing only Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. Free state tax filing only You are an employee of the eligible educational institution. Free state tax filing only You were an employee of the eligible educational institution, but you retired or left on disability. Free state tax filing only You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. Free state tax filing only You are the dependent child or spouse of an individual described in (1) through (3), above. Free state tax filing only Child of deceased parents. Free state tax filing only   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. Free state tax filing only Child of divorced parents. Free state tax filing only   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. Free state tax filing only Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. Free state tax filing only It is provided by an eligible educational institution. Free state tax filing only You are a graduate student who performs teaching or research activities for the educational institution. Free state tax filing only You must include in income any other tuition reductions for graduate education that you receive. Free state tax filing only How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. Free state tax filing only Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Free state tax filing only Prev  Up  Next   Home   More Online Publications