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Free tax file 6. Free tax file   Tax Treaty Benefits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Purpose of Tax Treaties Common Benefits Competent Authority AssistanceAdditional filing. Free tax file Obtaining Copies of Tax Treaties Topics - This chapter discusses: Some common tax treaty benefits, How to get help in certain situations, and How to get copies of tax treaties. Free tax file Useful Items - You may want to see: Publication 597 Information on the United States—Canada Income Tax Treaty 901 U. Free tax file S. Free tax file Tax Treaties See chapter 7 for information about getting these publications. Free tax file Purpose of Tax Treaties The United States has tax treaties or conventions with many countries. Free tax file See Table 6-1 at the end of this chapter for a list of these countries. Free tax file Under these treaties and conventions, citizens and residents of the United States who are subject to taxes imposed by the foreign countries are entitled to certain credits, deductions, exemptions, and reductions in the rate of taxes of those foreign countries. Free tax file If a foreign country with which the United States has a treaty imposes a tax on you, you may be entitled to benefits under the treaty. Free tax file Treaty benefits generally are available to residents of the United States. Free tax file They generally are not available to U. Free tax file S. Free tax file citizens who do not reside in the United States. Free tax file However, certain treaty benefits and safeguards, such as the nondiscrimination provisions, are available to U. Free tax file S. Free tax file citizens residing in the treaty countries. Free tax file U. Free tax file S. Free tax file citizens residing in a foreign country also may be entitled to benefits under that country's tax treaties with third countries. Free tax file Certification of U. Free tax file S. Free tax file residency. Free tax file   Use Form 8802, Application for United States Residency Certification, to request certification of U. Free tax file S. Free tax file residency for purposes of claiming benefits under a tax treaty. Free tax file Certification can be requested for the current and any prior calendar years. Free tax file You should examine the specific treaty articles to find if you are entitled to a tax credit, tax exemption, reduced rate of tax, or other treaty benefit or safeguard. Free tax file Common Benefits Some common tax treaty benefits are explained below. Free tax file The credits, deductions, exemptions, reductions in rate, and other benefits provided by tax treaties are subject to conditions and various restrictions. Free tax file Benefits provided by certain treaties are not provided by others. Free tax file Personal service income. Free tax file If you are a U. Free tax file S. Free tax file resident who is in a treaty country for a limited number of days in the tax year and you meet certain other requirements, the payment you receive for personal services performed in that country may be exempt from that country's income tax. Free tax file Professors and teachers. Free tax file If you are a U. Free tax file S. Free tax file resident, the payment you receive for the first 2 or 3 years that you are teaching or doing research in a treaty country may be exempt from that country's income tax. Free tax file Students, trainees, and apprentices. Free tax file If you are a U. Free tax file S. Free tax file resident, amounts you receive from the United States for study, research, or business, professional and technical training may be exempt from a treaty country's income tax. Free tax file Some treaties exempt grants, allowances, and awards received from governmental and certain nonprofit organizations. Free tax file Also, under certain circumstances, a limited amount of pay received by students, trainees, and apprentices may be exempt from the income tax of many treaty countries. Free tax file Pensions and annuities. Free tax file If you are a U. Free tax file S. Free tax file resident, nongovernment pensions and annuities you receive may be exempt from the income tax of treaty countries. Free tax file Most treaties contain separate provisions for exempting government pensions and annuities from treaty country income tax, and some treaties provide exemption from the treaty country's income tax for social security payments. Free tax file Investment income. Free tax file If you are a U. Free tax file S. Free tax file resident, investment income, such as interest and dividends, that you receive from sources in a treaty country may be exempt from that country's income tax or taxed at a reduced rate. Free tax file Several treaties provide exemption for capital gains (other than from sales of real property in most cases) if specified requirements are met. Free tax file Tax credit provisions. Free tax file If you are a U. Free tax file S. Free tax file resident who receives income from or owns capital in a foreign country, you may be taxed on that income or capital by both the United States and the treaty country. Free tax file Most treaties allow you to take a credit against or deduction from the treaty country's taxes based on the U. Free tax file S. Free tax file tax on the income. Free tax file Nondiscrimination provisions. Free tax file Most U. Free tax file S. Free tax file tax treaties provide that the treaty country cannot discriminate by imposing more burdensome taxes on U. Free tax file S. Free tax file citizens who are residents of the treaty country than it imposes on its own citizens in the same circumstances. Free tax file Saving clauses. Free tax file U. Free tax file S. Free tax file treaties contain saving clauses that provide that the treaties do not affect the U. Free tax file S. Free tax file taxation of its own citizens and residents. Free tax file As a result, U. Free tax file S. Free tax file citizens and residents generally cannot use the treaty to reduce their U. Free tax file S. Free tax file tax liability. Free tax file However, most treaties provide exceptions to saving clauses that allow certain provisions of the treaty to be claimed by U. Free tax file S. Free tax file citizens or residents. Free tax file It is important that you examine the applicable saving clause to determine if an exception applies. Free tax file More information on treaties. Free tax file   Publication 901 contains an explanation of treaty provisions that apply to amounts received by teachers, students, workers, and government employees and pensioners who are alien nonresidents or residents of the United States. Free tax file Since treaty provisions generally are reciprocal, you usually can substitute “United States” for the name of the treaty country whenever it appears, and vice versa when “U. Free tax file S. Free tax file ” appears in the treaty exemption discussions in Publication 901. Free tax file   Publication 597 contains an explanation of a number of frequently-used provisions of the United States–Canada income tax treaty. Free tax file Competent Authority Assistance If you are a U. Free tax file S. Free tax file citizen or resident alien, you can request assistance from the U. Free tax file S. Free tax file competent authority if you think that the actions of the United States, a treaty country, or both, cause or will cause a tax situation not intended by the treaty between the two countries. Free tax file You should read any treaty articles, including the mutual agreement procedure article, that apply in your situation. Free tax file The U. Free tax file S. Free tax file competent authority cannot consider requests involving countries with which the United States does not have a tax treaty. Free tax file Effect of request for assistance. Free tax file   If your request provides a basis for competent authority assistance, the U. Free tax file S. Free tax file competent authority generally will consult with the treaty country competent authority on how to resolve the situation. Free tax file How to make your request. Free tax file   It is important that you make your request for competent authority consideration as soon as either of the following occurs. Free tax file You are denied treaty benefits. Free tax file Actions taken by both the United States and the foreign country result in double taxation or will result in taxation not intended by the treaty. Free tax file   In addition to making a request for assistance, you should take steps so that any agreement reached by the competent authorities is not barred by administrative, legal, or procedural barriers. Free tax file Some of the steps you should consider taking include the following. Free tax file Filing a protective claim for credit or refund of U. Free tax file S. Free tax file taxes. Free tax file Delaying the expiration of any period of limitations on the making of a refund or other tax adjustment. Free tax file Avoiding the lapse or termination of your right to appeal any tax determination. Free tax file Complying with all applicable procedures for invoking competent authority consideration. Free tax file Contesting an adjustment or seeking an appropriate correlative adjustment with respect to the U. Free tax file S. Free tax file or treaty country tax. Free tax file Taxpayers can consult with the U. Free tax file S. Free tax file competent authority to determine whether they need to take protective steps and when any required steps need to be taken. Free tax file   The request should contain all essential items of information, including the following items. Free tax file A reference to the treaty and the treaty provisions on which the request is based. Free tax file The years and amounts involved in both U. Free tax file S. Free tax file dollars and foreign currency. Free tax file A brief description of the issues for which competent authority assistance is requested. Free tax file   A complete listing of the information that must be included with the request can be found in Revenue Procedure 2006-54, or its successor. Free tax file Revenue Procedure 2006-54 is available at www. Free tax file irs. Free tax file gov/irb/2006-49_IRB/ar13. Free tax file html. Free tax file   Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. Free tax file S. Free tax file competent authority assistance under tax treaties. Free tax file As noted, Revenue Procedure 2006-54 will be superseded by a revenue procedure to be published in the future. Free tax file    Your request for competent authority consideration should be addressed to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, NW Routing M4-365 Washington, DC 20224 Attn: TAIT Additional filing. Free tax file   In the case of U. Free tax file S. Free tax file - initiated adjustments, you also must file a copy of the request with the IRS office where your case is pending. Free tax file If the request is filed after the matter has been designated for litigation or while a suit contesting your relevant tax liability is pending in a United States court, a copy of the request, with a separate statement attached identifying the court where the suit is pending and the docket number of the action, also must be filed with the: Office of Associate Chief Counsel (International) Internal Revenue Service 1111 Constitution Avenue, NW Washington, DC 20224 Additional details on the procedures for requesting competent authority assistance are included in Revenue Procedure 2006-54, or its successor. Free tax file Obtaining Copies of Tax Treaties Table 6-1 lists those countries with which the United States has income tax treaties. Free tax file This table is updated through October 31, 2013. Free tax file You can get complete information about treaty provisions from the taxing authority in the country from which you receive income or from the treaty itself. Free tax file You can obtain the text of most U. Free tax file S. Free tax file treaties at IRS. Free tax file gov. Free tax file You also can request the text of treaties from the Department of Treasury at the following address. Free tax file Department of Treasury Office of Business and Public Liaison Rm. Free tax file 3411 1500 Pennsylvania Avenue, NW  Washington, DC 20220 If you have questions about a treaty and you are in the United States, Puerto Rico, or the U. Free tax file S. Free tax file Virgin Islands, you can call the IRS at 1-800-829-1040. Free tax file Table 6–1. Free tax file List of Tax Treaties (Updated through October 31, 2013) Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. Free tax file D. Free tax file ) Australia TIAS 10773 Dec. Free tax file 1, 1983 1986-2 C. Free tax file B. Free tax file 220 1986-2 C. Free tax file B. Free tax file 246 Protocol TIAS Jan. Free tax file 1, 2004     Austria TIAS Jan. Free tax file 1, 1999     Bangladesh TIAS Jan. Free tax file 1, 2007     Barbados TIAS 11090 Jan. Free tax file 1, 1984 1991-2 C. Free tax file B. Free tax file 436 1991-2 C. Free tax file B. Free tax file 466 Protocol TIAS Jan. Free tax file 1, 2005     Belgium TIAS Jan. Free tax file 1, 2008     Bulgaria TIAS Jan. Free tax file 1, 2009     Canada2 TIAS 11087 Jan. Free tax file 1, 1985 1986-2 C. Free tax file B. Free tax file 258 1987-2 C. Free tax file B. Free tax file 298 Protocol TIAS Jan. Free tax file 1, 2009     China, People's Republic of TIAS 12065 Jan. Free tax file 1, 1987 1988-1 C. Free tax file B. Free tax file 414 1988-1 C. Free tax file B. Free tax file 447 Commonwealth of Independent States3 TIAS 8225 Jan. Free tax file 1, 1976 1976-2 C. Free tax file B. Free tax file 463 1976-2 C. Free tax file B. Free tax file 475 Cyprus TIAS 10965 Jan. Free tax file 1, 1986 1989-2 C. Free tax file B. Free tax file 280 1989-2 C. Free tax file B. Free tax file 314 Czech Republic TIAS Jan. Free tax file 1, 1993     Denmark TIAS Jan. Free tax file 1, 2001     Protocol TIAS Jan. Free tax file 1, 2008     Egypt TIAS 10149 Jan. Free tax file 1, 1982 1982-1 C. Free tax file B. Free tax file 219 1982-1 C. Free tax file B. Free tax file 243 Estonia TIAS Jan. Free tax file 1, 2000     Finland TIAS 12101 Jan. Free tax file 1, 1991     Protocol TIAS Jan. Free tax file 1, 2008     France TIAS Jan. Free tax file 1, 1996     Protocol TIAS Jan. Free tax file 1, 2009     Germany TIAS Jan. Free tax file 1, 1990     Protocol TIAS Jan. Free tax file 1, 2008     Greece TIAS 2902 Jan. Free tax file 1, 1953 1958-2 C. Free tax file B. Free tax file 1054 T. Free tax file D. Free tax file 6109, 1954-2 C. Free tax file B. Free tax file 638 Hungary TIAS 9560 Jan. Free tax file 1, 1980 1980-1 C. Free tax file B. Free tax file 333 1980-1 C. Free tax file B. Free tax file 354 Iceland TIAS 8151 Jan. Free tax file 1, 2009     India TIAS Jan. Free tax file 1, 1991     Indonesia TIAS 11593 Jan. Free tax file 1, 1990     Ireland TIAS Jan. Free tax file 1, 1998     Israel TIAS Jan. Free tax file 1, 1995     Italy TIAS Jan. Free tax file 1, 2010     Jamaica TIAS 10207 Jan. Free tax file 1, 1982 1982-1 C. Free tax file B. Free tax file 257 1982-1 C. Free tax file B. Free tax file 291 Japan TIAS Jan. Free tax file 1, 2005     Kazakhstan TIAS Jan. Free tax file 1, 1996     Korea, South TIAS 9506 Jan. Free tax file 1, 1980 1979-2 C. Free tax file B. Free tax file 435 1979-2 C. Free tax file B. Free tax file 458 Latvia TIAS Jan. Free tax file 1, 2000     Lithuania TIAS Jan. Free tax file 1, 2000     Luxembourg TIAS Jan. Free tax file 1, 2001     Malta TIAS Jan. Free tax file 1, 2011     Mexico TIAS Jan. Free tax file 1,1994     Protocol TIAS Jan. Free tax file 1, 2004               Table 6–1 (continued). Free tax file Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. Free tax file D. Free tax file ) Morocco TIAS 10195 Jan. Free tax file 1, 1981 1982-2 C. Free tax file B. Free tax file 405 1982-2 C. Free tax file B. Free tax file 427 Netherlands TIAS Jan. Free tax file 1, 1994     Protocol TIAS Jan. Free tax file 1, 2005     New Zealand TIAS 10772 Nov. Free tax file 2, 1983 1990-2 C. Free tax file B. Free tax file 274 1990-2 C. Free tax file B. Free tax file 303 Protocol TIAS Jan. Free tax file 1, 2011     Norway TIAS 7474 Jan. Free tax file 1, 1971 1973-1 C. Free tax file B. Free tax file 669 1973-1 C. Free tax file B. Free tax file 693 Protocol TIAS 10205 Jan. Free tax file 1, 1982 1982-2 C. Free tax file B. Free tax file 440 1982-2 C. Free tax file B. Free tax file 454 Pakistan TIAS 4232 Jan. Free tax file 1, 1959 1960-2 C. Free tax file B. Free tax file 646 T. Free tax file D. Free tax file 6431, 1960-1 C. Free tax file B. Free tax file 755 Philippines TIAS 10417 Jan. Free tax file 1, 1983 1984-2 C. Free tax file B. Free tax file 384 1984-2 C. Free tax file B. Free tax file 412 Poland TIAS 8486 Jan. Free tax file 1, 1974 1977-1 C. Free tax file B. Free tax file 416 1977-1 C. Free tax file B. Free tax file 427 Portugal TIAS Jan. Free tax file 1, 1996     Romania TIAS 8228 Jan. Free tax file 1, 1974 1976-2 C. Free tax file B. Free tax file 492 1976-2 C. Free tax file B. Free tax file 504 Russia TIAS Jan. Free tax file 1, 1994     Slovak Republic TIAS Jan. Free tax file 1, 1993     Slovenia TIAS Jan. Free tax file 1, 2002     South Africa TIAS Jan. Free tax file 1, 1998     Spain TIAS Jan. Free tax file 1, 1991     Sri Lanka TIAS Jan. Free tax file 1, 2004     Sweden TIAS Jan. Free tax file 1, 1996     Protocol TIAS Jan. Free tax file 1, 2007     Switzerland TIAS Jan. Free tax file 1, 1998     Thailand TIAS Jan. Free tax file 1, 1998     Trinidad and Tobago TIAS 7047 Jan. Free tax file 1, 1970 1971-2 C. Free tax file B. Free tax file 479   Tunisia TIAS Jan. Free tax file 1, 1990     Turkey TIAS Jan. Free tax file 1, 1998     Ukraine TIAS Jan. Free tax file 1, 2001     United Kingdom TIAS Jan. Free tax file 1, 2004     Venezuela TIAS Jan. Free tax file 1, 2000      1(TIAS) — Treaties and Other International Act Series. Free tax file  2Information on the treaty can be found in Publication 597, Information on the United States—Canada Income Tax Treaty. Free tax file 3The U. Free tax file S. Free tax file -U. Free tax file S. Free tax file S. Free tax file R. Free tax file income tax treaty applies to the countries of Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. Free tax file Prev  Up  Next   Home   More Online Publications
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Free tax file Publication 3402 - Main Content Table of Contents What is a Limited Liability Company? Classification of an LLC LLCs Classified as Partnerships LLCs Classified as Disregarded Entities LLCs Classified as Corporations Subsequent Elections How To Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What is a Limited Liability Company? For purposes of this publication, a limited liability company (LLC) is a business entity organized in the United States under state law. Free tax file Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. Free tax file An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301. Free tax file 7701-3. Free tax file The information in this publication applies to LLCs in general, and different rules may apply to special situations, including banks, insurance companies, or nonprofit organizations that are LLCs or that own LLCs. Free tax file Check your state's requirements and the federal tax regulations for further information. Free tax file Classification of an LLC Default classification rules. Free tax file   An LLC with at least two members is classified as a partnership for federal income tax purposes. Free tax file An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes). Free tax file Also, an LLC's federal tax classification can subsequently change under certain default rules discussed later. Free tax file Elected classification. Free tax file   If an LLC does not choose to be classified under the above default classifications, it can elect to be classified as an association taxable as a corporation or as an S corporation. Free tax file After an LLC has determined its federal tax classification, it can later elect to change that classification. Free tax file For details, see Subsequent Elections, later. Free tax file LLCs Classified as Partnerships If an LLC has at least two members and is classified as a partnership, it generally must file Form 1065, U. Free tax file S. Free tax file Return of Partnership Income. Free tax file Generally, an LLC classified as a partnership is subject to the same filing and reporting requirements as partnerships. Free tax file For certain purposes, members of an LLC are treated as limited partners in a limited partnership. Free tax file For example, LLC members are treated as limited partners for purposes of material participation under the passive activity limitation rules (see Temporary Regulation section 1. Free tax file 469-5T(e)). Free tax file See the Instructions for Form 1065 for reporting rules that apply specifically to LLCs. Free tax file Member manager. Free tax file   Only a member manager of an LLC can sign the partnership tax return. Free tax file And only a member manager can represent the LLC as the tax matters partner under the consolidated audit proceedings in sections 6221 through 6234. Free tax file A member manager is any owner of an interest in the LLC who, alone or together with others, has the continuing authority to make the management decisions necessary to conduct the business for which the LLC was formed. Free tax file If there are no elected or designated member managers, each owner is treated as a member manager. Free tax file Change in default classification. Free tax file   If the number of members in an LLC classified as a partnership is reduced to only one member, it becomes an entity disregarded as separate from its owner under Regulations section 301. Free tax file 7701-3(f)(2). Free tax file However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a disregarded entity will not apply. Free tax file   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. Free tax file If a partnership that becomes a disregarded entity as a result of a decrease in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed under Subsequent Elections, later, apply. Free tax file Example 1. Free tax file Ethel and Francis are members of an LLC classified as a partnership for federal tax purposes. Free tax file Each holds an equal membership interest. Free tax file The LLC does not hold any unrealized receivables or substantially appreciated inventory. Free tax file Ethel sells her entire interest in the LLC to Francis for $10,000. Free tax file After the sale, the business is continued by the LLC, which is owned solely by Francis. Free tax file No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. Free tax file The partnership terminates when Francis buys Ethel's entire interest. Free tax file Ethel must treat the transaction as the sale of a partnership interest and must report gain or loss, if any, resulting from the sale of her partnership interest. Free tax file For purposes of determining the tax treatment of Francis, the partnership is deemed to make a liquidating distribution of all of its assets to Ethel and Francis, and after this distribution, Francis is treated as acquiring the assets deemed to have been distributed to Ethel in liquidation of Ethel's partnership interest. Free tax file Francis's basis in the assets attributable to Ethel's one-half interest in the partnership is $10,000, the purchase price for Ethel's partnership interest. Free tax file Upon the termination of the partnership, Francis is considered to receive a distribution of those assets attributable to Francis's former interest in the partnership. Free tax file Francis must recognize gain or loss, if any, on the deemed distribution of the assets to the extent required by Internal Revenue Code section 731(a). Free tax file See Partnership Distributions in Publication 541. Free tax file Example 2. Free tax file George and Henrietta are members of an LLC classified as a partnership for federal tax purposes. Free tax file Each holds an equal membership interest. Free tax file The LLC does not hold any unrealized receivables or substantially appreciated inventory. Free tax file George and Henrietta each sell their entire interests in the LLC to Ian, an unrelated person, in exchange for $10,000. Free tax file After the sale, the business is continued by the LLC, which is owned solely by Ian. Free tax file No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. Free tax file The partnership terminates when Ian purchases the entire interests of George and Henrietta in the LLC. Free tax file George and Henrietta must report gain or loss, if any, resulting from the sale of their partnership interests. Free tax file For purposes of classifying the acquisition by Ian, the partnership is deemed to make a liquidating distribution of its assets to George and Henrietta. Free tax file Immediately following this distribution, Ian is deemed to acquire, by purchase, all of the former partnership's assets. Free tax file   For more details on the preceding two examples, see Revenue Ruling 99-6, 1999-6 I. Free tax file R. Free tax file B. Free tax file 6. Free tax file You can find Revenue Ruling 99-6 at www. Free tax file irs. Free tax file gov/pub/irs-irbs/irb99-06. Free tax file pdf. Free tax file LLCs Classified as Disregarded Entities If an LLC has only one member and is classified as an entity disregarded as separate from its owner, its income, deductions, gains, losses, and credits are reported on the owner's income tax return. Free tax file For example, if the owner of the LLC is an individual, the LLC's income and expenses would be reported on the following schedules filed with the owner's Form 1040: Schedule C, Profit or Loss from Business (Sole Proprietorship); Schedule C-EZ, Net Profit From Business (Sole Proprietorship); Schedule E, Supplemental Income and Loss; or Schedule F, Profit or Loss From Farming. Free tax file Employment tax and certain excise taxes. Free tax file   A single-member LLC that is classified as a disregarded entity for income tax purposes is treated as a separate entity for purposes of employment tax and certain excise taxes. Free tax file For wages paid after January 1, 2009, the single-member LLC is required to use its name and employer identification number (EIN) for reporting and payment of employment taxes. Free tax file A single-member LLC is also required to use its name and EIN to register for excise tax activities on Form 637; pay and report excise taxes reported on Forms 720, 730, 2290, and 11-C; and claim any refunds, credits, and payments on Form 8849. Free tax file See the employment and excise tax returns for more information. Free tax file Self-employment tax rule for disregarded entity LLCs. Free tax file   An individual owner of a single-member LLC classified as a disregarded entity is not an employee of the LLC. Free tax file Instead, the owner is subject to tax on the net earnings from self-employment of the LLC which is treated in the same manner as a sole-proprietorship. Free tax file Example 3. Free tax file LLC is a disregarded entity owned by Irene. Free tax file LLC has three employees (Kent, Patricia, and Tex) and pays wages. Free tax file LLC is treated as an entity separate from its owner for purposes of employment taxes. Free tax file For the wages paid to Kent, Patricia, and Tex, LLC is liable for income tax withholding, Federal Insurance Contributions Act (FICA) taxes, and Federal Unemployment Tax Act (FUTA) taxes. Free tax file In addition, LLC must file under its name and EIN the applicable employment tax returns; make timely employment tax deposits; and file with the Social Security Administration and furnish to LLC's employees (Kent, Patricia, and Tex) Forms W-2, Wage and Tax Statement. Free tax file Irene is self-employed for purposes of the self-employment tax. Free tax file Thus, Irene is subject to self-employment tax on her net earnings from self-employment with respect to LLC's activities. Free tax file Irene is not an employee of LLC for purposes of employment taxes. Free tax file Because LLC is treated as a sole proprietorship of Irene for income tax purposes, Irene must report the income and expenses from LLC on her Schedule C. Free tax file Irene will figure the tax due on her net earnings from self-employment on Schedule SE. Free tax file Irene can also deduct one-half of her self-employment tax on line 27 of her Form 1040. Free tax file Taxpayer identification number. Free tax file   For all income tax purposes, a single-member LLC classified as a disregarded entity must use the owner's social security number (SSN) or EIN. Free tax file This includes all information returns and reporting related to income tax. Free tax file For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number and Certification, the LLC must provide the owner's SSN or EIN, not the LLC's EIN. Free tax file   However, most new single-member LLCs classified as a disregarded entity will need to obtain an EIN for the LLC. Free tax file An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed above (see Employment tax and certain excise taxes earlier). Free tax file See Form SS-4, Application for Employer Identification Number, for information on applying for an EIN. Free tax file Change in default classification. Free tax file   If a single-member LLC classified as a disregarded entity for income tax purposes acquires an additional member, it becomes a partnership under Regulations section 301. Free tax file 7701-3(f)(2). Free tax file However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a partnership will not apply. Free tax file   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. Free tax file If a disregarded entity that becomes a partnership as a result of an increase in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed in Subsequent Elections, later, apply. Free tax file Example 4. Free tax file Bart, who is not related to Alain, buys 50% of Alain's interest in an LLC that is a disregarded entity for $5,000. Free tax file Alain does not contribute any portion of the $5,000 to the LLC. Free tax file Alain and Bart continue to operate the business of the LLC as co-owners of the LLC. Free tax file The LLC is converted to a partnership when the new member, Bart, buys an interest in the disregarded entity from the owner, Alain. Free tax file Bart's buying a 50% interest in Alain's ownership interest in the LLC is treated as Bart's buying a 50% interest in each of the LLC's assets, which are treated as owned directly by Alain for federal income tax purposes. Free tax file Immediately thereafter, Alain and Bart are treated as contributing their respective interests in those assets to a partnership in exchange for ownership interests in the partnership. Free tax file Alain recognizes gain or loss from the deemed sale to Bart of the 50% interest in the assets. Free tax file Neither Alain nor Bart recognizes any gain or loss as a result of the deemed contribution of the assets to the partnership. Free tax file Example 5. Free tax file Charles, who is not related to Danielle, contributes $10,000 to an LLC owned by Danielle for a 50% ownership interest in the LLC. Free tax file The LLC uses all of the contributed cash in its business. Free tax file Charles and Danielle continue to operate the business of the LLC as co-owners of the LLC. Free tax file The LLC is converted from a disregarded entity to a partnership when Charles contributes cash to the LLC. Free tax file Charles's contribution is treated as a contribution to a partnership in exchange for an ownership interest in the partnership. Free tax file Danielle is treated as contributing all of the assets of the LLC to the partnership in exchange for a partnership interest. Free tax file Neither Charles nor Danielle recognizes gain or loss as a result of the conversion of the disregarded entity to a partnership. Free tax file   For more details on the preceding two examples, see Revenue Ruling 99-5, 1999-6 I. Free tax file R. Free tax file B. Free tax file 8. Free tax file You can find Revenue Ruling 99-5 at www. Free tax file irs. Free tax file gov/pub/irs-irbs/irb99-06. Free tax file pdf. Free tax file LLCs Classified as Corporations An LLC with either a single member or more than one member can elect to be classified as a corporation rather than be classified as a partnership or disregarded entity under the default rules discussed earlier. Free tax file File Form 8832, Entity Classification Election, to elect classification as a C corporation. Free tax file File Form 2553, Election by a Small Business Corporation, to elect classification as an S corporation. Free tax file LLCs electing classification as an S corporation are not required to file Form 8832 to elect classification as a corporation before filing Form 2553. Free tax file By filing Form 2553, an LLC is deemed to have elected classification as a corporation in addition to the S corporation classification. Free tax file If the LLC elects to be classified as a corporation by filing Form 8832, a copy of the LLC's Form 8832 must be attached to the federal income tax return of each direct and indirect owner of the LLC for the tax year of the owner that includes the date on which the election took effect. Free tax file Example 6. Free tax file Classification as a corporation without an S election. Free tax file Wanda and Sylvester are members of an LLC. Free tax file They agree that the LLC should be classified as a corporation but do not want to elect to have the LLC be treated as an S corporation. Free tax file The LLC must file Form 8832. Free tax file Example 7. Free tax file Classification as a corporation with an S election. Free tax file Evelyn and Carol are members of an LLC. Free tax file They agree that the LLC should be classified as an S corporation. Free tax file The LLC must file Form 2553 instead of Form 8832. Free tax file If the LLC is classified as a corporation, it must file a corporation income tax return. Free tax file If it is a C corporation, it is taxed on its taxable income and distributions to the members are includible in the members' gross income to the extent of the corporation's earnings and profits (double taxation). Free tax file If it is an S corporation, the corporation is generally not subject to any income tax and the income, deductions, gains, losses, and credits of the corporation “pass through” to the members. Free tax file Corporations generally file either: Form 1120, U. Free tax file S. Free tax file Corporation Income Tax Return; or Form 1120S, U. Free tax file S. Free tax file Income Tax Return for an S Corporation. Free tax file For more information on the income taxation of corporations and their shareholders, see Publication 542, Corporations. Free tax file For more information on the income taxation of S corporations and their shareholders, see the Instructions for Form 1120S, U. Free tax file S. Free tax file Income Tax Return for an S Corporation. Free tax file Subsequent Elections An LLC can elect to change its classification. Free tax file Generally, once an LLC has elected to change its classification, it cannot elect again to change it classification during the 60 months after the effective date of the election. Free tax file An election by a newly formed LLC that is effective on the date of formation is not considered a change for purposes of this limitation. Free tax file For more information and exceptions, see Regulations section 301. Free tax file 7701-3(c) and the Form 8832 instructions. Free tax file An election to change classification can have significant tax consequences based on the following transactions that are deemed to occur as a result of the election. Free tax file Partnership to corporation. Free tax file   An election to change classification from a partnership to a corporation will be treated as if the partnership contributed all of its assets and liabilities to the corporation in exchange for stock and the partnership then immediately liquidated by distributing the stock to its partners. Free tax file   For more information, see Partnership Distributions in Publication 541 and Property Exchanged for Stock in Publication 542. Free tax file Corporation to partnership. Free tax file   An election to change classification from a corporation to a partnership will be treated as if the corporation distributed all of its assets and liabilities to its shareholders in liquidation and the shareholders then immediately contributed all of the distributed assets and liabilities to a new partnership. Free tax file   For more information, see Contribution of Property in Publication 541 and Distributions to Shareholders in Publication 542. Free tax file Corporation to disregarded entity. Free tax file   An election to change classification from a corporation to a disregarded entity will be treated as if the corporation distributed all of its assets and liabilities to its single owner in liquidation. Free tax file   For more information, see Distributions to Shareholders in Publication 542. Free tax file Disregarded entity to corporation. Free tax file   An election to change classification from a disregarded entity to a corporation will be treated as if the owner of the disregarded entity contributed all of the assets and liabilities to the corporation in exchange for stock. Free tax file   For more information, see Property Exchanged for Stock in Publication 542. Free tax file How To Get More Information This section describes the help the IRS and other federal agencies offer to taxpayers who operate their own businesses. Free tax file Internal Revenue Service You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Free tax file By selecting the method that is best for you, you will have quick and easy access to tax help. Free tax file Contacting your Taxpayer Advocate. Free tax file   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. Free tax file   You can contact the TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if you are eligible for assistance. Free tax file You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service — Your Voice at the IRS. Free tax file You can file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf. Free tax file For more information, go to www. Free tax file irs. Free tax file gov/advocate. Free tax file Low Income Taxpayer Clinics (LITCs). Free tax file   LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies with the IRS for free or for a nominal charge. Free tax file The clinics also provide tax education and outreach for taxpayers with limited English proficiency or who speak English as a second language. Free tax file Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. Free tax file It is available at www. Free tax file irs. Free tax file gov or at your local IRS office. Free tax file Small business workshops. Free tax file   Small business workshops are designed to help the small business owner understand and fulfill their federal tax responsibilities. Free tax file Workshops are sponsored and presented by IRS partners who are federal tax specialists. Free tax file Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. Free tax file Although most are free, some workshops have fees associated with them. Free tax file Any fees charged for a workshop are paid to the sponsoring organization, not the IRS. Free tax file   For more information, visit www. Free tax file irs. Free tax file gov/businesses/small. Free tax file Subscribe to e-news for small businesses. Free tax file   Join the e-News for Small Businesses mailing list to receive updates, reminders, and other information useful to small business owners and self employed individuals. Free tax file Visit the website at www. Free tax file irs. Free tax file gov/businesses/small and click on “Subscribe to e-News. Free tax file ” Free tax services. Free tax file   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. Free tax file It contains a list of free tax publications and describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Free tax file   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Free tax file Internet. Free tax file You can access the IRS website at www. Free tax file irs. Free tax file gov 24 hours a day, 7 days a week, to: E-file your return. Free tax file Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Free tax file Check the status of your refund. Free tax file Go to www. Free tax file irs. Free tax file gov and click on Where's My Refund. Free tax file Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Free tax file If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Free tax file Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Free tax file Download forms, instructions, and publications. Free tax file Order IRS products online. Free tax file Research your tax questions online. Free tax file Search publications online by topic or keyword. Free tax file View Internal Revenue Bulletins (IRBs) published in the last few years. Free tax file Figure your withholding allowances using the withholding calculator online at www. Free tax file irs. Free tax file gov/individuals. Free tax file Determine if Form 6251 must be filed using our Alternative Minimum Tax (AMT) Assistant. Free tax file Sign up to receive local and national tax news by email. Free tax file Get information on starting and operating a small business. Free tax file Phone. Free tax file Many services are available by phone. Free tax file Ordering forms, instructions, and publications. Free tax file Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. Free tax file You should receive your order within 10 days. Free tax file Asking tax questions. Free tax file Call the IRS with your tax questions at 1-800-829-1040. Free tax file Solving problems. Free tax file You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Free tax file An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Free tax file Call your local Taxpayer Assistance Center for an appointment. Free tax file To find the number, go to www. Free tax file irs. Free tax file gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Free tax file TTY/TDD equipment. Free tax file If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Free tax file TeleTax topics. Free tax file Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Free tax file Refund information. Free tax file To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Free tax file Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Free tax file If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Free tax file Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Free tax file Refunds are sent out weekly on Fridays. Free tax file If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Free tax file Evaluating the quality of our telephone services. Free tax file To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Free tax file One method is for a second IRS representative to listen in on or record random telephone calls. Free tax file Another is to ask some callers to complete a short survey at the end of the call. Free tax file Walk-in. Free tax file Many products and services are available on a walk-in basis. Free tax file Products. Free tax file You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free tax file Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Free tax file Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Free tax file Services. Free tax file You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Free tax file An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Free tax file If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Free tax file No appointment is necessary—just walk in. Free tax file If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Free tax file A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Free tax file If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Free tax file All other issues will be handled without an appointment. Free tax file To find the number of your local office, go to www. Free tax file irs. Free tax file gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Free tax file Mail. Free tax file You can send your order for forms, instructions, and publications to the address below. Free tax file You should receive a response within 10 days after your request is received. Free tax file Internal Revenue Service1201 N. Free tax file Mitsubishi MotorwayBloomington, IL 61705–6613 DVD for tax products. Free tax file You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Free tax file Prior-year forms, instructions, and publications. Free tax file Tax Map: an electronic research tool and finding aid. Free tax file Tax law frequently asked questions. Free tax file Tax Topics from the IRS telephone response system. Free tax file Internal Revenue Code—Title 26 of the U. Free tax file S. Free tax file Code. Free tax file Fill-in, print, and save features for most tax forms. Free tax file Internal Revenue Bulletins. Free tax file Toll-free and email technical support. Free tax file Two releases during the year. Free tax file – The first release will ship the beginning of January. Free tax file – The final release will ship the beginning of March. Free tax file Purchase the DVD from National Technical Information Service (NTIS) at www. Free tax file irs. Free tax file gov/cdorders for $30 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the DVD for $30 (plus a $6 handling fee). Free tax file Small Business Administration The Small Business Administration (SBA) offers training and educational programs, counseling services, financial programs, and contract assistance for small business owners. Free tax file The SBA also has publications and videos on a variety of business topics. Free tax file The following briefly describes assistance provided by the SBA. Free tax file Small Business Development Centers (SBDCs). Free tax file   SBDCs provide counseling, training, and technical services to current and prospective small business owners who cannot afford the services of a private consultant. Free tax file Help is available when beginning, improving, or expanding a small business. Free tax file Business Information Centers (BICs). Free tax file   BICs offer a small business reference library, management video tapes, and computer technology to help plan a business. Free tax file BICs also offer one-on-one assistance. Free tax file Individuals who are in business or are interested in starting a business can use BICs as often as they wish at no charge. Free tax file Service Corps of Retired Executives (SCORE). Free tax file   SCORE provides small business counseling and training to current and prospective small business owners. Free tax file SCORE is made up of current and former business people who offer their expertise and knowledge to help people start, manage, and expand a small business. Free tax file SCORE also offers a variety of small business workshops. Free tax file    Internet. Free tax file You can visit the SBA website at www. Free tax file sba. Free tax file gov. Free tax file While visiting the SBA website, you can find a variety of information of interest to small business owners. Free tax file    Phone. Free tax file Call the SBA Answer Desk at 1-800-UASK-SBA (1-800-827-5722) for general information about programs available to assist small business owners. Free tax file    Walk-in. Free tax file You can walk in to a Small Business Development Center or Business Information Center to request assistance with your small business. Free tax file To find the location nearest you, visit the SBA website or call the SBA Answer Desk. Free tax file Other Federal Agencies Other federal agencies also publish publications and pamphlets to assist small businesses. Free tax file Most of these are available from the Superintendent of Documents at the Government Printing Office. Free tax file You can get information and order these publications and pamphlets in several ways. Free tax file Internet. Free tax file You can visit the GPO website at www. Free tax file access. Free tax file gpo. Free tax file gov. Free tax file Mail. Free tax file Write to the GPO at the following address. Free tax file Superintendent of DocumentsU. Free tax file S. Free tax file Government Printing OfficeP. Free tax file O. Free tax file Box 979050St. Free tax file Louis, MO 63917-9000 Phone. Free tax file Call the GPO toll-free at 1-866-512-1800 or at 202-512-1800 from the Washington, DC area. Free tax file Prev  Up  Next   Home   More Online Publications