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Free tax usa 2012 Publication 559 - Main Content Table of Contents Personal RepresentativeDuties Fees Received by Personal Representatives Final Income Tax Return for Decedent—Form 1040Name, Address, and Signature When and Where To File Filing Requirements Income To Include Exemptions and Deductions Credits, Other Taxes, and Payments Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Filing Reminders Other Tax InformationTax Benefits for Survivors Income in Respect of a Decedent Deductions in Respect of a Decedent Estate Tax Deduction Gifts, Insurance, and Inheritances Other Items of Income Income Tax Return of an Estate— Form 1041Filing Requirements Income To Include Exemption and Deductions Credits, Tax, and Payments Name, Address, and Signature When and Where To File Distributions to BeneficiariesIncome That Must Be Distributed Currently Other Amounts Distributed Discharge of a Legal Obligation Character of Distributions How and When To Report Bequest Termination of Estate Estate and Gift TaxesApplicable Credit Amount Gift Tax Estate Tax Generation-Skipping Transfer Tax Comprehensive ExampleFinal Return for Decedent—Form 1040 Income Tax Return of an Estate—Form 1041 How To Get Tax HelpLow Income Taxpayer Clinics Personal Representative A personal representative of an estate is an executor, administrator, or anyone who is in charge of the decedent's property. Free tax usa 2012 Generally, an executor (or executrix) is named in a decedent's will to administer the estate and distribute properties as the decedent has directed. Free tax usa 2012 An administrator (or administratrix) is usually appointed by the court if no will exists, if no executor was named in the will, or if the named executor cannot or will not serve. Free tax usa 2012 In general, an executor and an administrator perform the same duties and have the same responsibilities. Free tax usa 2012 For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term “executor” includes anyone in actual or constructive possession of any property of the decedent. Free tax usa 2012 It includes, among others, the decedent's agents and representatives; safe-deposit companies, warehouse companies, and other custodians of property in this country; brokers holding securities of the decedent as collateral; and the debtors of the decedent who are in this country. Free tax usa 2012 Duties The primary duties of a personal representative are to collect all the decedent's assets, pay his or her creditors, and distribute the remaining assets to the heirs or other beneficiaries. Free tax usa 2012 The personal representative also must perform the following duties. Free tax usa 2012 Apply for an employer identification number (EIN) for the estate. Free tax usa 2012 File all tax returns, including income, estate and gift tax returns, when due. Free tax usa 2012 Pay the tax determined up to the date of discharge from duties. Free tax usa 2012 Other duties of the personal representative in federal tax matters are discussed in other sections of this publication. Free tax usa 2012 If any beneficiary is a nonresident alien, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent. Free tax usa 2012 Penalty. Free tax usa 2012   There is a penalty for failure to file a tax return when due unless the failure is due to reasonable cause. Free tax usa 2012 Reliance on an agent (attorney, accountant, etc. Free tax usa 2012 ) is not reasonable cause for late filing. Free tax usa 2012 It is the personal representative's duty to file the returns for the decedent and the estate when due. Free tax usa 2012 Identification number. Free tax usa 2012   The first action you should take if you are the personal representative for the decedent is to apply for an EIN for the estate. Free tax usa 2012 You should apply for this number as soon as possible because you need to enter it on returns, statements, and other documents you file concerning the estate. Free tax usa 2012 You also must give the number to payers of interest and dividends and other payers who must file a return concerning the estate. Free tax usa 2012   You can get an EIN by applying online at www. Free tax usa 2012 irs. Free tax usa 2012 gov (click on "Apply for an EIN Online" under the Tools heading). Free tax usa 2012 Generally, if you apply online, you will receive your EIN immediately upon completing the application. Free tax usa 2012 You can also apply using Form SS-4, Application for Employer Identification Number. Free tax usa 2012 Generally, if you apply by mail, it takes about 4 weeks to get your EIN. Free tax usa 2012 See the form instructions for other ways to apply. Free tax usa 2012   Payers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. Free tax usa 2012 After a decedent's death, Forms 1099 must reflect the identification number of the estate or beneficiary to whom the amounts are payable. Free tax usa 2012 As the personal representative handling the estate, you must furnish this identification number to the payer. Free tax usa 2012 For example, if interest is payable to the estate, the estate's EIN must be provided to the payer and used to report the interest on Form 1099-INT, Interest Income. Free tax usa 2012 If the interest is payable to a surviving joint owner, the survivor's identification number, such as an SSN or ITIN, must be provided to the payer and used to report the interest. Free tax usa 2012   If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death, the payer should give you (or the survivor) a Form W-9, Request for Taxpayer Identification Number and Certification (or a similar substitute form). Free tax usa 2012 Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to the payer. Free tax usa 2012    Do not use the deceased individual's identifying number to file an individual income tax return after the decedent's final tax return. Free tax usa 2012 Also do not use it to make estimated tax payments for a tax year after the year of death. Free tax usa 2012 Penalty. Free tax usa 2012   If you do not include the EIN or the taxpayer identification number of another person where it is required on a return, statement, or other document, you are liable for a penalty for each failure, unless you can show reasonable cause. Free tax usa 2012 You also are liable for a penalty if you do not give the taxpayer identification number of another person when required on a return, statement, or other document. Free tax usa 2012 Notice of fiduciary relationship. Free tax usa 2012   The term fiduciary means any person acting for another person. Free tax usa 2012 It applies to persons who have positions of trust on behalf of others. Free tax usa 2012 A personal representative for a decedent's estate is a fiduciary. Free tax usa 2012 Form 56. Free tax usa 2012   If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the IRS stating this. Free tax usa 2012 Form 56, Notice Concerning Fiduciary Relationship, is used for this purpose. Free tax usa 2012 See the Instructions for Form 56 for filing requirements and other information. Free tax usa 2012   File Form 56 as soon as all the necessary information (including the EIN) is available. Free tax usa 2012 It notifies the IRS that you, as the fiduciary, are assuming the powers, rights, duties, and privileges of the decedent. Free tax usa 2012 The notice remains in effect until you notify the IRS (by filing another Form 56) that your fiduciary relationship with the estate has terminated. Free tax usa 2012 Termination of fiduciary relationship. Free tax usa 2012   Form 56 should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate has not been terminated. Free tax usa 2012 See Form 56 and its instructions for more information. Free tax usa 2012   At the time of termination of the fiduciary relationship, you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 6905, to wind up your duties as fiduciary. Free tax usa 2012 See below for a discussion of these forms. Free tax usa 2012 Request for prompt assessment (charge) of tax. Free tax usa 2012   The IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge any additional tax due. Free tax usa 2012 However, as a personal representative, you may request a prompt assessment of tax after the return has been filed. Free tax usa 2012 This reduces the time for making the assessment to 18 months from the date the written request for prompt assessment was received. Free tax usa 2012 This request can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. Free tax usa 2012 This may permit a quicker settlement of the tax liability of the estate and an earlier final distribution of the assets to the beneficiaries. Free tax usa 2012 Form 4810. Free tax usa 2012   Form 4810 can be used for making this request. Free tax usa 2012 It must be filed separately from any other document. Free tax usa 2012   As the personal representative for the decedent's estate, you are responsible for any additional taxes that may be due. Free tax usa 2012 You can request prompt assessment of any of the decedent's taxes (other than federal estate taxes) for any years for which the statutory period for assessment is open. Free tax usa 2012 This applies even though the returns were filed before the decedent's death. Free tax usa 2012 Failure to report income. Free tax usa 2012   If you or the decedent failed to report substantial amounts of gross income (more than 25% of the gross income reported on the return) or filed a false or fraudulent return, your request for prompt assessment will not shorten the period during which the IRS may assess the additional tax. Free tax usa 2012 However, such a request may relieve you of personal liability for the tax if you did not have knowledge of the unpaid tax. Free tax usa 2012 Request for discharge from personal liability for tax. Free tax usa 2012   An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate taxes. Free tax usa 2012 The request must be made after the returns for those taxes are filed. Free tax usa 2012 To make the request, file Form 5495. Free tax usa 2012 For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States. Free tax usa 2012   Within 9 months after receipt of the request, the IRS will notify the executor of the amount of taxes due. Free tax usa 2012 If this amount is paid, the executor will be discharged from personal liability for any future deficiencies. Free tax usa 2012 If the IRS has not notified the executor, he or she will be discharged from personal liability at the end of the 9-month period. Free tax usa 2012    Even if the executor is discharged from personal liability, the IRS will still be able to assess tax deficiencies against the executor to the extent he or she still has any of the decedent's property. Free tax usa 2012 Insolvent estate. Free tax usa 2012   Generally, if a decedent's estate is insufficient to pay all the decedent's debts, the debts due to the United States must be paid first. Free tax usa 2012 Both the decedent's federal income tax liabilities at the time of death and the estate's income tax liability are debts due to the United States. Free tax usa 2012 The personal representative of an insolvent estate is personally responsible for any tax liability of the decedent or of the estate if he or she had notice of such tax obligations or failed to exercise due care in determining if such obligations existed before distribution of the estate's assets and before being discharged from duties. Free tax usa 2012 The extent of such personal responsibility is the amount of any other payments made before paying the debts due to the United States, except where such other debt paid has priority over the debts due to the United States. Free tax usa 2012 Income tax liabilities need not be formally assessed for the personal representative to be liable if he or she was aware or should have been aware of their existence. Free tax usa 2012 Fees Received by Personal Representatives All personal representatives must include fees paid to them from an estate in their gross income. Free tax usa 2012 If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on your Form 1040, line 21. Free tax usa 2012 If you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C or Schedule C-EZ of your Form 1040. Free tax usa 2012 If the estate operates a trade or business and you, as executor, actively participate in the trade or business while fulfilling your duties, any fees you receive related to the operation of the trade or business must be reported as self-employment income on Schedule C (or Schedule C-EZ) of your Form 1040. Free tax usa 2012 Final Income Tax Return for Decedent—Form 1040 The personal representative (defined earlier) must file the final income tax return (Form 1040) of the decedent for the year of death and any returns not filed for preceding years. Free tax usa 2012 A surviving spouse, under certain circumstances, may have to file the returns for the decedent. Free tax usa 2012 See Joint Return, later. Free tax usa 2012 Return for preceding year. Free tax usa 2012   If an individual died after the close of the tax year, but before the return for that year was filed, the return for the year just closed will not be the final return. Free tax usa 2012 The return for that year will be a regular return and the personal representative must file it. Free tax usa 2012 Example. Free tax usa 2012 Samantha Smith died on March 21, 2013, before filing her 2012 tax return. Free tax usa 2012 Her personal representative must file her 2012 return by April 15, 2013. Free tax usa 2012 Her final tax return covering the period from January 1, 2013, to March 20, 2013, is due April 15, 2014. Free tax usa 2012 Name, Address, and Signature Write the word “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Free tax usa 2012 If filing a joint return, write the name and address of the decedent and the surviving spouse in the name and address fields. Free tax usa 2012 If a joint return is not being filed, write the decedent's name in the name field and the personal representative's name and address in the address field. Free tax usa 2012 Third party designee. Free tax usa 2012   You can check the “Yes” box in the Third Party Designee area on page 2 of the return to authorize the IRS to discuss the return with a friend, family member, or any other person you choose. Free tax usa 2012 This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the processing of the return. Free tax usa 2012 It also allows the designee to perform certain actions. Free tax usa 2012 See the Instructions for Form 1040 for details. Free tax usa 2012 Signature. Free tax usa 2012   If a personal representative has been appointed, that person must sign the return. Free tax usa 2012 If it is a joint return, the surviving spouse must also sign it. Free tax usa 2012 If no personal representative has been appointed, the surviving spouse (on a joint return) signs the return and writes in the signature area “Filing as surviving spouse. Free tax usa 2012 ” If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. Free tax usa 2012 ” Paid preparer. Free tax usa 2012   If you pay someone to prepare, assist in preparing, or review the tax return, that person must sign the return and fill in the other blanks in the Paid Preparer Use Only area of the return. Free tax usa 2012 See the Form 1040 instructions for details. Free tax usa 2012 When and Where To File The final income tax return is due at the same time the decedent's return would have been due had death not occurred. Free tax usa 2012 A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. Free tax usa 2012 However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the next business day. Free tax usa 2012 The tax return must be prepared for the year of death regardless of when during the year death occurred. Free tax usa 2012 Generally, you must file the final income tax return of the decedent with the Internal Revenue Service Center for the place where you live. Free tax usa 2012 A tax return for a decedent can be electronically filed. Free tax usa 2012 A personal representative may also obtain an income tax filing extension on behalf of a decedent. Free tax usa 2012 Filing Requirements The gross income, age, and filing status of a decedent generally determine whether a return must be filed. Free tax usa 2012 Gross income is all income received by an individual from any source in the form of money, goods, property, and services that is not tax-exempt. Free tax usa 2012 It includes gross receipts from self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods sold. Free tax usa 2012 In general, filing status depends on whether the decedent was considered single or married at the time of death. Free tax usa 2012 See the income tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. Free tax usa 2012 Refund A return must be filed to obtain a refund if tax was withheld from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return is not otherwise required to be filed. Free tax usa 2012 Also, the decedent may be entitled to other credits that result in a refund. Free tax usa 2012 These advance payments of tax and credits are discussed later under Credits, Other Taxes, and Payments. Free tax usa 2012 Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Free tax usa 2012   Form 1310 does not have to be filed if you are claiming a refund and you are: A surviving spouse filing an original or amended joint return with the decedent, or A court-appointed or certified personal representative filing the decedent’s original return and a copy of the court certificate showing your appointment is attached to the return. Free tax usa 2012   If the personal representative is filing a claim for refund on Form 1040X, Amended U. Free tax usa 2012 S. Free tax usa 2012 Individual Income Tax Return, or Form 843, Claim for Refund and Request for Abatement, and the court certificate has already been filed with the IRS, attach Form 1310 and write “Certificate Previously Filed” at the bottom of the form. Free tax usa 2012 Example. Free tax usa 2012 Edward Green died before filing his tax return. Free tax usa 2012 You were appointed the personal representative for Edward's estate, and you file his Form 1040 showing a refund due. Free tax usa 2012 You do not need Form 1310 to claim the refund if you attach a copy of the court certificate showing you were appointed the personal representative. Free tax usa 2012    If you are a surviving spouse and you receive a tax refund check in both your name and your deceased spouse's name, you can have the check reissued in your name alone. Free tax usa 2012 Return the joint-name check marked “VOID” to your local IRS office or the service center where you mailed your return, along with a written request for reissuance of the refund check. Free tax usa 2012 A new check will be issued in your name and mailed to you. Free tax usa 2012 Death certificate. Free tax usa 2012   When filing the decedent's final income tax return, do not attach the death certificate or other proof of death to the final return. Free tax usa 2012 Instead, keep it for your records and provide it if requested. Free tax usa 2012 Nonresident Alien If the decedent was a nonresident alien who would have had to file Form 1040NR, U. Free tax usa 2012 S. Free tax usa 2012 Nonresident Alien Income Tax Return, you must file that form for the decedent's final tax year. Free tax usa 2012 See the Instructions for Form 1040NR for the filing requirements, due date, and where to file. Free tax usa 2012 Joint Return Generally, the personal representative and the surviving spouse can file a joint return for the decedent and the surviving spouse. Free tax usa 2012 However, the surviving spouse alone can file the joint return if no personal representative has been appointed before the due date for filing the final joint return for the year of death. Free tax usa 2012 This also applies to the return for the preceding year if the decedent died after the close of the preceding tax year and before filing the return for that year. Free tax usa 2012 The income of the decedent that was includible on his or her return for the year up to the date of death (see Income To Include, later) and the income of the surviving spouse for the entire year must be included in the final joint return. Free tax usa 2012 A final joint return with the decedent cannot be filed if the surviving spouse remarried before the end of the year of the decedent's death. Free tax usa 2012 The filing status of the decedent in this instance is married filing a separate return. Free tax usa 2012 For information about tax benefits to which a surviving spouse may be entitled, see Tax Benefits for Survivors, later, under Other Tax Information. Free tax usa 2012 Personal representative may revoke joint return election. Free tax usa 2012   A court-appointed personal representative may revoke an election to file a joint return previously made by the surviving spouse alone. Free tax usa 2012 This is done by filing a separate return for the decedent within one year from the due date of the return (including any extensions). Free tax usa 2012 The joint return made by the surviving spouse will then be regarded as the separate return of that spouse by excluding the decedent's items and refiguring the tax liability. Free tax usa 2012 Relief from joint liability. Free tax usa 2012   In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Free tax usa 2012 If the decedent qualified for this relief while alive, the personal representative can pursue an existing request, or file a request, for relief from joint liability. Free tax usa 2012 For information on requesting this relief, see Publication 971, Innocent Spouse Relief. Free tax usa 2012 Income To Include The decedent's income includible on the final return is generally determined as if the person were still alive except that the taxable period is usually shorter because it ends on the date of death. Free tax usa 2012 The method of accounting regularly used by the decedent before death also determines the income includible on the final return. Free tax usa 2012 This section explains how some types of income are reported on the final return. Free tax usa 2012 For more information about accounting methods, see Publication 538, Accounting Periods and Methods. Free tax usa 2012 Cash Method If the decedent accounted for income under the cash method, only those items actually or constructively received before death are included on the final return. Free tax usa 2012 Constructive receipt of income. Free tax usa 2012   Interest from coupons on the decedent's bonds is constructively received by the decedent if the coupons matured in the decedent's final tax year, but had not been cashed. Free tax usa 2012 Include the interest income on the final return. Free tax usa 2012   Generally, a dividend is considered constructively received if it was available for use by the decedent without restriction. Free tax usa 2012 If the corporation customarily mailed its dividend checks, the dividend was includible when received. Free tax usa 2012 If the individual died between the time the dividend was declared and the time it was received in the mail, the decedent did not constructively receive it before death. Free tax usa 2012 Do not include the dividend in the final return. Free tax usa 2012 Accrual Method Generally, under an accrual method of accounting, income is reported when earned. Free tax usa 2012 If the decedent used an accrual method, only the income items normally accrued before death are included on the final return. Free tax usa 2012 Interest and Dividend Income (Forms 1099) Form(s) 1099 reporting interest and dividends earned by the decedent before death should be received and the amounts included on the decedent's final return. Free tax usa 2012 A separate Form 1099 should show the interest and dividends earned after the date of the decedent's death and paid to the estate or other recipient that must include those amounts on its return. Free tax usa 2012 You can request corrected Forms 1099 if these forms do not properly reflect the right recipient or amounts. Free tax usa 2012 For example, a Form 1099-INT, reporting interest payable to the decedent, may include income that should be reported on the final income tax return of the decedent, as well as income that the estate or other recipient should report, either as income earned after death or as income in respect of the decedent (discussed later). Free tax usa 2012 For income earned after death, you should ask the payer for a Form 1099 that properly identifies the recipient (by name and identification number) and the proper amount. Free tax usa 2012 If that is not possible, or if the form includes an amount that represents income in respect of the decedent, report the interest as shown next under How to report. Free tax usa 2012 See U. Free tax usa 2012 S. Free tax usa 2012 savings bonds acquired from decedent under Income in Respect of a Decedent, later, for information on savings bond interest that may have to be reported on the final return. Free tax usa 2012 How to report. Free tax usa 2012   If you are preparing the decedent's final return and you have received a Form 1099-INT for the decedent that includes amounts belonging to the decedent and to another recipient (the decedent's estate or another beneficiary), report the total interest shown on Form 1099-INT on Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. Free tax usa 2012 Next, enter a subtotal of the interest shown on Forms 1099, and the interest reportable from other sources for which you did not receive Forms 1099. Free tax usa 2012 Then, show any interest (including any interest you receive as a nominee) belonging to another recipient separately and subtract it from the subtotal. Free tax usa 2012 Identify the amount of this adjustment as “Nominee Distribution” or other appropriate designation. Free tax usa 2012   Report dividend income for which you received a Form 1099-DIV, Dividends and Distributions, on the appropriate schedule using the same procedure. Free tax usa 2012    Note. Free tax usa 2012 If the decedent received amounts as a nominee, you must give the actual owner a Form 1099, unless the owner is the decedent's spouse. Free tax usa 2012 See General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) for more information on filing Forms 1099. Free tax usa 2012 Partnership Income The death of a partner closes the partnership's tax year for that partner. Free tax usa 2012 Generally, it does not close the partnership's tax year for the remaining partners. Free tax usa 2012 The decedent's distributive share of partnership items must be figured as if the partnership's tax year ended on the date the partner died. Free tax usa 2012 To avoid an interim closing of the partnership books, the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would have included for the entire partnership tax year. Free tax usa 2012 On the decedent's final return, include the decedent's distributive share of partnership items for the following periods. Free tax usa 2012 The partnership's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). Free tax usa 2012 The period, if any, from the end of the partnership's tax year in (1) to the decedent's date of death. Free tax usa 2012 Example. Free tax usa 2012 Mary Smith was a partner in XYZ partnership and reported her income on a tax year ending December 31. Free tax usa 2012 The partnership uses a tax year ending June 30. Free tax usa 2012 Mary died August 31, 2013, and her estate established its tax year through August 31. Free tax usa 2012 The distributive share of partnership items based on the decedent's partnership interest is reported as follows. Free tax usa 2012 Final Return for the Decedent—January 1 through August 31, 2013, includes XYZ partnership items from (a) the partnership tax year ending June 30, 2013, and (b) the partnership tax year beginning July 1, 2013, and ending August 31, 2013 (the date of death). Free tax usa 2012 Income Tax Return of the Estate—September 1, 2013, through August 31, 2014, includes XYZ partnership items for the period September 1, 2013, through June 30, 2014. Free tax usa 2012 S Corporation Income If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for the following periods. Free tax usa 2012 The corporation's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). Free tax usa 2012 The period, if any, from the end of the corporation's tax year in (1) to the decedent's date of death. Free tax usa 2012 Self-Employment Income Include self-employment income actually or constructively received or accrued, depending on the decedent's accounting method. Free tax usa 2012 For self-employment tax purposes only, the decedent's self-employment income will include the decedent's distributive share of a partnership's income or loss through the end of the month in which death occurred. Free tax usa 2012 For this purpose, the partnership's income or loss is considered to be earned ratably over the partnership's tax year. Free tax usa 2012 Community Income If the decedent was married and domiciled in a community property state, half of the income received and half of the expenses paid during the decedent's tax year by either the decedent or spouse may be considered to be the income and expenses of the other. Free tax usa 2012 For more information, see Publication 555, Community Property. Free tax usa 2012 HSA, Archer MSA, or Medicare Advantage MSA The treatment of an HSA (health savings account), an Archer MSA (medical savings account), or a Medicare Advantage MSA at the death of the account holder, depends on who acquires the interest in the account. Free tax usa 2012 If the decedent's estate acquires the interest, the fair market value (FMV) of the assets in the account on the date of death is included in income on the decedent's final return. Free tax usa 2012 The estate tax deduction, discussed later, does not apply to this amount. Free tax usa 2012 If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. Free tax usa 2012 For other information on HSAs, Archer MSAs, or Medicare Advantage MSAs, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Free tax usa 2012 Coverdell Education Savings Account (ESA) Generally, the balance in a Coverdell ESA must be distributed within 30 days after the individual for whom the account was established reaches age 30, or dies, whichever is earlier. Free tax usa 2012 The treatment of the Coverdell ESA at the death of an individual under age 30 depends on who acquires the interest in the account. Free tax usa 2012 If the decedent's estate acquires the interest, the earnings on the account must be included on the final income tax return of the decedent. Free tax usa 2012 The estate tax deduction, discussed later, does not apply to this amount. Free tax usa 2012 If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. Free tax usa 2012 The age 30 limitation does not apply if the individual for whom the account was established or the beneficiary that acquires the account is an individual with special needs. Free tax usa 2012 This includes an individual who, because of a physical, mental, or emotional condition (including a learning disability), requires additional time to complete his or her education. Free tax usa 2012 For more information on Coverdell ESAs, see Publication 970, Tax Benefits for Education. Free tax usa 2012 Accelerated Death Benefits Accelerated death benefits are amounts received under a life insurance contract before the death of the insured individual. Free tax usa 2012 These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Free tax usa 2012 Generally, if the decedent received accelerated death benefits on the life of a terminally or chronically ill individual, whether on his or her own life or on the life of another person, those benefits are not included in the decedent's income. Free tax usa 2012 For more information, see the discussion under Gifts, Insurance, and Inheritances under Other Tax Information, later. Free tax usa 2012 Exemptions and Deductions Generally, the rules for exemptions and deductions allowed to an individual also apply to the decedent's final income tax return. Free tax usa 2012 Show on the final return deductible items the decedent paid (or accrued, if the decedent reported deductions on an accrual method) before death. Free tax usa 2012 This section contains a detailed discussion of medical expenses because the tax treatment of the decedent's medical expenses can be different. Free tax usa 2012 See Medical Expenses, later. Free tax usa 2012 Exemptions You can claim the decedent's personal exemption on the final income tax return. Free tax usa 2012 If the decedent was another person's dependent (for example, a parent's), you cannot claim the personal exemption on the decedent's final return. Free tax usa 2012 Standard Deduction If you do not itemize deductions on the final return, the full amount of the appropriate standard deduction is allowed regardless of the date of death. Free tax usa 2012 For information on the appropriate standard deduction, see the Form 1040 income tax return instructions or Publication 501. Free tax usa 2012 Medical Expenses Medical expenses paid before death by the decedent are deductible, subject to limits, on the final income tax return if deductions are itemized. Free tax usa 2012 This includes expenses for the decedent, as well as for the decedent's spouse and dependents. Free tax usa 2012 Beginning in 2013, medical expenses exceeding 10% of adjusted gross income (AGI) may be deducted, unless the decedent or their spouse is age 65 or older. Free tax usa 2012 In that case medical expenses exceeding 7. Free tax usa 2012 5% of AGI may be deducted. Free tax usa 2012 Qualified medical expenses are not deductible if paid with a tax-free distribution from an HSA or an Archer MSA. Free tax usa 2012 Election for decedent's expenses. Free tax usa 2012   Medical expenses not paid before death are liabilities of the estate and are shown on the federal estate tax return (Form 706). Free tax usa 2012 However, if medical expenses for the decedent are paid out of the estate during the 1-year period beginning with the day after death, you can elect to treat all or part of the expenses as paid by the decedent at the time they were incurred. Free tax usa 2012   If you make the election, you can claim all or part of the expenses on the decedent's income tax return (if deductions are itemized) rather than on the federal estate tax return (Form 706). Free tax usa 2012 You can deduct expenses incurred in the year of death on the final income tax return. Free tax usa 2012 You should file an amended return (Form 1040X) for medical expenses incurred in an earlier year, unless the statutory period for filing a claim for that year has expired. Free tax usa 2012   The amount you can deduct on the income tax return is the amount above 10% of adjusted gross income (or 7. Free tax usa 2012 5% of adjusted gross income if the decedent or the decedent's spouse was born before January 2, 1949). Free tax usa 2012 Amounts not deductible because of this percentage cannot be claimed on the federal estate tax return. Free tax usa 2012 Making the election. Free tax usa 2012   You make the election by attaching a statement, in duplicate, to the decedent's income tax return or amended return. Free tax usa 2012 The statement must state that you have not claimed the amount as an estate tax deduction, and that the estate waives the right to claim the amount as a deduction. Free tax usa 2012 This election applies only to expenses incurred for the decedent, not to expenses incurred to provide medical care for dependents. Free tax usa 2012 Example. Free tax usa 2012 Richard Brown used the cash method of accounting and filed his income tax return on a calendar year basis. Free tax usa 2012 Richard died on June 1, 2013, at the age of 78, after incurring $800 in medical expenses. Free tax usa 2012 Of that amount, $500 was incurred in 2012 and $300 was incurred in 2013. Free tax usa 2012 Richard itemized his deductions when he filed his 2012 income tax return. Free tax usa 2012 The personal representative of the estate paid the entire $800 liability in August 2013. Free tax usa 2012 The personal representative may file an amended return (Form 1040X) for 2012 claiming the $500 medical expense as a deduction, subject to the 7. Free tax usa 2012 5% limit. Free tax usa 2012 The $300 of expenses incurred in 2013 can be deducted on the final income tax return if deductions are itemized, subject to the 7. Free tax usa 2012 5% limit. Free tax usa 2012 The personal representative must file a statement in duplicate with each return stating that these amounts have not been claimed on the federal estate tax return (Form 706), and waiving the right to claim such a deduction on Form 706 in the future. Free tax usa 2012 Medical expenses not paid by estate. Free tax usa 2012   If you paid medical expenses for your deceased spouse or dependent, claim the expenses on your tax return for the year in which you paid them, whether they are paid before or after the decedent's death. Free tax usa 2012 If the decedent was a child of divorced or separated parents, the medical expenses can usually be claimed by both the custodial and noncustodial parent to the extent paid by that parent during the year. Free tax usa 2012 Insurance reimbursements. Free tax usa 2012   Insurance reimbursements of previously deducted medical expenses due a decedent at the time of death and later received by the decedent's estate are includible in the income tax return of the estate (Form 1041) for the year the reimbursements are received. Free tax usa 2012 The reimbursements are also includible in the decedent's gross estate. Free tax usa 2012 No deduction for funeral expenses can be taken on the final Form 1040 of a decedent. Free tax usa 2012 These expenses may be deductible for estate tax purposes on Form 706. Free tax usa 2012 Deduction for Losses A decedent's net operating loss deduction from a prior year and any capital losses (including capital loss carryovers) can be deducted only on the decedent's final income tax return. Free tax usa 2012 A net operating loss on the decedent's final income tax return can be carried back to prior years. Free tax usa 2012 (See Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Free tax usa 2012 ) You cannot deduct any unused net operating loss or capital loss on the estate's income tax return. Free tax usa 2012 At-risk loss limits. Free tax usa 2012   Special at-risk rules apply to most activities that are engaged in as a trade or business or for the production of income. Free tax usa 2012   These rules limit the deductible loss to the amount which the individual was considered at-risk in the activity. Free tax usa 2012 An individual generally will be considered at-risk to the extent of the money and the adjusted basis of property that he or she contributed to the activity and certain amounts the individual borrowed for use in the activity. Free tax usa 2012 An individual will be considered at-risk for amounts borrowed only if he or she was personally liable for the repayment or if the amounts borrowed were secured by property other than that used in the activity. Free tax usa 2012 The individual is not considered at-risk for borrowed amounts if the lender has an interest in the activity or if the lender is related to a person who has an interest in the activity. Free tax usa 2012 For more information, see Publication 925, Passive Activity and At-Risk Rules. Free tax usa 2012 Passive activity rules. Free tax usa 2012   A passive activity is any trade or business activity in which the taxpayer does not materially participate. Free tax usa 2012 To determine material participation, see Publication 925. Free tax usa 2012 Rental activities are passive activities regardless of the taxpayer's participation, unless the taxpayer meets certain eligibility requirements. Free tax usa 2012   Individuals, estates, and trusts can offset passive activity losses only against passive activity income. Free tax usa 2012 Passive activity losses or credits not allowed in one tax year can be carried forward to the next year. Free tax usa 2012   If a passive activity interest is transferred because a taxpayer dies, the accumulated unused passive activity losses are allowed as a deduction against the decedent's income in the year of death. Free tax usa 2012 Losses are allowed only to the extent they are greater than the excess of the transferee's (recipient of the interest transferred) basis in the property over the decedent's adjusted basis in the property immediately before death. Free tax usa 2012 The part of the accumulated losses equal to the excess is not allowed as a deduction for any tax year. Free tax usa 2012   Use Form 8582, Passive Activity Loss Limitations, to summarize losses and income from passive activities and to figure the amounts allowed. Free tax usa 2012 For more information, see Publication 925. Free tax usa 2012 Credits, Other Taxes, and Payments Discussed below are some of the tax credits, types of taxes that may be owed, income tax withheld, and estimated tax payments reported on the final return of a decedent. Free tax usa 2012 Credits On the final income tax return, you can claim any tax credits that applied to the decedent before death. Free tax usa 2012 Some of these credits are discussed next. Free tax usa 2012 Earned income credit. Free tax usa 2012   If the decedent was an eligible individual, you can claim the earned income credit on the decedent's final return even though the return covers less than 12 months. Free tax usa 2012 If the allowable credit is more than the tax liability for the year, the excess is refunded. Free tax usa 2012   For more information, see Publication 596, Earned Income Credit (EIC). Free tax usa 2012 Credit for the elderly or the disabled. Free tax usa 2012   This credit is allowable on a decedent's final income tax return if the decedent met both of the following requirements in the year of death. Free tax usa 2012 The decedent: Was a “qualified individual,” and Had income (adjusted gross income (AGI) and nontaxable social security and pensions) less than certain limits. Free tax usa 2012   For details on qualifying for or figuring the credit, see Publication 524, Credit for the Elderly or the Disabled. Free tax usa 2012 Child tax credit. Free tax usa 2012   If the decedent had a qualifying child, you may be able to claim the child tax credit on the decedent's final return even though the return covers less than 12 months. Free tax usa 2012 You may be able to claim the additional child tax credit and get a refund if the credit is more than the decedent's liability. Free tax usa 2012 For more information, see the Instructions for Form 1040. Free tax usa 2012 Adoption credit. Free tax usa 2012   Depending upon when the adoption was finalized, this credit may be taken on a decedent's final income tax return if the decedent: Adopted an eligible child and paid qualified adoption expenses, or Has a carryforward of an adoption credit from a prior year. Free tax usa 2012   Also, if the decedent is survived by a spouse who meets the filing status of qualifying widow(er), unused adoption credit may be carried forward and used following the death of the decedent. Free tax usa 2012 See Form 8839, Qualified Adoption Expenses, and its instructions for more details. Free tax usa 2012 General business tax credit. Free tax usa 2012   The general business credit available to a taxpayer is limited. Free tax usa 2012 Any credit arising in a tax year beginning before 1998 that has not been used up can be carried forward for up to 15 years. Free tax usa 2012 Any unused credit arising in a tax year beginning after 1997 has a 1-year carryback and a 20-year carryforward period. Free tax usa 2012   After the carryforward period, a deduction may be allowed for any unused business credit. Free tax usa 2012 If the taxpayer dies before the end of the carryforward period, the deduction generally is allowed in the year of death. Free tax usa 2012   For more information on the general business credit, see Publication 334, Tax Guide for Small Business. Free tax usa 2012 Other Taxes Taxes other than income tax that may be owed on the final return of a decedent include self-employment tax and alternative minimum tax, which are reported on Form 1040. Free tax usa 2012 Self-employment tax. Free tax usa 2012   Self-employment tax may be owed on the final return if either of the following applied to the decedent in the year of death: Net earnings from self-employment (excluding income described in (2)) were $400 or more; or Wages from services performed as a church employee were $108. Free tax usa 2012 28 or more. Free tax usa 2012 Alternative minimum tax (AMT). Free tax usa 2012   The tax laws give special treatment to certain types of income and allow special deductions and credits for certain types of expenses. Free tax usa 2012 The alternative minimum tax (AMT) was enacted so taxpayers who benefit from these laws still pay at least a minimum amount of tax. Free tax usa 2012 In general, the AMT is the excess of the tentative minimum tax over the regular tax shown on the return. Free tax usa 2012 Form 6251. Free tax usa 2012    Use Form 6251, Alternative Minimum Tax—Individuals, to determine if this tax applies to the decedent. Free tax usa 2012 See the form instructions for information on when you must attach Form 6251 to Form 1040. Free tax usa 2012 Form 8801. Free tax usa 2012   If the decedent paid AMT in a previous year or had a credit carryforward, the decedent may be eligible for a minimum tax credit. Free tax usa 2012 See Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts. Free tax usa 2012 Payments of Tax The income tax withheld from the decedent's salary, wages, pensions, or annuities, and the amount paid as estimated tax are credits (advance payments of tax) that must be claimed on the final return. Free tax usa 2012 Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Income tax liability may be forgiven for a decedent who dies due to service in a combat zone, due to military or terrorist actions, as a result of a terrorist attack, or while serving in the line of duty as an astronaut. Free tax usa 2012 Combat Zone If a member of the Armed Forces of the United States dies while in active service in a combat zone or from wounds, disease, or injury incurred in a combat zone, the decedent's income tax liability is abated (forgiven) for the entire year in which death occurred and for any prior tax year ending on or after the first day the person served in a combat zone in active service. Free tax usa 2012 For this purpose, a qualified hazardous duty area is treated as a combat zone. Free tax usa 2012 If the tax (including interest, additions to the tax, and additional amounts) for these years has been assessed, the assessment will be forgiven. Free tax usa 2012 If the tax has been collected (regardless of the date of collection), that tax will be credited or refunded. Free tax usa 2012 Any of the decedent's income tax for tax years before those mentioned above that remains unpaid as of the actual (or presumptive) date of death will not be assessed. Free tax usa 2012 If any unpaid tax (including interest, additions to the tax, and additional amounts) has been assessed, this assessment will be forgiven. Free tax usa 2012 Also, if any tax was collected after the date of death, that amount will be credited or refunded. Free tax usa 2012 The date of death of a member of the Armed Forces reported as missing in action or as a prisoner of war is the date his or her name is removed from missing status for military pay purposes. Free tax usa 2012 This is true even if death actually occurred earlier. Free tax usa 2012 For other tax information for members of the Armed Forces, see Publication 3, Armed Forces' Tax Guide. Free tax usa 2012 Military or Terrorist Actions The decedent's income tax liability is forgiven if, at death, he or she was a military or civilian employee of the United States who died because of wounds or injury incurred: While a U. Free tax usa 2012 S. Free tax usa 2012 employee, and In a military or terrorist action. Free tax usa 2012 The forgiveness applies to the tax year in which death occurred and for any earlier tax year, beginning with the year before the year in which the wounds or injury occurred. Free tax usa 2012 Example. Free tax usa 2012 The income tax liability of a civilian employee of the United States who died in 2013 because of wounds incurred while a U. Free tax usa 2012 S. Free tax usa 2012 employee in a terrorist attack that occurred in 2008 will be forgiven for 2013 and for all prior tax years in the period 2007 through 2012. Free tax usa 2012 Refunds are allowed for the tax years for which the period for filing a claim for refund has not ended, as discussed later. Free tax usa 2012 Military or terrorist action defined. Free tax usa 2012   A military or terrorist action means the following. Free tax usa 2012 Any terrorist activity that most of the evidence indicates was directed against the United States or any of its allies. Free tax usa 2012 Any military action involving the U. Free tax usa 2012 S. Free tax usa 2012 Armed Forces and resulting from violence or aggression against the United States or any of its allies, or the threat of such violence or aggression. Free tax usa 2012   Terrorist activity includes criminal offenses intended to coerce, intimidate, or retaliate against the government or civilian population. Free tax usa 2012 Military action does not include training exercises. Free tax usa 2012 Any multinational force in which the United States is participating is treated as an ally of the United States. Free tax usa 2012 Determining if a terrorist activity or military action has occurred. Free tax usa 2012   You may rely on published guidance from the IRS to determine if a particular event is considered a terrorist activity or military action. Free tax usa 2012 Specified Terrorist Victim The Victims of Terrorism Tax Relief Act of 2001 (the Act) provides tax relief for those injured or killed as a result of terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by terrorist attacks. Free tax usa 2012 Under the Act, the federal income tax liability of those killed in the following attacks (specified terrorist victim) is forgiven for certain tax years. Free tax usa 2012 The April 19, 1995, terrorist attack on the Alfred P. Free tax usa 2012 Murrah Federal Building (Oklahoma City). Free tax usa 2012 The September 11, 2001, terrorist attacks. Free tax usa 2012 The terrorist attacks involving anthrax occurring after September 10, 2001, and before January 1, 2002. Free tax usa 2012 The Act also exempts from federal income tax the following types of income. Free tax usa 2012 Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack. Free tax usa 2012 Certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in a terrorist attack. Free tax usa 2012 Certain death benefits paid by an employer to the survivor of an employee because the employee died as a result of a terrorist attack. Free tax usa 2012 Payments from the September 11th Victim Compensation Fund 2001. Free tax usa 2012 The Act also reduces the estate tax of individuals who die as a result of a terrorist attack. Free tax usa 2012 See Publication 3920, Tax Relief for Victims of Terrorist Attacks, for more information. Free tax usa 2012 Astronauts Legislation extended the tax relief available under the Victims of Terrorism Tax Relief Act of 2001 (the Act) to astronauts who died in the line of duty after December 31, 2002. Free tax usa 2012 The decedent's income tax liability is forgiven for the tax year in which death occurs, and for the tax year prior to death. Free tax usa 2012 For information on death benefit payments and the reduction of federal estate taxes, see Publication 3920. Free tax usa 2012 However, the discussions in that publication under Death Benefits and Estate Tax Reduction should be modified for astronauts (for example, by using the date of death of the astronaut instead of September 11, 2001). Free tax usa 2012 For more information on the Act, see Publication 3920. Free tax usa 2012 Claim for Credit or Refund If any of these tax-forgiveness situations applies to a prior year tax, any tax paid for which the period for filing a claim has not ended will be credited or refunded. Free tax usa 2012 If any tax is still due, it will be canceled. Free tax usa 2012 The normal period for filing a claim for credit or refund is 3 years after the return was filed or 2 years after the tax was paid, whichever is later. Free tax usa 2012 If death occurred in a combat zone or from wounds, disease, or injury incurred in a combat zone, the period for filing the claim is extended by: The amount of time served in the combat zone (including any period in which the individual was in missing status), plus The period of continuous qualified hospitalization for injury from service in the combat zone, if any, plus The next 180 days. Free tax usa 2012 Qualified hospitalization means any hospitalization outside the United States and any hospitalization in the United States of not more than 5 years. Free tax usa 2012 This extended period for filing the claim also applies to a member of the Armed Forces who was deployed outside the United States in a designated contingency operation. Free tax usa 2012 Filing a claim. Free tax usa 2012   Use the following procedures to file a claim. Free tax usa 2012 If a U. Free tax usa 2012 S. Free tax usa 2012 individual income tax return (Form 1040, 1040A, or 1040EZ) has not been filed, you should make a claim for refund of any withheld income tax or estimated tax payments by filing Form 1040. Free tax usa 2012 Form W-2, Wage and Tax Statement, must accompany all returns. Free tax usa 2012 If a U. Free tax usa 2012 S. Free tax usa 2012 individual income tax return has been filed, you should make a claim for refund by filing Form 1040X. Free tax usa 2012 You must file a separate Form 1040X for each year in question. Free tax usa 2012   You must file these returns and claims at the following address for regular mail (U. Free tax usa 2012 S. Free tax usa 2012 Postal Service). Free tax usa 2012    Internal Revenue Service 333 W. Free tax usa 2012 Pershing, P5–6503 Kansas City, MO 64108   Identify all returns and claims for refund by writing “Iraq—KIA,” “Enduring Freedom—KIA,” “Kosovo Operation—KIA,” “Desert Storm—KIA,” or “Former Yugoslavia—KIA” in bold letters on the top of page 1 of the return or claim. Free tax usa 2012 On the applicable return, write the same phrase on the line for total tax. Free tax usa 2012 If the individual was killed in a terrorist or military action, put “KITA” on the front of the return and on the line for total tax. Free tax usa 2012   Include an attachment showing the computation of the decedent's tax liability and a computation of the amount to be forgiven. Free tax usa 2012 On joint returns, make an allocation of the tax as described below under Joint returns. Free tax usa 2012 If you cannot make a proper allocation, attach a statement of all income and deductions allocable to each spouse and the IRS will make the proper allocation. Free tax usa 2012   You must attach Form 1310 to all returns and claims for refund. Free tax usa 2012 However, for exceptions to filing Form 1310, see Form 1310. Free tax usa 2012 Statement of Person Claiming Refund Due a Deceased Taxpayer, under Refund, earlier. Free tax usa 2012   You must also attach proof of death that includes a statement that the individual was a U. Free tax usa 2012 S. Free tax usa 2012 employee on the date of injury and on the date of death and died as the result of a military or terrorist action. Free tax usa 2012 For military and civilian employees of the Department of Defense, attach DD Form 1300, Report of Casualty. Free tax usa 2012 For other U. Free tax usa 2012 S. Free tax usa 2012 civilian employees killed in the United States, attach a death certificate and a certification (letter) from the federal employer. Free tax usa 2012 For other U. Free tax usa 2012 S. Free tax usa 2012 civilian employees killed overseas, attach a certification from the Department of State. Free tax usa 2012   If you do not have enough tax information to file a timely claim for refund, you can suspend the period for filing a claim by filing Form 1040X. Free tax usa 2012 Attach Form 1310, any required documentation currently available, and a statement that you will file an amended claim as soon as you have the required tax information. Free tax usa 2012 Joint returns. Free tax usa 2012   If a joint return was filed, only the decedent's part of the income tax liability is eligible for forgiveness. Free tax usa 2012 Determine the decedent's tax liability as follows. Free tax usa 2012 Figure the income tax for which the decedent would have been liable if a separate return had been filed. Free tax usa 2012 Figure the income tax for which the spouse would have been liable if a separate return had been filed. Free tax usa 2012 Multiply the joint tax liability by a fraction. Free tax usa 2012 The numerator of the fraction is the amount in (1), above. Free tax usa 2012 The denominator of the fraction is the total of (1) and (2). Free tax usa 2012   The resulting amount from (3) above is the decedent's tax liability eligible for forgiveness. Free tax usa 2012 Filing Reminders To minimize the time needed to process the decedent's final return and issue any refund, be sure to follow these procedures. Free tax usa 2012 Write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Free tax usa 2012 If a personal representative has been appointed, the personal representative must sign the return. Free tax usa 2012 If it is a joint return, the surviving spouse must also sign it. Free tax usa 2012 If you are the decedent's spouse filing a joint return with the decedent and no personal representative has been appointed, write “Filing as surviving spouse” in the area where you sign the return. Free tax usa 2012 If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. Free tax usa 2012 ” To claim a refund for the decedent, do the following. Free tax usa 2012 If you are the decedent's spouse filing a joint return with the decedent, file only the tax return to claim the refund. Free tax usa 2012 If you are the personal representative and the return is not a joint return filed with the decedent's surviving spouse, file the return and attach a copy of the certificate that shows your appointment by the court. Free tax usa 2012 (A power of attorney or a copy of the decedent's will is not acceptable evidence of your appointment as the personal representative. Free tax usa 2012 ) If you are filing an amended return, attach Form 1310 and a copy of the certificate of appointment (or, if you have already sent the certificate of appointment to IRS, write “Certificate Previously Filed” at the bottom of Form 1310). Free tax usa 2012 If you are not filing a joint return as the surviving spouse and a personal representative has not been appointed, file the return and attach Form 1310. Free tax usa 2012 Other Tax Information Discussed below is information about the effect of an individual's death on the income tax liability of the survivors (including widows and widowers), the beneficiaries, and the estate. Free tax usa 2012 Tax Benefits for Survivors Survivors can qualify for certain benefits when filing their own income tax returns. Free tax usa 2012 Joint return by surviving spouse. Free tax usa 2012   A surviving spouse can file a joint return for the year of death and may qualify for special tax rates for the following 2 years, as explained under Qualifying widows and widowers, later. Free tax usa 2012 Decedent as your dependent. Free tax usa 2012   If the decedent qualified as your dependent for a part of the year before death, you can claim the exemption for the dependent on your tax return, regardless of when death occurred during the year. Free tax usa 2012   If the decedent was your qualifying child, you may be able to claim the child tax credit or the earned income credit. Free tax usa 2012 To determine if you qualify for the child tax credit, see the instructions for Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 48. Free tax usa 2012 To determine if you qualify for the earned income credit, see the instructions for Form 1040, lines 64a and 64b or Form 1040A, lines 38a and 38b. Free tax usa 2012 Qualifying widows and widowers. Free tax usa 2012   If your spouse died within the 2 tax years preceding the year for which your return is being filed, you may be eligible to claim the filing status of qualifying widow(er) with dependent child and qualify to use the married-filing-jointly tax rates. Free tax usa 2012 Requirements. Free tax usa 2012   Generally, you qualify for this special benefit if you meet all of the following requirements. Free tax usa 2012 You were entitled to file a joint return with your spouse for the year of death—whether or not you actually filed jointly. Free tax usa 2012 You did not remarry before the end of the current tax year. Free tax usa 2012 You have a child, stepchild, or foster child who qualifies as your dependent for the tax year. Free tax usa 2012 You provide more than half the cost of maintaining your home, which is the principal residence of that child for the entire year except for temporary absences. Free tax usa 2012 Example. Free tax usa 2012 William Burns' wife died in 2010. Free tax usa 2012 William has not remarried and continued throughout 2011 and 2012 to maintain a home for himself and his dependent child. Free tax usa 2012 For 2010, he was entitled to file a joint return for himself and his deceased wife. Free tax usa 2012 For 2011 and 2012, he qualifies to file as a qualifying widower with dependent child. Free tax usa 2012 For later years, he may qualify to file as a head of household. Free tax usa 2012 Figuring your tax. Free tax usa 2012   Check the box on line 5 (Form 1040 or 1040A) under Filing Status on your tax return. Free tax usa 2012 Use the Tax Rate Schedule or the column in the Tax Table for Married filing jointly, which gives you the split-income benefits. Free tax usa 2012   The last year you can file jointly with, or claim an exemption for, your deceased spouse is the year of death. Free tax usa 2012 Joint return filing rules. Free tax usa 2012   If you are the surviving spouse and a personal representative is handling the estate for the decedent, you should coordinate filing your return for the year of death with this personal representative. Free tax usa 2012 See Joint Return under Final Income Tax Return for Decedent—Form 1040, earlier. Free tax usa 2012 Income in Respect of a Decedent All income the decedent would have received had death not occurred that was not properly includible on the final return, discussed earlier, is income in respect of a decedent. Free tax usa 2012 If the decedent is a specified terrorist victim (see Specified Terrorist Victim, earlier), income received after the date of death and before the end of the decedent's tax year (determined without regard to death) is excluded from the recipient's gross income. Free tax usa 2012 This exclusion does not apply to certain income. Free tax usa 2012 For more information, see Publication 3920. Free tax usa 2012 How To Report Income in respect of a decedent must be included in the income of one of the following. Free tax usa 2012 The decedent's estate, if the estate receives it. Free tax usa 2012 The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it. Free tax usa 2012 Any person to whom the estate properly distributes the right to receive it. Free tax usa 2012 If you have to include income in respect of a decedent in your gross income and an estate tax return (Form 706) was filed for the decedent, you may be able to claim a deduction for the estate tax paid on that income. Free tax usa 2012 See Estate Tax Deduction, later. Free tax usa 2012 Example 1. Free tax usa 2012 Frank Johnson owned and operated an apple orchard. Free tax usa 2012 He used the cash method of accounting. Free tax usa 2012 He sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but did not receive payment before his death. Free tax usa 2012 The proceeds from the sale are income in respect of a decedent. Free tax usa 2012 When the estate was settled, payment had not been made and the estate transferred the right to the payment to his widow. Free tax usa 2012 When Frank's widow collects the $2,000, she must include that amount in her return. Free tax usa 2012 It is not reported on the final return of the decedent or on the return of the estate. Free tax usa 2012 Example 2. Free tax usa 2012 Assume the same facts as in Example 1, except that Frank used the accrual method of accounting. Free tax usa 2012 The amount accrued from the sale of the apples would be included on his final return. Free tax usa 2012 Neither the estate nor the widow would realize income in respect of a decedent when the money is later paid. Free tax usa 2012 Example 3. Free tax usa 2012 On February 1, George High, a cash method taxpayer, sold his tractor for $3,000, payable March 1 of the same year. Free tax usa 2012 His adjusted basis in the tractor was $2,000. Free tax usa 2012 George died on February 15, before receiving payment. Free tax usa 2012 The gain to be reported as income in respect of a decedent is the $1,000 difference between the decedent's basis in the property and the sale proceeds. Free tax usa 2012 In other words, the income in respect of a decedent is the gain the decedent would have realized had he lived. Free tax usa 2012 Example 4. Free tax usa 2012 Cathy O'Neil was entitled to a large salary payment at the date of her death. Free tax usa 2012 The amount was to be paid in five annual installments. Free tax usa 2012 The estate, after collecting two installments, distributed the right to the remaining installments to you, the beneficiary. Free tax usa 2012 The payments are income in respect of a decedent. Free tax usa 2012 None of the payments were includible on Cathy's final return. Free tax usa 2012 The estate must include in its income the two installments it received, and you must include in your income each of the three installments as you receive them. Free tax usa 2012 Example 5. Free tax usa 2012 You inherited the right to receive renewal commissions on life insurance sold by your father before his death. Free tax usa 2012 You inherited the right from your mother, who acquired it by bequest from your father. Free tax usa 2012 Your mother died before she received all the commissions she had the right to receive, so you received the rest. Free tax usa 2012 The commissions are income in respect of a decedent. Free tax usa 2012 None of these commissions were includible in your father's final return. Free tax usa 2012 The commissions received by your mother were included in her income. Free tax usa 2012 The commissions you received are not includible in your mother's income, even on her final return. Free tax usa 2012 You must include them in your income. Free tax usa 2012 Character of income. Free tax usa 2012   The character of the income you receive in respect of a decedent remains the same as it would have been to the decedent if he or she were alive. Free tax usa 2012 If the income would have been a capital gain to the decedent, it will be a capital gain to you. Free tax usa 2012 Transfer of right to income. Free tax usa 2012   If you transfer your right to income in respect of a decedent, you must include in your income the greater of: The amount you receive for the right, or The fair market value of the right you transfer. Free tax usa 2012   If you make a gift of such a right, you must include in your income the fair market value of the right at the time of the gift. Free tax usa 2012   If the right to income from an installment obligation is transferred, the amount you must include in income is reduced by the basis of the obligation. Free tax usa 2012 See Installment obligations, later. Free tax usa 2012 Transfer defined. Free tax usa 2012   A transfer for this purpose includes a sale, exchange, or other disposition, the satisfaction of an installment obligation at other than face value, or the cancellation of an installment obligation. Free tax usa 2012 Installment obligations. Free tax usa 2012   If the decedent sold property using the installment method and you are collecting payments on an installment obligation acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that represents profit. Free tax usa 2012 Include in your income the same profit the decedent would have included had death not occurred. Free tax usa 2012 For more information, see Publication 537, Installment Sales. Free tax usa 2012   If you dispose of an installment obligation acquired from a decedent (other than by transfer to the obligor), the rules explained in Publication 537 for figuring gain or loss on the disposition apply to you. Free tax usa 2012 Transfer to obligor. Free tax usa 2012   A transfer of a right to income, discussed earlier, has occurred if the decedent (seller) sold property using the installment method and the installment obligation was transferred to the obligor (buyer or person legally obligated to pay the installments). Free tax usa 2012 A transfer also occurs if the obligation was canceled either at death or by the estate or person receiving the obligation from the decedent. Free tax usa 2012 An obligation that becomes unenforceable is treated as having been canceled. Free tax usa 2012   If such a transfer occurs, the amount included in the income of the transferor (the estate or beneficiary) is the greater of the amount received or the fair market value of the installment obligation at the time of transfer, reduced by the basis of the obligation. Free tax usa 2012 The basis of the obligation is the decedent's basis, adjusted for all installment payments received after the decedent's death and before the transfer. Free tax usa 2012   If the decedent and obligor were related persons, the fair market value of the obligation cannot be less than its face value. Free tax usa 2012 Specific Types of Income in Respect of a Decedent This section explains and provides examples of some specific types of income in respect of a decedent. Free tax usa 2012 Wages. Free tax usa 2012   The entire amount of wages or other employee compensation earned by the decedent but unpaid at the time of death is income in respect of a decedent. Free tax usa 2012 The income is not reduced by any amounts withheld by the employer. Free tax usa 2012 If the income is $600 or more, the employer should report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar statement. Free tax usa 2012   Wages paid as income in respect of a decedent are not subject to federal income tax withholding. Free tax usa 2012 However, if paid during the calendar year of death, they are subject to withholding for social security and Medicare taxes. Free tax usa 2012 These taxes should be included on the decedent's Form W-2 along with the taxes withheld before death. Free tax usa 2012 These wages are not included in box 1 of Form W-2. Free tax usa 2012   Wages paid as income in respect of a decedent after the year of death generally are not subject to withholding for any federal taxe
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Understanding Your CP255 Notice

We need information to complete the termination of your private foundation status.


What you need to do

  • Complete Form 8940, Request for Miscellaneous Determination Under Section 507, 509(a), 4940, 4942, 4945, and 6033 of the Internal Revenue Code.
  • Return the completed form to us by the date indicated in your notice.

You may want to

Review the termination procedures for Private Foundations in Publication 4779, Facts about Terminating or Merging Your Exempt Organization.


Answers to Common Questions

Which organizations must file a Form 990-PF?
Form 990-PF must be filed by:

  • Exempt private foundations (section 6033(a), (b), and (c))
  • Taxable private foundations (section 6033(d))
  • Organizations that agree to private foundation status and their applications for exempt status are pending on the due date for filing
  • Organizations that made an election under section 41(e)(6)
  • Foundations that are making a section 507 termination
  • Section 4947(a)(1) nonexempt charitable trusts treated as private foundations (section 6033(d))

When is Form 990-PF due?
Form 990-PF is due by the 15th day of the 5th month following the close of the foundation's accounting period. For a calendar year taxpayer, Form 990-PF is due on May 15 of the following year. If any due date falls on a Saturday, Sunday, or legal holiday, the foundation can file the return on the next business day.

Can I get help over the phone?
If you have questions or need help completing the form, please call 1-877-829-5500. Personal assistance is available Monday through Friday, 7 a.m. to 7 p.m. CT.

Where can I go for more information about tax-exempt organizations?
For more information on tax-exempt organizations see Tax Information for Charities & Other Non-Profits or Tax Information for Private Foundations.


Tips for next year

Review the tax-exempt organization resources at Form 990 Resources and Tools for Exempt Organizations.


Understanding your notice

Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP255, Page 1

Page Last Reviewed or Updated: 09-Dec-2013

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Free Tax Usa 2012

Free tax usa 2012 3. Free tax usa 2012   Environmental Taxes Table of Contents Oil Spill Liability Tax ODCs Imported Taxable Products Floor Stocks Tax Environmental taxes are imposed on crude oil and petroleum products (oil spill liability), the sale or use of ozone-depleting chemicals (ODCs), and imported products containing or manufactured with ODCs. Free tax usa 2012 In addition, a floor stocks tax is imposed on ODCs held on January 1 by any person (other than the manufacturer or importer of the ODCs) for sale or for use in further manufacture. Free tax usa 2012 Figure the environmental tax on Form 6627. Free tax usa 2012 Enter the tax on the appropriate lines of Form 720 and attach Form 6627 to Form 720. Free tax usa 2012 For environmental tax purposes, United States includes the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, the continental shelf areas (applying the principles of section 638), and foreign trade zones. Free tax usa 2012 No one is exempt from the environmental taxes, including the federal government, state and local governments, Indian tribal governments, and nonprofit educational organizations. Free tax usa 2012 Oil Spill Liability Tax The oil spill liability tax is reported on Form 6627, Environmental Taxes, and Form 720, Quarterly Federal Excise Tax Return (IRS Nos. Free tax usa 2012 18 and 21). Free tax usa 2012 The oil spill liability tax rate is $. Free tax usa 2012 08 per barrel and generally applies to crude oil received at a U. Free tax usa 2012 S. Free tax usa 2012 refinery and to petroleum products entered into the United States for consumption, use, or warehousing. Free tax usa 2012 The tax also applies to certain uses and the exportation of domestic crude oil. Free tax usa 2012 Crude oil includes crude oil condensates and natural gasoline. Free tax usa 2012 Petroleum products include crude oil, refined and residual oil, and other liquid hydrocarbon refinery products. Free tax usa 2012 Crude oil. Free tax usa 2012   Tax is imposed on crude oil when it is received at a United Sates refinery. Free tax usa 2012 The operator of the refinery is liable for the tax. Free tax usa 2012   Tax is imposed on domestic crude oil used or exported before it is received at a United States refinery. Free tax usa 2012 However, the use of crude oil for extracting oil or natural gas on the premises where such crude oil was produced is not taxable. Free tax usa 2012 The user or exporter is liable for the tax. Free tax usa 2012 Imported petroleum products. Free tax usa 2012   Tax is imposed on petroleum products when they enter the United States for consumption, use, or warehousing. Free tax usa 2012 The person entering the petroleum product into the country is liable for the tax, including the tax on imported crude oil, even if it is subsequently received at a U. Free tax usa 2012 S. Free tax usa 2012 refinery. Free tax usa 2012   Tax is imposed only once on any imported petroleum product. Free tax usa 2012 Thus, the operator of a U. Free tax usa 2012 S. Free tax usa 2012 refinery that receives imported crude oil must establish that the petroleum tax has already been imposed on such crude oil in order not to be liable for the tax. Free tax usa 2012 ODCs For a list of the taxable ODCs and tax rates, see the Form 6627 instructions. Free tax usa 2012 Taxable event. Free tax usa 2012   Tax is imposed on an ODC when it is first used or sold by its manufacturer or importer. Free tax usa 2012 The manufacturer or importer is liable for the tax. Free tax usa 2012 Use of ODCs. Free tax usa 2012   You use an ODC if you put it into service in a trade or business or for the production of income. Free tax usa 2012 Also, an ODC is used if you use it in the making of an article, including incorporation into the article, chemical transformation, or release into the air. Free tax usa 2012 The loss, destruction, packaging, repackaging, or warehousing of ODCs is not a use of the ODC. Free tax usa 2012   The creation of a mixture containing an ODC is treated as a taxable use of the ODC contained in the mixture. Free tax usa 2012 An ODC is contained in a mixture only if the chemical identity of the ODC is not changed. Free tax usa 2012 Generally, tax is imposed when the mixture is created and not on its sale or use. Free tax usa 2012 However, you can choose to have the tax imposed on its sale or use by checking the appropriate box on Form 6627. Free tax usa 2012 You can revoke this choice only with IRS consent. Free tax usa 2012   The creation of a mixture for export or for use as a feedstock is not a taxable use of the ODCs contained in the mixture. Free tax usa 2012 Exceptions. Free tax usa 2012   The following may be exempt from the tax on ODCs. Free tax usa 2012 Metered-dose inhalers. Free tax usa 2012 Recycled ODCs. Free tax usa 2012 Exported ODCs. Free tax usa 2012 ODCs used as feedstock. Free tax usa 2012 Metered-dose inhalers. Free tax usa 2012   There is no tax on ODCs used or sold for use as propellants in metered-dose inhalers. Free tax usa 2012 For a sale to be nontaxable, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Free tax usa 2012 The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Free tax usa 2012 4682-2(d)(5). Free tax usa 2012 The certificate may be included as part of the sales documentation. Free tax usa 2012 Keep the certificate with your records. Free tax usa 2012 Recycled ODCs. Free tax usa 2012   There is no tax on any ODC diverted or recovered in the United States as part of a recycling process (and not as part of the original manufacturing or production process). Free tax usa 2012 There is no tax on recycled Halon-1301 or recycled Halon-2402 imported from a country that has signed the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). Free tax usa 2012   The Montreal Protocol is administered by the United Nations (U. Free tax usa 2012 N. Free tax usa 2012 ). Free tax usa 2012 To determine if a country has signed the Montreal Protocol, contact the U. Free tax usa 2012 N. Free tax usa 2012 The website is untreaty. Free tax usa 2012 un. Free tax usa 2012 org. Free tax usa 2012 Exported ODCs. Free tax usa 2012   Generally, there is no tax on ODCs sold for export if certain requirements are met. Free tax usa 2012 For a sale to be nontaxable, you and the purchaser must be registered. Free tax usa 2012 See Form 637, Application for Registration (for Certain Excise Tax Activities). Free tax usa 2012 Also, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Free tax usa 2012 Keep the certificate with your records. Free tax usa 2012 The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Free tax usa 2012 4682-5(d)(3). Free tax usa 2012 The tax benefit of this exemption is limited. Free tax usa 2012 For more information, see Regulations section 52. Free tax usa 2012 4682-5. Free tax usa 2012 ODCs used as feedstock. Free tax usa 2012   There is no tax on ODCs sold for use or used as a feedstock. Free tax usa 2012 An ODC is used as a feedstock only if the ODC is entirely consumed in the manufacture of another chemical. Free tax usa 2012 The transformation of an ODC into one or more new compounds qualifies as use as a feedstock, but use of an ODC in a mixture does not qualify. Free tax usa 2012   For a sale to be nontaxable, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Free tax usa 2012 The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Free tax usa 2012 4682-2(d)(2). Free tax usa 2012 Keep the certificate with your records. Free tax usa 2012 Credits or refunds. Free tax usa 2012   A credit or refund (without interest) of tax paid on ODCs may be claimed if a taxed ODC is: Used as a propellant in a metered-dose inhaler (the person who used the ODC as a propellant may file a claim), Exported (the manufacturer may file a claim), or Used as a feedstock (the person who used the ODC may file a claim). Free tax usa 2012 For information on how to file for credits or refunds, see the Instructions for Form 720 or Schedule 6 (Form 8849). Free tax usa 2012 Conditions to allowance for ODCs exported. Free tax usa 2012   To claim a credit or refund for ODCs that are exported, you must have repaid or agreed to repay the tax to the exporter, or obtained the exporter's written consent to allowance of the credit or refund. Free tax usa 2012 You must also have the evidence required by the EPA as proof that the ODCs were exported. Free tax usa 2012 Imported Taxable Products An imported product containing or manufactured with ODCs is subject to tax if it is entered into the United States for consumption, use, or warehousing and is listed in the Imported Products Table. Free tax usa 2012 The Imported Products Table is listed in Regulations section 52. Free tax usa 2012 4682-3(f)(6). Free tax usa 2012 The tax is based on the weight of the ODCs used in the manufacture of the product. Free tax usa 2012 Use the following methods to figure the ODC weight. Free tax usa 2012 The actual (exact) weight of each ODC used as a material in manufacturing the product. Free tax usa 2012 If the actual weight cannot be determined, the ODC weight listed for the product in the Imported Products Table. Free tax usa 2012 However, if you cannot determine the actual weight and the table does not list an ODC weight for the product, the rate of tax is 1% of the entry value of the product. Free tax usa 2012 Taxable event. Free tax usa 2012   Tax is imposed on an imported taxable product when the product is first sold or used by its importer. Free tax usa 2012 The importer is liable for the tax. Free tax usa 2012 Use of imported products. Free tax usa 2012   You use an imported product if you put it into service in a trade or business or for the production of income or use it in the making of an article, including incorporation into the article. Free tax usa 2012 The loss, destruction, packaging, repackaging, warehousing, or repair of an imported product is not a use of that product. Free tax usa 2012 Entry as use. Free tax usa 2012   The importer may choose to treat the entry of a product into the United States as the use of the product. Free tax usa 2012 Tax is imposed on the date of entry instead of when the product is sold or used. Free tax usa 2012 The choice applies to all imported taxable products that you own and have not used when you make the choice and all later entries. Free tax usa 2012 Make the choice by checking the box in Part II of Form 6627. Free tax usa 2012 The choice is effective as of the beginning of the calendar quarter to which the Form 6627 applies. Free tax usa 2012 You can revoke this choice only with IRS consent. Free tax usa 2012 Sale of article incorporating imported product. Free tax usa 2012   The importer may treat the sale of an article manufactured or assembled in the United States as the first sale or use of an imported taxable product incorporated in that article if both the following apply. Free tax usa 2012 The importer has consistently treated the sale of similar items as the first sale or use of similar taxable imported products. Free tax usa 2012 The importer has not chosen to treat entry into the United States as use of the product. Free tax usa 2012 Imported products table. Free tax usa 2012   The table lists all the products that are subject to the tax on imported taxable products and specifies the ODC weight (discussed later) of each product. Free tax usa 2012   Each listing in the table identifies a product by name and includes only products that are described by that name. Free tax usa 2012 Most listings identify a product by both name and Harmonized Tariff Schedule (HTS) heading. Free tax usa 2012 In those cases, a product is included in that listing only if the product is described by that name and the rate of duty on the product is determined by reference to that HTS heading. Free tax usa 2012 A product is included in the listing even if it is manufactured with or contains a different ODC than the one specified in the table. Free tax usa 2012   Part II of the table lists electronic items that are not included within any other list in the table. Free tax usa 2012 An imported product is included in this list only if the product meets one of the following tests. Free tax usa 2012 It is an electronic component whose operation involves the use of nonmechanical amplification or switching devices such as tubes, transistors, and integrated circuits. Free tax usa 2012 It contains components described in (1), which account for more than 15% of the cost of the product. Free tax usa 2012   These components do not include passive electrical devices, such as resistors and capacitors. Free tax usa 2012 Items such as screws, nuts, bolts, plastic parts, and similar specially fabricated parts that may be used to construct an electronic item are not themselves included in the listing for electronic items. Free tax usa 2012 Rules for listing products. Free tax usa 2012   Products are listed in the table according to the following rules. Free tax usa 2012 A product is listed in Part I of the table if it is a mixture containing ODCs. Free tax usa 2012 A product is listed in Part II of the table if the Commissioner has determined that the ODCs used as materials in the manufacture of the product under the predominant method are used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components. Free tax usa 2012 A product is listed in Part III of the table if the Commissioner has determined that the product meets both the following tests. Free tax usa 2012 It is not an imported taxable product. Free tax usa 2012 It would otherwise be included within a list in Part II of the table. Free tax usa 2012   For example, floppy disk drive units are listed in Part III because they are not imported taxable products and would have been included in the Part II list for electronic items not specifically identified, but for their listing in Part III. Free tax usa 2012 ODC weight. Free tax usa 2012   The Table ODC weight of a product is the weight, determined by the Commissioner, of the ODCs used as materials in the manufacture of the product under the predominant method of manufacturing. Free tax usa 2012 The ODC weight is listed in Part II in pounds per single unit of product unless otherwise specified. Free tax usa 2012 Modifying the table. Free tax usa 2012   A manufacturer or importer of a product may request the IRS add a product and its ODC weight to the table. Free tax usa 2012 They also may request the IRS remove a product from the table, or change or specify the ODC weight of a product. Free tax usa 2012 To request a modification, see Regulations section 52. Free tax usa 2012 4682-3(g) for the mailing address and information that must be included in the request. Free tax usa 2012 Floor Stocks Tax Tax is imposed on any ODC held (other than by the manufacturer or importer of the ODC) on January 1 for sale or use in further manufacturing. Free tax usa 2012 The person holding title (as determined under local law) to the ODC is liable for the tax, whether or not delivery has been made. Free tax usa 2012 These chemicals are taxable without regard to the type or size of storage container in which the ODCs are held. Free tax usa 2012 The tax may apply to an ODC whether it is in a 14-ounce can or a 30-pound tank. Free tax usa 2012 You are liable for the floor stocks tax if you hold any of the following on January 1. Free tax usa 2012 At least 400 pounds of ODCs other than halons or methyl chloroform, At least 50 pounds of halons, or At least 1,000 pounds of methyl chloroform. Free tax usa 2012 If you are liable for the tax, prepare an inventory on January 1 of the taxable ODCs held on that date for sale or for use in further manufacturing. Free tax usa 2012 You must pay this floor stocks tax by June 30 of each year. Free tax usa 2012 Report the tax on Form 6627 and Part II of Form 720 for the second calendar quarter. Free tax usa 2012 For the tax rates, see the Form 6627 instructions. Free tax usa 2012 ODCs not subject to floor stocks tax. Free tax usa 2012   The floor stocks tax is not imposed on any of the following ODCs. Free tax usa 2012 ODCs mixed with other ingredients that contribute to achieving the purpose for which the mixture will be used, unless the mixture contains only ODCs and one or more stabilizers. Free tax usa 2012 ODCs contained in a manufactured article in which the ODCs will be used for their intended purpose without being released from the article. Free tax usa 2012 ODCs that have been reclaimed or recycled. Free tax usa 2012 ODCs sold in a qualifying sale for: Use as a feedstock, Export, or Use as a propellant in a metered-dose inhaler. Free tax usa 2012 Prev  Up  Next   Home   More Online Publications