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H&r Block Coupons 2012 Printable

H&r block coupons 2012 printable 6. H&r block coupons 2012 printable   How To Report Table of Contents Where To ReportGifts. H&r block coupons 2012 printable Statutory employees. H&r block coupons 2012 printable Vehicle Provided by Your Employer ReimbursementsAccountable Plans Nonaccountable Plans Rules for Independent Contractors and Clients How To Use Per Diem Rate TablesThe Two Substantiation Methods Transition Rules Completing Forms 2106 and 2106-EZInformation on use of cars. H&r block coupons 2012 printable Standard mileage rate. H&r block coupons 2012 printable Actual expenses. H&r block coupons 2012 printable Car rentals. H&r block coupons 2012 printable Hours of service limits. H&r block coupons 2012 printable Allocating your reimbursement. H&r block coupons 2012 printable 1. H&r block coupons 2012 printable Limit on meals and entertainment. H&r block coupons 2012 printable 2. H&r block coupons 2012 printable Limit on miscellaneous itemized deductions. H&r block coupons 2012 printable 3. H&r block coupons 2012 printable Limit on total itemized deductions. H&r block coupons 2012 printable Special Rules This chapter explains where and how to report the expenses discussed in this publication. H&r block coupons 2012 printable It discusses reimbursements and how to treat them under accountable and nonaccountable plans. H&r block coupons 2012 printable It also explains rules for independent contractors and clients, fee-basis officials, certain performing artists, Armed Forces reservists, and certain disabled employees. H&r block coupons 2012 printable The chapter ends with illustrations of how to report travel, entertainment, gift, and car expenses on Forms 2106 and 2106-EZ. H&r block coupons 2012 printable Where To Report This section provides general information on where to report the expenses discussed in this publication. H&r block coupons 2012 printable Self-employed. H&r block coupons 2012 printable   You must report your income and expenses on Schedule C (Form 1040) or Schedule C-EZ (Form 1040) if you are a sole proprietor, or on Schedule F (Form 1040) if you are a farmer. H&r block coupons 2012 printable You do not use Form 2106 or 2106-EZ. H&r block coupons 2012 printable    If you claim car or truck expenses, you must provide certain information on the use of your vehicle. H&r block coupons 2012 printable You provide this information on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Form 4562. H&r block coupons 2012 printable   If you file Schedule C (Form 1040): Report your travel expenses, except meals, on line 24a, Report your deductible meals (actual cost or standard meal allowance) and entertainment on line 24b, Report your gift expenses and transportation expenses, other than car expenses, on line 27a, and Report your car expenses on line 9. H&r block coupons 2012 printable Complete Part IV of the form unless you have to file Form 4562 for depreciation or amortization. H&r block coupons 2012 printable   If you file Schedule C-EZ (Form 1040), report the total of all business expenses on line 2. H&r block coupons 2012 printable You can only include 50% of your meals and entertainment in that total. H&r block coupons 2012 printable If you include car expenses, you must also complete Part III of the form. H&r block coupons 2012 printable    If you file Schedule F (Form 1040): Report your car expenses on line 10. H&r block coupons 2012 printable Attach Form 4562 and provide information on the use of your car in Part V of Form 4562. H&r block coupons 2012 printable Report all other business expenses discussed in this publication on line 32. H&r block coupons 2012 printable You can only include 50% of your meals and entertainment on that line. H&r block coupons 2012 printable See your form instructions for more information on how to complete your tax return. H&r block coupons 2012 printable Both self-employed and an employee. H&r block coupons 2012 printable   If you are both self-employed and an employee, you must keep separate records for each business activity. H&r block coupons 2012 printable Report your business expenses for self-employment on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040), as discussed earlier. H&r block coupons 2012 printable Report your business expenses for your work as an employee on Form 2106 or 2106-EZ, as discussed next. H&r block coupons 2012 printable Employees. H&r block coupons 2012 printable    If you are an employee, you generally must complete Form 2106 to deduct your travel, transportation, and entertainment expenses. H&r block coupons 2012 printable However, you can use the shorter Form 2106-EZ instead of Form 2106 if you meet all of the following conditions. H&r block coupons 2012 printable You are an employee deducting expenses attributable to your job. H&r block coupons 2012 printable You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). H&r block coupons 2012 printable If you claim car expenses, you use the standard mileage rate. H&r block coupons 2012 printable   For more information on how to report your expenses on Forms 2106 and 2106-EZ, see Completing Forms 2106 and 2106-EZ , later. H&r block coupons 2012 printable Gifts. H&r block coupons 2012 printable   If you did not receive any reimbursements (or the reimbursements were all included in box 1 of your Form W-2), the only business expense you are claiming is for gifts, and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. H&r block coupons 2012 printable Instead, claim the amount of your deductible gifts directly on line 21 of Schedule A (Form 1040). H&r block coupons 2012 printable Statutory employees. H&r block coupons 2012 printable    If you received a Form W-2 and the “Statutory employee” box in box 13 was checked, report your income and expenses related to that income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). H&r block coupons 2012 printable Do not complete Form 2106 or 2106-EZ. H&r block coupons 2012 printable   Statutory employees include full-time life insurance salespersons, certain agent or commission drivers, traveling salespersons, and certain homeworkers. H&r block coupons 2012 printable If you are entitled to a reimbursement from your employer but you do not claim it, you cannot claim a deduction for the expenses to which that unclaimed reimbursement applies. H&r block coupons 2012 printable Reimbursement for personal expenses. H&r block coupons 2012 printable    If your employer reimburses you for nondeductible personal expenses, such as for vacation trips, your employer must report the reimbursement as wage income in box 1 of your Form W-2. H&r block coupons 2012 printable You cannot deduct personal expenses. H&r block coupons 2012 printable Income-producing property. H&r block coupons 2012 printable   If you have travel or transportation expenses related to income-producing property, report your deductible expenses on the form appropriate for that activity. H&r block coupons 2012 printable   For example, if you have rental real estate income and expenses, report your expenses on Schedule E (Form 1040), Supplemental Income and Loss. H&r block coupons 2012 printable See Publication 527, Residential Rental Property, for more information on the rental of real estate. H&r block coupons 2012 printable If you have deductible investment-related transportation expenses, report them on Schedule A (Form 1040), line 23. H&r block coupons 2012 printable Vehicle Provided by Your Employer If your employer provides you with a car, you may be able to deduct the actual expenses of operating that car for business purposes. H&r block coupons 2012 printable The amount you can deduct depends on the amount that your employer included in your income and the business and personal miles you drove during the year. H&r block coupons 2012 printable You cannot use the standard mileage rate. H&r block coupons 2012 printable Value reported on Form W-2. H&r block coupons 2012 printable   Your employer can figure and report either the actual value of your personal use of the car or the value of the car as if you used it only for personal purposes (100% income inclusion). H&r block coupons 2012 printable Your employer must separately state the amount if 100% of the annual lease value was included in your income. H&r block coupons 2012 printable If you are unsure of the amount included on your Form W-2, ask your employer. H&r block coupons 2012 printable Full value included in your income. H&r block coupons 2012 printable   You can deduct the value of the business use of an employer-provided car if your employer reported 100% of the value of the car in your income. H&r block coupons 2012 printable On your 2013 Form W-2, the amount of the value will be included in box 1, Wages, tips, other compensation, and box 14. H&r block coupons 2012 printable    To claim your expenses, complete Form 2106, Part II, Sections A and C. H&r block coupons 2012 printable Enter your actual expenses on line 23 of Section C and include the entire value of the employer-provided car on line 25. H&r block coupons 2012 printable Complete the rest of the form. H&r block coupons 2012 printable Less than full value included in your income. H&r block coupons 2012 printable   If less than the full annual lease value of the car was included on your Form W-2, this means that your Form W-2 only includes the value of your personal use of the car. H&r block coupons 2012 printable Do not enter this value on your Form 2106 because it is not deductible. H&r block coupons 2012 printable   If you paid any actual costs (that your employer did not provide or reimburse you for) to operate the car, you can deduct the business portion of those costs. H&r block coupons 2012 printable Examples of costs that you may have are gas, oil, and repairs. H&r block coupons 2012 printable Complete Form 2106, Part II, Sections A and C. H&r block coupons 2012 printable Enter your actual costs on line 23 of Section C and leave line 25 blank. H&r block coupons 2012 printable Complete the rest of the form. H&r block coupons 2012 printable Reimbursements This section explains what to do when you receive an advance or are reimbursed for any of the employee business expenses discussed in this publication. H&r block coupons 2012 printable If you received an advance, allowance, or reimbursement for your expenses, how you report this amount and your expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. H&r block coupons 2012 printable This section explains the two types of plans, how per diem and car allowances simplify proving the amount of your expenses, and the tax treatment of your reimbursements and expenses. H&r block coupons 2012 printable It also covers rules for independent contractors. H&r block coupons 2012 printable No reimbursement. H&r block coupons 2012 printable   You are not reimbursed or given an allowance for your expenses if you are paid a salary or commission with the understanding that you will pay your own expenses. H&r block coupons 2012 printable In this situation, you have no reimbursement or allowance arrangement, and you do not have to read this section on reimbursements. H&r block coupons 2012 printable Instead, see Completing Forms 2106 and 2106-EZ , later, for information on completing your tax return. H&r block coupons 2012 printable Reimbursement, allowance, or advance. H&r block coupons 2012 printable   A reimbursement or other expense allowance arrangement is a system or plan that an employer uses to pay, substantiate, and recover the expenses, advances, reimbursements, and amounts charged to the employer for employee business expenses. H&r block coupons 2012 printable Arrangements include per diem and car allowances. H&r block coupons 2012 printable    A per diem allowance is a fixed amount of daily reimbursement your employer gives you for your lodging, meals, and incidental expenses when you are away from home on business. H&r block coupons 2012 printable (The term “ incidental expenses ” is defined in chapter 1 under Standard Meal Allowance. H&r block coupons 2012 printable ) A car allowance is an amount your employer gives you for the business use of your car. H&r block coupons 2012 printable   Your employer should tell you what method of reimbursement is used and what records you must provide. H&r block coupons 2012 printable Employers. H&r block coupons 2012 printable   If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. H&r block coupons 2012 printable Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. H&r block coupons 2012 printable Reimbursements treated as paid under nonaccountable plans , as explained later, are reported as pay. H&r block coupons 2012 printable See Publication 15 (Circular E), Employer's Tax Guide, for information on employee pay. H&r block coupons 2012 printable Accountable Plans To be an accountable plan, your employer's reimbursement or allowance arrangement must include all of the following rules: Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. H&r block coupons 2012 printable You must adequately account to your employer for these expenses within a reasonable period of time. H&r block coupons 2012 printable You must return any excess reimbursement or allowance within a reasonable period of time. H&r block coupons 2012 printable “ Adequate accounting ” and “ returning excess reimbursements ” are discussed later. H&r block coupons 2012 printable An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer. H&r block coupons 2012 printable Reasonable period of time. H&r block coupons 2012 printable   The definition of reasonable period of time depends on the facts and circumstances of your situation. H&r block coupons 2012 printable However, regardless of the facts and circumstances of your situation, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. H&r block coupons 2012 printable You receive an advance within 30 days of the time you have an expense. H&r block coupons 2012 printable You adequately account for your expenses within 60 days after they were paid or incurred. H&r block coupons 2012 printable You return any excess reimbursement within 120 days after the expense was paid or incurred. H&r block coupons 2012 printable You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. H&r block coupons 2012 printable Employee meets accountable plan rules. H&r block coupons 2012 printable   If you meet the three rules for accountable plans, your employer should not include any reimbursements in your income in box 1 of your Form W-2. H&r block coupons 2012 printable If your expenses equal your reimbursements, you do not complete Form 2106. H&r block coupons 2012 printable You have no deduction since your expenses and reimbursement are equal. H&r block coupons 2012 printable    If your employer included reimbursements in box 1 of your Form W-2 and you meet all the rules for accountable plans, ask your employer for a corrected Form W-2. H&r block coupons 2012 printable Accountable plan rules not met. H&r block coupons 2012 printable   Even though you are reimbursed under an accountable plan, some of your expenses may not meet all three rules. H&r block coupons 2012 printable All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan (discussed later). H&r block coupons 2012 printable Failure to return excess reimbursements. H&r block coupons 2012 printable   If you are reimbursed under an accountable plan, but you fail to return, within a reasonable time, any amounts in excess of the substantiated amounts, the amounts paid in excess of the substantiated expenses are treated as paid under a nonaccountable plan. H&r block coupons 2012 printable See Reasonable period of time , earlier, and Returning Excess Reimbursements , later. H&r block coupons 2012 printable Reimbursement of nondeductible expenses. H&r block coupons 2012 printable   You may be reimbursed under your employer's accountable plan for expenses related to that employer's business, some of which are deductible as employee business expenses and some of which are not deductible. H&r block coupons 2012 printable The reimbursements you receive for the nondeductible expenses do not meet rule (1) for accountable plans, and they are treated as paid under a nonaccountable plan. H&r block coupons 2012 printable Example. H&r block coupons 2012 printable Your employer's plan reimburses you for travel expenses while away from home on business and also for meals when you work late at the office, even though you are not away from home. H&r block coupons 2012 printable The part of the arrangement that reimburses you for the nondeductible meals when you work late at the office is treated as paid under a nonaccountable plan. H&r block coupons 2012 printable The employer makes the decision whether to reimburse employees under an accountable plan or a nonaccountable plan. H&r block coupons 2012 printable If you are an employee who receives payments under a nonaccountable plan, you cannot convert these amounts to payments under an accountable plan by voluntarily accounting to your employer for the expenses and voluntarily returning excess reimbursements to the employer. H&r block coupons 2012 printable Adequate Accounting One of the rules for an accountable plan is that you must adequately account to your employer for your expenses. H&r block coupons 2012 printable You adequately account by giving your employer a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it, along with documentary evidence (such as receipts) of your travel, mileage, and other employee business expenses. H&r block coupons 2012 printable (See Table 5-1 in chapter 5 for details you need to enter in your record and documents you need to prove certain expenses. H&r block coupons 2012 printable ) A per diem or car allowance satisfies the adequate accounting requirement under certain conditions. H&r block coupons 2012 printable See Per Diem and Car Allowances , later. H&r block coupons 2012 printable You must account for all amounts you received from your employer during the year as advances, reimbursements, or allowances. H&r block coupons 2012 printable This includes amounts you charged to your employer by credit card or other method. H&r block coupons 2012 printable You must give your employer the same type of records and supporting information that you would have to give to the IRS if the IRS questioned a deduction on your return. H&r block coupons 2012 printable You must pay back the amount of any reimbursement or other expense allowance for which you do not adequately account or that is more than the amount for which you accounted. H&r block coupons 2012 printable Per Diem and Car Allowances If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. H&r block coupons 2012 printable A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all the following conditions apply. H&r block coupons 2012 printable Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business. H&r block coupons 2012 printable The allowance is similar in form to and not more than the federal rate (defined later). H&r block coupons 2012 printable You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1 ) within a reasonable period of time. H&r block coupons 2012 printable You are not related to your employer (as defined next). H&r block coupons 2012 printable If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement. H&r block coupons 2012 printable If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. H&r block coupons 2012 printable In this case, you must be able to prove your expenses to the IRS. H&r block coupons 2012 printable Related to employer. H&r block coupons 2012 printable   You are related to your employer if: Your employer is your brother or sister, half brother or half sister, spouse, ancestor, or lineal descendant, Your employer is a corporation in which you own, directly or indirectly, more than 10% in value of the outstanding stock, or Certain relationships (such as grantor, fiduciary, or beneficiary) exist between you, a trust, and your employer. H&r block coupons 2012 printable You may be considered to indirectly own stock, for purposes of (2), if you have an interest in a corporation, partnership, estate, or trust that owns the stock or if a member of your family or your partner owns the stock. H&r block coupons 2012 printable The federal rate. H&r block coupons 2012 printable   The federal rate can be figured using any one of the following methods. H&r block coupons 2012 printable For per diem amounts: The regular federal per diem rate. H&r block coupons 2012 printable The standard meal allowance. H&r block coupons 2012 printable The high-low rate. H&r block coupons 2012 printable For car expenses: The standard mileage rate. H&r block coupons 2012 printable A fixed and variable rate (FAVR). H&r block coupons 2012 printable    For per diem amounts, use the rate in effect for the area where you stop for sleep or rest. H&r block coupons 2012 printable Regular federal per diem rate. H&r block coupons 2012 printable   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. H&r block coupons 2012 printable The rates are different for different locations. H&r block coupons 2012 printable Your employer should have these rates available. H&r block coupons 2012 printable You can also find federal per diem rates at www. H&r block coupons 2012 printable gsa. H&r block coupons 2012 printable gov/perdiem. H&r block coupons 2012 printable The standard meal allowance. H&r block coupons 2012 printable   The standard meal allowance (discussed in chapter 1) is the federal rate for meals and incidental expenses (M&IE). H&r block coupons 2012 printable The rate for most small localities in the United States is $46 a day. H&r block coupons 2012 printable Most major cities and many other localities qualify for higher rates. H&r block coupons 2012 printable You can find this information on the Internet at www. H&r block coupons 2012 printable gsa. H&r block coupons 2012 printable gov/perdiem. H&r block coupons 2012 printable   You receive an allowance only for meals and incidental expenses when your employer does one of the following. H&r block coupons 2012 printable Provides you with lodging (furnishes it in kind). H&r block coupons 2012 printable Reimburses you, based on your receipts, for the actual cost of your lodging. H&r block coupons 2012 printable Pays the hotel, motel, etc. H&r block coupons 2012 printable , directly for your lodging. H&r block coupons 2012 printable Does not have a reasonable belief that you had (or will have) lodging expenses, such as when you stay with friends or relatives or sleep in the cab of your truck. H&r block coupons 2012 printable Figures the allowance on a basis similar to that used in computing your compensation, such as number of hours worked or miles traveled. H&r block coupons 2012 printable High-low rate. H&r block coupons 2012 printable   This is a simplified method of computing the federal per diem rate for travel within the continental United States. H&r block coupons 2012 printable It eliminates the need to keep a current list of the per diem rates for each city. H&r block coupons 2012 printable   Under the high-low method, the per diem amount for travel during January through September of 2013 is $242 (including $65 for M&IE) for certain high-cost locations. H&r block coupons 2012 printable All other areas have a per diem amount of $163 (including $52 for M&IE). H&r block coupons 2012 printable For more information, see Notice 2012-63, which can be found on the Internet at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/irb/2012-42_IRB/ar12. H&r block coupons 2012 printable html. H&r block coupons 2012 printable    Effective October 1, 2013, the per diem rate for certain high-cost locations increased to $251 (including $65 for M&IE). H&r block coupons 2012 printable The rate for all other locations increased to $170 (including $52 for M&IE). H&r block coupons 2012 printable Employers who did not use the high-low method during the first 9 months of 2013 cannot begin to use it before 2014. H&r block coupons 2012 printable For more information, see Notice 2013-65, which can be found on the Internet at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/pub/irs-drop/n-13–65. H&r block coupons 2012 printable pdf and Revenue Procedure 2011-47 at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/irb/2011-42_IRB/ar12. H&r block coupons 2012 printable html. H&r block coupons 2012 printable Prorating the standard meal allowance on partial days of travel. H&r block coupons 2012 printable   The standard meal allowance is for a full 24-hour day of travel. H&r block coupons 2012 printable If you travel for part of a day, such as on the days you depart and return, you must prorate the full-day M&IE rate. H&r block coupons 2012 printable This rule also applies if your employer uses the regular federal per diem rate or the high-low rate. H&r block coupons 2012 printable   You can use either of the following methods to figure the federal M&IE for that day. H&r block coupons 2012 printable Method 1: For the day you depart, add 3/4 of the standard meal allowance amount for that day. H&r block coupons 2012 printable For the day you return, add 3/4 of the standard meal allowance amount for the preceding day. H&r block coupons 2012 printable Method 2: Prorate the standard meal allowance using any method you consistently apply in accordance with reasonable business practice. H&r block coupons 2012 printable For example, an employer can treat 2 full days of per diem (that includes M&IE) paid for travel away from home from 9 a. H&r block coupons 2012 printable m. H&r block coupons 2012 printable of one day to 5 p. H&r block coupons 2012 printable m. H&r block coupons 2012 printable of the next day as being no more than the federal rate. H&r block coupons 2012 printable This is true even though a federal employee would be limited to a reimbursement of M&IE for only 1½ days of the federal M&IE rate. H&r block coupons 2012 printable The standard mileage rate. H&r block coupons 2012 printable   This is a set rate per mile that you can use to compute your deductible car expenses. H&r block coupons 2012 printable For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. H&r block coupons 2012 printable Fixed and variable rate (FAVR). H&r block coupons 2012 printable   This is an allowance your employer may use to reimburse your car expenses. H&r block coupons 2012 printable Under this method, your employer pays an allowance that includes a combination of payments covering fixed and variable costs, such as a cents-per-mile rate to cover your variable operating costs (such as gas, oil, etc. H&r block coupons 2012 printable ) plus a flat amount to cover your fixed costs (such as depreciation (or lease payments), insurance, etc. H&r block coupons 2012 printable ). H&r block coupons 2012 printable If your employer chooses to use this method, your employer will request the necessary records from you. H&r block coupons 2012 printable Reporting your expenses with a per diem or car allowance. H&r block coupons 2012 printable   If your reimbursement is in the form of an allowance received under an accountable plan, the following facts affect your reporting. H&r block coupons 2012 printable The federal rate. H&r block coupons 2012 printable Whether the allowance or your actual expenses were more than the federal rate. H&r block coupons 2012 printable The following discussions explain where to report your expenses depending upon how the amount of your allowance compares to the federal rate. H&r block coupons 2012 printable Allowance less than or equal to the federal rate. H&r block coupons 2012 printable   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. H&r block coupons 2012 printable You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance. H&r block coupons 2012 printable   However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). H&r block coupons 2012 printable If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. H&r block coupons 2012 printable If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount. H&r block coupons 2012 printable Example 1. H&r block coupons 2012 printable In April, Jeremy takes a 2-day business trip to Denver. H&r block coupons 2012 printable The federal rate for Denver is $215 per day. H&r block coupons 2012 printable As required by his employer's accountable plan, he accounts for the time (dates), place, and business purpose of the trip. H&r block coupons 2012 printable His employer reimburses him $215 a day ($430 total) for living expenses. H&r block coupons 2012 printable Jeremy's living expenses in Denver are not more than $215 a day. H&r block coupons 2012 printable Jeremy's employer does not include any of the reimbursement on his Form W-2 and Jeremy does not deduct the expenses on his return. H&r block coupons 2012 printable Example 2. H&r block coupons 2012 printable In June, Matt takes a 2-day business trip to Boston. H&r block coupons 2012 printable Matt's employer uses the high-low method to reimburse employees. H&r block coupons 2012 printable Since Boston is a high-cost area, Matt is given an advance of $242 a day ($484 total) for his lodging, meals, and incidental expenses. H&r block coupons 2012 printable Matt's actual expenses totaled $700. H&r block coupons 2012 printable Since Matt's $700 of expenses are more than his $484 advance, he includes the excess expenses when he itemizes his deductions. H&r block coupons 2012 printable Matt completes Form 2106 (showing all of his expenses and reimbursements). H&r block coupons 2012 printable He must also allocate his reimbursement between his meals and other expenses as discussed later under Completing Forms 2106 and 2106-EZ . H&r block coupons 2012 printable Example 3. H&r block coupons 2012 printable Nicole drives 10,000 miles in 2013 for business. H&r block coupons 2012 printable Under her employer's accountable plan, she accounts for the time (dates), place, and business purpose of each trip. H&r block coupons 2012 printable Her employer pays her a mileage allowance of 40 cents a mile. H&r block coupons 2012 printable Since Nicole's $5,650 expense computed under the standard mileage rate (10,000 miles x 56½ cents) is more than her $4,000 reimbursement (10,000 miles × 40 cents), she itemizes her deductions to claim the excess expense. H&r block coupons 2012 printable Nicole completes Form 2106 (showing all her expenses and reimbursements) and enters $1,650 ($5,650 − $4,000) as an itemized deduction. H&r block coupons 2012 printable Allowance more than the federal rate. H&r block coupons 2012 printable   If your allowance is more than the federal rate, your employer must include the allowance amount up to the federal rate in box 12 of your Form W-2. H&r block coupons 2012 printable This amount is not taxable. H&r block coupons 2012 printable However, the excess allowance will be included in box 1 of your Form W-2. H&r block coupons 2012 printable You must report this part of your allowance as if it were wage income. H&r block coupons 2012 printable   If your actual expenses are less than or equal to the federal rate, you do not complete Form 2106 or claim any of your expenses on your return. H&r block coupons 2012 printable   However, if your actual expenses are more than the federal rate, you can complete Form 2106 and deduct those excess expenses. H&r block coupons 2012 printable You must report on Form 2106 your reimbursements up to the federal rate (as shown in box 12 of your Form W-2) and all your expenses. H&r block coupons 2012 printable You should be able to prove these amounts to the IRS. H&r block coupons 2012 printable Example 1. H&r block coupons 2012 printable Laura lives and works in Austin. H&r block coupons 2012 printable In July her employer sent her to Albuquerque for 4 days on business. H&r block coupons 2012 printable Laura's employer paid the hotel directly for her lodging and reimbursed Laura $65 a day ($260 total) for meals and incidental expenses. H&r block coupons 2012 printable Laura's actual meal expenses were not more than the federal rate for Albuquerque, which is $56 per day. H&r block coupons 2012 printable Table 6-1. H&r block coupons 2012 printable Reporting Travel, Entertainment, Gift, and Car Expenses and Reimbursements IF the type of reimbursement (or  other expense allowance)  arrangement is under: THEN the employer reports on Form W-2: AND the employee reports on  Form 2106: * An accountable plan with: Actual expense reimbursement: Adequate accounting made and excess returned. H&r block coupons 2012 printable No amount. H&r block coupons 2012 printable No amount. H&r block coupons 2012 printable Actual expense reimbursement: Adequate accounting and return of excess both required but excess not returned. H&r block coupons 2012 printable The excess amount as wages in box 1. H&r block coupons 2012 printable No amount. H&r block coupons 2012 printable Per diem or mileage allowance up to the federal rate: Adequate accounting made and excess returned. H&r block coupons 2012 printable No amount. H&r block coupons 2012 printable All expenses and reimbursements only if excess expenses are claimed. H&r block coupons 2012 printable Otherwise, form is not filed. H&r block coupons 2012 printable Per diem or mileage allowance up to the federal rate: Adequate accounting and return of excess both required but excess not returned. H&r block coupons 2012 printable The excess amount as wages in box 1. H&r block coupons 2012 printable The amount up to the federal rate is reported only in box 12—it is not reported in box 1. H&r block coupons 2012 printable No amount. H&r block coupons 2012 printable Per diem or mileage allowance exceeds the federal rate: Adequate accounting up to the federal rate only and excess not returned. H&r block coupons 2012 printable The excess amount as wages in box 1. H&r block coupons 2012 printable The amount up to the federal rate is reported only in box 12—it is not reported in box 1. H&r block coupons 2012 printable All expenses (and reimbursements reported on Form W-2, box 12) only if expenses in excess of the federal rate are claimed. H&r block coupons 2012 printable Otherwise, form is not filed. H&r block coupons 2012 printable A nonaccountable plan with: Either adequate accounting or return of excess, or both, not required by plan. H&r block coupons 2012 printable The entire amount as wages in box 1. H&r block coupons 2012 printable All expenses. H&r block coupons 2012 printable No reimbursement plan: The entire amount as wages in box 1. H&r block coupons 2012 printable All expenses. H&r block coupons 2012 printable * You may be able to use Form 2106-EZ. H&r block coupons 2012 printable See Completing Forms 2106 and 2106-EZ . H&r block coupons 2012 printable Her employer included the $36 that was more than the federal rate (($65 − $56) × 4) in box 1 of Laura's Form W-2. H&r block coupons 2012 printable Her employer shows $224 ($56 a day × 4) in box 12 of her Form W-2. H&r block coupons 2012 printable This amount is not included in Laura's income. H&r block coupons 2012 printable Laura does not have to complete Form 2106; however, she must include the $36 in her gross income as wages (by reporting the total amount shown in box 1 of her Form W-2). H&r block coupons 2012 printable Example 2. H&r block coupons 2012 printable Joe also lives in Austin and works for the same employer as Laura. H&r block coupons 2012 printable In May the employer sent Joe to San Diego for 4 days and paid the hotel directly for Joe's hotel bill. H&r block coupons 2012 printable The employer reimbursed Joe $75 a day for his meals and incidental expenses. H&r block coupons 2012 printable The federal rate for San Diego is $71 a day. H&r block coupons 2012 printable Joe can prove that his actual meal expenses totaled $380. H&r block coupons 2012 printable His employer's accountable plan will not pay more than $75 a day for travel to San Diego, so Joe does not give his employer the records that prove that he actually spent $380. H&r block coupons 2012 printable However, he does account for the time, place, and business purpose of the trip. H&r block coupons 2012 printable This is Joe's only business trip this year. H&r block coupons 2012 printable Joe was reimbursed $300 ($75 × 4 days), which is $16 more than the federal rate of $284 ($71 × 4 days). H&r block coupons 2012 printable The employer includes the $16 as income on Joe's Form W-2 in box 1. H&r block coupons 2012 printable The employer also enters $284 in box 12 of Joe's Form W-2. H&r block coupons 2012 printable Joe completes Form 2106 to figure his deductible expenses. H&r block coupons 2012 printable He enters the total of his actual expenses for the year ($380) on Form 2106. H&r block coupons 2012 printable He also enters the reimbursements that were not included in his income ($284). H&r block coupons 2012 printable His total deductible expense, before the 50% limit, is $96. H&r block coupons 2012 printable After he figures the 50% limit on his unreimbursed meals and entertainment, he will include the balance, $48, as an itemized deduction. H&r block coupons 2012 printable Example 3. H&r block coupons 2012 printable Debbie drives 10,000 miles in 2013 for business. H&r block coupons 2012 printable Under her employer's accountable plan, she gets reimbursed 60 cents a mile, which is more than the standard mileage rate. H&r block coupons 2012 printable Her total reimbursement is $6,000. H&r block coupons 2012 printable Debbie's employer must include the reimbursement amount up to the standard mileage rate, $5,650 (10,000 × 56½ cents), in box 12 of her Form W-2. H&r block coupons 2012 printable That amount is not taxable. H&r block coupons 2012 printable Her employer must also include $350 ($6,000 − $5,650) in box 1 of her Form W-2. H&r block coupons 2012 printable This is the reimbursement that is more than the standard mileage rate. H&r block coupons 2012 printable If Debbie's expenses are equal to or less than the standard mileage rate, she would not complete Form 2106. H&r block coupons 2012 printable If her expenses are more than the standard mileage rate, she would complete Form 2106 and report her total expenses and reimbursement (shown in box 12 of her Form W-2). H&r block coupons 2012 printable She would then claim the excess expenses as an itemized deduction. H&r block coupons 2012 printable Returning Excess Reimbursements Under an accountable plan, you are required to return any excess reimbursement or other expense allowances for your business expenses to the person paying the reimbursement or allowance. H&r block coupons 2012 printable Excess reimbursement means any amount for which you did not adequately account within a reasonable period of time. H&r block coupons 2012 printable For example, if you received a travel advance and you did not spend all the money on business-related expenses or you do not have proof of all your expenses, you have an excess reimbursement. H&r block coupons 2012 printable “ Adequate accounting ” and “ reasonable period of time ” were discussed earlier in this chapter. H&r block coupons 2012 printable Travel advance. H&r block coupons 2012 printable   You receive a travel advance if your employer provides you with an expense allowance before you actually have the expense, and the allowance is reasonably expected to be no more than your expense. H&r block coupons 2012 printable Under an accountable plan, you are required to adequately account to your employer for this advance and to return any excess within a reasonable period of time. H&r block coupons 2012 printable   If you do not adequately account for or do not return any excess advance within a reasonable period of time, the amount you do not account for or return will be treated as having been paid under a nonaccountable plan (discussed later). H&r block coupons 2012 printable Unproved amounts. H&r block coupons 2012 printable   If you do not prove that you actually traveled on each day for which you received a per diem or car allowance (proving the elements described in Table 5-1 ), you must return this unproved amount of the travel advance within a reasonable period of time. H&r block coupons 2012 printable If you do not do this, the unproved amount will be considered paid under a nonaccountable plan (discussed later). H&r block coupons 2012 printable Per diem allowance more than federal rate. H&r block coupons 2012 printable   If your employer's accountable plan pays you an allowance that is higher than the federal rate, you do not have to return the difference between the two rates for the period you can prove business-related travel expenses. H&r block coupons 2012 printable However, the difference will be reported as wages on your Form W-2. H&r block coupons 2012 printable This excess amount is considered paid under a nonaccountable plan (discussed later). H&r block coupons 2012 printable Example. H&r block coupons 2012 printable Your employer sends you on a 5-day business trip to Phoenix in March 2013 and gives you a $400 ($80 × 5 days) advance to cover your meals and incidental expenses. H&r block coupons 2012 printable The federal per diem for meals and incidental expenses for Phoenix is $71. H&r block coupons 2012 printable Your trip lasts only 3 days. H&r block coupons 2012 printable Under your employer's accountable plan, you must return the $160 ($80 × 2 days) advance for the 2 days you did not travel. H&r block coupons 2012 printable For the 3 days you did travel you do not have to return the $27 difference between the allowance you received and the federal rate for Phoenix (($80 − $71) × 3 days). H&r block coupons 2012 printable However, the $27 will be reported on your Form W-2 as wages. H&r block coupons 2012 printable Nonaccountable Plans A nonaccountable plan is a reimbursement or expense allowance arrangement that does not meet one or more of the three rules listed earlier under Accountable Plans. H&r block coupons 2012 printable In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan: Excess reimbursements you fail to return to your employer, and Reimbursement of nondeductible expenses related to your employer's business. H&r block coupons 2012 printable See Reimbursement of nondeductible expenses , earlier, under Accountable Plans. H&r block coupons 2012 printable An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. H&r block coupons 2012 printable This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses. H&r block coupons 2012 printable If you are not sure if the reimbursement or expense allowance arrangement is an accountable or nonaccountable plan, ask your employer. H&r block coupons 2012 printable Reporting your expenses under a nonaccountable plan. H&r block coupons 2012 printable   Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a nonaccountable plan with your wages, salary, or other pay. H&r block coupons 2012 printable Your employer will report the total in box 1 of your Form W-2. H&r block coupons 2012 printable    You must complete Form 2106 or 2106-EZ and itemize your deductions to deduct your expenses for travel, transportation, meals, or entertainment. H&r block coupons 2012 printable Your meal and entertainment expenses will be subject to the 50% limit discussed in chapter 2. H&r block coupons 2012 printable Also, your total expenses will be subject to the 2%-of-adjusted-gross-income limit that applies to most miscellaneous itemized deductions. H&r block coupons 2012 printable Example 1. H&r block coupons 2012 printable Kim's employer gives her $1,000 a month ($12,000 total for the year) for her business expenses. H&r block coupons 2012 printable Kim does not have to provide any proof of her expenses to her employer, and Kim can keep any funds that she does not spend. H&r block coupons 2012 printable Kim is being reimbursed under a nonaccountable plan. H&r block coupons 2012 printable Her employer will include the $12,000 on Kim's Form W-2 as if it were wages. H&r block coupons 2012 printable If Kim wants to deduct her business expenses, she must complete Form 2106 or 2106-EZ and itemize her deductions. H&r block coupons 2012 printable Example 2. H&r block coupons 2012 printable Kevin is paid $2,000 a month by his employer. H&r block coupons 2012 printable On days that he travels away from home on business, his employer designates $50 a day of his salary as paid to reimburse his travel expenses. H&r block coupons 2012 printable Because his employer would pay Kevin his monthly salary whether or not he was traveling away from home, the arrangement is a nonaccountable plan. H&r block coupons 2012 printable No part of the $50 a day designated by his employer is treated as paid under an accountable plan. H&r block coupons 2012 printable Rules for Independent Contractors and Clients This section provides rules for independent contractors who incur expenses on behalf of a client or customer. H&r block coupons 2012 printable The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers. H&r block coupons 2012 printable You are considered an independent contractor if you are self-employed and you perform services for a customer or client. H&r block coupons 2012 printable Accounting to Your Client If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. H&r block coupons 2012 printable If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. H&r block coupons 2012 printable You must keep adequate records of these expenses whether or not you account to your client for these expenses. H&r block coupons 2012 printable If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. H&r block coupons 2012 printable See 50% Limit in chapter 2. H&r block coupons 2012 printable Adequate accounting. H&r block coupons 2012 printable   As a self-employed person, you adequately account by reporting your actual expenses. H&r block coupons 2012 printable You should follow the recordkeeping rules in chapter 5 . H&r block coupons 2012 printable How to report. H&r block coupons 2012 printable   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter. H&r block coupons 2012 printable Required Records for Clients or Customers If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. H&r block coupons 2012 printable However, you must keep records if: You reimburse the contractor for entertainment expenses incurred on your behalf, and The contractor adequately accounts to you for these expenses. H&r block coupons 2012 printable Contractor adequately accounts. H&r block coupons 2012 printable   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . H&r block coupons 2012 printable Use your records as proof for a deduction on your tax return. H&r block coupons 2012 printable If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. H&r block coupons 2012 printable If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return. H&r block coupons 2012 printable Contractor does not adequately account. H&r block coupons 2012 printable    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. H&r block coupons 2012 printable You are not subject to the 50% limit on entertainment in this case. H&r block coupons 2012 printable You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. H&r block coupons 2012 printable However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year. H&r block coupons 2012 printable How To Use Per Diem Rate Tables This section contains information about the per diem rate substantiation methods available and the choice of rates you must make for the last 3 months of the year. H&r block coupons 2012 printable The Two Substantiation Methods High-low method. H&r block coupons 2012 printable   IRS notices list the localities that are treated under the high-low substantiation method as high-cost localities for all or part of the year. H&r block coupons 2012 printable Notice 2012–63, available at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/irb/2012–42_IRB/ar12. H&r block coupons 2012 printable html, lists the localities that are eligible for $242 ($65 meals and incidental expenses (M&IE)) per diem, effective October 1, 2012. H&r block coupons 2012 printable For travel on or after October 1, 2012, all other localities within CONUS are eligible for $163 ($52 M&IE) per diem under the high-low method. H&r block coupons 2012 printable   Notice 2013–65, available at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/pub/irs-drop/n-13–65. H&r block coupons 2012 printable pdf, lists the localities that are eligible for $251 ($65 M&IE) per diem, effective October 1, 2013. H&r block coupons 2012 printable For travel on or after October 1, 2013, the per diem for all other localities increased to $170 ($52 M&IE). H&r block coupons 2012 printable Regular federal per diem rate method. H&r block coupons 2012 printable   Regular federal per diem rates are published by the General Services Administration (GSA). H&r block coupons 2012 printable Both tables include the separate rate for meals and incidental expenses (M&IE) for each locality. H&r block coupons 2012 printable The rates listed for FY2013 at www. H&r block coupons 2012 printable gsa. H&r block coupons 2012 printable gov/perdiem are effective October 1, 2012 and those listed for FY2014 are effective October 1, 2013. H&r block coupons 2012 printable The standard rate for all locations within CONUS not specifically listed for FY2013 is $123 ($77 for lodging and $46 for M&IE). H&r block coupons 2012 printable For FY2014, this rate increased to $129 ($83 for lodging and $46 for M&IE). H&r block coupons 2012 printable Transition Rules The transition period covers the last 3 months of the calendar year, from the time that new rates are effective (generally October 1) through December 31. H&r block coupons 2012 printable During this period, you generally may change to the new rates or finish out the year with the rates you had been using. H&r block coupons 2012 printable High-low method. H&r block coupons 2012 printable   If you use the high-low substantiation method, when new rates become effective (generally October 1) you can either continue with the rates you used for the first part of the year or change to the new rates. H&r block coupons 2012 printable However, you must continue using the high-low method for the rest of the calendar year (through December 31). H&r block coupons 2012 printable If you are an employer, you must use the same rates for all employees reimbursed under the high-low method during that calendar year. H&r block coupons 2012 printable   The new rates and localities for the high-low method are included each year in a notice that is generally published in mid-to-late-September. H&r block coupons 2012 printable You can find the notice in the weekly Internal Revenue Bulletin (IRB) on the Internet at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/irb. H&r block coupons 2012 printable Federal per diem rate method. H&r block coupons 2012 printable   New CONUS per diem rates become effective on October 1 of each year and remain in effect through September 30 of the following year. H&r block coupons 2012 printable Employees being reimbursed under the per diem rate method during the first 9 months of a year (January 1–September 30) must continue under the same method through the end of that calendar year (December 31). H&r block coupons 2012 printable However, for travel by these employees from October 1 through December 31, you can choose to continue using the same per diem rates or use the new rates. H&r block coupons 2012 printable   The new federal CONUS per diem rates are published each year, generally early in September, on the Internet. H&r block coupons 2012 printable Go to www. H&r block coupons 2012 printable gsa. H&r block coupons 2012 printable gov/perdiem. H&r block coupons 2012 printable Per diem rates for localities listed for FY2014 may change at any time. H&r block coupons 2012 printable To be sure you have the most current rate, check www. H&r block coupons 2012 printable gsa. H&r block coupons 2012 printable gov/perdiem. H&r block coupons 2012 printable Completing Forms 2106 and 2106-EZ This section briefly describes how employees complete Forms 2106 and 2106-EZ. H&r block coupons 2012 printable Table 6-1 explains what the employer reports on Form W-2 and what the employee reports on Form 2106. H&r block coupons 2012 printable The instructions for the forms have more information on completing them. H&r block coupons 2012 printable If you are self-employed, do not file Form 2106 or 2106-EZ. H&r block coupons 2012 printable Report your expenses on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). H&r block coupons 2012 printable See the instructions for the form that you must file. H&r block coupons 2012 printable Form 2106-EZ. H&r block coupons 2012 printable   You may be able to use the shorter Form 2106-EZ to claim your employee business expenses. H&r block coupons 2012 printable You can use this form if you meet all the following conditions. H&r block coupons 2012 printable You are an employee deducting ordinary and necessary expenses attributable to your job. H&r block coupons 2012 printable You were not reimbursed by your employer for your expenses (amounts included in box 1 of your Form W-2 are not considered reimbursements). H&r block coupons 2012 printable If you are claiming car expenses, you are using the standard mileage rate. H&r block coupons 2012 printable Car expenses. H&r block coupons 2012 printable   If you used a car to perform your job as an employee, you may be able to deduct certain car expenses. H&r block coupons 2012 printable These are generally figured on Form 2106, Part II, and then claimed on Form 2106, Part I, line 1, Column A. H&r block coupons 2012 printable Car expenses using the standard mileage rate can also be figured on Form 2106-EZ by completing Part II and Part I, line 1. H&r block coupons 2012 printable Information on use of cars. H&r block coupons 2012 printable   If you claim any deduction for the business use of a car, you must answer certain questions and provide information about the use of the car. H&r block coupons 2012 printable The information relates to the following items. H&r block coupons 2012 printable Date placed in service. H&r block coupons 2012 printable Mileage (total, business, commuting, and other personal mileage). H&r block coupons 2012 printable Percentage of business use. H&r block coupons 2012 printable After-work use. H&r block coupons 2012 printable Use of other vehicles. H&r block coupons 2012 printable Whether you have evidence to support the deduction. H&r block coupons 2012 printable Whether or not the evidence is written. H&r block coupons 2012 printable Employees must complete Form 2106, Part II, Section A, or Form 2106-EZ, Part II, to provide this information. H&r block coupons 2012 printable Standard mileage rate. H&r block coupons 2012 printable   If you claim a deduction based on the standard mileage rate instead of your actual expenses, you must complete Form 2106, Part II, Section B. H&r block coupons 2012 printable The amount on line 22 (Section B) is carried to Form 2106, Part I, line 1. H&r block coupons 2012 printable In addition, on Part 1, line 2, you can deduct parking fees and tolls that apply to the business use of the car. H&r block coupons 2012 printable If you file Form 2106-EZ, complete Part I, line 1, for the standard mileage rate and line 2 for parking fees and tolls. H&r block coupons 2012 printable See Standard Mileage Rate in chapter 4 for information on using this rate. H&r block coupons 2012 printable Actual expenses. H&r block coupons 2012 printable   If you claim a deduction based on actual car expenses, you cannot use Form 2106-EZ. H&r block coupons 2012 printable You must complete Form 2106, Part II, Section C. H&r block coupons 2012 printable In addition, unless you lease your car, you must complete Section D to show your depreciation deduction and any section 179 deduction you claim. H&r block coupons 2012 printable   If you are still using a car that is fully depreciated, continue to complete Section C. H&r block coupons 2012 printable Since you have no depreciation deduction, enter zero on line 28. H&r block coupons 2012 printable In this case, do not complete Section D. H&r block coupons 2012 printable Car rentals. H&r block coupons 2012 printable   If you claim car rental expenses on Form 2106, line 24a, you may have to reduce that expense by an inclusion amount as described in chapter 4. H&r block coupons 2012 printable If so, you can show your car expenses and any inclusion amount as follows. H&r block coupons 2012 printable Compute the inclusion amount without taking into account your business use percentage for the tax year. H&r block coupons 2012 printable Report the inclusion amount from (1) on Form 2106, Part II, line 24b. H&r block coupons 2012 printable Report on line 24c the net amount of car rental expenses (total car rental expenses minus the inclusion amount computed in (1)). H&r block coupons 2012 printable The net amount of car rental expenses will be adjusted on Form 2106, Part II, line 27, to reflect the percentage of business use for the tax year. H&r block coupons 2012 printable Transportation expenses. H&r block coupons 2012 printable   Show your transportation expenses that did not involve overnight travel on Form 2106, line 2, Column A, or on Form 2106-EZ, Part I, line 2. H&r block coupons 2012 printable Also include on this line business expenses you have for parking fees and tolls. H&r block coupons 2012 printable Do not include expenses of operating your car or expenses of commuting between your home and work. H&r block coupons 2012 printable Employee business expenses other than meals and entertainment. H&r block coupons 2012 printable   Show your other employee business expenses on Form 2106, lines 3 and 4, Column A, or Form 2106-EZ, lines 3 and 4. H&r block coupons 2012 printable Do not include expenses for meals and entertainment on those lines. H&r block coupons 2012 printable Line 4 is for expenses such as gifts, educational expenses (tuition and books), office-in-the-home expenses, and trade and professional publications. H&r block coupons 2012 printable    If line 4 expenses are the only ones you are claiming, you received no reimbursements (or the reimbursements were all included in box 1 of your Form W-2), and the Special Rules discussed later do not apply to you, do not complete Form 2106 or 2106-EZ. H&r block coupons 2012 printable Claim these amounts directly on Schedule A (Form 1040), line 21. H&r block coupons 2012 printable List the type and amount of each expense on the dotted lines and include the total on line 21. H&r block coupons 2012 printable Meal and entertainment expenses. H&r block coupons 2012 printable   Show the full amount of your expenses for business-related meals and entertainment on Form 2106, line 5, Column B. H&r block coupons 2012 printable Include meals while away from your tax home overnight and other business meals and entertainment. H&r block coupons 2012 printable Enter 50% of the line 8, Column B, meal and entertainment expenses on line 9, Column B. H&r block coupons 2012 printable   If you file Form 2106-EZ, enter the full amount of your meals and entertainment on the line to the left of line 5 and multiply the total by 50%. H&r block coupons 2012 printable Enter the result on line 5. H&r block coupons 2012 printable Hours of service limits. H&r block coupons 2012 printable   If you are subject to the Department of Transportation's “hours of service” limits (as explained earlier under Individuals subject to “hours of service” limits in chapter 2), use 80% instead of 50% for meals while away from your tax home. H&r block coupons 2012 printable Reimbursements. H&r block coupons 2012 printable   Enter on Form 2106, line 7 (you cannot use Form 2106-EZ) the amounts your employer (or third party) reimbursed you that were not reported to you in box 1 of your Form W-2. H&r block coupons 2012 printable This includes any amount reported under code L in box 12 of Form W-2. H&r block coupons 2012 printable Allocating your reimbursement. H&r block coupons 2012 printable   If you were reimbursed under an accountable plan and want to deduct excess expenses that were not reimbursed, you may have to allocate your reimbursement. H&r block coupons 2012 printable This is necessary when your employer pays your reimbursement in the following manner: Pays you a single amount that covers meals and/or entertainment, as well as other business expenses, and Does not clearly identify how much is for deductible meals and/or entertainment. H&r block coupons 2012 printable You must allocate that single payment so that you know how much to enter on Form 2106, line 7, Column A and Column B. H&r block coupons 2012 printable Example. H&r block coupons 2012 printable Rob's employer paid him an expense allowance of $12,000 this year under an accountable plan. H&r block coupons 2012 printable The $12,000 payment consisted of $5,000 for airfare and $7,000 for meals, entertainment, and car expenses. H&r block coupons 2012 printable The employer did not clearly show how much of the $7,000 was for the cost of deductible meals and entertainment. H&r block coupons 2012 printable Rob actually spent $14,000 during the year ($5,500 for airfare, $4,500 for meals and entertainment, and $4,000 for car expenses). H&r block coupons 2012 printable Since the airfare allowance was clearly identified, Rob knows that $5,000 of the payment goes in Column A, line 7, of Form 2106. H&r block coupons 2012 printable To allocate the remaining $7,000, Rob uses the worksheet from the Instructions for Form 2106. H&r block coupons 2012 printable His completed worksheet follows. H&r block coupons 2012 printable Reimbursement Allocation Worksheet (Keep for your records)   1. H&r block coupons 2012 printable Enter the total amount of reimbursements your employer gave you that were not reported to you in box 1 of Form W-2 $7,000   2. H&r block coupons 2012 printable Enter the total amount of your expenses for the periods covered by this reimbursement 8,500   3. H&r block coupons 2012 printable Of the amount on line 2, enter your total expense for meals and entertainment 4,500   4. H&r block coupons 2012 printable Divide line 3 by line 2. H&r block coupons 2012 printable Enter the result as a decimal (rounded to at least three places) . H&r block coupons 2012 printable 529   5. H&r block coupons 2012 printable Multiply line 1 by line 4. H&r block coupons 2012 printable Enter the result here and in Column B, line 7 3,703   6. H&r block coupons 2012 printable Subtract line 5 from line 1. H&r block coupons 2012 printable Enter the result here and in Column A, line 7 $3,297 On line 7 of Form 2106, Rob enters $8,297 ($5,000 airfare and $3,297 of the $7,000) in Column A and $3,703 (of the $7,000) in Column B. H&r block coupons 2012 printable After you complete the form. H&r block coupons 2012 printable   After you have completed your Form 2106 or 2106-EZ, follow the directions on that form to deduct your expenses on the appropriate line of your tax return. H&r block coupons 2012 printable For most taxpayers, this is line 21 of Schedule A (Form 1040). H&r block coupons 2012 printable However, if you are a government official paid on a fee basis, a performing artist, an Armed Forces reservist, or a disabled employee with impairment-related work expenses, see Special Rules , later. H&r block coupons 2012 printable Limits on employee business expenses. H&r block coupons 2012 printable   Your employee business expenses may be subject to either of the limits described next. H&r block coupons 2012 printable They are figured in the following order on the specified form. H&r block coupons 2012 printable 1. H&r block coupons 2012 printable Limit on meals and entertainment. H&r block coupons 2012 printable   Certain meal and entertainment expenses are subject to a 50% limit. H&r block coupons 2012 printable If you are an employee, you figure this limit on line 9 of Form 2106 or line 5 of Form 2106-EZ. H&r block coupons 2012 printable (See 50% Limit in chapter 2. H&r block coupons 2012 printable ) 2. H&r block coupons 2012 printable Limit on miscellaneous itemized deductions. H&r block coupons 2012 printable   If you are an employee, deduct your employee business expenses (as figured on Form 2106 or 2106-EZ) on line 21 of Schedule A (Form 1040). H&r block coupons 2012 printable Most miscellaneous itemized deductions, including employee business expenses, are subject to a 2%-of-adjusted-gross-income limit. H&r block coupons 2012 printable This limit is figured on line 26 of Schedule A (Form 1040). H&r block coupons 2012 printable 3. H&r block coupons 2012 printable Limit on total itemized deductions. H&r block coupons 2012 printable   If your adjusted gross income (line 38 of Form 1040) is more than $300,000 ($150,000 if you are married filing separately), the total of certain itemized deductions, including employee business expenses, may be limited. H&r block coupons 2012 printable See your form instructions for information on how to figure this limit. H&r block coupons 2012 printable Special Rules This section discusses special rules that apply only to Armed Forces reservists, government officials who are paid on a fee basis, performing artists, and disabled employees with impairment-related work expenses. H&r block coupons 2012 printable Armed Forces Reservists Traveling More Than 100 Miles From Home If you are a member of a reserve component of the Armed Forces of the United States and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. H&r block coupons 2012 printable The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. H&r block coupons 2012 printable See Per Diem and Car Allowances , earlier, for more information. H&r block coupons 2012 printable Any expenses in excess of these amounts can be claimed only as a miscellaneous itemized deduction subject to the 2% limit. H&r block coupons 2012 printable Member of a reserve component. H&r block coupons 2012 printable   You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Marine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; the Air National Guard of the United States; or the Reserve Corps of the Public Health Service. H&r block coupons 2012 printable How to report. H&r block coupons 2012 printable   If you have reserve-related travel that takes you more than 100 miles from home, you should first complete Form 2106 or Form 2106-EZ. H&r block coupons 2012 printable Then include your expenses for reserve travel over 100 miles from home, up to the federal rate, from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. H&r block coupons 2012 printable Subtract this amount from the total on Form 2106, line 10, or Form 2106-EZ, line 6, and deduct the balance as an itemized deduction on Schedule A (Form 1040), line 21. H&r block coupons 2012 printable   You cannot deduct expenses of travel that does not take you more than 100 miles from home as an adjustment to gross income. H&r block coupons 2012 printable Instead, you must complete Form 2106 or 2106-EZ and deduct those expenses as an itemized deduction on Schedule A (Form 1040), line 21. H&r block coupons 2012 printable Officials Paid on a Fee Basis Certain fee-basis officials can claim their employee business expenses whether or not they itemize their other deductions on Schedule A (Form 1040). H&r block coupons 2012 printable Fee-basis officials are persons who are employed by a state or local government and who are paid in whole or in part on a fee basis. H&r block coupons 2012 printable They can deduct their business expenses in performing services in that job as an adjustment to gross income rather than as a miscellaneous itemized deduction. H&r block coupons 2012 printable If you are a fee-basis official, include your employee business expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. H&r block coupons 2012 printable Expenses of Certain Performing Artists If you are a performing artist, you may qualify to deduct your employee business expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction. H&r block coupons 2012 printable To qualify, you must meet all of the following requirements. H&r block coupons 2012 printable During the tax year, you perform services in the performing arts as an employee for at least two employers. H&r block coupons 2012 printable You receive at least $200 each from any two of these employers. H&r block coupons 2012 printable Your related performing-arts business expenses are more than 10% of your gross income from the performance of those services. H&r block coupons 2012 printable Your adjusted gross income is not more than $16,000 before deducting these business expenses. H&r block coupons 2012 printable Special rules for married persons. H&r block coupons 2012 printable   If you are married, you must file a joint return unless you lived apart from your spouse at all times during the tax year. H&r block coupons 2012 printable If you file a joint return, you must figure requirements (1), (2), and (3) separately for both you and your spouse. H&r block coupons 2012 printable However, requirement (4) applies to your and your spouse's combined adjusted gross income. H&r block coupons 2012 printable Where to report. H&r block coupons 2012 printable   If you meet all of the above requirements, you should first complete Form 2106 or 2106-EZ. H&r block coupons 2012 printable Then you include your performing-arts-related expenses from Form 2106, line 10, or Form 2106-EZ, line 6, in the total on Form 1040, line 24. H&r block coupons 2012 printable   If you do not meet all of the above requirements, you do not qualify to deduct your expenses as an adjustment to gross income. H&r block coupons 2012 printable Instead, you must complete Form 2106 or 2106-EZ and deduct your employee business expenses as an itemized deduction on Schedule A (Form 1040), line 21. H&r block coupons 2012 printable Impairment-Related Work Expenses of Disabled Employees If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. H&r block coupons 2012 printable After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dotted line next to line 28. H&r block coupons 2012 printable Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21. H&r block coupons 2012 printable Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work. H&r block coupons 2012 printable You are disabled if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. H&r block coupons 2012 printable You can deduct impairment-related expenses as business expenses if they are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. H&r block coupons 2012 printable Example 1. H&r block coupons 2012 printable You are blind. H&r block coupons 2012 printable You must use a reader to do your work. H&r block coupons 2012 printable You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. H&r block coupons 2012 printable The reader's services are only for your work. H&r block coupons 2012 printable You can deduct your expenses for the reader as business expenses. H&r block coupons 2012 printable Example 2. H&r block coupons 2012 printable You are deaf. H&r block coupons 2012 printable You must use a sign language interpreter during meetings while you are at work. H&r block coupons 2012 printable The interpreter's services are used only for your work. H&r block coupons 2012 printable You can deduct your expenses for the interpreter as business expenses. H&r block coupons 2012 printable Prev  Up  Next   Home   More Online Publications
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H&r block coupons 2012 printable Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). H&r block coupons 2012 printable Low Income Taxpayer Clinics (LITCs). H&r block coupons 2012 printable Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. H&r block coupons 2012 printable All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. H&r block coupons 2012 printable The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). H&r block coupons 2012 printable After notice and hearing, the bankruptcy court may extend the period for another 30 days. H&r block coupons 2012 printable Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable Individual debtors should use their home address when filing Form 1040 with the IRS. H&r block coupons 2012 printable Returns should not be filed “in care of” the trustee's address. H&r block coupons 2012 printable Ordering tax transcripts and copies of returns. H&r block coupons 2012 printable   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. H&r block coupons 2012 printable The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. H&r block coupons 2012 printable If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. H&r block coupons 2012 printable Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. H&r block coupons 2012 printable Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. H&r block coupons 2012 printable A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. H&r block coupons 2012 printable To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. H&r block coupons 2012 printable It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. H&r block coupons 2012 printable 00 per tax return for copies of the returns. H&r block coupons 2012 printable Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. H&r block coupons 2012 printable If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. H&r block coupons 2012 printable Tax returns and payment of taxes in chapter 11 cases. H&r block coupons 2012 printable   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. H&r block coupons 2012 printable Disclosure of debtor's return information to trustee. H&r block coupons 2012 printable   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. H&r block coupons 2012 printable If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. H&r block coupons 2012 printable    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. H&r block coupons 2012 printable Material interest is generally defined as a financial or monetary interest. H&r block coupons 2012 printable Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. H&r block coupons 2012 printable   However, the U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. H&r block coupons 2012 printable Disclosure of bankruptcy estate's return information to debtor. H&r block coupons 2012 printable    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. H&r block coupons 2012 printable Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. H&r block coupons 2012 printable Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. H&r block coupons 2012 printable Chapter 13 relief is not available to corporations or partnerships. H&r block coupons 2012 printable The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. H&r block coupons 2012 printable In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Individual Income Tax Return. H&r block coupons 2012 printable On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. H&r block coupons 2012 printable Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. H&r block coupons 2012 printable To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. H&r block coupons 2012 printable See Debt Cancellation, later. H&r block coupons 2012 printable Interest on trust accounts in chapter 13 cases. H&r block coupons 2012 printable   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. H&r block coupons 2012 printable This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Trustee system. H&r block coupons 2012 printable The interest is also not taxable to the trustee as income. H&r block coupons 2012 printable Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. H&r block coupons 2012 printable The bankruptcy estate in a chapter 7 case is represented by a trustee. H&r block coupons 2012 printable The trustee is appointed to administer the estate and liquidate any nonexempt assets. H&r block coupons 2012 printable In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. H&r block coupons 2012 printable However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. H&r block coupons 2012 printable During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. H&r block coupons 2012 printable The bankruptcy trustee files a Form 1041 for the bankruptcy estate. H&r block coupons 2012 printable However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). H&r block coupons 2012 printable Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. H&r block coupons 2012 printable Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). H&r block coupons 2012 printable For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. H&r block coupons 2012 printable Debtor's Election To End Tax Year – Form 1040 Short tax years. H&r block coupons 2012 printable   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. H&r block coupons 2012 printable If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. H&r block coupons 2012 printable The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. H&r block coupons 2012 printable   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. H&r block coupons 2012 printable Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. H&r block coupons 2012 printable    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. H&r block coupons 2012 printable Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. H&r block coupons 2012 printable Making the Election - Filing Requirements First short tax year. H&r block coupons 2012 printable   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. H&r block coupons 2012 printable The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. H&r block coupons 2012 printable Second short tax year. H&r block coupons 2012 printable   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. H&r block coupons 2012 printable   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. H&r block coupons 2012 printable To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. H&r block coupons 2012 printable Example. H&r block coupons 2012 printable Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. H&r block coupons 2012 printable If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. H&r block coupons 2012 printable Jane's second short year runs from May 8, 2012, through December 31, 2012. H&r block coupons 2012 printable To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. H&r block coupons 2012 printable To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. H&r block coupons 2012 printable The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Individual Tax Return. H&r block coupons 2012 printable The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. H&r block coupons 2012 printable The debtor must file Form 4868 by the due date of the return for the first short tax year. H&r block coupons 2012 printable The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. H&r block coupons 2012 printable Election by debtor's spouse. H&r block coupons 2012 printable   If the debtor is married, the debtor's spouse may join in the election to end the tax year. H&r block coupons 2012 printable If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. H&r block coupons 2012 printable The debtor must elect by the due date for filing the return for the first short tax year. H&r block coupons 2012 printable Once the election is made, it cannot be revoked for the first short tax year. H&r block coupons 2012 printable However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. H&r block coupons 2012 printable Later bankruptcy of spouse. H&r block coupons 2012 printable    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. H&r block coupons 2012 printable   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. H&r block coupons 2012 printable If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. H&r block coupons 2012 printable However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. H&r block coupons 2012 printable The debtor and the spouse are precluded from this election because they have different tax years. H&r block coupons 2012 printable This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. H&r block coupons 2012 printable Example 1. H&r block coupons 2012 printable Paul and Mary Harris are calendar-year taxpayers. H&r block coupons 2012 printable Paul's voluntary chapter 7 bankruptcy case begins on March 4. H&r block coupons 2012 printable If Paul does not make an election, his tax year does not end on March 3. H&r block coupons 2012 printable If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. H&r block coupons 2012 printable Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. H&r block coupons 2012 printable They must make the election by July 15, the due date for filing the joint return. H&r block coupons 2012 printable Example 2. H&r block coupons 2012 printable Fred and Ethel Barnes are calendar-year taxpayers. H&r block coupons 2012 printable Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. H&r block coupons 2012 printable Ethel could elect to end her tax year on October 31. H&r block coupons 2012 printable If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. H&r block coupons 2012 printable Her first tax year is January 1–October 31, and her second year is November 1–December 31. H&r block coupons 2012 printable If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. H&r block coupons 2012 printable If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. H&r block coupons 2012 printable Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. H&r block coupons 2012 printable Example 3. H&r block coupons 2012 printable Jack and Karen Thomas are calendar-year taxpayers. H&r block coupons 2012 printable Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. H&r block coupons 2012 printable Karen elected to close her tax year on April 9 and Jack joins in Karen's election. H&r block coupons 2012 printable Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. H&r block coupons 2012 printable The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. H&r block coupons 2012 printable Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). H&r block coupons 2012 printable If Karen does join in, she would have the same 3 short tax years as Jack. H&r block coupons 2012 printable Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. H&r block coupons 2012 printable Annualizing taxable income. H&r block coupons 2012 printable   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. H&r block coupons 2012 printable See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. H&r block coupons 2012 printable Dismissal of bankruptcy case. H&r block coupons 2012 printable   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. H&r block coupons 2012 printable It is as if no bankruptcy estate was created for tax purposes. H&r block coupons 2012 printable In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. H&r block coupons 2012 printable Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. H&r block coupons 2012 printable Attach a statement to the amended returns explaining why the debtor is filing an amended return. H&r block coupons 2012 printable Taxes and the Bankruptcy Estate Property of the bankruptcy estate. H&r block coupons 2012 printable   At the commencement of a bankruptcy case a bankruptcy estate is created. H&r block coupons 2012 printable Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. H&r block coupons 2012 printable This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. H&r block coupons 2012 printable However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. H&r block coupons 2012 printable Excluded property is never included in the estate. H&r block coupons 2012 printable Transfer of assets between debtor and bankruptcy estate. H&r block coupons 2012 printable   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. H&r block coupons 2012 printable The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. H&r block coupons 2012 printable For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. H&r block coupons 2012 printable The estate assumes the same basis, holding period, and character of the transferred assets. H&r block coupons 2012 printable Also, the estate generally accounts for the transferred assets in the same manner as debtor. H&r block coupons 2012 printable   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. H&r block coupons 2012 printable The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. H&r block coupons 2012 printable Abandoned property. H&r block coupons 2012 printable    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. H&r block coupons 2012 printable If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. H&r block coupons 2012 printable Separate taxable entity. H&r block coupons 2012 printable   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. H&r block coupons 2012 printable The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Income Tax Return for Estates and Trusts, and paying its taxes. H&r block coupons 2012 printable The debtor remains responsible for filing his or her own returns on Form 1040, U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Individual Income Tax Return, and paying taxes on income that does not belong to the estate. H&r block coupons 2012 printable Employer identification number. H&r block coupons 2012 printable   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. H&r block coupons 2012 printable The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. H&r block coupons 2012 printable See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. H&r block coupons 2012 printable    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. H&r block coupons 2012 printable Income, deductions, and credits – Form 1040. H&r block coupons 2012 printable   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). H&r block coupons 2012 printable Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. H&r block coupons 2012 printable The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. H&r block coupons 2012 printable See Debt Cancellation, below. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. H&r block coupons 2012 printable Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. H&r block coupons 2012 printable However, other exclusions, such as the insolvency exclusion, may apply. H&r block coupons 2012 printable Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. H&r block coupons 2012 printable    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. H&r block coupons 2012 printable Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. H&r block coupons 2012 printable   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. H&r block coupons 2012 printable Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. H&r block coupons 2012 printable Income of the estate in individual chapter 11 cases. H&r block coupons 2012 printable    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. H&r block coupons 2012 printable Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable C. H&r block coupons 2012 printable section 1115). H&r block coupons 2012 printable Note. H&r block coupons 2012 printable A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. H&r block coupons 2012 printable Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). H&r block coupons 2012 printable Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. H&r block coupons 2012 printable See Administrative expenses, below. H&r block coupons 2012 printable Conversion or dismissal of chapter 11 cases. H&r block coupons 2012 printable   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. H&r block coupons 2012 printable If the chapter 11 case is converted to a chapter 7 case, 11 U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable C. H&r block coupons 2012 printable section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. H&r block coupons 2012 printable Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. H&r block coupons 2012 printable If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. H&r block coupons 2012 printable Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). H&r block coupons 2012 printable Administrative expenses. H&r block coupons 2012 printable   Allowable expenses include administrative expenses. H&r block coupons 2012 printable    Administrative expenses can only be deducted by the estate, never by the debtor. H&r block coupons 2012 printable   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. H&r block coupons 2012 printable These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. H&r block coupons 2012 printable See IRC section 67(e). H&r block coupons 2012 printable Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. H&r block coupons 2012 printable See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. H&r block coupons 2012 printable Administrative expense loss. H&r block coupons 2012 printable   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. H&r block coupons 2012 printable The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. H&r block coupons 2012 printable The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. H&r block coupons 2012 printable For a discussion of NOLs, see Publication 536. H&r block coupons 2012 printable Attribute carryovers. H&r block coupons 2012 printable   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. H&r block coupons 2012 printable These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. H&r block coupons 2012 printable The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. H&r block coupons 2012 printable   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. H&r block coupons 2012 printable See Debt Cancellation, later. H&r block coupons 2012 printable   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. H&r block coupons 2012 printable The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. H&r block coupons 2012 printable See Administrative expense loss, above. H&r block coupons 2012 printable Passive and at-risk activities. H&r block coupons 2012 printable   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. H&r block coupons 2012 printable Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. H&r block coupons 2012 printable These transfers include the return of exempt property and abandonment of estate property to the debtor. H&r block coupons 2012 printable Carrybacks from the debtor's activities. H&r block coupons 2012 printable   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. H&r block coupons 2012 printable Carrybacks from the bankruptcy estate. H&r block coupons 2012 printable   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. H&r block coupons 2012 printable The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. H&r block coupons 2012 printable Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. H&r block coupons 2012 printable    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. H&r block coupons 2012 printable The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. H&r block coupons 2012 printable These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. H&r block coupons 2012 printable The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. H&r block coupons 2012 printable The same method must be used to allocate the income and the withheld tax. H&r block coupons 2012 printable Example. H&r block coupons 2012 printable If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. H&r block coupons 2012 printable Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. H&r block coupons 2012 printable See IRC section 31(a). H&r block coupons 2012 printable   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. H&r block coupons 2012 printable In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. H&r block coupons 2012 printable    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. H&r block coupons 2012 printable The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). H&r block coupons 2012 printable   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. H&r block coupons 2012 printable Self-employment taxes in individual chapter 11 cases. H&r block coupons 2012 printable   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. H&r block coupons 2012 printable Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. H&r block coupons 2012 printable   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. H&r block coupons 2012 printable Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. H&r block coupons 2012 printable This schedule includes self-employment income earned post-petition and the attributable deductions. H&r block coupons 2012 printable The debtor must pay any self-employment tax imposed by IRC section 1401. H&r block coupons 2012 printable Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. H&r block coupons 2012 printable   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. H&r block coupons 2012 printable However, section 1115 of the Bankruptcy Code (11 U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable C. H&r block coupons 2012 printable section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. H&r block coupons 2012 printable See Notice 2006-83. H&r block coupons 2012 printable   The reporting and withholding obligations of a debtor's employer also do not change. H&r block coupons 2012 printable An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. H&r block coupons 2012 printable Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. H&r block coupons 2012 printable   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. H&r block coupons 2012 printable See IRC section 6109(a)(2). H&r block coupons 2012 printable As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). H&r block coupons 2012 printable   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. H&r block coupons 2012 printable See Notice 2006-83. H&r block coupons 2012 printable An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. H&r block coupons 2012 printable   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. H&r block coupons 2012 printable However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. H&r block coupons 2012 printable See Employment Tax Regulations section 31. H&r block coupons 2012 printable 3402(f)(2)-1. H&r block coupons 2012 printable Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. H&r block coupons 2012 printable See IRC section 6654(a). H&r block coupons 2012 printable Notice required in converted and dismissed cases. H&r block coupons 2012 printable   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. H&r block coupons 2012 printable The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. H&r block coupons 2012 printable This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. H&r block coupons 2012 printable   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. H&r block coupons 2012 printable Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. H&r block coupons 2012 printable However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. H&r block coupons 2012 printable After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. H&r block coupons 2012 printable Employment taxes. H&r block coupons 2012 printable   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. H&r block coupons 2012 printable See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. H&r block coupons 2012 printable   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. H&r block coupons 2012 printable For a further discussion of employment taxes, see Employment Taxes, later. H&r block coupons 2012 printable Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . H&r block coupons 2012 printable The bankruptcy court case number is . H&r block coupons 2012 printable Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. H&r block coupons 2012 printable   Year Taxpayer   Estate 1. H&r block coupons 2012 printable Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. H&r block coupons 2012 printable Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. H&r block coupons 2012 printable Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. H&r block coupons 2012 printable Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. H&r block coupons 2012 printable   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. H&r block coupons 2012 printable This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. H&r block coupons 2012 printable   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). H&r block coupons 2012 printable   These amounts are generally adjusted annually. H&r block coupons 2012 printable See the present year Form 1041 Instructions at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/form1041 for the current dollar amounts. H&r block coupons 2012 printable Accounting period. H&r block coupons 2012 printable   A bankruptcy estate may have a fiscal year. H&r block coupons 2012 printable However, this period cannot be longer than 12 months. H&r block coupons 2012 printable Change of accounting period. H&r block coupons 2012 printable   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. H&r block coupons 2012 printable This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. H&r block coupons 2012 printable The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. H&r block coupons 2012 printable Employer identification number. H&r block coupons 2012 printable   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. H&r block coupons 2012 printable The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. H&r block coupons 2012 printable    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. H&r block coupons 2012 printable   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/businesses/small. H&r block coupons 2012 printable The EIN is issued immediately once the application information is validated. H&r block coupons 2012 printable By telephone at 1-800-829-4933 from 7:00 a. H&r block coupons 2012 printable m. H&r block coupons 2012 printable to 7:00 p. H&r block coupons 2012 printable m. H&r block coupons 2012 printable in the trustee's or debtor-in-possession's local time zone. H&r block coupons 2012 printable Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. H&r block coupons 2012 printable   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. H&r block coupons 2012 printable For more details, see Pub. H&r block coupons 2012 printable 583, Starting a Business and Keeping Records. H&r block coupons 2012 printable   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. H&r block coupons 2012 printable Figuring tax due. H&r block coupons 2012 printable   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. H&r block coupons 2012 printable However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. H&r block coupons 2012 printable The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. H&r block coupons 2012 printable The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. H&r block coupons 2012 printable Tax rate schedule. H&r block coupons 2012 printable The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. H&r block coupons 2012 printable When to file. H&r block coupons 2012 printable   Calendar year bankruptcy estates must file Form 1041 by April 15th. H&r block coupons 2012 printable Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. H&r block coupons 2012 printable For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. H&r block coupons 2012 printable If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. H&r block coupons 2012 printable Transmittal for Form 1040. H&r block coupons 2012 printable   Form 1041 is used as a transmittal for Form 1040. H&r block coupons 2012 printable If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. H&r block coupons 2012 printable   Prepare the bankruptcy estate's return by completing Form 1040. H&r block coupons 2012 printable In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. H&r block coupons 2012 printable ” Then, attach Form 1040 to the Form 1041 transmittal. H&r block coupons 2012 printable Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. H&r block coupons 2012 printable An example of a bankruptcy estate's tax return is prepared below. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. H&r block coupons 2012 printable Payment of Tax Due Payment methods. H&r block coupons 2012 printable   Payment of tax due may be made by check or money order or by credit or debit card. H&r block coupons 2012 printable For information on how to make payments electronically by credit or debit card, go to irs. H&r block coupons 2012 printable gov/e-pay. H&r block coupons 2012 printable      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. H&r block coupons 2012 printable To enroll in EFTPS, go to eftps. H&r block coupons 2012 printable gov or call 1-800-555-4477. H&r block coupons 2012 printable For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. H&r block coupons 2012 printable Payment voucher – Form 1041-V. H&r block coupons 2012 printable   Form 1041-V accompanies payments made by check or money order for Form 1041. H&r block coupons 2012 printable The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. H&r block coupons 2012 printable Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. H&r block coupons 2012 printable We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. H&r block coupons 2012 printable Estimated tax – Form 1041-ES. H&r block coupons 2012 printable   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. H&r block coupons 2012 printable See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. H&r block coupons 2012 printable Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. H&r block coupons 2012 printable Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. H&r block coupons 2012 printable If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. H&r block coupons 2012 printable   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. H&r block coupons 2012 printable Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. H&r block coupons 2012 printable The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. H&r block coupons 2012 printable If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. H&r block coupons 2012 printable , with their individual income tax returns. H&r block coupons 2012 printable Tax Return Example – Form 1041 This publication is not revised annually. H&r block coupons 2012 printable Future changes to the forms and their instructions may not be reflected in this example. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable The following return was prepared for tax year 2011. H&r block coupons 2012 printable In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). H&r block coupons 2012 printable Facts and circumstances. H&r block coupons 2012 printable   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. H&r block coupons 2012 printable Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. H&r block coupons 2012 printable   The estate received the following assets from Mr. H&r block coupons 2012 printable Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. H&r block coupons 2012 printable   Also, the estate received a $251,500 capital loss carryover. H&r block coupons 2012 printable   Mr. H&r block coupons 2012 printable Smith's bankruptcy case was closed on December 31, 2011. H&r block coupons 2012 printable During 2011, Mr. H&r block coupons 2012 printable Smith was relieved of $70,000 of debt by the bankruptcy court. H&r block coupons 2012 printable The estate chose a calendar year as its tax year. H&r block coupons 2012 printable Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. H&r block coupons 2012 printable Schedule B (Form 1040). H&r block coupons 2012 printable    The certificate of deposit earned $5,500 of interest during 2011. H&r block coupons 2012 printable Joan reports this interest on Schedule B. H&r block coupons 2012 printable She completes this schedule and enters the result on Form 1040. H&r block coupons 2012 printable Form 4562. H&r block coupons 2012 printable   Joan enters the depreciation allowed on Form 4562. H&r block coupons 2012 printable She completes the form and enters the result on Schedule E. H&r block coupons 2012 printable Schedule E (Form 1040). H&r block coupons 2012 printable   The commercial real estate was rented through the date of sale. H&r block coupons 2012 printable Joan reports the income and expenses on Schedule E. H&r block coupons 2012 printable She enters the net income on Form 1040. H&r block coupons 2012 printable Form 4797. H&r block coupons 2012 printable   The commercial real estate was sold on July 1, 2011, for $280,000. H&r block coupons 2012 printable The property was purchased in 2001 at a cost of $250,000. H&r block coupons 2012 printable The total depreciation allowable as of the date of sale was $120,000. H&r block coupons 2012 printable Additionally, $25,000 of selling expenses were incurred. H&r block coupons 2012 printable Joan reports the gain or loss from the sale on Form 4797. H&r block coupons 2012 printable She completes the form and enters the gain on Schedule D (Form 1040). H&r block coupons 2012 printable   Mr. H&r block coupons 2012 printable Smith's former residence was sold on September 30, 2011. H&r block coupons 2012 printable The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. H&r block coupons 2012 printable This sale is excluded from gross income under IRC section 121. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). H&r block coupons 2012 printable Bankruptcy estates succeed to this exclusion at the commencement of the case. H&r block coupons 2012 printable See Regulation section 1. H&r block coupons 2012 printable 1398-3. H&r block coupons 2012 printable Schedule D (Form 1040). H&r block coupons 2012 printable   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). H&r block coupons 2012 printable She enters the results on Form 1040. H&r block coupons 2012 printable Form 1040, page 1. H&r block coupons 2012 printable   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. H&r block coupons 2012 printable Schedule A (Form 1040). H&r block coupons 2012 printable   During 2011, the estate paid mortgage interest and real property tax on Mr. H&r block coupons 2012 printable Smith's former residence. H&r block coupons 2012 printable It also paid income tax to the state. H&r block coupons 2012 printable Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. H&r block coupons 2012 printable Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. H&r block coupons 2012 printable She completes the Schedule A and enters the result on page 2 of Form 1040. H&r block coupons 2012 printable Form 1040, page 2. H&r block coupons 2012 printable   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. H&r block coupons 2012 printable She then enters the estate's estimated tax payments and figures the amount the estate still owes. H&r block coupons 2012 printable Form 982. H&r block coupons 2012 printable   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. H&r block coupons 2012 printable Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. H&r block coupons 2012 printable See Debt Cancellation, later. H&r block coupons 2012 printable After the bankruptcy case ends, Mr. H&r block coupons 2012 printable Smith will assume the estate's tax attributes. H&r block coupons 2012 printable Mr. H&r block coupons 2012 printable Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). H&r block coupons 2012 printable Note. H&r block coupons 2012 printable If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. H&r block coupons 2012 printable Form 1041. H&r block coupons 2012 printable   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. H&r block coupons 2012 printable She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. H&r block coupons 2012 printable This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Schedule A This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Schedule B This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Schedule D This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Schedule E This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 2119 This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 4562 This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. H&r block coupons 2012 printable Please click the link to view the image. H&r block coupons 2012 printable Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. H&r block coupons 2012 printable Otherwise, you do not have any carryovers. H&r block coupons 2012 printable 1. H&r block coupons 2012 printable Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. H&r block coupons 2012 printable If a loss, enclose the amount in parentheses 1. H&r block coupons 2012 printable 19,880   2. H&r block coupons 2012 printable Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. H&r block coupons 2012 printable 1,500   3. H&r block coupons 2012 printable Combine lines 1 and 2. H&r block coupons 2012 printable If zero or less, enter -0- 3. H&r block coupons 2012 printable 21,380   4. H&r block coupons 2012 printable Enter the smaller of line 2 or line 3 4. H&r block coupons 2012 printable 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. H&r block coupons 2012 printable       5. H&r block coupons 2012 printable Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. H&r block coupons 2012 printable 0   6. H&r block coupons 2012 printable Enter any gain from your 2010 Schedule D, line 15. H&r block coupons 2012 printable If a loss, enter -0- 6. H&r block coupons 2012 printable         7. H&r block coupons 2012 printable Add lines 4 and 6 7. H&r block coupons 2012 printable 1,500   8. H&r block coupons 2012 printable Short-term capital loss carryover for 2011. H&r block coupons 2012 printable Subtract line 7 from line 5. H&r block coupons 2012 printable If zero or less, enter -0-. H&r block coupons 2012 printable If more than zero, also enter this amount on Schedule D, line 6 8. H&r block coupons 2012 printable 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. H&r block coupons 2012 printable       9. H&r block coupons 2012 printable Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. H&r block coupons 2012 printable 251,500   10. H&r block coupons 2012 printable Enter any gain from your 2010 Schedule D, line 7. H&r block coupons 2012 printable If a loss, enter -0- 10. H&r block coupons 2012 printable 0       11. H&r block coupons 2012 printable Subtract line 5 from line 4. H&r block coupons 2012 printable If zero or less, enter -0- 11. H&r block coupons 2012 printable 1,500       12. H&r block coupons 2012 printable Add lines 10 and 11 12. H&r block coupons 2012 printable 1,500   13. H&r block coupons 2012 printable Long-term capital loss carryover for 2011. H&r block coupons 2012 printable Subtract line 12 from line 9. H&r block coupons 2012 printable If zero or less, enter -0-. H&r block coupons 2012 printable If more than zero, also enter this amount on Schedule D, line 14 13. H&r block coupons 2012 printable 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. H&r block coupons 2012 printable The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. H&r block coupons 2012 printable In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. H&r block coupons 2012 printable The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. H&r block coupons 2012 printable Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. H&r block coupons 2012 printable However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. H&r block coupons 2012 printable A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. H&r block coupons 2012 printable However, It may or may not be included in the individual partners' income. H&r block coupons 2012 printable See Partnerships, below under Debt Cancellation. H&r block coupons 2012 printable Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. H&r block coupons 2012 printable A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. H&r block coupons 2012 printable The following discussion only highlights bankruptcy tax rules applying to corporations. H&r block coupons 2012 printable The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. H&r block coupons 2012 printable Therefore, you may wish to seek the help of a professional tax advisor. H&r block coupons 2012 printable See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. H&r block coupons 2012 printable Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. H&r block coupons 2012 printable However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. H&r block coupons 2012 printable A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. H&r block coupons 2012 printable In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. H&r block coupons 2012 printable In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. H&r block coupons 2012 printable Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. H&r block coupons 2012 printable In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. H&r block coupons 2012 printable IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. H&r block coupons 2012 printable IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. H&r block coupons 2012 printable In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. H&r block coupons 2012 printable No loss is recognized in this situation. H&r block coupons 2012 printable Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. H&r block coupons 2012 printable To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. H&r block coupons 2012 printable The exemption request must be submitted to the local IRS Insolvency Office handling the case. H&r block coupons 2012 printable The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. H&r block coupons 2012 printable The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. H&r block coupons 2012 printable ” The statement must be signed by the trustee, receiver or assignee. H&r block coupons 2012 printable The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). H&r block coupons 2012 printable The IRS will act on your request within 90 days. H&r block coupons 2012 printable Disclosure of return information to trustee. H&r block coupons 2012 printable   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. H&r block coupons 2012 printable However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. H&r block coupons 2012 printable Material interest is generally defined as a financial or monetary interest. H&r block coupons 2012 printable Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. H&r block coupons 2012 printable Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. H&r block coupons 2012 printable Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. H&r block coupons 2012 printable QSFs are required to file an annual income tax return, Form 1120-SF, U. H&r block coupons 2012 printable S. H&r block coupons 2012 printable Income Tax Return for Settlement Funds. H&r block coupons 2012 printable More information about QSFs may be found in Treasury Regulation sections 1. H&r block coupons 2012 printable 468B-1 through -5. H&r block coupons 2012 printable Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. H&r block coupons 2012 printable After a return is filed, the IRS will either accept the return as filed or select the return for examination. H&r block coupons 2012 printable Under examination the IRS may redetermine the tax liability shown on the return. H&r block coupons 2012 printable If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. H&r block coupons 2012 printable See Court Jurisdiction over Tax Matters, later. H&r block coupons 2012 printable Prompt Determination Requests Pursuant to Rev. H&r block coupons 2012 printable Proc. H&r block coupons 2012 printable 2006-24, 2006-22 I. H&r block coupons 2012 printable R. H&r block coupons 2012 printable B. H&r block coupons 2012 printable 943, www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. H&r block coupons 2012 printable irs. H&r block coupons 2012 printable gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. H&r block coupons 2012 printable Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). H&r block coupons 2012 printable Making the request for determination. H&r block coupons 2012 printable   As detailed in Rev. H&r block coupons 2012 printable Proc. H&r block coupons 2012 printable 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. H&r block coupons 2012 printable O. H&r block coupons 2012 printable Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). H&r block coupons 2012 printable   The request must be submitted in duplicate and must be executed under penalties of perjury. H&r block coupons 2012 printable In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. H&r block coupons 2012 printable The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. H&r block coupons 2012 printable The name and location of the office where the return was filed. H&r block coupons 2012 printable The name of the debtor. H&r block coupons 2012 printable Debtor's social security number, TIN, or EIN. H&r block coupons 2012 printable Type of bankruptcy estate. H&r block coupons 2012 printable Bankruptcy case number. H&r block coupons 2012 printable Court where the bankruptcy case is pending. H&r block coupons 2012 printable   The copy of the return(s) submitted with the request must be an exact copy of a valid return. H&r block coupons 2012 printable A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. H&r block coupons 2012 printable    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. H&r block coupons 2012 printable A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. H&r block coupons 2012 printable Examination of return. H&r block coupons 2012 printable   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. H&r block coupons 2012 printable If the return is selected for examination, it will be examined as soon as possible. H&r block coupons 2012 printable The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. H&r block coupons 2012 printable   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. H&r block coupons 2012 printable   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. H&r block coupons 2012 printable   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. H&r block coupons 2012 printable Note. H&r block coupons 2012 printable An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. H&r block coupons 2012 printable   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei