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How Do You Amend A Tax Return

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How Do You Amend A Tax Return

How do you amend a tax return 16. How do you amend a tax return   Reporting Gains and Losses Table of Contents What's New Introduction Useful Items - You may want to see: Reporting Capital Gains and Losses Exception 1. How do you amend a tax return Exception 2. How do you amend a tax return File Form 1099-B or Form 1099-S with the IRS. How do you amend a tax return Capital Losses Capital Gain Tax Rates What's New Maximum capital gain rates. How do you amend a tax return . How do you amend a tax return  For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. How do you amend a tax return Introduction This chapter discusses how to report capital gains and losses from sales, exchanges, and other dispositions of investment property on Form 8949 and Schedule D (Form 1040). How do you amend a tax return The discussion includes the following topics. How do you amend a tax return How to report short-term gains and losses. How do you amend a tax return How to report long-term gains and losses. How do you amend a tax return How to figure capital loss carryovers. How do you amend a tax return How to figure your tax on a net capital gain. How do you amend a tax return If you sell or otherwise dispose of property used in a trade or business or for the production of income, see Publication 544, Sales and Other Dispositions of Assets, before completing Schedule D (Form 1040). How do you amend a tax return Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income 8582 Passive Activity Loss Limitations 8949 Sales and Other Dispositions of Capital Assets Schedule D (Form 1040) Capital Gains and Losses Reporting Capital Gains and Losses Generally, report capital gains and losses on Form 8949. How do you amend a tax return Complete Form 8949 before you complete line 1b, 2, 3, 8b, 9, or 10 of Schedule D (Form 1040). How do you amend a tax return Use Form 8949 to report: The sale or exchange of a capital asset not reported on another form or schedule; Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit; and Nonbusiness bad debts. How do you amend a tax return Use Schedule D (Form 1040): To figure the overall gain or loss from transactions reported on Form 8949; To report a gain from Form 6252 or Part I of Form 4797; To report a gain or loss from Form 4684, 6781, or 8824; To report capital gain distributions not reported directly on Form 1040 or Form 1040A; To report a capital loss carryover from the previous tax year to the current tax year; To report your share of a gain or (loss) from a partnership, S corporation, estate, or trust; To report transactions reported to you on a Form 1099-B (or substitute statement) showing basis was reported to the IRS and to which none of the Form 8949 adjustments or codes apply; and To report undistributed long-term capital gains from Form 2439. How do you amend a tax return On Form 8949, enter all sales and exchanges of capital assets, including stocks, bonds, etc. How do you amend a tax return , and real estate (if not reported on Form 4684, 4797, 6252, 6781, 8824, or line 1a or 8a of Schedule D). How do you amend a tax return Include these transactions even if you did not receive a Form 1099-B or 1099-S (or substitute statement) for the transaction. How do you amend a tax return Report short-term gains or losses in Part I. How do you amend a tax return Report long-term gains or losses in Part II. How do you amend a tax return Use as many Forms 8949 as you need. How do you amend a tax return Exceptions to filing Form 8949 and Schedule D (Form 1040). How do you amend a tax return   There are certain situations where you may not have to file Form 8949 and/or Schedule D (Form 1040). How do you amend a tax return Exception 1. How do you amend a tax return   You do not have to file Form 8949 or Schedule D (Form 1040) if you have no capital losses and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a (or substitute statements). How do you amend a tax return (If any Form(s) 1099-DIV (or substitute statements) you receive have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section 1202 gain), or box 2d (collectibles (28%) gain), you do not qualify for this exception. How do you amend a tax return ) If you qualify for this exception, report your capital gain distributions directly on line 13 of Form 1040 (and check the box on line 13). How do you amend a tax return Also use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions to figure your tax. How do you amend a tax return You can report your capital gain distributions on line 10 of Form 1040A, instead of on Form 1040, if none of the Forms 1099-DIV (or substitute statements) you received have an amount in box 2b, 2c, or 2d, and you do not have to file Form 1040. How do you amend a tax return Exception 2. How do you amend a tax return   You must file Schedule D (Form 1040), but generally do not have to file Form 8949, if Exception 1 does not apply and your only capital gains and losses are: Capital gain distributions; A capital loss carryover; A gain from Form 2439 or 6252 or Part I of Form 4797; A gain or loss from Form 4684, 6781, or 8824; A gain or loss from a partnership, S corporation, estate, or trust; or Gains and losses from transactions for which you received a Form 1099-B (or substitute statement) that shows the basis was reported to the IRS and for which you do not need to make any adjustments in column (g) of Form 8949 or enter any codes in column (f) of Form 8949. How do you amend a tax return Installment sales. How do you amend a tax return   You cannot use the installment method to report a gain from the sale of stock or securities traded on an established securities market. How do you amend a tax return You must report the entire gain in the year of sale (the year in which the trade date occurs). How do you amend a tax return Passive activity gains and losses. How do you amend a tax return    If you have gains or losses from a passive activity, you may also have to report them on Form 8582. How do you amend a tax return In some cases, the loss may be limited under the passive activity rules. How do you amend a tax return Refer to Form 8582 and its instructions for more information about reporting capital gains and losses from a passive activity. How do you amend a tax return Form 1099-B transactions. How do you amend a tax return   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B or substitute statement from the broker. How do you amend a tax return Use the Form 1099-B or the substitute statement to complete Form 8949. How do you amend a tax return If you sold a covered security in 2013, your broker should send you a Form 1099-B (or substitute statement) that shows your basis. How do you amend a tax return This will help you complete Form 8949. How do you amend a tax return Generally, a covered security is a security you acquired after 2010. How do you amend a tax return   Report the gross proceeds shown in box 2a of Form 1099-B as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. How do you amend a tax return However, if the broker advises you, in box 2a of Form 1099-B, that gross proceeds (sales price) less commissions and option premiums were reported to the IRS, enter that net sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. How do you amend a tax return    Include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). How do you amend a tax return If you include an expense of sale in column (g), enter “E” in column (f). How do you amend a tax return Form 1099-CAP transactions. How do you amend a tax return   If a corporation in which you own stock has had a change in control or a substantial change in capital structure, you should receive Form 1099-CAP or a substitute statement from the corporation. How do you amend a tax return Use the Form 1099-CAP or substitute statement to fill in Form 8949. How do you amend a tax return If your computations show that you would have a loss because of the change, do not enter any amounts on Form 8949 or Schedule D (Form 1040). How do you amend a tax return You cannot claim a loss on Schedule D (Form 1040) as a result of this transaction. How do you amend a tax return   Report the aggregate amount received shown in box 2 of Form 1099-CAP as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. How do you amend a tax return Form 1099-S transactions. How do you amend a tax return   If you sold or traded reportable real estate, you generally should receive from the real estate reporting person a Form 1099-S showing the gross proceeds. How do you amend a tax return    “Reportable real estate” is defined as any present or future ownership interest in any of the following: Improved or unimproved land, including air space; Inherently permanent structures, including any residential, commercial, or industrial building; A condominium unit and its accessory fixtures and common elements, including land; and Stock in a cooperative housing corporation (as defined in section 216 of the Internal Revenue Code). How do you amend a tax return   A “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. How do you amend a tax return   Your Form 1099-S will show the gross proceeds from the sale or exchange in box 2. How do you amend a tax return See the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040) for how to report these transactions and include them in Part I or Part II of Form 8949 as appropriate. How do you amend a tax return However, report like-kind exchanges on Form 8824 instead. How do you amend a tax return   It is unlawful for any real estate reporting person to separately charge you for complying with the requirement to file Form 1099-S. How do you amend a tax return Nominees. How do you amend a tax return   If you receive gross proceeds as a nominee (that is, the gross proceeds are in your name but actually belong to someone else), see the Instructions for Form 8949 for how to report these amounts on Form 8949. How do you amend a tax return File Form 1099-B or Form 1099-S with the IRS. How do you amend a tax return   If you received gross proceeds as a nominee in 2013, you must file a Form 1099-B or Form 1099-S for those proceeds with the IRS. How do you amend a tax return Send the Form 1099-B or Form 1099-S with a Form 1096, Annual Summary and Transmittal of U. How do you amend a tax return S. How do you amend a tax return Information Returns, to your Internal Revenue Service Center by February 28, 2014 (March 31, 2014, if you file Form 1099-B or Form 1099-S electronically). How do you amend a tax return Give the actual owner of the proceeds Copy B of the Form 1099-B or Form 1099-S by February 18, 2014. How do you amend a tax return On Form 1099-B, you should be listed as the “Payer. How do you amend a tax return ” The other owner should be listed as the “Recipient. How do you amend a tax return ” On Form 1099-S, you should be listed as the “Filer. How do you amend a tax return ” The other owner should be listed as the “Transferor. How do you amend a tax return ” You do not have to file a Form 1099-B or Form 1099-S to show proceeds for your spouse. How do you amend a tax return For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns. How do you amend a tax return If you are filing electronically see Publication 1220. How do you amend a tax return Sale of property bought at various times. How do you amend a tax return   If you sell a block of stock or other property that you bought at various times, report the short-term gain or loss from the sale on one row in Part I of Form 8949, and the long-term gain or loss on one row in Part II of Form 8949. How do you amend a tax return Write “Various” in column (b) for the “Date acquired. How do you amend a tax return ” Sale expenses. How do you amend a tax return    On Form 8949, include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). How do you amend a tax return If you include an expense of sale in column (g), enter “E” in column (f). How do you amend a tax return   For more information about adjustments to basis, see chapter 13. How do you amend a tax return Short-term gains and losses. How do you amend a tax return   Capital gain or loss on the sale or trade of investment property held 1 year or less is a short-term capital gain or loss. How do you amend a tax return You report it in Part I of Form 8949. How do you amend a tax return   You combine your share of short-term capital gain or loss from partnerships, S corporations, estates, and trusts, and any short-term capital loss carryover, with your other short-term capital gains and losses to figure your net short-term capital gain or loss on line 7 of Schedule D (Form 1040). How do you amend a tax return Long-term gains and losses. How do you amend a tax return    A capital gain or loss on the sale or trade of investment property held more than 1 year is a long-term capital gain or loss. How do you amend a tax return You report it in Part II of Form 8949. How do you amend a tax return   You report the following in Part II of Schedule D (Form 1040): Undistributed long-term capital gains from a mutual fund (or other regulated investment company) or real estate investment trust (REIT); Your share of long-term capital gains or losses from partnerships, S corporations, estates, and trusts; All capital gain distributions from mutual funds and REITs not reported directly on line 10 of Form 1040A or line 13 of Form 1040; and Long-term capital loss carryovers. How do you amend a tax return    The result after combining these items with your other long-term capital gains and losses is your net long-term capital gain or loss (Schedule D (Form 1040), line 15). How do you amend a tax return Total net gain or loss. How do you amend a tax return   To figure your total net gain or loss, combine your net short-term capital gain or loss (Schedule D (Form 1040), line 7) with your net long-term capital gain or loss (Schedule D (Form 1040), line 15). How do you amend a tax return Enter the result on Schedule D (Form 1040), Part III, line 16. How do you amend a tax return If your losses are more than your gains, see Capital Losses , next. How do you amend a tax return If both lines 15 and 16 of your Schedule D (Form 1040) are gains and your taxable income on your Form 1040 is more than zero, see Capital Gain Tax Rates , later. How do you amend a tax return Capital Losses If your capital losses are more than your capital gains, you can claim a capital loss deduction. How do you amend a tax return Report the amount of the deduction on line 13 of Form 1040, in parentheses. How do you amend a tax return Limit on deduction. How do you amend a tax return   Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of: $3,000 ($1,500 if you are married and file a separate return); or Your total net loss as shown on line 16 of Schedule D (Form 1040). How do you amend a tax return   You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit. How do you amend a tax return Capital loss carryover. How do you amend a tax return   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. How do you amend a tax return If part of the loss is still unused, you can carry it over to later years until it is completely used up. How do you amend a tax return   When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. How do you amend a tax return   When you carry over a loss, it remains long term or short term. How do you amend a tax return A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains. How do you amend a tax return Figuring your carryover. How do you amend a tax return   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of: Your allowable capital loss deduction for the year; or Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions. How do you amend a tax return   If your deductions are more than your gross income for the tax year, use your negative taxable income in computing the amount in item (2). How do you amend a tax return    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Publication 550 to determine the part of your capital loss that you can carry over. How do you amend a tax return Example. How do you amend a tax return Bob and Gloria sold securities in 2013. How do you amend a tax return The sales resulted in a capital loss of $7,000. How do you amend a tax return They had no other capital transactions. How do you amend a tax return Their taxable income was $26,000. How do you amend a tax return On their joint 2013 return, they can deduct $3,000. How do you amend a tax return The unused part of the loss, $4,000 ($7,000 − $3,000), can be carried over to 2014. How do you amend a tax return If their capital loss had been $2,000, their capital loss deduction would have been $2,000. How do you amend a tax return They would have no carryover. How do you amend a tax return Use short-term losses first. How do you amend a tax return   When you figure your capital loss carryover, use your short-term capital losses first, even if you incurred them after a long-term capital loss. How do you amend a tax return If you have not reached the limit on the capital loss deduction after using the short-term capital losses, use the long-term capital losses until you reach the limit. How do you amend a tax return Decedent's capital loss. How do you amend a tax return    A capital loss sustained by a decedent during his or her last tax year (or carried over to that year from an earlier year) can be deducted only on the final income tax return filed for the decedent. How do you amend a tax return The capital loss limits discussed earlier still apply in this situation. How do you amend a tax return The decedent's estate cannot deduct any of the loss or carry it over to following years. How do you amend a tax return Joint and separate returns. How do you amend a tax return   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. How do you amend a tax return However, if you and your spouse once filed a joint return and are now filing separate returns, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. How do you amend a tax return Capital Gain Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. How do you amend a tax return These lower rates are called the maximum capital gain rates. How do you amend a tax return The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. How do you amend a tax return For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. How do you amend a tax return See Table 16-1 for details. How do you amend a tax return If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies. How do you amend a tax return Example. How do you amend a tax return All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. How do you amend a tax return If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply. How do you amend a tax return Investment interest deducted. How do you amend a tax return   If you claim a deduction for investment interest, you may have to reduce the amount of your net capital gain that is eligible for the capital gain tax rates. How do you amend a tax return Reduce it by the amount of the net capital gain you choose to include in investment income when figuring the limit on your investment interest deduction. How do you amend a tax return This is done on the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet. How do you amend a tax return For more information about the limit on investment interest, see Interest Expenses in chapter 3 of Publication 550. How do you amend a tax return Table 16-1. How do you amend a tax return What Is Your Maximum Capital Gain Rate? IF your net capital gain is from . How do you amend a tax return . How do you amend a tax return . How do you amend a tax return THEN your  maximum capital gain rate is . How do you amend a tax return . How do you amend a tax return . How do you amend a tax return a collectibles gain 28% an eligible gain on qualified small business stock minus the section 1202 exclusion 28% an unrecaptured section 1250 gain 25% other gain1 and the regular tax rate that would apply is 39. How do you amend a tax return 6% 20% other gain1 and the regular tax rate that would apply is 25%, 28%, 33%, or 35% 15% other gain1 and the regular tax rate that would apply is 10% or 15% 0% 1 Other gain means any gain that is not collectibles gain, gain on qualified small business stock, or unrecaptured section 1250 gain. How do you amend a tax return     Collectibles gain or loss. How do you amend a tax return   This is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year. How do you amend a tax return   Collectibles gain includes gain from sale of an interest in a partnership, S corporation, or trust due to unrealized appreciation of collectibles. How do you amend a tax return Gain on qualified small business stock. How do you amend a tax return    If you realized a gain from qualified small business stock that you held more than 5 years, you generally can exclude some or all of your gain under section 1202. How do you amend a tax return The eligible gain minus your section 1202 exclusion is a 28% rate gain. How do you amend a tax return See Gains on Qualified Small Business Stock in chapter 4 of Publication 550. How do you amend a tax return Unrecaptured section 1250 gain. How do you amend a tax return    Generally, this is any part of your capital gain from selling section 1250 property (real property) that is due to depreciation (but not more than your net section 1231 gain), reduced by any net loss in the 28% group. How do you amend a tax return Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D (Form 1040) instructions to figure your unrecaptured section 1250 gain. How do you amend a tax return For more information about section 1250 property and section 1231 gain, see chapter 3 of Publication 544. How do you amend a tax return Tax computation using maximum capital gain rates. How do you amend a tax return   Use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet (whichever applies) to figure your tax if you have qualified dividends or net capital gain. How do you amend a tax return You have net capital gain if Schedule D (Form 1040), lines 15 and 16, are both gains. How do you amend a tax return Schedule D Tax Worksheet. How do you amend a tax return   Use the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions to figure your tax if: You have to file Schedule D (Form 1040); and Schedule D (Form 1040), line 18 (28% rate gain) or line 19 (unrecaptured section 1250 gain), is more than zero. How do you amend a tax return Qualified Dividends and Capital Gain Tax Worksheet. How do you amend a tax return   If you do not have to use the Schedule D Tax Worksheet (as explained above) and any of the following apply, use the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040 or Form 1040A (whichever you file) to figure your tax. How do you amend a tax return You received qualified dividends. How do you amend a tax return (See Qualified Dividends in chapter 8. How do you amend a tax return ) You do not have to file Schedule D (Form 1040) and you received capital gain distributions. How do you amend a tax return (See Exceptions to filing Form 8949 and Schedule D (Form 1040) , earlier. How do you amend a tax return ) Schedule D (Form 1040), lines 15 and 16, are both more than zero. How do you amend a tax return Alternative minimum tax. How do you amend a tax return   These capital gain rates are also used in figuring alternative minimum tax. How do you amend a tax return Prev  Up  Next   Home   More Online Publications
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IRS Gives One-Week Filing Extension to Taxpayers Whose Preparers Were Affected by Hurricane Irene

IR-2011-88, Sept. 1, 2011

WASHINGTON — The Internal Revenue Service today announced it is granting taxpayers whose preparers were affected by Hurricane Irene until Sept. 22 to file returns normally due Sept. 15. The taxpayer’s preparer must be located in an area that was under an evacuation order or a severe weather warning because of Hurricane Irene, even if the preparer is located outside of the federally declared disaster areas.

This relief, which primarily applies to corporations, partnerships and trusts that previously obtained a tax filing extension, is available to taxpayers regardless of their location.

This relief does not apply to any tax payment requirements.

This relief is in addition to the filing and payment relief the IRS is providing to taxpayers located in disaster areas declared by the Federal Emergency Management Agency (FEMA). For details, visit Tax Relief in Disaster Situations on this website.

 

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The How Do You Amend A Tax Return

How do you amend a tax return 5. How do you amend a tax return   Taxes Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: When To Deduct Taxes Real Estate TaxesSeparate elections. How do you amend a tax return Making the election. How do you amend a tax return Form 3115. How do you amend a tax return Income TaxesAccrual of contested income taxes. How do you amend a tax return Employment Taxes Other TaxesAdditional Medicare Tax. How do you amend a tax return What's New Additional Medicare Tax. How do you amend a tax return  Beginning in 2013, you must withhold a 0. How do you amend a tax return 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. How do you amend a tax return Also, self-employed individuals may be required to pay Additional Medicare Tax on self-employment income. How do you amend a tax return See Employment Taxes , and Self-employment tax , later. How do you amend a tax return Introduction You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. How do you amend a tax return You cannot deduct federal income taxes, estate and gift taxes, or state inheritance, legacy, and succession taxes. How do you amend a tax return Topics - This chapter discusses: When to deduct taxes Real estate taxes Income taxes Employment taxes Other taxes Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 334 Tax Guide for Small Business 510 Excise Taxes 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch SE (Form 1040) Self-Employment Tax 3115 Application for Change in Accounting Method 8959 Additional Medicare Tax See chapter 12 for information about getting publications and forms. How do you amend a tax return When To Deduct Taxes Generally, you can only deduct taxes in the year you pay them. How do you amend a tax return This applies whether you use the cash method or an accrual method of accounting. How do you amend a tax return Under an accrual method, you can deduct a tax before you pay it if you meet the exception for recurring items discussed under Economic Performance in Publication 538. How do you amend a tax return You can also elect to ratably accrue real estate taxes as discussed later under Real Estate Taxes . How do you amend a tax return Limit on accrual of taxes. How do you amend a tax return   A taxing jurisdiction can require the use of a date for accruing taxes that is earlier than the date it originally required. How do you amend a tax return However, if you use an accrual method, and can deduct the tax before you pay it, use the original accrual date for the year of change and all future years to determine when you can deduct the tax. How do you amend a tax return Example. How do you amend a tax return Your state imposes a tax on personal property used in a trade or business conducted in the state. How do you amend a tax return This tax is assessed and becomes a lien as of July 1 (accrual date). How do you amend a tax return In 2013, the state changed the assessment and lien dates from July 1, 2014, to December 31, 2013, for property tax year 2014. How do you amend a tax return Use the original accrual date (July 1, 2014) to determine when you can deduct the tax. How do you amend a tax return You must also use the July 1 accrual date for all future years to determine when you can deduct the tax. How do you amend a tax return Uniform capitalization rules. How do you amend a tax return   Uniform capitalization rules apply to certain taxpayers who produce real property or tangible personal property for use in a trade or business or for sale to customers. How do you amend a tax return They also apply to certain taxpayers who acquire property for resale. How do you amend a tax return Under these rules, you either include certain costs in inventory or capitalize certain expenses related to the property, such as taxes. How do you amend a tax return For more information, see chapter 1. How do you amend a tax return Carrying charges. How do you amend a tax return   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. How do you amend a tax return You can elect to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. How do you amend a tax return For more information, see chapter 7. How do you amend a tax return Refunds of taxes. How do you amend a tax return   If you receive a refund for any taxes you deducted in an earlier year, include the refund in income to the extent the deduction reduced your federal income tax in the earlier year. How do you amend a tax return For more information, see Recovery of amount deducted (tax benefit rule) in chapter 1. How do you amend a tax return    You must include in income any interest you receive on tax refunds. How do you amend a tax return Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. How do you amend a tax return The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. How do you amend a tax return Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. How do you amend a tax return See Taxes for local benefits , later. How do you amend a tax return If you use an accrual method, you generally cannot accrue real estate taxes until you pay them to the government authority. How do you amend a tax return However, you can elect to ratably accrue the taxes during the year. How do you amend a tax return See Electing to ratably accrue , later. How do you amend a tax return Taxes for local benefits. How do you amend a tax return   Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. How do you amend a tax return These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. How do you amend a tax return You should increase the basis of your property by the amount of the assessment. How do you amend a tax return   You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. How do you amend a tax return If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax. How do you amend a tax return Example. How do you amend a tax return To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. How do you amend a tax return The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. How do you amend a tax return The city is paying the principal and interest with the annual payments made by the property owners. How do you amend a tax return The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. How do you amend a tax return The part of the payments used to pay the interest charges on the bonds is deductible as taxes. How do you amend a tax return Charges for services. How do you amend a tax return   Water bills, sewerage, and other service charges assessed against your business property are not real estate taxes, but are deductible as business expenses. How do you amend a tax return Purchase or sale of real estate. How do you amend a tax return   If real estate is sold, the real estate taxes must be allocated between the buyer and the seller. How do you amend a tax return   The buyer and seller must allocate the real estate taxes according to the number of days in the real property tax year (the period to which the tax imposed relates) that each owned the property. How do you amend a tax return Treat the seller as paying the taxes up to but not including the date of sale. How do you amend a tax return Treat the buyer as paying the taxes beginning with the date of sale. How do you amend a tax return You can usually find this information on the settlement statement you received at closing. How do you amend a tax return   If you (the seller) use an accrual method and have not elected to ratably accrue real estate taxes, you are considered to have accrued your part of the tax on the date you sell the property. How do you amend a tax return Example. How do you amend a tax return Alberto Verde, a calendar year accrual method taxpayer, owns real estate in Olmo County. How do you amend a tax return He has not elected to ratably accrue property taxes. How do you amend a tax return November 30 of each year is the assessment and lien date for the current real property tax year, which is the calendar year. How do you amend a tax return He sold the property on June 30, 2013. How do you amend a tax return Under his accounting method he would not be able to claim a deduction for the taxes because the sale occurred before November 30. How do you amend a tax return He is treated as having accrued his part of the tax, 181/366  (January 1–June 29), on June 30, and he can deduct it for 2013. How do you amend a tax return Electing to ratably accrue. How do you amend a tax return   If you use an accrual method, you can elect to accrue real estate tax related to a definite period ratably over that period. How do you amend a tax return Example. How do you amend a tax return Juan Sanchez is a calendar year taxpayer who uses an accrual method. How do you amend a tax return His real estate taxes for the real property tax year, July 1, 2013, to June 30, 2014, are $1,200. How do you amend a tax return July 1 is the assessment and lien date. How do you amend a tax return If Juan elects to ratably accrue the taxes, $600 will accrue in 2013 ($1,200 × 6/12, July 1–December 31) and the balance will accrue in 2014. How do you amend a tax return Separate elections. How do you amend a tax return   You can elect to ratably accrue the taxes for each separate trade or business and for nonbusiness activities if you account for them separately. How do you amend a tax return Once you elect to ratably accrue real estate taxes, you must use that method unless you get permission from the IRS to change. How do you amend a tax return See Form 3115 , later. How do you amend a tax return Making the election. How do you amend a tax return   If you elect to ratably accrue the taxes for the first year in which you incur real estate taxes, attach a statement to your income tax return for that year. How do you amend a tax return The statement should show all the following items. How do you amend a tax return The trades or businesses to which the election applies and the accounting method or methods used. How do you amend a tax return The period to which the taxes relate. How do you amend a tax return The computation of the real estate tax deduction for that first year. How do you amend a tax return   Generally, you must file your return by the due date (including extensions). How do you amend a tax return However, if you timely filed your return for the year without electing to ratably accrue, you can still make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). How do you amend a tax return Attach the statement to the amended return and write “Filed pursuant to section 301. How do you amend a tax return 9100-2” on the statement. How do you amend a tax return File the amended return at the same address where you filed the original return. How do you amend a tax return Form 3115. How do you amend a tax return    If you elect to ratably accrue real estate taxes for a year after the first year in which you incur real estate taxes, or if you want to revoke your election to ratably accrue real estate taxes, file Form 3115. How do you amend a tax return For more information, including applicable time frames for filing, see the Instructions for Form 3115. How do you amend a tax return Note. How do you amend a tax return If you are filing an application for a change in accounting method filed after January 9, 2011, for a year of change ending after April 29, 2010, see Revenue Procedure 2011-14, 2011-4 I. How do you amend a tax return R. How do you amend a tax return B. How do you amend a tax return 330, as modified and clarified by Revenue Procedure 2012-19, 2012-14 I. How do you amend a tax return R. How do you amend a tax return B. How do you amend a tax return 689, and Revenue Procedure 2012-20, 2012-14 I. How do you amend a tax return R. How do you amend a tax return B. How do you amend a tax return 700, or any successor. How do you amend a tax return Revenue Procedure 2011-14 is available at  www. How do you amend a tax return irs. How do you amend a tax return gov/irb/2011-04IRB/ar08. How do you amend a tax return html. How do you amend a tax return Income Taxes This section discusses federal, state, local, and foreign income taxes. How do you amend a tax return Federal income taxes. How do you amend a tax return   You cannot deduct federal income taxes. How do you amend a tax return State and local income taxes. How do you amend a tax return   A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. How do you amend a tax return An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). How do you amend a tax return   However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense. How do you amend a tax return Accrual of contested income taxes. How do you amend a tax return   If you use an accrual method, and you contest a state or local income tax liability, you must accrue and deduct any contested amount in the tax year in which the liability is finally determined. How do you amend a tax return   If additional state or local income taxes for a prior year are assessed in a later year, you can deduct the taxes in the year in which they were originally imposed (the prior year) if the tax liability is not contested. How do you amend a tax return You cannot deduct them in the year in which the liability is finally determined. How do you amend a tax return    The filing of an income tax return is not considered a contest and, in the absence of an overt act of protest, you can deduct the tax in the prior year. How do you amend a tax return Also, you can deduct any additional taxes in the prior year if you do not show some affirmative evidence of denial of the liability. How do you amend a tax return   However, if you consistently deduct additional assessments in the year they are paid or finally determined (including those for which there was no contest), you must continue to do so. How do you amend a tax return You cannot take a deduction in the earlier year unless you receive permission to change your method of accounting. How do you amend a tax return For more information on accounting methods, see When Can I Deduct an Expense in chapter 1. How do you amend a tax return Foreign income taxes. How do you amend a tax return   Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. How do you amend a tax return S. How do you amend a tax return possession. How do you amend a tax return However, an individual cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. How do you amend a tax return S. How do you amend a tax return tax under the foreign earned income exclusion or the foreign housing exclusion. How do you amend a tax return For information on these exclusions, see Publication 54, Tax Guide for U. How do you amend a tax return S. How do you amend a tax return Citizens and Resident Aliens Abroad. How do you amend a tax return For information on the foreign tax credit, see Publication 514, Foreign Tax Credit for Individuals. How do you amend a tax return Employment Taxes If you have employees, you must withhold various taxes from your employees' pay. How do you amend a tax return Most employers must withhold their employees' share of social security, Medicare taxes, and Additional Medicare Tax (if applicable) along with state and federal income taxes. How do you amend a tax return You may also need to pay certain employment taxes from your own funds. How do you amend a tax return These include your share of social security and Medicare taxes as an employer, along with unemployment taxes. How do you amend a tax return Note. How do you amend a tax return Additional Medicare Tax is only imposed on the employee. How do you amend a tax return There is no employer share of Additional Medicare Tax. How do you amend a tax return Your deduction for wages paid is not reduced by the social security and Medicare taxes, Additional Medicare Tax, and income taxes you withhold from your employees. How do you amend a tax return You can deduct the employment taxes you must pay from your own funds as taxes. How do you amend a tax return Example. How do you amend a tax return You pay your employee $18,000 a year. How do you amend a tax return However, after you withhold various taxes, your employee receives $14,500. How do you amend a tax return You also pay an additional $1,500 in employment taxes. How do you amend a tax return You should deduct the full $18,000 as wages. How do you amend a tax return You can deduct the $1,500 you pay from your own funds as taxes. How do you amend a tax return For more information on employment taxes, see Publication 15 (Circular E). How do you amend a tax return Unemployment fund taxes. How do you amend a tax return   As an employer, you may have to make payments to a state unemployment compensation fund or to a state disability benefit fund. How do you amend a tax return Deduct these payments as taxes. How do you amend a tax return Other Taxes The following are other taxes you can deduct if you incur them in the ordinary course of your trade or business. How do you amend a tax return Excise taxes. How do you amend a tax return   Generally, you can deduct as a business expense all excise taxes that are ordinary and necessary expenses of carrying on your trade or business. How do you amend a tax return However, see Fuel taxes , later. How do you amend a tax return   For more information on excise taxes, see Publication 510. How do you amend a tax return Franchise taxes. How do you amend a tax return   You can deduct corporate franchise taxes as a business expense. How do you amend a tax return Fuel taxes. How do you amend a tax return   Generally, taxes on gasoline, diesel fuel, and other motor fuels that you use in your business are included as part of the cost of the fuel. How do you amend a tax return Do not deduct these taxes as a separate item. How do you amend a tax return   You may be entitled to a credit or refund for federal excise tax you paid on fuels used for certain purposes. How do you amend a tax return For more information, see Publication 510. How do you amend a tax return Occupational taxes. How do you amend a tax return   You can deduct as a business expense an occupational tax charged at a flat rate by a locality for the privilege of working or conducting a business in the locality. How do you amend a tax return Personal property tax. How do you amend a tax return   You can deduct any tax imposed by a state or local government on personal property used in your trade or business. How do you amend a tax return Sales tax. How do you amend a tax return   Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property. How do you amend a tax return If the service or the cost or use of the property is a deductible business expense, you can deduct the tax as part of that service or cost. How do you amend a tax return If the property is merchandise bought for resale, the sales tax is part of the cost of the merchandise. How do you amend a tax return If the property is depreciable, add the sales tax to the basis for depreciation. How do you amend a tax return For more information on basis, see Publication 551. How do you amend a tax return    Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. How do you amend a tax return Also, do not include these taxes in gross receipts or sales. How do you amend a tax return Self-employment tax. How do you amend a tax return   You can deduct part of your self-employment tax as a business expense in figuring your adjusted gross income. How do you amend a tax return This deduction only affects your income tax. How do you amend a tax return It does not affect your net earnings from self-employment or your self-employment tax. How do you amend a tax return   To deduct the tax, enter on Form 1040, line 27, the amount shown on the Deduction for one-half of self-employment tax line of Schedule SE (Form 1040). How do you amend a tax return   For more information on self-employment tax, see Publication 334. How do you amend a tax return Additional Medicare Tax. How do you amend a tax return   Beginning in 2013, you may be required to pay Additional Medicare Tax on self-employment income. How do you amend a tax return See Form 8959 and the Instructions for Form 8959 for more information on the Additional Medicare Tax. How do you amend a tax return Prev  Up  Next   Home   More Online Publications