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How To File An Amended Tax Return For 2011 Turbotax

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How To File An Amended Tax Return For 2011 Turbotax

How to file an amended tax return for 2011 turbotax Publication 15-B - Main Content Table of Contents 1. How to file an amended tax return for 2011 turbotax Fringe Benefit OverviewAre Fringe Benefits Taxable? Cafeteria Plans Simple Cafeteria Plans 2. How to file an amended tax return for 2011 turbotax Fringe Benefit Exclusion RulesAccident and Health Benefits Achievement Awards Adoption Assistance Athletic Facilities De Minimis (Minimal) Benefits Dependent Care Assistance Educational Assistance Employee Discounts Employee Stock Options Employer-Provided Cell Phones Group-Term Life Insurance Coverage Health Savings Accounts Lodging on Your Business Premises Meals Moving Expense Reimbursements No-Additional-Cost Services Retirement Planning Services Transportation (Commuting) Benefits Tuition Reduction Working Condition Benefits 3. How to file an amended tax return for 2011 turbotax Fringe Benefit Valuation RulesGeneral Valuation Rule Cents-Per-Mile Rule Commuting Rule Lease Value Rule Unsafe Conditions Commuting Rule 4. How to file an amended tax return for 2011 turbotax Rules for Withholding, Depositing, and ReportingTransfer of property. How to file an amended tax return for 2011 turbotax Amount of deposit. How to file an amended tax return for 2011 turbotax Limitation. How to file an amended tax return for 2011 turbotax Conformity rules. How to file an amended tax return for 2011 turbotax Election not to withhold income tax. How to file an amended tax return for 2011 turbotax How To Get Tax Help 1. How to file an amended tax return for 2011 turbotax Fringe Benefit Overview A fringe benefit is a form of pay for the performance of services. How to file an amended tax return for 2011 turbotax For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. How to file an amended tax return for 2011 turbotax Performance of services. How to file an amended tax return for 2011 turbotax   A person who performs services for you does not have to be your employee. How to file an amended tax return for 2011 turbotax A person may perform services for you as an independent contractor, partner, or director. How to file an amended tax return for 2011 turbotax Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services. How to file an amended tax return for 2011 turbotax Provider of benefit. How to file an amended tax return for 2011 turbotax   You are the provider of a fringe benefit if it is provided for services performed for you. How to file an amended tax return for 2011 turbotax You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. How to file an amended tax return for 2011 turbotax For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care. How to file an amended tax return for 2011 turbotax Recipient of benefit. How to file an amended tax return for 2011 turbotax   The person who performs services for you is considered the recipient of a fringe benefit provided for those services. How to file an amended tax return for 2011 turbotax That person may be considered the recipient even if the benefit is provided to someone who did not perform services for you. How to file an amended tax return for 2011 turbotax For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family. How to file an amended tax return for 2011 turbotax Are Fringe Benefits Taxable? Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. How to file an amended tax return for 2011 turbotax Section 2 discusses the exclusions that apply to certain fringe benefits. How to file an amended tax return for 2011 turbotax Any benefit not excluded under the rules discussed in section 2 is taxable. How to file an amended tax return for 2011 turbotax Including taxable benefits in pay. How to file an amended tax return for 2011 turbotax   You must include in a recipient's pay the amount by which the value of a fringe benefit is more than the sum of the following amounts. How to file an amended tax return for 2011 turbotax Any amount the law excludes from pay. How to file an amended tax return for 2011 turbotax Any amount the recipient paid for the benefit. How to file an amended tax return for 2011 turbotax The rules used to determine the value of a fringe benefit are discussed in section 3. How to file an amended tax return for 2011 turbotax   If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be reported on Form W-2, Wage and Tax Statement. How to file an amended tax return for 2011 turbotax However, you can use special rules to withhold, deposit, and report the employment taxes. How to file an amended tax return for 2011 turbotax These rules are discussed in section 4. How to file an amended tax return for 2011 turbotax   If the recipient of a taxable fringe benefit is not your employee, the benefit is not subject to employment taxes. How to file an amended tax return for 2011 turbotax However, you may have to report the benefit on one of the following information returns. How to file an amended tax return for 2011 turbotax If the recipient receives the benefit as: Use: An independent contractor Form 1099-MISC, Miscellaneous Income A partner Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. How to file an amended tax return for 2011 turbotax For more information, see the instructions for the forms listed above. How to file an amended tax return for 2011 turbotax Cafeteria Plans A cafeteria plan, including a flexible spending arrangement, is a written plan that allows your employees to choose between receiving cash or taxable benefits instead of certain qualified benefits for which the law provides an exclusion from wages. How to file an amended tax return for 2011 turbotax If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead will not make the qualified benefit taxable. How to file an amended tax return for 2011 turbotax Generally, a cafeteria plan does not include any plan that offers a benefit that defers pay. How to file an amended tax return for 2011 turbotax However, a cafeteria plan can include a qualified 401(k) plan as a benefit. How to file an amended tax return for 2011 turbotax Also, certain life insurance plans maintained by educational institutions can be offered as a benefit even though they defer pay. How to file an amended tax return for 2011 turbotax Qualified benefits. How to file an amended tax return for 2011 turbotax   A cafeteria plan can include the following benefits discussed in section 2. How to file an amended tax return for 2011 turbotax Accident and health benefits (but not Archer medical savings accounts (Archer MSAs) or long-term care insurance). How to file an amended tax return for 2011 turbotax Adoption assistance. How to file an amended tax return for 2011 turbotax Dependent care assistance. How to file an amended tax return for 2011 turbotax Group-term life insurance coverage (including costs that cannot be excluded from wages). How to file an amended tax return for 2011 turbotax Health savings accounts (HSAs). How to file an amended tax return for 2011 turbotax Distributions from an HSA may be used to pay eligible long-term care insurance premiums or qualified long-term care services. How to file an amended tax return for 2011 turbotax Benefits not allowed. How to file an amended tax return for 2011 turbotax   A cafeteria plan cannot include the following benefits discussed in section 2. How to file an amended tax return for 2011 turbotax Archer MSAs. How to file an amended tax return for 2011 turbotax See Accident and Health Benefits in section 2. How to file an amended tax return for 2011 turbotax Athletic facilities. How to file an amended tax return for 2011 turbotax De minimis (minimal) benefits. How to file an amended tax return for 2011 turbotax Educational assistance. How to file an amended tax return for 2011 turbotax Employee discounts. How to file an amended tax return for 2011 turbotax Employer-provided cell phones. How to file an amended tax return for 2011 turbotax Lodging on your business premises. How to file an amended tax return for 2011 turbotax Meals. How to file an amended tax return for 2011 turbotax Moving expense reimbursements. How to file an amended tax return for 2011 turbotax No-additional-cost services. How to file an amended tax return for 2011 turbotax Transportation (commuting) benefits. How to file an amended tax return for 2011 turbotax Tuition reduction. How to file an amended tax return for 2011 turbotax Working condition benefits. How to file an amended tax return for 2011 turbotax It also cannot include scholarships or fellowships (discussed in Publication 970, Tax Benefits for Education). How to file an amended tax return for 2011 turbotax $2,500 limit on a health flexible spending arrangement (FSA). How to file an amended tax return for 2011 turbotax   For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,500. How to file an amended tax return for 2011 turbotax For plan years beginning after December 31, 2013, the limit is unchanged at $2,500. How to file an amended tax return for 2011 turbotax   A cafeteria plan offering a health FSA must be amended to specify the $2,500 limit (or any lower limit set by the employer). How to file an amended tax return for 2011 turbotax While cafeteria plans generally must be amended on a prospective basis, an amendment that is adopted on or before December 31, 2014, may be made effective retroactively, provided that in operation the cafeteria plan meets the limit for plan years beginning after December 31, 2012. How to file an amended tax return for 2011 turbotax A cafeteria plan that does not limit health FSA contributions to the dollar limit is not a cafeteria plan and all benefits offered under the plan are includible in the employee's gross income. How to file an amended tax return for 2011 turbotax   For more information, see Notice 2012-40, 2012-26 I. How to file an amended tax return for 2011 turbotax R. How to file an amended tax return for 2011 turbotax B. How to file an amended tax return for 2011 turbotax 1046, available at www. How to file an amended tax return for 2011 turbotax irs. How to file an amended tax return for 2011 turbotax gov/irb/2012-26_IRB/ar09. How to file an amended tax return for 2011 turbotax html. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For these plans, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current common-law employee. How to file an amended tax return for 2011 turbotax See section 2 in Publication 15 (Circular E) for more information. How to file an amended tax return for 2011 turbotax A full-time life insurance agent who is a current statutory employee. How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax Exception for S corporation shareholders. How to file an amended tax return for 2011 turbotax   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file an amended tax return for 2011 turbotax A 2% shareholder for this purpose is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file an amended tax return for 2011 turbotax Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file an amended tax return for 2011 turbotax Plans that favor highly compensated employees. How to file an amended tax return for 2011 turbotax   If your plan favors highly compensated employees as to eligibility to participate, contributions, or benefits, you must include in their wages the value of taxable benefits they could have selected. How to file an amended tax return for 2011 turbotax A plan you maintain under a collective bargaining agreement does not favor highly compensated employees. How to file an amended tax return for 2011 turbotax   A highly compensated employee for this purpose is any of the following employees. How to file an amended tax return for 2011 turbotax An officer. How to file an amended tax return for 2011 turbotax A shareholder who owns more than 5% of the voting power or value of all classes of the employer's stock. How to file an amended tax return for 2011 turbotax An employee who is highly compensated based on the facts and circumstances. How to file an amended tax return for 2011 turbotax A spouse or dependent of a person described in (1), (2), or (3). How to file an amended tax return for 2011 turbotax Plans that favor key employees. How to file an amended tax return for 2011 turbotax   If your plan favors key employees, you must include in their wages the value of taxable benefits they could have selected. How to file an amended tax return for 2011 turbotax A plan favors key employees if more than 25% of the total of the nontaxable benefits you provide for all employees under the plan go to key employees. How to file an amended tax return for 2011 turbotax However, a plan you maintain under a collective bargaining agreement does not favor key employees. How to file an amended tax return for 2011 turbotax   A key employee during 2014 is generally an employee who is either of the following. How to file an amended tax return for 2011 turbotax An officer having annual pay of more than $170,000. How to file an amended tax return for 2011 turbotax An employee who for 2014 is either of the following. How to file an amended tax return for 2011 turbotax A 5% owner of your business. How to file an amended tax return for 2011 turbotax A 1% owner of your business whose annual pay was more than $150,000. How to file an amended tax return for 2011 turbotax Simple Cafeteria Plans Eligible employers meeting contribution requirements and eligibility and participation requirements can establish a simple cafeteria plan. How to file an amended tax return for 2011 turbotax Simple cafeteria plans are treated as meeting the nondiscrimination requirements of a cafeteria plan and certain benefits under a cafeteria plan. How to file an amended tax return for 2011 turbotax Eligible employer. How to file an amended tax return for 2011 turbotax   You are an eligible employer if you employ an average of 100 or fewer employees during either of the 2 preceding years. How to file an amended tax return for 2011 turbotax If your business was not in existence throughout the preceding year, you are eligible if you reasonably expect to employ an average of 100 or fewer employees in the current year. How to file an amended tax return for 2011 turbotax If you establish a simple cafeteria plan in a year that you employ an average of 100 or fewer employees, you are considered an eligible employer for any subsequent year as long as you do not employ an average of 200 or more employees in a subsequent year. How to file an amended tax return for 2011 turbotax Eligibility and participation requirements. How to file an amended tax return for 2011 turbotax   These requirements are met if all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate and each employee eligible to participate in the plan may elect any benefit available under the plan. How to file an amended tax return for 2011 turbotax You may elect to exclude from the plan employees who: Are under age 21 before the close of the plan year, Have less than 1 year of service with you as of any day during the plan year, Are covered under a collective bargaining agreement, or Are nonresident aliens working outside the United States whose income did not come from a U. How to file an amended tax return for 2011 turbotax S. How to file an amended tax return for 2011 turbotax source. How to file an amended tax return for 2011 turbotax Contribution requirements. How to file an amended tax return for 2011 turbotax   You must make a contribution to provide qualified benefits on behalf of each qualified employee in an amount equal to: A uniform percentage (not less than 2%) of the employee’s compensation for the plan year, or An amount which is at least 6% of the employee’s compensation for the plan year or twice the amount of the salary reduction contributions of each qualified employee, whichever is less. How to file an amended tax return for 2011 turbotax If the contribution requirements are met using option (2), the rate of contribution to any salary reduction contribution of a highly compensated or key employee can not be greater than the rate of contribution to any other employee. How to file an amended tax return for 2011 turbotax More information. How to file an amended tax return for 2011 turbotax   For more information about cafeteria plans, see section 125 of the Internal Revenue Code and its regulations. How to file an amended tax return for 2011 turbotax 2. How to file an amended tax return for 2011 turbotax Fringe Benefit Exclusion Rules This section discusses the exclusion rules that apply to fringe benefits. How to file an amended tax return for 2011 turbotax These rules exclude all or part of the value of certain benefits from the recipient's pay. How to file an amended tax return for 2011 turbotax The excluded benefits are not subject to federal income tax withholding. How to file an amended tax return for 2011 turbotax Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2. How to file an amended tax return for 2011 turbotax This section discusses the exclusion rules for the following fringe benefits. How to file an amended tax return for 2011 turbotax Accident and health benefits. How to file an amended tax return for 2011 turbotax Achievement awards. How to file an amended tax return for 2011 turbotax Adoption assistance. How to file an amended tax return for 2011 turbotax Athletic facilities. How to file an amended tax return for 2011 turbotax De minimis (minimal) benefits. How to file an amended tax return for 2011 turbotax Dependent care assistance. How to file an amended tax return for 2011 turbotax Educational assistance. How to file an amended tax return for 2011 turbotax Employee discounts. How to file an amended tax return for 2011 turbotax Employee stock options. How to file an amended tax return for 2011 turbotax Employer-provided cell phones. How to file an amended tax return for 2011 turbotax Group-term life insurance coverage. How to file an amended tax return for 2011 turbotax Health savings accounts (HSAs). How to file an amended tax return for 2011 turbotax Lodging on your business premises. How to file an amended tax return for 2011 turbotax Meals. How to file an amended tax return for 2011 turbotax Moving expense reimbursements. How to file an amended tax return for 2011 turbotax No-additional-cost services. How to file an amended tax return for 2011 turbotax Retirement planning services. How to file an amended tax return for 2011 turbotax Transportation (commuting) benefits. How to file an amended tax return for 2011 turbotax Tuition reduction. How to file an amended tax return for 2011 turbotax Working condition benefits. How to file an amended tax return for 2011 turbotax See Table 2-1, later, for an overview of the employment tax treatment of these benefits. How to file an amended tax return for 2011 turbotax Table 2-1. How to file an amended tax return for 2011 turbotax Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section. How to file an amended tax return for 2011 turbotax ) Treatment Under Employment Taxes Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000) Federal Unemployment (FUTA) Accident and health benefits Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement. How to file an amended tax return for 2011 turbotax Exempt, except for certain payments to S corporation employees who are 2% shareholders. How to file an amended tax return for 2011 turbotax Exempt Achievement awards Exempt1 up to $1,600 for qualified plan awards ($400 for nonqualified awards). How to file an amended tax return for 2011 turbotax Adoption assistance Exempt1,3 Taxable Taxable Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children and the facility is operated by the employer on premises owned or leased by the employer. How to file an amended tax return for 2011 turbotax De minimis (minimal) benefits Exempt Exempt Exempt Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return). How to file an amended tax return for 2011 turbotax Educational assistance Exempt up to $5,250 of benefits each year. How to file an amended tax return for 2011 turbotax (See Educational Assistance , later in this section. How to file an amended tax return for 2011 turbotax ) Employee discounts Exempt3 up to certain limits. How to file an amended tax return for 2011 turbotax (See Employee Discounts , later in this section. How to file an amended tax return for 2011 turbotax ) Employee stock options See Employee Stock Options , later in this section. How to file an amended tax return for 2011 turbotax Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes. How to file an amended tax return for 2011 turbotax Group-term life insurance coverage Exempt Exempt1,4, 7 up to cost of $50,000 of coverage. How to file an amended tax return for 2011 turbotax (Special rules apply to former employees. How to file an amended tax return for 2011 turbotax ) Exempt Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. How to file an amended tax return for 2011 turbotax (See Health Savings Accounts , later in this section. How to file an amended tax return for 2011 turbotax ) Lodging on your business premises Exempt1 if furnished for your convenience as a condition of employment. How to file an amended tax return for 2011 turbotax Meals Exempt if furnished on your business premises for your convenience. How to file an amended tax return for 2011 turbotax Exempt if de minimis. How to file an amended tax return for 2011 turbotax Moving expense reimbursements Exempt1 if expenses would be deductible if the employee had paid them. How to file an amended tax return for 2011 turbotax No-additional-cost services Exempt3 Exempt3 Exempt3 Retirement planning services Exempt5 Exempt5 Exempt5 Transportation (commuting) benefits Exempt1 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($130), qualified parking ($250), or qualified bicycle commuting reimbursement6 ($20). How to file an amended tax return for 2011 turbotax (See Transportation (Commuting) Benefits , later in this section. How to file an amended tax return for 2011 turbotax ) Exempt if de minimis. How to file an amended tax return for 2011 turbotax Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities). How to file an amended tax return for 2011 turbotax Working condition benefits Exempt Exempt Exempt 1 Exemption does not apply to S corporation employees who are 2% shareholders. How to file an amended tax return for 2011 turbotax 2 Exemption does not apply to certain highly compensated employees under a self-insured plan that favors those employees. How to file an amended tax return for 2011 turbotax 3 Exemption does not apply to certain highly compensated employees under a program that favors those employees. How to file an amended tax return for 2011 turbotax 4 Exemption does not apply to certain key employees under a plan that favors those employees. How to file an amended tax return for 2011 turbotax 5 Exemption does not apply to services for tax preparation, accounting, legal, or brokerage services. How to file an amended tax return for 2011 turbotax 6 If the employee receives a qualified bicycle commuting reimbursement in a qualified bicycle commuting month, the employee cannot receive commuter highway vehicle, transit pass, or qualified parking benefits in that same month. How to file an amended tax return for 2011 turbotax 7 You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. How to file an amended tax return for 2011 turbotax Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. How to file an amended tax return for 2011 turbotax Also, show it in box 12 with code “C. How to file an amended tax return for 2011 turbotax ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. How to file an amended tax return for 2011 turbotax Accident and Health Benefits This exclusion applies to contributions you make to an accident or health plan for an employee, including the following. How to file an amended tax return for 2011 turbotax Contributions to the cost of accident or health insurance including qualified long-term care insurance. How to file an amended tax return for 2011 turbotax Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits. How to file an amended tax return for 2011 turbotax Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans). How to file an amended tax return for 2011 turbotax This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following. How to file an amended tax return for 2011 turbotax Payments or reimbursements of medical expenses. How to file an amended tax return for 2011 turbotax Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). How to file an amended tax return for 2011 turbotax The payments must be figured without regard to any period of absence from work. How to file an amended tax return for 2011 turbotax Accident or health plan. How to file an amended tax return for 2011 turbotax   This is an arrangement that provides benefits for your employees, their spouses, their dependents, and their children (under age 27) in the event of personal injury or sickness. How to file an amended tax return for 2011 turbotax The plan may be insured or noninsured and does not need to be in writing. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current common-law employee. How to file an amended tax return for 2011 turbotax A full-time life insurance agent who is a current statutory employee. How to file an amended tax return for 2011 turbotax A retired employee. How to file an amended tax return for 2011 turbotax A former employee you maintain coverage for based on the employment relationship. How to file an amended tax return for 2011 turbotax A widow or widower of an individual who died while an employee. How to file an amended tax return for 2011 turbotax A widow or widower of a retired employee. How to file an amended tax return for 2011 turbotax For the exclusion of contributions to an accident or health plan, a leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax Special rule for certain government plans. How to file an amended tax return for 2011 turbotax   For certain government accident and health plans, payments to a deceased plan participant's beneficiary may qualify for the exclusion from gross income if the other requirements for exclusion are met. How to file an amended tax return for 2011 turbotax See section 105(j) for details. How to file an amended tax return for 2011 turbotax Exception for S corporation shareholders. How to file an amended tax return for 2011 turbotax   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file an amended tax return for 2011 turbotax A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file an amended tax return for 2011 turbotax Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file an amended tax return for 2011 turbotax Exclusion from wages. How to file an amended tax return for 2011 turbotax   You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages. How to file an amended tax return for 2011 turbotax Exception for certain long-term care benefits. How to file an amended tax return for 2011 turbotax   You cannot exclude contributions to the cost of long-term care insurance from an employee's wages subject to federal income tax withholding if the coverage is provided through a flexible spending or similar arrangement. How to file an amended tax return for 2011 turbotax This is a benefit program that reimburses specified expenses up to a maximum amount that is reasonably available to the employee and is less than five times the total cost of the insurance. How to file an amended tax return for 2011 turbotax However, you can exclude these contributions from the employee's wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. How to file an amended tax return for 2011 turbotax S corporation shareholders. How to file an amended tax return for 2011 turbotax   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the value of accident or health benefits you provide to the employee in the employee's wages subject to federal income tax withholding. How to file an amended tax return for 2011 turbotax However, you can exclude the value of these benefits (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. How to file an amended tax return for 2011 turbotax Exception for highly compensated employees. How to file an amended tax return for 2011 turbotax   If your plan is a self-insured medical reimbursement plan that favors highly compensated employees, you must include all or part of the amounts you pay to these employees in their wages subject to federal income tax withholding. How to file an amended tax return for 2011 turbotax However, you can exclude these amounts (other than payments for specific injuries or illnesses) from the employee's wages subject to social security, Medicare, and FUTA taxes. How to file an amended tax return for 2011 turbotax   A self-insured plan is a plan that reimburses your employees for medical expenses not covered by an accident or health insurance policy. How to file an amended tax return for 2011 turbotax   A highly compensated employee for this exception is any of the following individuals. How to file an amended tax return for 2011 turbotax One of the five highest paid officers. How to file an amended tax return for 2011 turbotax An employee who owns (directly or indirectly) more than 10% in value of the employer's stock. How to file an amended tax return for 2011 turbotax An employee who is among the highest paid 25% of all employees (other than those who can be excluded from the plan). How to file an amended tax return for 2011 turbotax   For more information on this exception, see section 105(h) of the Internal Revenue Code and its regulations. How to file an amended tax return for 2011 turbotax COBRA premiums. How to file an amended tax return for 2011 turbotax   The exclusion for accident and health benefits applies to amounts you pay to maintain medical coverage for a current or former employee under the Combined Omnibus Budget Reconciliation Act of 1986 (COBRA). How to file an amended tax return for 2011 turbotax The exclusion applies regardless of the length of employment, whether you directly pay the premiums or reimburse the former employee for premiums paid, and whether the employee's separation is permanent or temporary. How to file an amended tax return for 2011 turbotax Achievement Awards This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. How to file an amended tax return for 2011 turbotax The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. How to file an amended tax return for 2011 turbotax The award must meet the requirements for employee achievement awards discussed in chapter 2 of Publication 535, Business Expenses. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current employee. How to file an amended tax return for 2011 turbotax A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee. How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax Exception for S corporation shareholders. How to file an amended tax return for 2011 turbotax   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file an amended tax return for 2011 turbotax A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file an amended tax return for 2011 turbotax Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file an amended tax return for 2011 turbotax Exclusion from wages. How to file an amended tax return for 2011 turbotax   You can generally exclude the value of achievement awards you give to an employee from the employee's wages if their cost is not more than the amount you can deduct as a business expense for the year. How to file an amended tax return for 2011 turbotax The excludable annual amount is $1,600 ($400 for awards that are not “qualified plan awards”). How to file an amended tax return for 2011 turbotax See chapter 2 of Publication 535 for more information about the limit on deductions for employee achievement awards. How to file an amended tax return for 2011 turbotax    To determine for 2014 whether an achievement award is a “qualified plan award” under the deduction rules described in Publication 535, treat any employee who received more than $115,000 in pay for 2013 as a highly compensated employee. How to file an amended tax return for 2011 turbotax   If the cost of awards given to an employee is more than your allowable deduction, include in the employee's wages the larger of the following amounts. How to file an amended tax return for 2011 turbotax The part of the cost that is more than your allowable deduction (up to the value of the awards). How to file an amended tax return for 2011 turbotax The amount by which the value of the awards exceeds your allowable deduction. How to file an amended tax return for 2011 turbotax Exclude the remaining value of the awards from the employee's wages. How to file an amended tax return for 2011 turbotax Adoption Assistance An adoption assistance program is a separate written plan of an employer that meets all of the following requirements. How to file an amended tax return for 2011 turbotax It benefits employees who qualify under rules set up by you, which do not favor highly compensated employees or their dependents. How to file an amended tax return for 2011 turbotax To determine whether your plan meets this test, do not consider employees excluded from your plan who are covered by a collective bargaining agreement, if there is evidence that adoption assistance was a subject of good-faith bargaining. How to file an amended tax return for 2011 turbotax It does not pay more than 5% of its payments during the year for shareholders or owners (or their spouses or dependents). How to file an amended tax return for 2011 turbotax A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. How to file an amended tax return for 2011 turbotax You give reasonable notice of the plan to eligible employees. How to file an amended tax return for 2011 turbotax Employees provide reasonable substantiation that payments or reimbursements are for qualifying expenses. How to file an amended tax return for 2011 turbotax For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file an amended tax return for 2011 turbotax The employee was a 5% owner at any time during the year or the preceding year. How to file an amended tax return for 2011 turbotax The employee received more than $115,000 in pay for the preceding year. How to file an amended tax return for 2011 turbotax You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file an amended tax return for 2011 turbotax You must exclude all payments or reimbursements you make under an adoption assistance program for an employee's qualified adoption expenses from the employee's wages subject to federal income tax withholding. How to file an amended tax return for 2011 turbotax However, you cannot exclude these payments from wages subject to social security, Medicare, and federal unemployment (FUTA) taxes. How to file an amended tax return for 2011 turbotax For more information, see the Instructions for Form 8839, Qualified Adoption Expenses. How to file an amended tax return for 2011 turbotax You must report all qualifying adoption expenses you paid or reimbursed under your adoption assistance program for each employee for the year in box 12 of the employee's Form W-2. How to file an amended tax return for 2011 turbotax Use code “T” to identify this amount. How to file an amended tax return for 2011 turbotax Exception for S corporation shareholders. How to file an amended tax return for 2011 turbotax   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. How to file an amended tax return for 2011 turbotax A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file an amended tax return for 2011 turbotax Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, including using the benefit as a reduction in distributions to the 2% shareholder. How to file an amended tax return for 2011 turbotax Athletic Facilities You can exclude the value of an employee's use of an on-premises gym or other athletic facility you operate from an employee's wages if substantially all use of the facility during the calendar year is by your employees, their spouses, and their dependent children. How to file an amended tax return for 2011 turbotax For this purpose, an employee's dependent child is a child or stepchild who is the employee's dependent or who, if both parents are deceased, has not attained the age of 25. How to file an amended tax return for 2011 turbotax On-premises facility. How to file an amended tax return for 2011 turbotax   The athletic facility must be located on premises you own or lease. How to file an amended tax return for 2011 turbotax It does not have to be located on your business premises. How to file an amended tax return for 2011 turbotax However, the exclusion does not apply to an athletic facility for residential use, such as athletic facilities that are part of a resort. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current employee. How to file an amended tax return for 2011 turbotax A former employee who retired or left on disability. How to file an amended tax return for 2011 turbotax A widow or widower of an individual who died while an employee. How to file an amended tax return for 2011 turbotax A widow or widower of a former employee who retired or left on disability. How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax A partner who performs services for a partnership. How to file an amended tax return for 2011 turbotax De Minimis (Minimal) Benefits You can exclude the value of a de minimis benefit you provide to an employee from the employee's wages. How to file an amended tax return for 2011 turbotax A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. How to file an amended tax return for 2011 turbotax Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare. How to file an amended tax return for 2011 turbotax Examples of de minimis benefits include the following. How to file an amended tax return for 2011 turbotax Personal use of an employer-provided cell phone provided primarily for noncompensatory business purposes. How to file an amended tax return for 2011 turbotax See Employer-Provided Cell Phones , later in this section, for details. How to file an amended tax return for 2011 turbotax Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes. How to file an amended tax return for 2011 turbotax Holiday gifts, other than cash, with a low fair market value. How to file an amended tax return for 2011 turbotax Group-term life insurance payable on the death of an employee's spouse or dependent if the face amount is not more than $2,000. How to file an amended tax return for 2011 turbotax Meals. How to file an amended tax return for 2011 turbotax See Meals , later in this section, for details. How to file an amended tax return for 2011 turbotax Occasional parties or picnics for employees and their guests. How to file an amended tax return for 2011 turbotax Occasional tickets for theater or sporting events. How to file an amended tax return for 2011 turbotax Transportation fare. How to file an amended tax return for 2011 turbotax See Transportation (Commuting) Benefits , later in this section, for details. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat any recipient of a de minimis benefit as an employee. How to file an amended tax return for 2011 turbotax Dependent Care Assistance This exclusion applies to household and dependent care services you directly or indirectly pay for or provide to an employee under a dependent care assistance program that covers only your employees. How to file an amended tax return for 2011 turbotax The services must be for a qualifying person's care and must be provided to allow the employee to work. How to file an amended tax return for 2011 turbotax These requirements are basically the same as the tests the employee would have to meet to claim the dependent care credit if the employee paid for the services. How to file an amended tax return for 2011 turbotax For more information, see Qualifying Person Test and Work-Related Expense Test in Publication 503, Child and Dependent Care Expenses. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current employee. How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax Yourself (if you are a sole proprietor). How to file an amended tax return for 2011 turbotax A partner who performs services for a partnership. How to file an amended tax return for 2011 turbotax Exclusion from wages. How to file an amended tax return for 2011 turbotax   You can exclude the value of benefits you provide to an employee under a dependent care assistance program from the employee's wages if you reasonably believe that the employee can exclude the benefits from gross income. How to file an amended tax return for 2011 turbotax   An employee can generally exclude from gross income up to $5,000 of benefits received under a dependent care assistance program each year. How to file an amended tax return for 2011 turbotax This limit is reduced to $2,500 for married employees filing separate returns. How to file an amended tax return for 2011 turbotax   However, the exclusion cannot be more than the smaller of the earned income of either the employee or employee's spouse. How to file an amended tax return for 2011 turbotax Special rules apply to determine the earned income of a spouse who is either a student or not able to care for himself or herself. How to file an amended tax return for 2011 turbotax For more information on the earned income limit, see Publication 503. How to file an amended tax return for 2011 turbotax Exception for highly compensated employees. How to file an amended tax return for 2011 turbotax   You cannot exclude dependent care assistance from the wages of a highly compensated employee unless the benefits provided under the program do not favor highly compensated employees and the program meets the requirements described in section 129(d) of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file an amended tax return for 2011 turbotax The employee was a 5% owner at any time during the year or the preceding year. How to file an amended tax return for 2011 turbotax The employee received more than $115,000 in pay for the preceding year. How to file an amended tax return for 2011 turbotax You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file an amended tax return for 2011 turbotax Form W-2. How to file an amended tax return for 2011 turbotax   Report the value of all dependent care assistance you provide to an employee under a dependent care assistance program in box 10 of the employee's Form W-2. How to file an amended tax return for 2011 turbotax Include any amounts you cannot exclude from the employee's wages in boxes 1, 3, and 5. How to file an amended tax return for 2011 turbotax Report both the nontaxable portion of assistance (up to $5,000) and any assistance above the amount that is non-taxable to the employee. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax   Company A provides a dependent care assistance flexible spending arrangement to its employees through a cafeteria plan. How to file an amended tax return for 2011 turbotax In addition, it provides occasional on-site dependent care to its employees at no cost. How to file an amended tax return for 2011 turbotax Emily, an employee of company A, had $4,500 deducted from her pay for the dependent care flexible spending arrangement. How to file an amended tax return for 2011 turbotax In addition, Emily used the on-site dependent care several times. How to file an amended tax return for 2011 turbotax The fair market value of the on-site care was $700. How to file an amended tax return for 2011 turbotax Emily's Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 flexible spending arrangement plus $700 on-site dependent care). How to file an amended tax return for 2011 turbotax Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount. How to file an amended tax return for 2011 turbotax Educational Assistance This exclusion applies to educational assistance you provide to employees under an educational assistance program. How to file an amended tax return for 2011 turbotax The exclusion also applies to graduate level courses. How to file an amended tax return for 2011 turbotax Educational assistance means amounts you pay or incur for your employees' education expenses. How to file an amended tax return for 2011 turbotax These expenses generally include the cost of books, equipment, fees, supplies, and tuition. How to file an amended tax return for 2011 turbotax However, these expenses do not include the cost of a course or other education involving sports, games, or hobbies, unless the education: Has a reasonable relationship to your business, or Is required as part of a degree program. How to file an amended tax return for 2011 turbotax Education expenses do not include the cost of tools or supplies (other than textbooks) your employee is allowed to keep at the end of the course. How to file an amended tax return for 2011 turbotax Nor do they include the cost of lodging, meals, or transportation. How to file an amended tax return for 2011 turbotax Educational assistance program. How to file an amended tax return for 2011 turbotax   An educational assistance program is a separate written plan that provides educational assistance only to your employees. How to file an amended tax return for 2011 turbotax The program qualifies only if all of the following tests are met. How to file an amended tax return for 2011 turbotax The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees. How to file an amended tax return for 2011 turbotax To determine whether your program meets this test, do not consider employees excluded from your program who are covered by a collective bargaining agreement if there is evidence that educational assistance was a subject of good-faith bargaining. How to file an amended tax return for 2011 turbotax The program does not provide more than 5% of its benefits during the year for shareholders or owners. How to file an amended tax return for 2011 turbotax A shareholder or owner is someone who owns (on any day of the year) more than 5% of the stock or of the capital or profits interest of your business. How to file an amended tax return for 2011 turbotax The program does not allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance. How to file an amended tax return for 2011 turbotax You give reasonable notice of the program to eligible employees. How to file an amended tax return for 2011 turbotax Your program can cover former employees if their employment is the reason for the coverage. How to file an amended tax return for 2011 turbotax   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file an amended tax return for 2011 turbotax The employee was a 5% owner at any time during the year or the preceding year. How to file an amended tax return for 2011 turbotax The employee received more than $115,000 in pay for the preceding year. How to file an amended tax return for 2011 turbotax You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current employee. How to file an amended tax return for 2011 turbotax A former employee who retired, left on disability, or was laid off. How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax Yourself (if you are a sole proprietor). How to file an amended tax return for 2011 turbotax A partner who performs services for a partnership. How to file an amended tax return for 2011 turbotax Exclusion from wages. How to file an amended tax return for 2011 turbotax   You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year. How to file an amended tax return for 2011 turbotax Assistance over $5,250. How to file an amended tax return for 2011 turbotax   If you do not have an educational assistance plan, or you provide an employee with assistance exceeding $5,250, you must include the value of these benefits as wages, unless the benefits are working condition benefits. How to file an amended tax return for 2011 turbotax Working condition benefits may be excluded from wages. How to file an amended tax return for 2011 turbotax Property or a service provided is a working condition benefit to the extent that if the employee paid for it, the amount paid would have been deductible as a business or depreciation expense. How to file an amended tax return for 2011 turbotax See Working Condition Benefits , later, in this section. How to file an amended tax return for 2011 turbotax Employee Discounts This exclusion applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. How to file an amended tax return for 2011 turbotax However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current employee. How to file an amended tax return for 2011 turbotax A former employee who retired or left on disability. How to file an amended tax return for 2011 turbotax A widow or widower of an individual who died while an employee. How to file an amended tax return for 2011 turbotax A widow or widower of an employee who retired or left on disability. How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. How to file an amended tax return for 2011 turbotax A partner who performs services for a partnership. How to file an amended tax return for 2011 turbotax Exclusion from wages. How to file an amended tax return for 2011 turbotax   You can generally exclude the value of an employee discount you provide an employee from the employee's wages, up to the following limits. How to file an amended tax return for 2011 turbotax For a discount on services, 20% of the price you charge nonemployee customers for the service. How to file an amended tax return for 2011 turbotax For a discount on merchandise or other property, your gross profit percentage times the price you charge nonemployee customers for the property. How to file an amended tax return for 2011 turbotax   Determine your gross profit percentage in the line of business based on all property you offer to customers (including employee customers) and your experience during the tax year immediately before the tax year in which the discount is available. How to file an amended tax return for 2011 turbotax To figure your gross profit percentage, subtract the total cost of the property from the total sales price of the property and divide the result by the total sales price of the property. How to file an amended tax return for 2011 turbotax Exception for highly compensated employees. How to file an amended tax return for 2011 turbotax   You cannot exclude from the wages of a highly compensated employee any part of the value of a discount that is not available on the same terms to one of the following groups. How to file an amended tax return for 2011 turbotax All of your employees. How to file an amended tax return for 2011 turbotax A group of employees defined under a reasonable classification you set up that does not favor highly compensated employees. How to file an amended tax return for 2011 turbotax   For this exclusion, a highly compensated employee for 2014 is an employee who meets either of the following tests. How to file an amended tax return for 2011 turbotax The employee was a 5% owner at any time during the year or the preceding year. How to file an amended tax return for 2011 turbotax The employee received more than $115,000 in pay for the preceding year. How to file an amended tax return for 2011 turbotax You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file an amended tax return for 2011 turbotax Employee Stock Options There are three kinds of stock options—incentive stock options, employee stock purchase plan options, and nonstatutory (nonqualified) stock options. How to file an amended tax return for 2011 turbotax Wages for social security, Medicare, and federal unemployment (FUTA) taxes do not include remuneration resulting from the exercise, after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or from any disposition of stock acquired by exercising such an option. How to file an amended tax return for 2011 turbotax The IRS will not apply these taxes to an exercise before October 23, 2004, of an incentive stock option or an employee stock purchase plan option or to a disposition of stock acquired by such exercise. How to file an amended tax return for 2011 turbotax Additionally, federal income tax withholding is not required on the income resulting from a disqualifying disposition of stock acquired by the exercise after October 22, 2004, of an incentive stock option or under an employee stock purchase plan option, or on income equal to the discount portion of stock acquired by the exercise, after October 22, 2004, of an employee stock purchase plan option resulting from any disposition of the stock. How to file an amended tax return for 2011 turbotax The IRS will not apply federal income tax withholding upon the disposition of stock acquired by the exercise, before October 23, 2004, of an incentive stock option or an employee stock purchase plan option. How to file an amended tax return for 2011 turbotax However, the employer must report as income in box 1 of Form W-2, (a) the discount portion of stock acquired by the exercise of an employee stock purchase plan option upon disposition of the stock, and (b) the spread (between the exercise price and the fair market value of the stock at the time of exercise) upon a disqualifying disposition of stock acquired by the exercise of an incentive stock option or an employee stock purchase plan option. How to file an amended tax return for 2011 turbotax An employer must report the excess of the fair market value of stock received upon exercise of a nonstatutory stock option over the amount paid for the stock option on Form W-2 in boxes 1, 3 (up to the social security wage base), 5, and in box 12 using the code “V. How to file an amended tax return for 2011 turbotax ” See Regulations section 1. How to file an amended tax return for 2011 turbotax 83-7. How to file an amended tax return for 2011 turbotax An employee who transfers his or her interest in nonstatutory stock options to the employee's former spouse incident to a divorce is not required to include an amount in gross income upon the transfer. How to file an amended tax return for 2011 turbotax The former spouse, rather than the employee, is required to include an amount in gross income when the former spouse exercises the stock options. How to file an amended tax return for 2011 turbotax See Revenue Ruling 2002-22 and Revenue Ruling 2004-60 for details. How to file an amended tax return for 2011 turbotax You can find Revenue Ruling 2002-22 on page 849 of Internal Revenue Bulletin 2002-19 at www. How to file an amended tax return for 2011 turbotax irs. How to file an amended tax return for 2011 turbotax gov/pub/irs-irbs/irb02-19. How to file an amended tax return for 2011 turbotax pdf. How to file an amended tax return for 2011 turbotax See Revenue Ruling 2004-60, 2004-24 I. How to file an amended tax return for 2011 turbotax R. How to file an amended tax return for 2011 turbotax B. How to file an amended tax return for 2011 turbotax 1051, available at www. How to file an amended tax return for 2011 turbotax irs. How to file an amended tax return for 2011 turbotax gov/irb/2004-24_IRB/ar13. How to file an amended tax return for 2011 turbotax html. How to file an amended tax return for 2011 turbotax For more information about employee stock options, see sections 421, 422, and 423 of the Internal Revenue Code and their related regulations. How to file an amended tax return for 2011 turbotax Employer-Provided Cell Phones The value of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a working condition fringe benefit. How to file an amended tax return for 2011 turbotax Personal use of an employer-provided cell phone, provided primarily for noncompensatory business reasons, is excludable from an employee's income as a de minimis fringe benefit. How to file an amended tax return for 2011 turbotax For the rules relating to these types of benefits, see De Minimis (Minimal) Benefits , earlier in this section, and Working Condition Benefits , later in this section. How to file an amended tax return for 2011 turbotax Noncompensatory business purposes. How to file an amended tax return for 2011 turbotax   You provide a cell phone primarily for noncompensatory business purposes if there are substantial business reasons for providing the cell phone. How to file an amended tax return for 2011 turbotax Examples of substantial business reasons include the employer's: Need to contact the employee at all times for work-related emergencies, Requirement that the employee be available to speak with clients at times when the employee is away from the office, and Need to speak with clients located in other time zones at times outside the employee's normal workday. How to file an amended tax return for 2011 turbotax Cell phones provided to promote goodwill, boost morale, or attract prospective employees. How to file an amended tax return for 2011 turbotax   You cannot exclude from an employee's wages the value of a cell phone provided to promote goodwill of an employee, to attract a prospective employee, or as a means of providing additional compensation to an employee. How to file an amended tax return for 2011 turbotax Additional information. How to file an amended tax return for 2011 turbotax   For additional information on the tax treatment of employer-provided cell phones, see Notice 2011-72, 2011-38 I. How to file an amended tax return for 2011 turbotax R. How to file an amended tax return for 2011 turbotax B. How to file an amended tax return for 2011 turbotax 407, available at  www. How to file an amended tax return for 2011 turbotax irs. How to file an amended tax return for 2011 turbotax gov/irb/2011-38_IRB/ar07. How to file an amended tax return for 2011 turbotax html. How to file an amended tax return for 2011 turbotax Group-Term Life Insurance Coverage This exclusion applies to life insurance coverage that meets all the following conditions. How to file an amended tax return for 2011 turbotax It provides a general death benefit that is not included in income. How to file an amended tax return for 2011 turbotax You provide it to a group of employees. How to file an amended tax return for 2011 turbotax See The 10-employee rule , later. How to file an amended tax return for 2011 turbotax It provides an amount of insurance to each employee based on a formula that prevents individual selection. How to file an amended tax return for 2011 turbotax This formula must use factors such as the employee's age, years of service, pay, or position. How to file an amended tax return for 2011 turbotax You provide it under a policy you directly or indirectly carry. How to file an amended tax return for 2011 turbotax Even if you do not pay any of the policy's cost, you are considered to carry it if you arrange for payment of its cost by your employees and charge at least one employee less than, and at least one other employee more than, the cost of his or her insurance. How to file an amended tax return for 2011 turbotax Determine the cost of the insurance, for this purpose, as explained under Coverage over the limit , later. How to file an amended tax return for 2011 turbotax Group-term life insurance does not include the following insurance. How to file an amended tax return for 2011 turbotax Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits. How to file an amended tax return for 2011 turbotax Life insurance on the life of your employee's spouse or dependent. How to file an amended tax return for 2011 turbotax However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit. How to file an amended tax return for 2011 turbotax See De Minimis (Minimal) Benefits , earlier in this section. How to file an amended tax return for 2011 turbotax Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met. How to file an amended tax return for 2011 turbotax See Regulations section 1. How to file an amended tax return for 2011 turbotax 79-1 for details. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat the following individuals as employees. How to file an amended tax return for 2011 turbotax A current common-law employee. How to file an amended tax return for 2011 turbotax A full-time life insurance agent who is a current statutory employee. How to file an amended tax return for 2011 turbotax An individual who was formerly your employee under (1) or (2). How to file an amended tax return for 2011 turbotax A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction and control. How to file an amended tax return for 2011 turbotax Exception for S corporation shareholders. How to file an amended tax return for 2011 turbotax   Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. How to file an amended tax return for 2011 turbotax A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file an amended tax return for 2011 turbotax Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file an amended tax return for 2011 turbotax The 10-employee rule. How to file an amended tax return for 2011 turbotax   Generally, life insurance is not group-term life insurance unless you provide it to at least 10 full-time employees at some time during the year. How to file an amended tax return for 2011 turbotax   For this rule, count employees who choose not to receive the insurance unless, to receive it, they must contribute to the cost of benefits other than the group-term life insurance. How to file an amended tax return for 2011 turbotax For example, count an employee who could receive insurance by paying part of the cost, even if that employee chooses not to receive it. How to file an amended tax return for 2011 turbotax However, do not count an employee who must pay part or all of the cost of permanent benefits to get insurance, unless that employee chooses to receive it. How to file an amended tax return for 2011 turbotax A permanent benefit is an economic value extending beyond one policy year (for example, a paid-up or cash-surrender value) that is provided under a life insurance policy. How to file an amended tax return for 2011 turbotax Exceptions. How to file an amended tax return for 2011 turbotax   Even if you do not meet the 10-employee rule, two exceptions allow you to treat insurance as group-term life insurance. How to file an amended tax return for 2011 turbotax   Under the first exception, you do not have to meet the 10-employee rule if all the following conditions are met. How to file an amended tax return for 2011 turbotax If evidence that the employee is insurable is required, it is limited to a medical questionnaire (completed by the employee) that does not require a physical. How to file an amended tax return for 2011 turbotax You provide the insurance to all your full-time employees or, if the insurer requires the evidence mentioned in (1), to all full-time employees who provide evidence the insurer accepts. How to file an amended tax return for 2011 turbotax You figure the coverage based on either a uniform percentage of pay or the insurer's coverage brackets that meet certain requirements. How to file an amended tax return for 2011 turbotax See Regulations section 1. How to file an amended tax return for 2011 turbotax 79-1 for details. How to file an amended tax return for 2011 turbotax   Under the second exception, you do not have to meet the 10-employee rule if all the following conditions are met. How to file an amended tax return for 2011 turbotax You provide the insurance under a common plan covering your employees and the employees of at least one other employer who is not related to you. How to file an amended tax return for 2011 turbotax The insurance is restricted to, but mandatory for, all your employees who belong to, or are represented by, an organization (such as a union) that carries on substantial activities besides obtaining insurance. How to file an amended tax return for 2011 turbotax Evidence of whether an employee is insurable does not affect an employee's eligibility for insurance or the amount of insurance that employee gets. How to file an amended tax return for 2011 turbotax   To apply either exception, do not consider employees who were denied insurance for any of the following reasons. How to file an amended tax return for 2011 turbotax They were 65 or older. How to file an amended tax return for 2011 turbotax They customarily work 20 hours or less a week or 5 months or less in a calendar year. How to file an amended tax return for 2011 turbotax They have not been employed for the waiting period given in the policy. How to file an amended tax return for 2011 turbotax This waiting period cannot be more than 6 months. How to file an amended tax return for 2011 turbotax Exclusion from wages. How to file an amended tax return for 2011 turbotax   You can generally exclude the cost of up to $50,000 of group-term life insurance from the wages of an insured employee. How to file an amended tax return for 2011 turbotax You can exclude the same amount from the employee's wages when figuring social security and Medicare taxes. How to file an amended tax return for 2011 turbotax In addition, you do not have to withhold federal income tax or pay FUTA tax on any group-term life insurance you provide to an employee. How to file an amended tax return for 2011 turbotax Coverage over the limit. How to file an amended tax return for 2011 turbotax   You must include in your employee's wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. How to file an amended tax return for 2011 turbotax Report it as wages in boxes 1, 3, and 5 of the employee's Form W-2. How to file an amended tax return for 2011 turbotax Also, show it in box 12 with code “C. How to file an amended tax return for 2011 turbotax ” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax. How to file an amended tax return for 2011 turbotax   Figure the monthly cost of the insurance to include in the employee's wages by multiplying the number of thousands of dollars of all insurance coverage over $50,000 (figured to the nearest $100) by the cost shown in Table 2-2. How to file an amended tax return for 2011 turbotax For all coverage provided within the calendar year, use the employee's age on the last day of the employee's tax year. How to file an amended tax return for 2011 turbotax You must prorate the cost from the table if less than a full month of coverage is involved. How to file an amended tax return for 2011 turbotax Table 2-2. How to file an amended tax return for 2011 turbotax Cost Per $1,000 of Protection For 1 Month Age Cost Under 25 $ . How to file an amended tax return for 2011 turbotax 05 25 through 29 . How to file an amended tax return for 2011 turbotax 06 30 through 34 . How to file an amended tax return for 2011 turbotax 08 35 through 39 . How to file an amended tax return for 2011 turbotax 09 40 through 44 . How to file an amended tax return for 2011 turbotax 10 45 through 49 . How to file an amended tax return for 2011 turbotax 15 50 through 54 . How to file an amended tax return for 2011 turbotax 23 55 through 59 . How to file an amended tax return for 2011 turbotax 43 60 through 64 . How to file an amended tax return for 2011 turbotax 66 65 through 69 1. How to file an amended tax return for 2011 turbotax 27 70 and older 2. How to file an amended tax return for 2011 turbotax 06 You figure the total cost to include in the employee's wages by multiplying the monthly cost by the number of full months' coverage at that cost. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax Tom's employer provides him with group-term life insurance coverage of $200,000. How to file an amended tax return for 2011 turbotax Tom is 45 years old, is not a key employee, and pays $100 per year toward the cost of the insurance. How to file an amended tax return for 2011 turbotax Tom's employer must include $170 in his wages. How to file an amended tax return for 2011 turbotax The $200,000 of insurance coverage is reduced by $50,000. How to file an amended tax return for 2011 turbotax The yearly cost of $150,000 of coverage is $270 ($. How to file an amended tax return for 2011 turbotax 15 x 150 x 12), and is reduced by the $100 Tom pays for the insurance. How to file an amended tax return for 2011 turbotax The employer includes $170 in boxes 1, 3, and 5 of Tom's Form W-2. How to file an amended tax return for 2011 turbotax The employer also enters $170 in box 12 with code “C. How to file an amended tax return for 2011 turbotax ” Coverage for dependents. How to file an amended tax return for 2011 turbotax   Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount is not more than $2,000. How to file an amended tax return for 2011 turbotax If the face amount is greater than $2,000, the entire cost of the dependent coverage must be included in income unless the amount over $2,000 is purchased with employee contributions on an after-tax basis. How to file an amended tax return for 2011 turbotax The cost of the insurance is determined by using Table 2-2. How to file an amended tax return for 2011 turbotax Former employees. How to file an amended tax return for 2011 turbotax   When group-term life insurance over $50,000 is provided to an employee (including retirees) after his or her termination, the employee share of social security and Medicare taxes on that period of coverage is paid by the former employee with his or her tax return and is not collected by the employer. How to file an amended tax return for 2011 turbotax You are not required to collect those taxes. How to file an amended tax return for 2011 turbotax Use the table above to determine the amount of social security and Medicare taxes owed by the former employee for coverage provided after separation from service. How to file an amended tax return for 2011 turbotax Report those uncollected amounts separately in box 12 of Form W-2 using codes “M” and “N. How to file an amended tax return for 2011 turbotax ” See the General Instructions for Forms W-2 and W-3 and the Instructions for Form 941. How to file an amended tax return for 2011 turbotax Exception for key employees. How to file an amended tax return for 2011 turbotax   Generally, if your group-term life insurance plan favors key employees as to participation or benefits, you must include the entire cost of the insurance in your key employees' wages. How to file an amended tax return for 2011 turbotax This exception generally does not apply to church plans. How to file an amended tax return for 2011 turbotax When figuring social security and Medicare taxes, you must also include the entire cost in the employees' wages. How to file an amended tax return for 2011 turbotax Include the cost in boxes 1, 3, and 5 of Form W-2. How to file an amended tax return for 2011 turbotax However, you do not have to withhold federal income tax or pay FUTA tax on the cost of any group-term life insurance you provide to an employee. How to file an amended tax return for 2011 turbotax   For this purpose, the cost of the insurance is the greater of the following amounts. How to file an amended tax return for 2011 turbotax The premiums you pay for the employee's insurance. How to file an amended tax return for 2011 turbotax See Regulations section 1. How to file an amended tax return for 2011 turbotax 79-4T(Q&A 6) for more information. How to file an amended tax return for 2011 turbotax The cost you figure using Table 2-2. How to file an amended tax return for 2011 turbotax   For this exclusion, a key employee during 2014 is an employee or former employee who is one of the following individuals. How to file an amended tax return for 2011 turbotax See section 416(i) of the Internal Revenue Code for more information. How to file an amended tax return for 2011 turbotax An officer having annual pay of more than $170,000. How to file an amended tax return for 2011 turbotax An individual who for 2014 was either of the following. How to file an amended tax return for 2011 turbotax A 5% owner of your business. How to file an amended tax return for 2011 turbotax A 1% owner of your business whose annual pay was more than $150,000. How to file an amended tax return for 2011 turbotax   A former employee who was a key employee upon retirement or separation from service is also a key employee. How to file an amended tax return for 2011 turbotax   Your plan does not favor key employees as to participation if at least one of the following is true. How to file an amended tax return for 2011 turbotax It benefits at least 70% of your employees. How to file an amended tax return for 2011 turbotax At least 85% of the participating employees are not key employees. How to file an amended tax return for 2011 turbotax It benefits employees who qualify under a set of rules you set up that do not favor key employees. How to file an amended tax return for 2011 turbotax   Your plan meets this participation test if it is part of a cafeteria plan (discussed in section 1) and it meets the participation test for those plans. How to file an amended tax return for 2011 turbotax   When applying this test, do not consider employees who: Have not completed 3 years of service, Are part-time or seasonal, Are nonresident aliens who receive no U. How to file an amended tax return for 2011 turbotax S. How to file an amended tax return for 2011 turbotax source earned income from you, or Are not included in the plan but are in a unit of employees covered by a collective bargaining agreement, if the benefits provided under the plan were the subject of good-faith bargaining between you and employee representatives. How to file an amended tax return for 2011 turbotax   Your plan does not favor key employees as to benefits if all benefits available to participating key employees are also available to all other participating employees. How to file an amended tax return for 2011 turbotax Your plan does not favor key employees just because the amount of insurance you provide to your employees is uniformly related to their pay. How to file an amended tax return for 2011 turbotax S corporation shareholders. How to file an amended tax return for 2011 turbotax   Because you cannot treat a 2% shareholder of an S corporation as an employee for this exclusion, you must include the cost of all group-term life insurance coverage you provide the 2% shareholder in his or her wages. How to file an amended tax return for 2011 turbotax When figuring social security and Medicare taxes, you must also include the cost of this coverage in the 2% shareholder's wages. How to file an amended tax return for 2011 turbotax Include the cost in boxes 1, 3, and 5 of Form W-2. How to file an amended tax return for 2011 turbotax However, you do not have to withhold federal income tax or pay federal unemployment tax on the cost of any group-term life insurance coverage you provide to the 2% shareholder. How to file an amended tax return for 2011 turbotax Health Savings Accounts A Health Savings Account (HSA) is an account owned by a qualified individual who is generally your employee or former employee. How to file an amended tax return for 2011 turbotax Any contributions that you make to an HSA become the employee's property and cannot be withdrawn by you. How to file an amended tax return for 2011 turbotax Contributions to the account are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. How to file an amended tax return for 2011 turbotax The medical expenses must not be reimbursable by insurance or other sources and their payment from HSA funds (distribution) will not give rise to a medical expense deduction on the individual's federal income tax return. How to file an amended tax return for 2011 turbotax For more information about HSAs, visit the Department of Treasury's website at www. How to file an amended tax return for 2011 turbotax treasury. How to file an amended tax return for 2011 turbotax gov and enter “HSA” in the search box. How to file an amended tax return for 2011 turbotax Eligibility. How to file an amended tax return for 2011 turbotax   A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance except for permitted insurance listed under section 223(c)(3) or insurance for accidents, disability, dental care, vision care, or long-term care. How to file an amended tax return for 2011 turbotax For calendar year 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage and $12,700 for family coverage. How to file an amended tax return for 2011 turbotax   There are no income limits that restrict an individual's eligibility to contribute to an HSA nor is there a requirement that the account owner have earned income to make a contribution. How to file an amended tax return for 2011 turbotax Exceptions. How to file an amended tax return for 2011 turbotax   An individual is not a qualified individual if he or she can be claimed as a dependent on another person's tax return. How to file an amended tax return for 2011 turbotax Also, an employee's participation in a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) generally disqualifies the individual (and employer) from making contributions to his or her HSA. How to file an amended tax return for 2011 turbotax However, an individual may qualify to participate in an HSA if he or she is participating in only a limited-purpose FSA or HRA or a post-deductible FSA. How to file an amended tax return for 2011 turbotax For more information, see Other employee health plans in Publication 969. How to file an amended tax return for 2011 turbotax Employer contributions. How to file an amended tax return for 2011 turbotax   Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. How to file an amended tax return for 2011 turbotax For 2014, you can contribute up to $3,300 for self-only coverage or $6,550 for family coverage to a qualified individual's HSA. How to file an amended tax return for 2011 turbotax   The contribution amounts listed above are increased by $1,000 for a qualified individual who is age 55 or older at any time during the year. How to file an amended tax return for 2011 turbotax For two qualified individuals who are married to each other and who each are age 55 or older at any time during the year, each spouse's contribution limit is increased by $1,000 provided each spouse has a separate HSA. How to file an amended tax return for 2011 turbotax No contributions can be made to an individual's HSA after he or she becomes enrolled in Medicare Part A or Part B. How to file an amended tax return for 2011 turbotax Nondiscrimination rules. How to file an amended tax return for 2011 turbotax    Your contribution amount to an employee's HSA must be comparable for all employees who have comparable coverage during the same period. How to file an amended tax return for 2011 turbotax Otherwise, there will be an excise tax equal to 35% of the amount you contributed to all employees' HSAs. How to file an amended tax return for 2011 turbotax   For guidance on employer comparable contributions to HSAs under section 4980G in instances where an employee has not established an HSA by December 31 and in instances where an employer accelerates contributions for the calendar year for employees who have incurred qualified medical expenses, see Regulations section 54. How to file an amended tax return for 2011 turbotax 4980G-4. How to file an amended tax return for 2011 turbotax Exception. How to file an amended tax return for 2011 turbotax   The Tax Relief and Health Care Act of 2006 allows employers to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee. How to file an amended tax return for 2011 turbotax A highly compensated employee for 2014 is an employee who meets either of the following tests. How to file an amended tax return for 2011 turbotax The employee was a 5% owner at any time during the year or the preceding year. How to file an amended tax return for 2011 turbotax The employee received more than $115,000 in pay for the preceding year. How to file an amended tax return for 2011 turbotax You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year. How to file an amended tax return for 2011 turbotax Partnerships and S corporations. How to file an amended tax return for 2011 turbotax   Partners and 2% shareholders of an S corporation are not eligible for salary reduction (pre-tax) contributions to an HSA. How to file an amended tax return for 2011 turbotax Employer contributions to the HSA of a bona fide partner or 2% shareholder are treated as distributions or guaranteed payments as determined by the facts and circumstances. How to file an amended tax return for 2011 turbotax Cafeteria plans. How to file an amended tax return for 2011 turbotax   You may contribute to an employee's HSA using a cafeteria plan and your contributions are not subject to the statutory comparability rules. How to file an amended tax return for 2011 turbotax However, cafeteria plan nondiscrimination rules still apply. How to file an amended tax return for 2011 turbotax For example, contributions under a cafeteria plan to employee HSAs cannot be greater for higher-paid employees than they are for lower-paid employees. How to file an amended tax return for 2011 turbotax Contributions that favor lower-paid employees are not prohibited. How to file an amended tax return for 2011 turbotax Reporting requirements. How to file an amended tax return for 2011 turbotax   You must report your contributions to an employee's HSA in box 12 of Form W-2 using code “W. How to file an amended tax return for 2011 turbotax ” The trustee or custodian of the HSA, generally a bank or insurance company, reports distributions from the HSA using Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. How to file an amended tax return for 2011 turbotax Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests. How to file an amended tax return for 2011 turbotax It is furnished on your business premises. How to file an amended tax return for 2011 turbotax It is furnished for your convenience. How to file an amended tax return for 2011 turbotax The employee must accept it as a condition of employment. How to file an amended tax return for 2011 turbotax Different tests may apply to lodging furnished by educational institutions. How to file an amended tax return for 2011 turbotax See section 119(d) of the Internal Revenue Code for details. How to file an amended tax return for 2011 turbotax The exclusion does not apply if you allow your employee to choose to receive additional pay instead of lodging. How to file an amended tax return for 2011 turbotax On your business premises. How to file an amended tax return for 2011 turbotax   For this exclusion, your business premises is generally your employee's place of work. How to file an amended tax return for 2011 turbotax For special rules that apply to lodging furnished in a camp located in a foreign country, see section 119(c) of the Internal Revenue Code and its regulations. How to file an amended tax return for 2011 turbotax For your convenience. How to file an amended tax return for 2011 turbotax   Whether or not you furnish lodging for your convenience as an employer depends on all the facts and circumstances. How to file an amended tax return for 2011 turbotax You furnish the lodging to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. How to file an amended tax return for 2011 turbotax This is true even if a law or an employment contract provides that the lodging is furnished as pay. How to file an amended tax return for 2011 turbotax However, a written statement that the lodging is furnished for your convenience is not sufficient. How to file an amended tax return for 2011 turbotax Condition of employment. How to file an amended tax return for 2011 turbotax   Lodging meets this test if you require your employees to accept the lodging because they need to live on your business premises to be able to properly perform their duties. How to file an amended tax return for 2011 turbotax Examples include employees who must be available at all times and employees who could not perform their required duties without being furnished the lodging. How to file an amended tax return for 2011 turbotax   It does not matter whether you must furnish the lodging as pay under the terms of an employment contract or a law fixing the terms of employment. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax A hospital gives Joan, an employee of the hospital, the choice of living at the hospital free of charge or living elsewhere and receiving a cash allowance in addition to her regular salary. How to file an amended tax return for 2011 turbotax If Joan chooses to live at the hospital, the hospital cannot exclude the value of the lodging from her wages because she is not required to live at the hospital to properly perform the duties of her employment. How to file an amended tax return for 2011 turbotax S corporation shareholders. How to file an amended tax return for 2011 turbotax   For this exclusion, do not treat a 2% shareholder of an S corporation as an employee of the corporation. How to file an amended tax return for 2011 turbotax A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. How to file an amended tax return for 2011 turbotax Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. How to file an amended tax return for 2011 turbotax Meals This section discusses the exclusion rules that apply to de minimis meals and meals on your business premises. How to file an amended tax return for 2011 turbotax De Minimis Meals You can exclude any occasional meal or meal money you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. How to file an amended tax return for 2011 turbotax The exclusion applies, for example, to the following items. How to file an amended tax return for 2011 turbotax Coffee, doughnuts, or soft drinks. How to file an amended tax return for 2011 turbotax Occasional meals or meal money provided to enable an employee to work overtime. How to file an amended tax return for 2011 turbotax However, the exclusion does not apply to meal money figured on the basis of hours worked. How to file an amended tax return for 2011 turbotax Occasional parties or picnics for employees and their guests. How to file an amended tax return for 2011 turbotax This exclusion also applies to meals you provide at an employer-operated eating facility for employees if the annual revenue from the facility equals or exceeds the direct costs of the facility. How to file an amended tax return for 2011 turbotax For this purpose, your revenue from providing a meal is considered equal to the facility's direct operating costs to provide that meal if its value can be excluded from an employee's wages as explained under Meals on Your Business Premises , later. How to file an amended tax return for 2011 turbotax If food or beverages you furnish to employees qualify as a de minimis benefit, you can deduct their full cost. How to file an amended tax return for 2011 turbotax The 50% limit on deductions for the cost of meals does not apply. How to file an amended tax return for 2011 turbotax The deduction limit on meals is discussed in chapter 2 of Publication 535. How to file an amended tax return for 2011 turbotax Employee. How to file an amended tax return for 2011 turbotax   For this exclusion, treat any recipient of a de minimis meal as
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The How To File An Amended Tax Return For 2011 Turbotax

How to file an amended tax return for 2011 turbotax Publication 538 - Main Content Table of Contents Accounting PeriodsCalendar Year Fiscal Year Short Tax Year Improper Tax Year Change in Tax Year Individuals Partnerships, S Corporations, and Personal Service Corporations (PSCs) Corporations (Other Than S Corporations and PSCs) Accounting MethodsSpecial methods. How to file an amended tax return for 2011 turbotax Hybrid method. How to file an amended tax return for 2011 turbotax Cash Method Accrual Method Inventories Change in Accounting Method How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). How to file an amended tax return for 2011 turbotax Accounting Periods You must use a tax year to figure your taxable income. How to file an amended tax return for 2011 turbotax A tax year is an annual accounting period for keeping records and reporting income and expenses. How to file an amended tax return for 2011 turbotax An annual accounting period does not include a short tax year (discussed later). How to file an amended tax return for 2011 turbotax You can use the following tax years: A calendar year; or A fiscal year (including a 52-53-week tax year). How to file an amended tax return for 2011 turbotax Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. How to file an amended tax return for 2011 turbotax A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. How to file an amended tax return for 2011 turbotax You cannot adopt a tax year by merely: Filing an application for an extension of time to file an income tax return; Filing an application for an employer identification number (Form SS-4); or Paying estimated taxes. How to file an amended tax return for 2011 turbotax This section discusses: A calendar year. How to file an amended tax return for 2011 turbotax A fiscal year (including a period of 52 or 53 weeks). How to file an amended tax return for 2011 turbotax A short tax year. How to file an amended tax return for 2011 turbotax An improper tax year. How to file an amended tax return for 2011 turbotax A change in tax year. How to file an amended tax return for 2011 turbotax Special situations that apply to individuals. How to file an amended tax return for 2011 turbotax Restrictions that apply to the accounting period of a partnership, S corporation, or personal service corporation. How to file an amended tax return for 2011 turbotax Special situations that apply to corporations. How to file an amended tax return for 2011 turbotax Calendar Year A calendar year is 12 consecutive months beginning on January 1st and ending on December 31st. How to file an amended tax return for 2011 turbotax If you adopt the calendar year, you must maintain your books and records and report your income and expenses from January 1st through December 31st of each year. How to file an amended tax return for 2011 turbotax If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you obtain approval from the IRS to change it, or are otherwise allowed to change it without IRS approval. How to file an amended tax return for 2011 turbotax See Change in Tax Year, later. How to file an amended tax return for 2011 turbotax Generally, anyone can adopt the calendar year. How to file an amended tax return for 2011 turbotax However, you must adopt the calendar year if: You keep no books or records; You have no annual accounting period; Your present tax year does not qualify as a fiscal year; or You are required to use a calendar year by a provision in the Internal Revenue Code or the Income Tax Regulations. How to file an amended tax return for 2011 turbotax Fiscal Year A fiscal year is 12 consecutive months ending on the last day of any month except December 31st. How to file an amended tax return for 2011 turbotax If you are allowed to adopt a fiscal year, you must consistently maintain your books and records and report your income and expenses using the time period adopted. How to file an amended tax return for 2011 turbotax 52-53-Week Tax Year You can elect to use a 52-53-week tax year if you keep your books and records and report your income and expenses on that basis. How to file an amended tax return for 2011 turbotax If you make this election, your 52-53-week tax year must always end on the same day of the week. How to file an amended tax return for 2011 turbotax Your 52-53-week tax year must always end on: Whatever date this same day of the week last occurs in a calendar month, or Whatever date this same day of the week falls that is nearest to the last day of the calendar month. How to file an amended tax return for 2011 turbotax For example, if you elect a tax year that always ends on the last Monday in March, your 2012 tax year will end on March 25, 2013. How to file an amended tax return for 2011 turbotax Election. How to file an amended tax return for 2011 turbotax   To make the election for the 52-53-week tax year, attach a statement with the following information to your tax return. How to file an amended tax return for 2011 turbotax The month in which the new 52-53-week tax year ends. How to file an amended tax return for 2011 turbotax The day of the week on which the tax year always ends. How to file an amended tax return for 2011 turbotax The date the tax year ends. How to file an amended tax return for 2011 turbotax It can be either of the following dates on which the chosen day: Last occurs in the month in (1), above, or Occurs nearest to the last day of the month in (1), above. How to file an amended tax return for 2011 turbotax   When you figure depreciation or amortization, a 52-53-week tax year is generally considered a year of 12 calendar months. How to file an amended tax return for 2011 turbotax   To determine an effective date (or apply provisions of any law) expressed in terms of tax years beginning, including, or ending on the first or last day of a specified calendar month, a 52-53-week tax year is considered to: Begin on the first day of the calendar month beginning nearest to the first day of the 52-53-week tax year, and End on the last day of the calendar month ending nearest to the last day of the 52-53-week tax year. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax Assume a tax provision applies to tax years beginning on or after July 1, 2012, which happens to be a Sunday. How to file an amended tax return for 2011 turbotax For this purpose, a 52-53-week tax year that begins on the last Tuesday of June, which falls on June 26, 2012, is treated as beginning on July 1, 2012. How to file an amended tax return for 2011 turbotax Short Tax Year A short tax year is a tax year of less than 12 months. How to file an amended tax return for 2011 turbotax A short period tax return may be required when you (as a taxable entity): Are not in existence for an entire tax year, or Change your accounting period. How to file an amended tax return for 2011 turbotax Tax on a short period tax return is figured differently for each situation. How to file an amended tax return for 2011 turbotax Not in Existence Entire Year Even if a taxable entity was not in existence for the entire year, a tax return is required for the time it was in existence. How to file an amended tax return for 2011 turbotax Requirements for filing the return and figuring the tax are generally the same as the requirements for a return for a full tax year (12 months) ending on the last day of the short tax year. How to file an amended tax return for 2011 turbotax Example 1. How to file an amended tax return for 2011 turbotax XYZ Corporation was organized on July 1, 2012. How to file an amended tax return for 2011 turbotax It elected the calendar year as its tax year. How to file an amended tax return for 2011 turbotax Therefore, its first tax return was due March 15, 2013. How to file an amended tax return for 2011 turbotax This short period return will cover the period from July 1, 2012, through December 31, 2012. How to file an amended tax return for 2011 turbotax Example 2. How to file an amended tax return for 2011 turbotax A calendar year corporation dissolved on July 23, 2012. How to file an amended tax return for 2011 turbotax Its final return is due by October 15, 2012. How to file an amended tax return for 2011 turbotax It will cover the short period from January 1, 2012, through July 23, 2012. How to file an amended tax return for 2011 turbotax Death of individual. How to file an amended tax return for 2011 turbotax   When an individual dies, a tax return must be filed for the decedent by the 15th day of the 4th month after the close of the individual's regular tax year. How to file an amended tax return for 2011 turbotax The decedent's final return will be a short period tax return that begins on January 1st, and ends on the date of death. How to file an amended tax return for 2011 turbotax In the case of a decedent who dies on December 31st, the last day of the regular tax year, a full calendar-year tax return is required. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax   Agnes Green was a single, calendar year taxpayer. How to file an amended tax return for 2011 turbotax She died on March 6, 2012. How to file an amended tax return for 2011 turbotax Her final income tax return must be filed by April 15, 2013. How to file an amended tax return for 2011 turbotax It will cover the short period from January 1, 2012, to March 6, 2012. How to file an amended tax return for 2011 turbotax Figuring Tax for Short Year If the IRS approves a change in your tax year or you are required to change your tax year, you must figure the tax and file your return for the short tax period. How to file an amended tax return for 2011 turbotax The short tax period begins on the first day after the close of your old tax year and ends on the day before the first day of your new tax year. How to file an amended tax return for 2011 turbotax Figure tax for a short year under the general rule, explained below. How to file an amended tax return for 2011 turbotax You may then be able to use a relief procedure, explained later, and claim a refund of part of the tax you paid. How to file an amended tax return for 2011 turbotax General rule. How to file an amended tax return for 2011 turbotax   Income tax for a short tax year must be annualized. How to file an amended tax return for 2011 turbotax However, self-employment tax is figured on the actual self-employment income for the short period. How to file an amended tax return for 2011 turbotax Individuals. How to file an amended tax return for 2011 turbotax   An individual must figure income tax for the short tax year as follows. How to file an amended tax return for 2011 turbotax Determine your adjusted gross income (AGI) for the short tax year and then subtract your actual itemized deductions for the short tax year. How to file an amended tax return for 2011 turbotax You must itemize deductions when you file a short period tax return. How to file an amended tax return for 2011 turbotax Multiply the dollar amount of your exemptions by the number of months in the short tax year and divide the result by 12. How to file an amended tax return for 2011 turbotax Subtract the amount in (2) from the amount in (1). How to file an amended tax return for 2011 turbotax The result is your modified taxable income. How to file an amended tax return for 2011 turbotax Multiply the modified taxable income in (3) by 12, then divide the result by the number of months in the short tax year. How to file an amended tax return for 2011 turbotax The result is your annualized income. How to file an amended tax return for 2011 turbotax Figure the total tax on your annualized income using the appropriate tax rate schedule. How to file an amended tax return for 2011 turbotax Multiply the total tax by the number of months in the short tax year and divide the result by 12. How to file an amended tax return for 2011 turbotax The result is your tax for the short tax year. How to file an amended tax return for 2011 turbotax Relief procedure. How to file an amended tax return for 2011 turbotax   Individuals and corporations can use a relief procedure to figure the tax for the short tax year. How to file an amended tax return for 2011 turbotax It may result in less tax. How to file an amended tax return for 2011 turbotax Under this procedure, the tax is figured by two separate methods. How to file an amended tax return for 2011 turbotax If the tax figured under both methods is less than the tax figured under the general rule, you can file a claim for a refund of part of the tax you paid. How to file an amended tax return for 2011 turbotax For more information, see section 443(b)(2) of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax Alternative minimum tax. How to file an amended tax return for 2011 turbotax   To figure the alternative minimum tax (AMT) due for a short tax year: Figure the annualized alternative minimum taxable income (AMTI) for the short tax period by completing the following steps. How to file an amended tax return for 2011 turbotax Multiply the AMTI by 12. How to file an amended tax return for 2011 turbotax Divide the result by the number of months in the short tax year. How to file an amended tax return for 2011 turbotax Multiply the annualized AMTI by the appropriate rate of tax under section 55(b)(1) of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax The result is the annualized AMT. How to file an amended tax return for 2011 turbotax Multiply the annualized AMT by the number of months in the short tax year and divide the result by 12. How to file an amended tax return for 2011 turbotax   For information on the AMT for individuals, see the Instructions for Form 6251, Alternative Minimum Tax–Individuals. How to file an amended tax return for 2011 turbotax For information on the AMT for corporations, see the Instructions to Form 4626, Alternative Minimum Tax–Corporations. How to file an amended tax return for 2011 turbotax Tax withheld from wages. How to file an amended tax return for 2011 turbotax   You can claim a credit against your income tax liability for federal income tax withheld from your wages. How to file an amended tax return for 2011 turbotax Federal income tax is withheld on a calendar year basis. How to file an amended tax return for 2011 turbotax The amount withheld in any calendar year is allowed as a credit for the tax year beginning in the calendar year. How to file an amended tax return for 2011 turbotax Improper Tax Year Taxpayers that have adopted an improper tax year must change to a proper tax year. How to file an amended tax return for 2011 turbotax For example, if a taxpayer began business on March 15 and adopted a tax year ending on March 14 (a period of exactly 12 months), this would be an improper tax year. How to file an amended tax return for 2011 turbotax See Accounting Periods, earlier, for a description of permissible tax years. How to file an amended tax return for 2011 turbotax To change to a proper tax year, you must do one of the following. How to file an amended tax return for 2011 turbotax If you are requesting a change to a calendar tax year, file an amended income tax return based on a calendar tax year that corrects the most recently filed tax return that was filed on the basis of an improper tax year. How to file an amended tax return for 2011 turbotax Attach a completed Form 1128 to the amended tax return. How to file an amended tax return for 2011 turbotax Write “FILED UNDER REV. How to file an amended tax return for 2011 turbotax PROC. How to file an amended tax return for 2011 turbotax 85-15” at the top of Form 1128 and file the forms with the Internal Revenue Service Center where you filed your original return. How to file an amended tax return for 2011 turbotax If you are requesting a change to a fiscal tax year, file Form 1128 in accordance with the form instructions to request IRS approval for the change. How to file an amended tax return for 2011 turbotax Change in Tax Year Generally, you must file Form 1128 to request IRS approval to change your tax year. How to file an amended tax return for 2011 turbotax See the Instructions for Form 1128 for exceptions. How to file an amended tax return for 2011 turbotax If you qualify for an automatic approval request, a user fee is not required. How to file an amended tax return for 2011 turbotax Individuals Generally, individuals must adopt the calendar year as their tax year. How to file an amended tax return for 2011 turbotax An individual can adopt a fiscal year provided that the individual maintains his or her books and records on the basis of the adopted fiscal year. How to file an amended tax return for 2011 turbotax Partnerships, S Corporations, and Personal Service Corporations (PSCs) Generally, partnerships, S corporations (including electing S corporations), and PSCs must use a required tax year. How to file an amended tax return for 2011 turbotax A required tax year is a tax year that is required under the Internal Revenue Code and Income Tax Regulations. How to file an amended tax return for 2011 turbotax The entity does not have to use the required tax year if it receives IRS approval to use another permitted tax year or makes an election under section 444 of the Internal Revenue Code (discussed later). How to file an amended tax return for 2011 turbotax The following discussions provide the rules for partnerships, S corporations, and PSCs. How to file an amended tax return for 2011 turbotax Partnership A partnership must conform its tax year to its partners' tax years unless any of the following apply. How to file an amended tax return for 2011 turbotax The partnership makes an election under section 444 of the Internal Revenue Code to have a tax year other than a required tax year by filing Form 8716. How to file an amended tax return for 2011 turbotax The partnership elects to use a 52-53-week tax year that ends with reference to either its required tax year or a tax year elected under section 444. How to file an amended tax return for 2011 turbotax The partnership can establish a business purpose for a different tax year. How to file an amended tax return for 2011 turbotax The rules for the required tax year for partnerships are as follows. How to file an amended tax return for 2011 turbotax If one or more partners having the same tax year own a majority interest (more than 50%) in partnership profits and capital, the partnership must use the tax year of those partners. How to file an amended tax return for 2011 turbotax If there is no majority interest tax year, the partnership must use the tax year of all its principal partners. How to file an amended tax return for 2011 turbotax A principal partner is one who has a 5% or more interest in the profits or capital of the partnership. How to file an amended tax return for 2011 turbotax If there is no majority interest tax year and the principal partners do not have the same tax year, the partnership generally must use a tax year that results in the least aggregate deferral of income to the partners. How to file an amended tax return for 2011 turbotax If a partnership changes to a required tax year because of these rules, it can get automatic approval by filing Form 1128. How to file an amended tax return for 2011 turbotax Least aggregate deferral of income. How to file an amended tax return for 2011 turbotax   The tax year that results in the least aggregate deferral of income is determined as follows. How to file an amended tax return for 2011 turbotax Figure the number of months of deferral for each partner using one partner's tax year. How to file an amended tax return for 2011 turbotax Find the months of deferral by counting the months from the end of that tax year forward to the end of each other partner's tax year. How to file an amended tax return for 2011 turbotax Multiply each partner's months of deferral figured in step (1) by that partner's share of interest in the partnership profits for the year used in step (1). How to file an amended tax return for 2011 turbotax Add the amounts in step (2) to get the aggregate (total) deferral for the tax year used in step (1). How to file an amended tax return for 2011 turbotax Repeat steps (1) through (3) for each partner's tax year that is different from the other partners' years. How to file an amended tax return for 2011 turbotax   The partner's tax year that results in the lowest aggregate (total) number is the tax year that must be used by the partnership. How to file an amended tax return for 2011 turbotax If the calculation results in more than one tax year qualifying as the tax year with the least aggregate deferral, the partnership can choose any one of those tax years as its tax year. How to file an amended tax return for 2011 turbotax However, if one of the tax years that qualifies is the partnership's existing tax year, the partnership must retain that tax year. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax A and B each have a 50% interest in partnership P, which uses a fiscal year ending June 30. How to file an amended tax return for 2011 turbotax A uses the calendar year and B uses a fiscal year ending November 30. How to file an amended tax return for 2011 turbotax P must change its tax year to a fiscal year ending November 30 because this results in the least aggregate deferral of income to the partners, as shown in the following table. How to file an amended tax return for 2011 turbotax Year End 12/31: Year End Profits Interest Months of Deferral Interest × Deferral A 12/31 0. How to file an amended tax return for 2011 turbotax 5 -0- -0- B 11/30 0. How to file an amended tax return for 2011 turbotax 5 11 5. How to file an amended tax return for 2011 turbotax 5 Total Deferral 5. How to file an amended tax return for 2011 turbotax 5 Year End 11/30: Year End Profits Interest Months of Deferral Interest × Deferral A 12/31 0. How to file an amended tax return for 2011 turbotax 5 1 0. How to file an amended tax return for 2011 turbotax 5 B 11/30 0. How to file an amended tax return for 2011 turbotax 5 -0- -0- Total Deferral 0. How to file an amended tax return for 2011 turbotax 5 When determination is made. How to file an amended tax return for 2011 turbotax   The determination of the tax year under the least aggregate deferral rules must generally be made at the beginning of the partnership's current tax year. How to file an amended tax return for 2011 turbotax However, the IRS can require the partnership to use another day or period that will more accurately reflect the ownership of the partnership. How to file an amended tax return for 2011 turbotax This could occur, for example, if a partnership interest was transferred for the purpose of qualifying for a particular tax year. How to file an amended tax return for 2011 turbotax Short period return. How to file an amended tax return for 2011 turbotax   When a partnership changes its tax year, a short period return must be filed. How to file an amended tax return for 2011 turbotax The short period return covers the months between the end of the partnership's prior tax year and the beginning of its new tax year. How to file an amended tax return for 2011 turbotax   If a partnership changes to the tax year resulting in the least aggregate deferral, it must file a Form 1128 with the short period return showing the computations used to determine that tax year. How to file an amended tax return for 2011 turbotax The short period return must indicate at the top of page 1, “FILED UNDER SECTION 1. How to file an amended tax return for 2011 turbotax 706-1. How to file an amended tax return for 2011 turbotax ” More information. How to file an amended tax return for 2011 turbotax   For more information about changing a partnership's tax year, and information about ruling requests, see the Instructions for Form 1128. How to file an amended tax return for 2011 turbotax S Corporation All S corporations, regardless of when they became an S corporation, must use a permitted tax year. How to file an amended tax return for 2011 turbotax A permitted tax year is any of the following. How to file an amended tax return for 2011 turbotax The calendar year. How to file an amended tax return for 2011 turbotax A tax year elected under section 444 of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax See Section 444 Election, below for details. How to file an amended tax return for 2011 turbotax A 52-53-week tax year ending with reference to the calendar year or a tax year elected under section 444. How to file an amended tax return for 2011 turbotax Any other tax year for which the corporation establishes a business purpose. How to file an amended tax return for 2011 turbotax If an electing S corporation wishes to adopt a tax year other than a calendar year, it must request IRS approval using Form 2553, instead of filing Form 1128. How to file an amended tax return for 2011 turbotax For information about changing an S corporation's tax year and information about ruling requests, see the Instructions for Form 1128. How to file an amended tax return for 2011 turbotax Personal Service Corporation (PSC) A PSC must use a calendar tax year unless any of the following apply. How to file an amended tax return for 2011 turbotax The corporation makes an election under section 444 of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax See Section 444 Election, below for details. How to file an amended tax return for 2011 turbotax The corporation elects to use a 52-53-week tax year ending with reference to the calendar year or a tax year elected under section 444. How to file an amended tax return for 2011 turbotax The corporation establishes a business purpose for a fiscal year. How to file an amended tax return for 2011 turbotax See the Instructions for Form 1120 for general information about PSCs. How to file an amended tax return for 2011 turbotax For information on adopting or changing tax years for PSCs and information about ruling requests, see the Instructions for Form 1128. How to file an amended tax return for 2011 turbotax Section 444 Election A partnership, S corporation, electing S corporation, or PSC can elect under section 444 of the Internal Revenue Code to use a tax year other than its required tax year. How to file an amended tax return for 2011 turbotax Certain restrictions apply to the election. How to file an amended tax return for 2011 turbotax A partnership or an S corporation that makes a section 444 election must make certain required payments and a PSC must make certain distributions (discussed later). How to file an amended tax return for 2011 turbotax The section 444 election does not apply to any partnership, S corporation, or PSC that establishes a business purpose for a different period, explained later. How to file an amended tax return for 2011 turbotax A partnership, S corporation, or PSC can make a section 444 election if it meets all the following requirements. How to file an amended tax return for 2011 turbotax It is not a member of a tiered structure (defined in section 1. How to file an amended tax return for 2011 turbotax 444-2T of the regulations). How to file an amended tax return for 2011 turbotax It has not previously had a section 444 election in effect. How to file an amended tax return for 2011 turbotax It elects a year that meets the deferral period requirement. How to file an amended tax return for 2011 turbotax Deferral period. How to file an amended tax return for 2011 turbotax   The determination of the deferral period depends on whether the partnership, S corporation, or PSC is retaining its tax year or adopting or changing its tax year with a section 444 election. How to file an amended tax return for 2011 turbotax Retaining tax year. How to file an amended tax return for 2011 turbotax   Generally, a partnership, S corporation, or PSC can make a section 444 election to retain its tax year only if the deferral period of the new tax year is 3 months or less. How to file an amended tax return for 2011 turbotax This deferral period is the number of months between the beginning of the retained year and the close of the first required tax year. How to file an amended tax return for 2011 turbotax Adopting or changing tax year. How to file an amended tax return for 2011 turbotax   If the partnership, S corporation, or PSC is adopting or changing to a tax year other than its required year, the deferral period is the number of months from the end of the new tax year to the end of the required tax year. How to file an amended tax return for 2011 turbotax The IRS will allow a section 444 election only if the deferral period of the new tax year is less than the shorter of: Three months, or The deferral period of the tax year being changed. How to file an amended tax return for 2011 turbotax This is the tax year immediately preceding the year for which the partnership, S corporation, or PSC wishes to make the section 444 election. How to file an amended tax return for 2011 turbotax If the partnership, S corporation, or PSC's tax year is the same as its required tax year, the deferral period is zero. How to file an amended tax return for 2011 turbotax Example 1. How to file an amended tax return for 2011 turbotax BD Partnership uses a calendar year, which is also its required tax year. How to file an amended tax return for 2011 turbotax BD cannot make a section 444 election because the deferral period is zero. How to file an amended tax return for 2011 turbotax Example 2. How to file an amended tax return for 2011 turbotax E, a newly formed partnership, began operations on December 1. How to file an amended tax return for 2011 turbotax E is owned by calendar year partners. How to file an amended tax return for 2011 turbotax E wants to make a section 444 election to adopt a September 30 tax year. How to file an amended tax return for 2011 turbotax E's deferral period for the tax year beginning December 1 is 3 months, the number of months between September 30 and December 31. How to file an amended tax return for 2011 turbotax Making the election. How to file an amended tax return for 2011 turbotax   Make a section 444 election by filing Form 8716 with the Internal Revenue Service Center where the entity will file its tax return. How to file an amended tax return for 2011 turbotax Form 8716 must be filed by the earlier of: The due date (not including extensions) of the income tax return for the tax year resulting from the section 444 election, or The 15th day of the 6th month of the tax year for which the election will be effective. How to file an amended tax return for 2011 turbotax For this purpose, count the month in which the tax year begins, even if it begins after the first day of that month. How to file an amended tax return for 2011 turbotax Note. How to file an amended tax return for 2011 turbotax If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. How to file an amended tax return for 2011 turbotax   Attach a copy of Form 8716 to Form 1065, Form 1120S, or Form 1120 for the first tax year for which the election is made. How to file an amended tax return for 2011 turbotax Example 1. How to file an amended tax return for 2011 turbotax AB, a partnership, begins operations on September 13, 2012, and is qualified to make a section 444 election to use a September 30 tax year for its tax year beginning September 13, 2012. How to file an amended tax return for 2011 turbotax AB must file Form 8716 by January 15, 2013, which is the due date of the partnership's tax return for the period from September 13, 2012, to September 30, 2012. How to file an amended tax return for 2011 turbotax Example 2. How to file an amended tax return for 2011 turbotax The facts are the same as in Example 1 except that AB begins operations on October 21, 2012. How to file an amended tax return for 2011 turbotax AB must file Form 8716 by March 17, 2013. How to file an amended tax return for 2011 turbotax Example 3. How to file an amended tax return for 2011 turbotax B is a corporation that first becomes a PSC for its tax year beginning September 1, 2012. How to file an amended tax return for 2011 turbotax B qualifies to make a section 444 election to use a September 30 tax year for its tax year beginning September 1, 2012. How to file an amended tax return for 2011 turbotax B must file Form 8716 by December 17, 2012, the due date of the income tax return for the short period from September 1, 2012, to September 30, 2012. How to file an amended tax return for 2011 turbotax Note. How to file an amended tax return for 2011 turbotax The due dates in Examples 2 and 3 are adjusted because the dates fall on a Saturday, Sunday or legal holiday. How to file an amended tax return for 2011 turbotax Extension of time for filing. How to file an amended tax return for 2011 turbotax   There is an automatic extension of 12 months to make this election. How to file an amended tax return for 2011 turbotax See the Form 8716 instructions for more information. How to file an amended tax return for 2011 turbotax Terminating the election. How to file an amended tax return for 2011 turbotax   The section 444 election remains in effect until it is terminated. How to file an amended tax return for 2011 turbotax If the election is terminated, another section 444 election cannot be made for any tax year. How to file an amended tax return for 2011 turbotax   The election ends when any of the following applies to the partnership, S corporation, or PSC. How to file an amended tax return for 2011 turbotax The entity changes to its required tax year. How to file an amended tax return for 2011 turbotax The entity liquidates. How to file an amended tax return for 2011 turbotax The entity becomes a member of a tiered structure. How to file an amended tax return for 2011 turbotax The IRS determines that the entity willfully failed to comply with the required payments or distributions. How to file an amended tax return for 2011 turbotax   The election will also end if either of the following events occur. How to file an amended tax return for 2011 turbotax An S corporation's S election is terminated. How to file an amended tax return for 2011 turbotax However, if the S corporation immediately becomes a PSC, the PSC can continue the section 444 election of the S corporation. How to file an amended tax return for 2011 turbotax A PSC ceases to be a PSC. How to file an amended tax return for 2011 turbotax If the PSC elects to be an S corporation, the S corporation can continue the election of the PSC. How to file an amended tax return for 2011 turbotax Required payment for partnership or S corporation. How to file an amended tax return for 2011 turbotax   A partnership or an S corporation must make a required payment for any tax year: The section 444 election is in effect. How to file an amended tax return for 2011 turbotax The required payment for that year (or any preceding tax year) is more than $500. How to file an amended tax return for 2011 turbotax    This payment represents the value of the tax deferral the owners receive by using a tax year different from the required tax year. How to file an amended tax return for 2011 turbotax   Form 8752, Required Payment or Refund Under Section 7519, must be filed each year the section 444 election is in effect, even if no payment is due. How to file an amended tax return for 2011 turbotax If the required payment is more than $500 (or the required payment for any prior year was more than $500), the payment must be made when Form 8752 is filed. How to file an amended tax return for 2011 turbotax If the required payment is $500 or less and no payment was required in a prior year, Form 8752 must be filed showing a zero amount. How to file an amended tax return for 2011 turbotax Applicable election year. How to file an amended tax return for 2011 turbotax   Any tax year a section 444 election is in effect, including the first year, is called an applicable election year. How to file an amended tax return for 2011 turbotax Form 8752 must be filed and the required payment made (or zero amount reported) by May 15th of the calendar year following the calendar year in which the applicable election year begins. How to file an amended tax return for 2011 turbotax Required distribution for PSC. How to file an amended tax return for 2011 turbotax   A PSC with a section 444 election in effect must distribute certain amounts to employee-owners by December 31 of each applicable year. How to file an amended tax return for 2011 turbotax If it fails to make these distributions, it may be required to defer certain deductions for amounts paid to owner-employees. How to file an amended tax return for 2011 turbotax The amount deferred is treated as paid or incurred in the following tax year. How to file an amended tax return for 2011 turbotax   For information on the minimum distribution, see the instructions for Part I of Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC). How to file an amended tax return for 2011 turbotax Back-up election. How to file an amended tax return for 2011 turbotax   A partnership, S corporation, or PSC can file a back-up section 444 election if it requests (or plans to request) permission to use a business purpose tax year, discussed later. How to file an amended tax return for 2011 turbotax If the request is denied, the back-up section 444 election must be activated (if the partnership, S corporation, or PSC otherwise qualifies). How to file an amended tax return for 2011 turbotax Making back-up election. How to file an amended tax return for 2011 turbotax   The general rules for making a section 444 election, as discussed earlier, apply. How to file an amended tax return for 2011 turbotax When filing Form 8716, type or print “BACK-UP ELECTION” at the top of the form. How to file an amended tax return for 2011 turbotax However, if Form 8716 is filed on or after the date Form 1128 (or Form 2553) is filed, type or print “FORM 1128 (or FORM 2553) BACK-UP ELECTION” at the top of Form 8716. How to file an amended tax return for 2011 turbotax Activating election. How to file an amended tax return for 2011 turbotax   A partnership or S corporation activates its back-up election by filing the return required and making the required payment with Form 8752. How to file an amended tax return for 2011 turbotax The due date for filing Form 8752 and making the payment is the later of the following dates. How to file an amended tax return for 2011 turbotax May 15 of the calendar year following the calendar year in which the applicable election year begins. How to file an amended tax return for 2011 turbotax 60 days after the partnership or S corporation has been notified by the IRS that the business year request has been denied. How to file an amended tax return for 2011 turbotax   A PSC activates its back-up election by filing Form 8716 with its original or amended income tax return for the tax year in which the election is first effective and printing on the top of the income tax return, “ACTIVATING BACK-UP ELECTION. How to file an amended tax return for 2011 turbotax ” 52-53-Week Tax Year A partnership, S corporation, or PSC can use a tax year other than its required tax year if it elects a 52-53-week tax year (discussed earlier) that ends with reference to either its required tax year or a tax year elected under section 444 (discussed earlier). How to file an amended tax return for 2011 turbotax A newly formed partnership, S corporation, or PSC can adopt a 52-53-week tax year ending with reference to either its required tax year or a tax year elected under section 444 without IRS approval. How to file an amended tax return for 2011 turbotax However, if the entity wishes to change to a 52-53-week tax year or change from a 52-53-week tax year that references a particular month to a non-52-53-week tax year that ends on the last day of that month, it must request IRS approval by filing Form 1128. How to file an amended tax return for 2011 turbotax Business Purpose Tax Year A partnership, S corporation, or PSC establishes the business purpose for a tax year by filing Form 1128. How to file an amended tax return for 2011 turbotax See the Instructions for Form 1128 for details. How to file an amended tax return for 2011 turbotax Corporations (Other Than S Corporations and PSCs) A new corporation establishes its tax year when it files its first tax return. How to file an amended tax return for 2011 turbotax A newly reactivated corporation that has been inactive for a number of years is treated as a new taxpayer for the purpose of adopting a tax year. How to file an amended tax return for 2011 turbotax An S corporation or a PSC must use the required tax year rules, discussed earlier, to establish a tax year. How to file an amended tax return for 2011 turbotax Generally, a corporation that wants to change its tax year must obtain approval from the IRS under either the: (a) automatic approval procedures; or (b) ruling request procedures. How to file an amended tax return for 2011 turbotax See the Instructions for Form 1128 for details. How to file an amended tax return for 2011 turbotax Accounting Methods An accounting method is a set of rules used to determine when income and expenses are reported on your tax return. How to file an amended tax return for 2011 turbotax Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. How to file an amended tax return for 2011 turbotax You choose an accounting method when you file your first tax return. How to file an amended tax return for 2011 turbotax If you later want to change your accounting method, you must get IRS approval. How to file an amended tax return for 2011 turbotax See Change in Accounting Method, later. How to file an amended tax return for 2011 turbotax No single accounting method is required of all taxpayers. How to file an amended tax return for 2011 turbotax You must use a system that clearly reflects your income and expenses and you must maintain records that will enable you to file a correct return. How to file an amended tax return for 2011 turbotax In addition to your permanent accounting books, you must keep any other records necessary to support the entries on your books and tax returns. How to file an amended tax return for 2011 turbotax You must use the same accounting method from year to year. How to file an amended tax return for 2011 turbotax An accounting method clearly reflects income only if all items of gross income and expenses are treated the same from year to year. How to file an amended tax return for 2011 turbotax If you do not regularly use an accounting method that clearly reflects your income, your income will be refigured under the method that, in the opinion of the IRS, does clearly reflect income. How to file an amended tax return for 2011 turbotax Methods you can use. How to file an amended tax return for 2011 turbotax   In general, you can compute your taxable income under any of the following accounting methods. How to file an amended tax return for 2011 turbotax Cash method. How to file an amended tax return for 2011 turbotax Accrual method. How to file an amended tax return for 2011 turbotax Special methods of accounting for certain items of income and expenses. How to file an amended tax return for 2011 turbotax A hybrid method which combines elements of two or more of the above accounting methods. How to file an amended tax return for 2011 turbotax The cash and accrual methods of accounting are explained later. How to file an amended tax return for 2011 turbotax Special methods. How to file an amended tax return for 2011 turbotax   This publication does not discuss special methods of accounting for certain items of income or expenses. How to file an amended tax return for 2011 turbotax For information on reporting income using one of the long-term contract methods, see section 460 of the Internal Revenue Code and the related regulations. How to file an amended tax return for 2011 turbotax The following publications also discuss special methods of reporting income or expenses. How to file an amended tax return for 2011 turbotax Publication 225, Farmer's Tax Guide. How to file an amended tax return for 2011 turbotax Publication 535, Business Expenses. How to file an amended tax return for 2011 turbotax Publication 537, Installment Sales. How to file an amended tax return for 2011 turbotax Publication 946, How To Depreciate Property. How to file an amended tax return for 2011 turbotax Hybrid method. How to file an amended tax return for 2011 turbotax   Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly reflects your income and you use it consistently. How to file an amended tax return for 2011 turbotax However, the following restrictions apply. How to file an amended tax return for 2011 turbotax If an inventory is necessary to account for your income, you must use an accrual method for purchases and sales. How to file an amended tax return for 2011 turbotax See Exceptions under Inventories, later. How to file an amended tax return for 2011 turbotax Generally, you can use the cash method for all other items of income and expenses. How to file an amended tax return for 2011 turbotax See Inventories, later. How to file an amended tax return for 2011 turbotax If you use the cash method for reporting your income, you must use the cash method for reporting your expenses. How to file an amended tax return for 2011 turbotax If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. How to file an amended tax return for 2011 turbotax Any combination that includes the cash method is treated as the cash method for purposes of section 448 of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax Business and personal items. How to file an amended tax return for 2011 turbotax   You can account for business and personal items using different accounting methods. How to file an amended tax return for 2011 turbotax For example, you can determine your business income and expenses under an accrual method, even if you use the cash method to figure personal items. How to file an amended tax return for 2011 turbotax Two or more businesses. How to file an amended tax return for 2011 turbotax   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. How to file an amended tax return for 2011 turbotax No business is separate and distinct, unless a complete and separate set of books and records is maintained for each business. How to file an amended tax return for 2011 turbotax Note. How to file an amended tax return for 2011 turbotax If you use different accounting methods to create or shift profits or losses between businesses (for example, through inventory adjustments, sales, purchases, or expenses) so that income is not clearly reflected, the businesses will not be considered separate and distinct. How to file an amended tax return for 2011 turbotax Cash Method Most individuals and many small businesses use the cash method of accounting. How to file an amended tax return for 2011 turbotax Generally, if you produce, purchase, or sell merchandise, you must keep an inventory and use an accrual method for sales and purchases of merchandise. How to file an amended tax return for 2011 turbotax See Inventories, later, for exceptions to this rule. How to file an amended tax return for 2011 turbotax Income Under the cash method, you include in your gross income all items of income you actually or constructively receive during the tax year. How to file an amended tax return for 2011 turbotax If you receive property and services, you must include their fair market value (FMV) in income. How to file an amended tax return for 2011 turbotax Constructive receipt. How to file an amended tax return for 2011 turbotax   Income is constructively received when an amount is credited to your account or made available to you without restriction. How to file an amended tax return for 2011 turbotax You need not have possession of it. How to file an amended tax return for 2011 turbotax If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. How to file an amended tax return for 2011 turbotax Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax You are a calendar year taxpayer. How to file an amended tax return for 2011 turbotax Your bank credited, and made available, interest to your bank account in December 2012. How to file an amended tax return for 2011 turbotax You did not withdraw it or enter it into your books until 2013. How to file an amended tax return for 2011 turbotax You must include the amount in gross income for 2012, the year you constructively received it. How to file an amended tax return for 2011 turbotax You cannot hold checks or postpone taking possession of similar property from one tax year to another to postpone paying tax on the income. How to file an amended tax return for 2011 turbotax You must report the income in the year the property is received or made available to you without restriction. How to file an amended tax return for 2011 turbotax Expenses Under the cash method, generally, you deduct expenses in the tax year in which you actually pay them. How to file an amended tax return for 2011 turbotax This includes business expenses for which you contest liability. How to file an amended tax return for 2011 turbotax However, you may not be able to deduct an expense paid in advance. How to file an amended tax return for 2011 turbotax Instead, you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. How to file an amended tax return for 2011 turbotax Expense paid in advance. How to file an amended tax return for 2011 turbotax   An expense you pay in advance is deductible only in the year to which it applies, unless the expense qualifies for the 12-month rule. How to file an amended tax return for 2011 turbotax   Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of the following. How to file an amended tax return for 2011 turbotax 12 months after the right or benefit begins, or The end of the tax year after the tax year in which payment is made. How to file an amended tax return for 2011 turbotax   If you have not been applying the general rule (an expense paid in advance is deductible only in the year to which it applies) and/or the 12-month rule to the expenses you paid in advance, you must obtain approval from the IRS before using the general rule and/or the 12-month rule. How to file an amended tax return for 2011 turbotax See Change in Accounting Method, later. How to file an amended tax return for 2011 turbotax Example 1. How to file an amended tax return for 2011 turbotax You are a calendar year taxpayer and pay $3,000 in 2012 for a business insurance policy that is effective for three years (36 months), beginning on July 1, 2012. How to file an amended tax return for 2011 turbotax The general rule that an expense paid in advance is deductible only in the year to which it applies is applicable to this payment because the payment does not qualify for the 12-month rule. How to file an amended tax return for 2011 turbotax Therefore, only $500 (6/36 x $3,000) is deductible in 2012, $1,000 (12/36 x $3,000) is deductible in 2013, $1,000 (12/36 x $3,000) is deductible in 2014, and the remaining $500 is deductible in 2015. How to file an amended tax return for 2011 turbotax Example 2. How to file an amended tax return for 2011 turbotax You are a calendar year taxpayer and pay $10,000 on July 1, 2012, for a business insurance policy that is effective for only one year beginning on July 1, 2012. How to file an amended tax return for 2011 turbotax The 12-month rule applies. How to file an amended tax return for 2011 turbotax Therefore, the full $10,000 is deductible in 2012. How to file an amended tax return for 2011 turbotax Excluded Entities The following entities cannot use the cash method, including any combination of methods that includes the cash method. How to file an amended tax return for 2011 turbotax (See Special rules for farming businesses, later. How to file an amended tax return for 2011 turbotax ) A corporation (other than an S corporation) with average annual gross receipts exceeding $5 million. How to file an amended tax return for 2011 turbotax See Gross receipts test, below. How to file an amended tax return for 2011 turbotax A partnership with a corporation (other than an S corporation) as a partner, and with the partnership having average annual gross receipts exceeding $5 million. How to file an amended tax return for 2011 turbotax See Gross receipts test, below. How to file an amended tax return for 2011 turbotax A tax shelter. How to file an amended tax return for 2011 turbotax Exceptions The following entities are not prohibited from using the cash method of accounting. How to file an amended tax return for 2011 turbotax Any corporation or partnership, other than a tax shelter, that meets the gross receipts test for all tax years after 1985. How to file an amended tax return for 2011 turbotax A qualified personal service corporation (PSC). How to file an amended tax return for 2011 turbotax Gross receipts test. How to file an amended tax return for 2011 turbotax   A corporation or partnership, other than a tax shelter, that meets the gross receipts test can generally use the cash method. How to file an amended tax return for 2011 turbotax A corporation or a partnership meets the test if, for each prior tax year beginning after 1985, its average annual gross receipts are $5 million or less. How to file an amended tax return for 2011 turbotax    An entity's average annual gross receipts for a prior tax year is determined by: Adding the gross receipts for that tax year and the 2 preceding tax years; and Dividing the total by 3. How to file an amended tax return for 2011 turbotax See Gross receipts test for qualifying taxpayers, for more information. How to file an amended tax return for 2011 turbotax Generally, a partnership applies the test at the partnership level. How to file an amended tax return for 2011 turbotax Gross receipts for a short tax year are annualized. How to file an amended tax return for 2011 turbotax Aggregation rules. How to file an amended tax return for 2011 turbotax   Organizations that are members of an affiliated service group or a controlled group of corporations treated as a single employer for tax purposes are required to aggregate their gross receipts to determine whether the gross receipts test is met. How to file an amended tax return for 2011 turbotax Change to accrual method. How to file an amended tax return for 2011 turbotax   A corporation or partnership that fails to meet the gross receipts test for any tax year is prohibited from using the cash method and must change to an accrual method of accounting, effective for the tax year in which the entity fails to meet this test. How to file an amended tax return for 2011 turbotax Special rules for farming businesses. How to file an amended tax return for 2011 turbotax   Generally, a taxpayer engaged in the trade or business of farming is allowed to use the cash method for its farming business. How to file an amended tax return for 2011 turbotax However, certain corporations (other than S corporations) and partnerships that have a partner that is a corporation must use an accrual method for their farming business. How to file an amended tax return for 2011 turbotax For this purpose, farming does not include the operation of a nursery or sod farm or the raising or harvesting of trees (other than fruit and nut trees). How to file an amended tax return for 2011 turbotax   There is an exception to the requirement to use an accrual method for corporations with gross receipts of $1 million or less for each prior tax year after 1975. How to file an amended tax return for 2011 turbotax For family corporations engaged in farming, the exception applies if gross receipts were $25 million or less for each prior tax year after 1985. How to file an amended tax return for 2011 turbotax See chapter 2 of Publication 225, Farmer's Tax Guide, for more information. How to file an amended tax return for 2011 turbotax Qualified PSC. How to file an amended tax return for 2011 turbotax   A PSC that meets the following function and ownership tests can use the cash method. How to file an amended tax return for 2011 turbotax Function test. How to file an amended tax return for 2011 turbotax   A corporation meets the function test if at least 95% of its activities are in the performance of services in the fields of health, veterinary services, law, engineering (including surveying and mapping), architecture, accounting, actuarial science, performing arts, or consulting. How to file an amended tax return for 2011 turbotax Ownership test. How to file an amended tax return for 2011 turbotax   A corporation meets the ownership test if at least 95% of its stock is owned, directly or indirectly, at all times during the year by one or more of the following. How to file an amended tax return for 2011 turbotax Employees performing services for the corporation in a field qualifying under the function test. How to file an amended tax return for 2011 turbotax Retired employees who had performed services in those fields. How to file an amended tax return for 2011 turbotax The estate of an employee described in (1) or (2). How to file an amended tax return for 2011 turbotax Any other person who acquired the stock by reason of the death of an employee referred to in (1) or (2), but only for the 2-year period beginning on the date of death. How to file an amended tax return for 2011 turbotax   Indirect ownership is generally taken into account if the stock is owned indirectly through one or more partnerships, S corporations, or qualified PSCs. How to file an amended tax return for 2011 turbotax Stock owned by one of these entities is considered owned by the entity's owners in proportion to their ownership interest in that entity. How to file an amended tax return for 2011 turbotax Other forms of indirect stock ownership, such as stock owned by family members, are generally not considered when determining if the ownership test is met. How to file an amended tax return for 2011 turbotax   For purposes of the ownership test, a person is not considered an employee of a corporation unless that person performs more than minimal services for the corporation. How to file an amended tax return for 2011 turbotax Change to accrual method. How to file an amended tax return for 2011 turbotax   A corporation that fails to meet the function test for any tax year; or fails to meet the ownership test at any time during any tax year must change to an accrual method of accounting, effective for the year in which the corporation fails to meet either test. How to file an amended tax return for 2011 turbotax A corporation that fails to meet the function test or the ownership test is not treated as a qualified PSC for any part of that tax year. How to file an amended tax return for 2011 turbotax Accrual Method Under the accrual method of accounting, generally you report income in the year it is earned and deduct or capitalize expenses in the year incurred. How to file an amended tax return for 2011 turbotax The purpose of an accrual method of accounting is to match income and expenses in the correct year. How to file an amended tax return for 2011 turbotax Income Generally, you include an amount in gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. How to file an amended tax return for 2011 turbotax Under this rule, you report an amount in your gross income on the earliest of the following dates. How to file an amended tax return for 2011 turbotax When you receive payment. How to file an amended tax return for 2011 turbotax When the income amount is due to you. How to file an amended tax return for 2011 turbotax When you earn the income. How to file an amended tax return for 2011 turbotax When title has passed. How to file an amended tax return for 2011 turbotax Estimated income. How to file an amended tax return for 2011 turbotax   If you include a reasonably estimated amount in gross income and later determine the exact amount is different, take the difference into account in the tax year you make that determination. How to file an amended tax return for 2011 turbotax Change in payment schedule. How to file an amended tax return for 2011 turbotax   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a reduced rate. How to file an amended tax return for 2011 turbotax Continue this procedure until you complete the services, then account for the difference. How to file an amended tax return for 2011 turbotax Advance Payment for Services Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. How to file an amended tax return for 2011 turbotax However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. How to file an amended tax return for 2011 turbotax However, you cannot postpone including any payment beyond that tax year. How to file an amended tax return for 2011 turbotax Service agreement. How to file an amended tax return for 2011 turbotax   You can postpone reporting income from an advance payment you receive for a service agreement on property you sell, lease, build, install, or construct. How to file an amended tax return for 2011 turbotax This includes an agreement providing for incidental replacement of parts or materials. How to file an amended tax return for 2011 turbotax However, this applies only if you offer the property without a service agreement in the normal course of business. How to file an amended tax return for 2011 turbotax Postponement not allowed. How to file an amended tax return for 2011 turbotax   Generally, one cannot postpone including an advance payment in income for services if either of the following applies. How to file an amended tax return for 2011 turbotax You are to perform any part of the service after the end of the tax year immediately following the year you receive the advance payment. How to file an amended tax return for 2011 turbotax You are to perform any part of the service at any unspecified future date that may be after the end of the tax year immediately following the year you receive the advance payment. How to file an amended tax return for 2011 turbotax Examples. How to file an amended tax return for 2011 turbotax   In each of the following examples, assume the tax year is a calendar year and that the accrual method of accounting is used. How to file an amended tax return for 2011 turbotax Example 1. How to file an amended tax return for 2011 turbotax You manufacture, sell, and service computers. How to file an amended tax return for 2011 turbotax You received payment in 2012 for a one-year contingent service contract on a computer you sold. How to file an amended tax return for 2011 turbotax You can postpone including in income the part of the payment you did not earn in 2012 if, in the normal course of your business, you offer computers for sale without a contingent service contract. How to file an amended tax return for 2011 turbotax Example 2. How to file an amended tax return for 2011 turbotax You are in the television repair business. How to file an amended tax return for 2011 turbotax You received payments in 2012 for one-year contracts under which you agree to repair or replace certain parts that fail to function properly in television sets manufactured and sold by unrelated parties. How to file an amended tax return for 2011 turbotax You include the payments in gross income as you earn them. How to file an amended tax return for 2011 turbotax Example 3. How to file an amended tax return for 2011 turbotax You own a dance studio. How to file an amended tax return for 2011 turbotax On October 1, 2012, you receive payment for a one-year contract for 48 one-hour lessons beginning on that date. How to file an amended tax return for 2011 turbotax You give eight lessons in 2012. How to file an amended tax return for 2011 turbotax Under this method of including advance payments, you must include one-sixth (8/48) of the payment in income for 2012, and five-sixths (40/48) of the payment in 2013, even if you do not give all the lessons by the end of 2013. How to file an amended tax return for 2011 turbotax Example 4. How to file an amended tax return for 2011 turbotax Assume the same facts as in Example 3, except the payment is for a two-year contract for 96 lessons. How to file an amended tax return for 2011 turbotax You must include the entire payment in income in 2012 since part of the services may be performed after the following year. How to file an amended tax return for 2011 turbotax Guarantee or warranty. How to file an amended tax return for 2011 turbotax   Generally, you cannot postpone reporting income you receive under a guarantee or warranty contract. How to file an amended tax return for 2011 turbotax Prepaid rent. How to file an amended tax return for 2011 turbotax   You cannot postpone reporting income from prepaid rent. How to file an amended tax return for 2011 turbotax Prepaid rent does not include payment for the use of a room or other space when significant service is also provided for the occupant. How to file an amended tax return for 2011 turbotax You provide significant service when you supply space in a hotel, boarding house, tourist home, motor court, motel, or apartment house that furnishes hotel services. How to file an amended tax return for 2011 turbotax Books and records. How to file an amended tax return for 2011 turbotax   Any advance payment you include in gross receipts on your tax return for the year you receive payment must not be less than the payment you include in income for financial reports under the method of accounting used for those reports. How to file an amended tax return for 2011 turbotax Financial reports include reports to shareholders, partners, beneficiaries, and other proprietors for credit purposes and consolidated financial statements. How to file an amended tax return for 2011 turbotax IRS approval. How to file an amended tax return for 2011 turbotax   You must file Form 3115 to obtain IRS approval to change your method of accounting for advance payment for services. How to file an amended tax return for 2011 turbotax Advance Payment for Sales Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods held primarily for sale to customers in the ordinary course of your trade or business. How to file an amended tax return for 2011 turbotax However, the rules do not apply to a payment (or part of a payment) for services that are not an integral part of the main activities covered under the agreement. How to file an amended tax return for 2011 turbotax An agreement includes a gift certificate that can be redeemed for goods. How to file an amended tax return for 2011 turbotax Amounts due and payable are considered received. How to file an amended tax return for 2011 turbotax How to report payments. How to file an amended tax return for 2011 turbotax   Generally, include an advance payment in income in the year in which you receive it. How to file an amended tax return for 2011 turbotax However, you can use the alternative method, discussed next. How to file an amended tax return for 2011 turbotax Alternative method of reporting. How to file an amended tax return for 2011 turbotax   Under the alternative method, generally include an advance payment in income in the earlier tax year in which you: Include advance payments in gross receipts under the method of accounting you use for tax purposes, or Include any part of advance payments in income for financial reports under the method of accounting used for those reports. How to file an amended tax return for 2011 turbotax Financial reports include reports to shareholders, partners, beneficiaries, and other proprietors for credit purposes and consolidated financial statements. How to file an amended tax return for 2011 turbotax Example 1. How to file an amended tax return for 2011 turbotax You are a retailer. How to file an amended tax return for 2011 turbotax You use an accrual method of accounting and account for the sale of goods when you ship the goods. How to file an amended tax return for 2011 turbotax You use this method for both tax and financial reporting purposes. How to file an amended tax return for 2011 turbotax You can include advance payments in gross receipts for tax purposes in either: (a) the tax year in which you receive the payments; or (b) the tax year in which you ship the goods. How to file an amended tax return for 2011 turbotax However, see Exception for inventory goods, later. How to file an amended tax return for 2011 turbotax Example 2. How to file an amended tax return for 2011 turbotax You are a calendar year taxpayer. How to file an amended tax return for 2011 turbotax You manufacture household furniture and use an accrual method of accounting. How to file an amended tax return for 2011 turbotax Under this method, you accrue income for your financial reports when you ship the furniture. How to file an amended tax return for 2011 turbotax For tax purposes, you do not accrue income until the furniture has been delivered and accepted. How to file an amended tax return for 2011 turbotax In 2012, you received an advance payment of $8,000 for an order of furniture to be manufactured for a total price of $20,000. How to file an amended tax return for 2011 turbotax You shipped the furniture to the customer in December 2012, but it was not delivered and accepted until January 2013. How to file an amended tax return for 2011 turbotax For tax purposes, you include the $8,000 advance payment in gross income for 2012; and include the remaining $12,000 of the contract price in gross income for 2013. How to file an amended tax return for 2011 turbotax Information schedule. How to file an amended tax return for 2011 turbotax   If you use the alternative method of reporting advance payments, you must attach a statement with the following information to your tax return each year. How to file an amended tax return for 2011 turbotax Total advance payments received in the current tax year. How to file an amended tax return for 2011 turbotax Total advance payments received in earlier tax years and not included in income before the current tax year. How to file an amended tax return for 2011 turbotax Total payments received in earlier tax years included in income for the current tax year. How to file an amended tax return for 2011 turbotax Exception for inventory goods. How to file an amended tax return for 2011 turbotax   If you have an agreement to sell goods properly included in inventory, you can postpone including the advance payment in income until the end of the second tax year following the year you receive an advance payment if, on the last day of the tax year, you meet the following requirements. How to file an amended tax return for 2011 turbotax You account for the advance payment under the alternative method (discussed earlier). How to file an amended tax return for 2011 turbotax You have received a substantial advance payment on the agreement (discussed next). How to file an amended tax return for 2011 turbotax You have enough substantially similar goods on hand, or available through your normal source of supply, to satisfy the agreement. How to file an amended tax return for 2011 turbotax These rules also apply to an agreement, such as a gift certificate, that can be satisfied with goods that cannot be identified in the tax year you receive an advance payment. How to file an amended tax return for 2011 turbotax   If you meet these conditions, all advance payments you receive by the end of the second tax year, including payments received in prior years but not reported, must be included in income by the second tax year following the tax year of receipt of substantial advance payments. How to file an amended tax return for 2011 turbotax You must also deduct in that second year all actual or estimated costs for the goods required to satisfy the agreement. How to file an amended tax return for 2011 turbotax If you estimated the cost, you must take into account any difference between the estimate and the actual cost when the goods are delivered. How to file an amended tax return for 2011 turbotax Note. How to file an amended tax return for 2011 turbotax You must report any advance payments you receive after the second year in the year received. How to file an amended tax return for 2011 turbotax No further deferral is allowed. How to file an amended tax return for 2011 turbotax Substantial advance payments. How to file an amended tax return for 2011 turbotax   Under an agreement for a future sale, you have substantial advance payments if, by the end of the tax year, the total advance payments received during that year and preceding tax years are equal to or more than the total costs reasonably estimated to be includible in inventory because of the agreement. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax You are a calendar year, accrual method taxpayer who accounts for advance payments under the alternative method. How to file an amended tax return for 2011 turbotax In 2008, you entered into a contract for the sale of goods properly includible in your inventory. How to file an amended tax return for 2011 turbotax The total contract price is $50,000 and you estimate that your total inventoriable costs for the goods will be $25,000. How to file an amended tax return for 2011 turbotax You receive the following advance payments under the contract. How to file an amended tax return for 2011 turbotax 2009 $17,500 2010 10,000 2011 7,500 2012 5,000 2013 5,000 2014 5,000 Total contract price $50,000   Your customer asked you to deliver the goods in 2015. How to file an amended tax return for 2011 turbotax In your 2010 closing inventory, you had on hand enough of the type of goods specified in the contract to satisfy the contract. How to file an amended tax return for 2011 turbotax Since the advance payments you had received by the end of 2010 were more than the costs you estimated, the payments are substantial advance payments. How to file an amended tax return for 2011 turbotax   For 2012, include in income all payments you received by the end of 2012, the second tax year following the tax year in which you received substantial advance payments. How to file an amended tax return for 2011 turbotax You must include $40,000 in sales for 2012 (the total amounts received from 2009 through 2012) and include in inventory the cost of the goods (or similar goods) on hand. How to file an amended tax return for 2011 turbotax If no such goods are on hand, then estimate the cost necessary to satisfy the contract. How to file an amended tax return for 2011 turbotax   No further deferral is allowed. How to file an amended tax return for 2011 turbotax You must include in gross income the advance payment you receive each remaining year of the contract. How to file an amended tax return for 2011 turbotax Take into account the difference between any estimated cost of goods sold and the actual cost when you deliver the goods in 2015. How to file an amended tax return for 2011 turbotax IRS approval. How to file an amended tax return for 2011 turbotax   You must file Form 3115 to obtain IRS approval to change your method of accounting for advance payments for sales. How to file an amended tax return for 2011 turbotax Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. How to file an amended tax return for 2011 turbotax The all-events test has been met. How to file an amended tax return for 2011 turbotax The test is met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. How to file an amended tax return for 2011 turbotax Economic performance has occurred. How to file an amended tax return for 2011 turbotax Economic Performance Generally, you cannot deduct or capitalize a business expense until economic performance occurs. How to file an amended tax return for 2011 turbotax If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or the property is used. How to file an amended tax return for 2011 turbotax If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. How to file an amended tax return for 2011 turbotax Example. How to file an amended tax return for 2011 turbotax You are a calendar year taxpayer. How to file an amended tax return for 2011 turbotax You buy office supplies in December 2012. How to file an amended tax return for 2011 turbotax You receive the supplies and the bill in December, but you pay the bill in January 2013. How to file an amended tax return for 2011 turbotax You can deduct the expense in 2012 because all events have occurred to fix the liability, the amount of the liability can be determined, and economic performance occurred in 2012. How to file an amended tax return for 2011 turbotax Your office supplies may qualify as a recurring item, discussed later. How to file an amended tax return for 2011 turbotax If so, you can deduct them in 2012, even if the supplies are not delivered until 2013 (when economic performance occurs). How to file an amended tax return for 2011 turbotax Workers' compensation and tort liability. How to file an amended tax return for 2011 turbotax   If you are required to make payments under workers' compensation laws or in satisfaction of any tort liability, economic performance occurs as you make the payments. How to file an amended tax return for 2011 turbotax If you are required to make payments to a special designated settlement fund established by court order for a tort liability, economic performance occurs as you make the payments. How to file an amended tax return for 2011 turbotax Taxes. How to file an amended tax return for 2011 turbotax   Economic performance generally occurs as estimated income tax, property taxes, employment taxes, etc. How to file an amended tax return for 2011 turbotax are paid. How to file an amended tax return for 2011 turbotax However, you can elect to treat taxes as a recurring item, discussed later. How to file an amended tax return for 2011 turbotax You can also elect to ratably accrue real estate taxes. How to file an amended tax return for 2011 turbotax See chapter 5 of Publication 535 for information about real estate taxes. How to file an amended tax return for 2011 turbotax Other liabilities. How to file an amended tax return for 2011 turbotax   Other liabilities for which economic performance occurs as you make payments include liabilities for breach of contract (to the extent of incidental, consequential, and liquidated damages), violation of law, rebates and refunds, awards, prizes, jackpots, insurance, and warranty and service contracts. How to file an amended tax return for 2011 turbotax Interest. How to file an amended tax return for 2011 turbotax   Economic performance occurs with the passage of time (as the borrower uses, and the lender forgoes use of, the lender's money) rather than as payments are made. How to file an amended tax return for 2011 turbotax Compensation for services. How to file an amended tax return for 2011 turbotax   Generally, economic performance occurs as an employee renders service to the employer. How to file an amended tax return for 2011 turbotax However, deductions for compensation or other benefits paid to an employee in a year subsequent to economic performance are subject to the rules governing deferred compensation, deferred benefits, and funded welfare benefit plans. How to file an amended tax return for 2011 turbotax For information on employee benefit programs, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. How to file an amended tax return for 2011 turbotax Vacation pay. How to file an amended tax return for 2011 turbotax   You can take a current deduction for vacation pay earned by your employees if you pay it during the year or, if the amount is vested, within 2½ months after the end of the year. How to file an amended tax return for 2011 turbotax If you pay it later than this, you must deduct it in the year actually paid. How to file an amended tax return for 2011 turbotax An amount is vested if your right to it cannot be nullified or cancelled. How to file an amended tax return for 2011 turbotax Exception for recurring items. How to file an amended tax return for 2011 turbotax   An exception to the economic performance rule allows certain recurring items to be treated as incurred during the tax year even though economic performance has not occurred. How to file an amended tax return for 2011 turbotax The exception applies if all the following requirements are met. How to file an amended tax return for 2011 turbotax The all-events test, discussed earlier, is met. How to file an amended tax return for 2011 turbotax Economic performance occurs by the earlier of the following dates. How to file an amended tax return for 2011 turbotax 8½ months after the close of the year. How to file an amended tax return for 2011 turbotax The date you file a timely return (including extensions) for the year. How to file an amended tax return for 2011 turbotax The item is recurring in nature and you consistently treat similar items as incurred in the tax year in which the all-events test is met. How to file an amended tax return for 2011 turbotax Either: The item is not material, or Accruing the item in the year in which the all-events test is met results in a better match against income than accruing the item in the year of economic performance. How to file an amended tax return for 2011 turbotax This exception does not apply to workers' compensation or tort liabilities. How to file an amended tax return for 2011 turbotax Amended return. How to file an amended tax return for 2011 turbotax   You may be able to file an amended return and treat a liability as incurred under the recurring item exception. How to file an amended tax return for 2011 turbotax You can do so if economic performance for the liability occurs after you file your tax return for the year, but within 8½ months after the close of the tax year. How to file an amended tax return for 2011 turbotax Recurrence and consistency. How to file an amended tax return for 2011 turbotax   To determine whether an item is recurring and consistently reported, consider the frequency with which the item and similar items are incurred (or expected to be incurred) and how you report these items for tax purposes. How to file an amended tax return for 2011 turbotax A new expense or an expense not incurred every year can be treated as recurring if it is reasonable to expect that it will be incurred regularly in the future. How to file an amended tax return for 2011 turbotax Materiality. How to file an amended tax return for 2011 turbotax   Factors to consider in determining the materiality of a recurring item include the size of the item (both in absolute terms and in relation to your income and other expenses) and the treatment of the item on your financial statements. How to file an amended tax return for 2011 turbotax   An item considered material for financial statement purposes is also considered material for tax purposes. How to file an amended tax return for 2011 turbotax However, in certain situations an immaterial item for financial accounting purposes is treated as material for purposes of economic performance. How to file an amended tax return for 2011 turbotax Matching expenses with income. How to file an amended tax return for 2011 turbotax   Costs directly associated with the revenue of a period are properly allocable to that period. How to file an amended tax return for 2011 turbotax To determine whether the accrual of an expense in a particular year results in a better match with the income to which it relates, generally accepted accounting principles (GAAP; visit www. How to file an amended tax return for 2011 turbotax fasab. How to file an amended tax return for 2011 turbotax gov/accepted. How to file an amended tax return for 2011 turbotax html) are an important factor. How to file an amended tax return for 2011 turbotax   For example, if you report sales income in the year of sale, but you do not ship the goods until the following year, the shipping costs are more properly matched to income in the year of sale than the year the goods are shipped. How to file an amended tax return for 2011 turbotax Expenses that cannot be practically associated with income of a particular period, such as advertising costs, should be assigned to the period the costs are incurred. How to file an amended tax return for 2011 turbotax However, the matching requirement is considered met for certain types of expenses. How to file an amended tax return for 2011 turbotax These expenses include taxes, payments under insurance, warranty, and service contracts, rebates, refunds, awards, prizes, and jackpots. How to file an amended tax return for 2011 turbotax Expenses Paid in Advance An expense you pay in advance is deductible only in the year to which it applies, unless the expense qualifies for the 12-month rule. How to file an amended tax return for 2011 turbotax Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of the following. How to file an amended tax return for 2011 turbotax 12 months after the right or benefit begins, or The end of the tax year after the tax year in which payment is made. How to file an amended tax return for 2011 turbotax If you have not been applying the general rule (an expense paid in advance is deductible only in the year to which it applies) and/or the 12-month rule to the expenses you paid in advance, you must get IRS approval before using the general rule and/or the 12-month rule. How to file an amended tax return for 2011 turbotax See Change in Accounting Method, later, for information on how to get IRS approval. How to file an amended tax return for 2011 turbotax See Expense paid in advance under Cash Method, earlier, for examples illustrating the application of the general and 12-month rules. How to file an amended tax return for 2011 turbotax Related Persons Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. How to file an amended tax return for 2011 turbotax Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. How to file an amended tax return for 2011 turbotax See section 267 of the Internal Revenue Code and Publication 542, Corporations, for the definition of related person. How to file an amended tax return for 2011 turbotax Inventories An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. How to file an amended tax return for 2011 turbotax If you must account for an inventory in your business, you must use an accrual method of accounting for your purchases and sales. How to file an amended tax return for 2011 turbotax However, see Exceptions, next. How to file an amended tax return for 2011 turbotax See also Accrual Method, earlier. How to file an amended tax return for 2011 turbotax To figure taxable income, you must value your inventory at the beginning and end of each tax year. How to file an amended tax return for 2011 turbotax To determine the value, you need a method for identifying the items in your inventory and a method for valuing these items. How to file an amended tax return for 2011 turbotax See Identifying Cost and Valuing Inventory, later. How to file an amended tax return for 2011 turbotax The rules for valuing inventory are not the same for all businesses. How to file an amended tax return for 2011 turbotax The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. How to file an amended tax return for 2011 turbotax Your inventory practices must be consistent from year to year. How to file an amended tax return for 2011 turbotax The rules discussed here apply only if they do not conflict with the uniform capitalization rules of section 263A and the mark-to-market rules of section 475. How to file an amended tax return for 2011 turbotax Exceptions The following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. How to file an amended tax return for 2011 turbotax These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). How to file an amended tax return for 2011 turbotax A qualifying taxpayer under Revenue Procedure 2001-10 on page 272 of Internal Revenue Bulletin 2001-2, available at www. How to file an amended tax return for 2011 turbotax irs. How to file an amended tax return for 2011 turbotax gov/pub/irs-irbs/irb01–02. How to file an amended tax return for 2011 turbotax pdf. How to file an amended tax return for 2011 turbotax A qualifying small business taxpayer under Revenue Procedure 2002-28, on page 815 of Internal Revenue Bulletin 2002-18, available at www. How to file an amended tax return for 2011 turbotax irs. How to file an amended tax return for 2011 turbotax gov/pub/irs-irbs/irb02–18. How to file an amended tax return for 2011 turbotax pdf. How to file an amended tax return for 2011 turbotax In addition to the information provided in this publication, you should see the revenue procedures referenced in the list, above, and the instructions for Form 3115 for information you will need to adopt or change to these accounting methods (see Changing methods, later). How to file an amended tax return for 2011 turbotax Qualifying taxpayer. How to file an amended tax return for 2011 turbotax   You are a qualifying taxpayer under Revenue Procedure 2001-10 only if: You satisfy the gross receipts test for each prior tax year ending on or after December 17, 1998 (see Gross receipts test for qualifying taxpayers, next). How to file an amended tax return for 2011 turbotax Your average annual gross receipts for each test year (explained in Step 1, listed next) must be $1 million or less. How to file an amended tax return for 2011 turbotax You are not a tax shelter as defined under section 448(d)(3) of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax Gross receipts test for qualifying taxpayers. How to file an amended tax return for 2011 turbotax   To determine if you meet the gross receipts test for qualifying taxpayers, use the following steps: Step 1. How to file an amended tax return for 2011 turbotax List each of the test years. How to file an amended tax return for 2011 turbotax For qualifying taxpayers under Revenue Procedure 2001-10, the test years are each prior tax year ending on or after December 17, 1998. How to file an amended tax return for 2011 turbotax Step 2. How to file an amended tax return for 2011 turbotax Determine your average annual gross receipts for each test year listed in Step 1. How to file an amended tax return for 2011 turbotax Your average annual gross receipts for a tax year is determined by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. How to file an amended tax return for 2011 turbotax Step 3. How to file an amended tax return for 2011 turbotax You meet the gross receipts test for qualifying taxpayers if your average annual gross receipts for each test year listed in Step 1 is $1 million or less. How to file an amended tax return for 2011 turbotax Qualifying small business taxpayer. How to file an amended tax return for 2011 turbotax   You are a qualifying small business taxpayer under Revenue Procedure 2002-28 only if: You satisfy the gross receipts test for each prior tax year ending on or after December 31, 2000 (see Gross receipts test for qualifying small business taxpayers, next). How to file an amended tax return for 2011 turbotax Your average annual gross receipts for each test year (explained in Step 1, listed next) must be $10 million or less. How to file an amended tax return for 2011 turbotax You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. How to file an amended tax return for 2011 turbotax Your principle business activity is an eligible business. How to file an amended tax return for 2011 turbotax See Eligible business, later. How to file an amended tax return for 2011 turbotax You have not changed (or have not been required to change) from the cash method because you became ineligible to use the cash method under Revenue Procedure 2002-28. How to file an amended tax return for 2011 turbotax Note. How to file an amended tax return for 2011 turbotax Revenue Procedure 2002-28 does not apply to a farming business of a qualifying small business taxpayer. How to file an amended tax return for 2011 turbotax A taxpayer engaged in the trade or business of farming generally is allowed to use the cash method for any farming business. How to file an amended tax return for 2011 turbotax See Special rules for farming businesses under Cash Method, earlier. How to file an amended tax return for 2011 turbotax Gross receipts test for qualifying small business taxpayers. How to file an amended tax return for 2011 turbotax   To determine if you meet the gross receipts test for qualifying small business taxpayers, use the following steps: Step 1. How to file an amended tax return for 2011 turbotax List each of the test years. How to file an amended tax return for 2011 turbotax For qualifying small business taxpayers under Revenue Procedure 2002-28, the test years are each prior tax year ending on or after December 31, 2000. How to file an amended tax return for 2011 turbotax Step 2. How to file an amended tax return for 2011 turbotax Determine your average annual gross receipts for each test year listed in Step 1. How to file an amended tax return for 2011 turbotax Your average annual gross receipts for a tax year is determined by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. How to file an amended tax return for 2011 turbotax Step 3. How to file an amended tax return for 2011 turbotax You meet the gross receipts test for qualifying small business taxpayers if your average annual gross receipts for each test year listed in Step 1 is $10 million or less. How to file an amended tax return for 2011 turbotax Eligible business. How to file an amended tax return for 2011 turbotax   An eligible business is any business for which a qualified small business taxpayer can use the cash method and choose to not keep an inventory. How to file an amended tax return for 2011 turbotax You have an eligible business if you meet any of the following requirements. How to file an amended tax return for 2011 turbotax Your principal business activity is described in a North American Industry Classification System (NAICS) code other than any of the following NAICS subsector codes: NAICS codes 211 and 212 (mining activities). How to file an amended tax return for 2011 turbotax NAICS codes 31-33 (manufacturing). How to file an amended tax return for 2011 turbotax NAICS code 42 (wholesale trade). How to file an amended tax return for 2011 turbotax NAICS codes 44-45 (retail trade). How to file an amended tax return for 2011 turbotax NAICS codes 5111 and 5122 (information industries). How to file an amended tax return for 2011 turbotax Your principal business activity is the provision of services, including the provision of property incident to those services. How to file an amended tax return for 2011 turbotax Your principal business activity is the fabrication or modification of tangible personal property upon demand in accordance with customer design or specifications. How to file an amended tax return for 2011 turbotax   Information about the NAICS codes can be found at http://www. How to file an amended tax return for 2011 turbotax census. How to file an amended tax return for 2011 turbotax gov/naics or in the instructions for your federal income tax return. How to file an amended tax return for 2011 turbotax Gross receipts. How to file an amended tax return for 2011 turbotax   In general, gross receipts must include all receipts from all your trades or businesses that must be recognized under the method of accounting you used for that tax year for federal income tax purposes. How to file an amended tax return for 2011 turbotax See the definit