Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

How To File An Amendment For Taxes

Irs 2012 Tax Forms 1040ezFederal Tax Form 10401040ez Fillable Form2012 Turbo Tax Return2010 Ez 1040 FormFile 2012 Taxes FreeDownload A 1040ez Federal Tax Form2011 1040aWho Can Use 1040ezFiling A 1040 Ez1040ez 2013 FormWww Onlinetaxes H&rblock Com2011 1040ez2012 Federal 1040 Tax FormsState Income Tax ReturnH&r Block Home EditionIrs Gov FormsFree 2011 Tax SoftwareFree Electronic State Tax Filing2011 Tax FormsAmended 1040x Instructions2012 1040 FormHow To File A 1040 EzState Tax Forms FreeIrs Gov FormsFile State Taxes Free OnlineHow To Complete A 1040x2014 Tax Forms 1040ezHow To File Amended Tax Return For 20111040 Ez Online2012 1040 Ez FormTurbotax Amended ReturnE-file State Tax OnlyFile 2010 Taxes Online FreeCan I Efile A 2012 Tax Return2005 Tax FormsCan I File My 2011 Taxes OnlineIrs Gov VitaTax Forms EzFree Tax Service

How To File An Amendment For Taxes

How to file an amendment for taxes 5. How to file an amendment for taxes   Wages, Salaries, and Other Earnings Table of Contents Reminder Introduction Useful Items - You may want to see: Employee CompensationBabysitting. How to file an amendment for taxes Miscellaneous Compensation Fringe Benefits Retirement Plan Contributions Stock Options Restricted Property Special Rules for Certain EmployeesClergy Members of Religious Orders Foreign Employer Military Volunteers Sickness and Injury BenefitsDisability Pensions Long-Term Care Insurance Contracts Workers' Compensation Other Sickness and Injury Benefits Reminder Foreign income. How to file an amendment for taxes   If you are a U. How to file an amendment for taxes S. How to file an amendment for taxes citizen or resident alien, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U. How to file an amendment for taxes S. How to file an amendment for taxes law. How to file an amendment for taxes This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or Form 1099 from the foreign payer. How to file an amendment for taxes This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). How to file an amendment for taxes If you reside outside the United States, you may be able to exclude part or all of your foreign source earned income. How to file an amendment for taxes For details, see Publication 54, Tax Guide for U. How to file an amendment for taxes S. How to file an amendment for taxes Citizens and Resident Aliens Abroad. How to file an amendment for taxes Introduction This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. How to file an amendment for taxes The following topics are included. How to file an amendment for taxes Bonuses and awards. How to file an amendment for taxes Special rules for certain employees. How to file an amendment for taxes Sickness and injury benefits. How to file an amendment for taxes The chapter explains what income is included in the employee's gross income and what is not included. How to file an amendment for taxes Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income Employee Compensation This section discusses various types of employee compensation including fringe benefits, retirement plan contributions, stock options, and restricted property. How to file an amendment for taxes Form W-2. How to file an amendment for taxes    If you are an employee, you should receive Form W-2 from your employer showing the pay you received for your services. How to file an amendment for taxes Include your pay on line 7 of Form 1040 or Form 1040A, or on line 1 of Form 1040EZ, even if you do not receive a Form W-2. How to file an amendment for taxes   If you performed services, other than as an independent contractor, and your employer did not withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040. How to file an amendment for taxes These wages must be included on line 7 of Form 1040. How to file an amendment for taxes See Form 8919 for more information. How to file an amendment for taxes Childcare providers. How to file an amendment for taxes    If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. How to file an amendment for taxes If you are not an employee, you are probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. How to file an amendment for taxes You generally are not an employee unless you are subject to the will and control of the person who employs you as to what you are to do and how you are to do it. How to file an amendment for taxes Babysitting. How to file an amendment for taxes   If you babysit for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you. How to file an amendment for taxes Miscellaneous Compensation This section discusses different types of employee compensation. How to file an amendment for taxes Advance commissions and other earnings. How to file an amendment for taxes   If you receive advance commissions or other amounts for services to be performed in the future and you are a cash-method taxpayer, you must include these amounts in your income in the year you receive them. How to file an amendment for taxes    If you repay unearned commissions or other amounts in the same year you receive them, reduce the amount included in your income by the repayment. How to file an amendment for taxes If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), or you may be able to take a credit for that year. How to file an amendment for taxes See Repayments in chapter 12. How to file an amendment for taxes Allowances and reimbursements. How to file an amendment for taxes    If you receive travel, transportation, or other business expense allowances or reimbursements from your employer, see Publication 463. How to file an amendment for taxes If you are reimbursed for moving expenses, see Publication 521, Moving Expenses. How to file an amendment for taxes Back pay awards. How to file an amendment for taxes    Include in income amounts you are awarded in a settlement or judgment for back pay. How to file an amendment for taxes These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. How to file an amendment for taxes They should be reported to you by your employer on Form W-2. How to file an amendment for taxes Bonuses and awards. How to file an amendment for taxes   Bonuses or awards you receive for outstanding work are included in your income and should be shown on your Form W-2. How to file an amendment for taxes These include prizes such as vacation trips for meeting sales goals. How to file an amendment for taxes If the prize or award you receive is goods or services, you must include the fair market value of the goods or services in your income. How to file an amendment for taxes However, if your employer merely promises to pay you a bonus or award at some future time, it is not taxable until you receive it or it is made available to you. How to file an amendment for taxes Employee achievement award. How to file an amendment for taxes   If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. How to file an amendment for taxes However, the amount you can exclude is limited to your employer's cost and cannot be more than $1,600 ($400 for awards that are not qualified plan awards) for all such awards you receive during the year. How to file an amendment for taxes Your employer can tell you whether your award is a qualified plan award. How to file an amendment for taxes Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that do not create a significant likelihood of it being disguised pay. How to file an amendment for taxes   However, the exclusion does not apply to the following awards: A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years. How to file an amendment for taxes A safety achievement award if you are a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year. How to file an amendment for taxes Example. How to file an amendment for taxes Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, and two qualified plan awards of a stereo valued at $1,000 and a set of golf clubs valued at $500. How to file an amendment for taxes Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. How to file an amendment for taxes However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 – $1,600) in his income. How to file an amendment for taxes Differential wage payments. How to file an amendment for taxes   This is any payment made to you by an employer for any period during which you are, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages you would have received from the employer during that period. How to file an amendment for taxes These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. How to file an amendment for taxes The payments are reported as wages on Form W-2. How to file an amendment for taxes Government cost-of-living allowances. How to file an amendment for taxes   Most payments received by U. How to file an amendment for taxes S. How to file an amendment for taxes Government civilian employees for working abroad are taxable. How to file an amendment for taxes However, certain cost-of-living allowances are tax free. How to file an amendment for taxes Publication 516, U. How to file an amendment for taxes S. How to file an amendment for taxes Government Civilian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad. How to file an amendment for taxes Nonqualified deferred compensation plans. How to file an amendment for taxes   Your employer will report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan. How to file an amendment for taxes This amount is shown on Form W-2, box 12, using code Y. How to file an amendment for taxes This amount is not included in your income. How to file an amendment for taxes   However, if at any time during the tax year, the plan fails to meet certain requirements, or is not operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years are included in your income for the current year. How to file an amendment for taxes This amount is included in your wages shown on Form W-2, box 1. How to file an amendment for taxes It is also shown on Form W-2, box 12, using code Z. How to file an amendment for taxes Note received for services. How to file an amendment for taxes    If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. How to file an amendment for taxes When you later receive payments on the note, a proportionate part of each payment is the recovery of the fair market value that you previously included in your income. How to file an amendment for taxes Do not include that part again in your income. How to file an amendment for taxes Include the rest of the payment in your income in the year of payment. How to file an amendment for taxes   If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensation income when you receive them. How to file an amendment for taxes Severance pay. How to file an amendment for taxes   You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. How to file an amendment for taxes Accrued leave payment. How to file an amendment for taxes    If you are a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2. How to file an amendment for taxes   If you resign from one agency and are reemployed by another agency, you may have to repay part of your lump-sum annual leave payment to the second agency. How to file an amendment for taxes You can reduce gross wages by the amount you repaid in the same tax year in which you received it. How to file an amendment for taxes Attach to your tax return a copy of the receipt or statement given to you by the agency you repaid to explain the difference between the wages on the return and the wages on your Forms W-2. How to file an amendment for taxes Outplacement services. How to file an amendment for taxes   If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and interview techniques), you must include the unreduced amount of the severance pay in income. How to file an amendment for taxes    However, you can deduct the value of these outplacement services (up to the difference between the severance pay included in income and the amount actually received) as a miscellaneous deduction (subject to the 2%-of-adjusted-gross-income (AGI) limit) on Schedule A (Form 1040). How to file an amendment for taxes Sick pay. How to file an amendment for taxes   Pay you receive from your employer while you are sick or injured is part of your salary or wages. How to file an amendment for taxes In addition, you must include in your income sick pay benefits received from any of the following payers: A welfare fund. How to file an amendment for taxes A state sickness or disability fund. How to file an amendment for taxes An association of employers or employees. How to file an amendment for taxes An insurance company, if your employer paid for the plan. How to file an amendment for taxes However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy are not taxable. How to file an amendment for taxes For more information, see Publication 525. How to file an amendment for taxes Social security and Medicare taxes paid by employer. How to file an amendment for taxes   If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. How to file an amendment for taxes The payment also is treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. How to file an amendment for taxes However, these payments are not treated as social security and Medicare wages if you are a household worker or a farm worker. How to file an amendment for taxes Stock appreciation rights. How to file an amendment for taxes   Do not include a stock appreciation right granted by your employer in income until you exercise (use) the right. How to file an amendment for taxes When you use the right, you are entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. How to file an amendment for taxes You include the cash payment in your income in the year you use the right. How to file an amendment for taxes Fringe Benefits Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they are specifically excluded by law. How to file an amendment for taxes Abstaining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules. How to file an amendment for taxes Accounting period. How to file an amendment for taxes   You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. How to file an amendment for taxes Your employer has the option to report taxable noncash fringe benefits by using either of the following rules. How to file an amendment for taxes The general rule: benefits are reported for a full calendar year (January 1–December 31). How to file an amendment for taxes The special accounting period rule: benefits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calendar year. How to file an amendment for taxes For example, each year your employer reports the value of benefits provided during the last 2 months of the prior year and the first 10 months of the current year. How to file an amendment for taxes  Your employer does not have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit. How to file an amendment for taxes   You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example). How to file an amendment for taxes Form W-2. How to file an amendment for taxes   Your employer must include all taxable fringe benefits in box 1 of Form W-2 as wages, tips, and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages. How to file an amendment for taxes Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). How to file an amendment for taxes However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must separately report this value to you in box 14 (or on a separate statement). How to file an amendment for taxes Accident or Health Plan In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income. How to file an amendment for taxes Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits . How to file an amendment for taxes For information on the items covered in this section, other than Long-term care coverage, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. How to file an amendment for taxes Long-term care coverage. How to file an amendment for taxes    Contributions by your employer to provide coverage for long-term care services generally are not included in your income. How to file an amendment for taxes However, contributions made through a flexible spending or similar arrangement (such as a cafeteria plan) must be included in your income. How to file an amendment for taxes This amount will be reported as wages in box 1 of your Form W-2. How to file an amendment for taxes   Contributions you make to the plan are discussed in Publication 502, Medical and Dental Expenses. How to file an amendment for taxes Archer MSA contributions. How to file an amendment for taxes    Contributions by your employer to your Archer MSA generally are not included in your income. How to file an amendment for taxes Their total will be reported in box 12 of Form W-2 with code R. How to file an amendment for taxes You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. How to file an amendment for taxes File the form with your return. How to file an amendment for taxes Health flexible spending arrangement (health FSA). How to file an amendment for taxes   If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduction, and reimbursements of your medical care expenses, in most cases, are not included in your income. How to file an amendment for taxes Note. How to file an amendment for taxes Health FSAs are subject to a $2,500 limit on salary reduction contributions for plan years beginning after 2012. How to file an amendment for taxes The $2,500 limit is subject to an inflation adjustment for plan years beginning after 2013. How to file an amendment for taxes For more information, see Notice 2012-40, 2012-26 I. How to file an amendment for taxes R. How to file an amendment for taxes B. How to file an amendment for taxes 1046, available at www. How to file an amendment for taxes irs. How to file an amendment for taxes gov/irb/2012-26 IRB/ar09. How to file an amendment for taxes html. How to file an amendment for taxes Health reimbursement arrangement (HRA). How to file an amendment for taxes   If your employer provides an HRA that qualifies as an accident or health plan, coverage and reimbursements of your medical care expenses generally are not included in your income. How to file an amendment for taxes Health savings accounts (HSA). How to file an amendment for taxes   If you are an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. How to file an amendment for taxes Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. How to file an amendment for taxes Contributions made by your employer are not included in your income. How to file an amendment for taxes Distributions from your HSA that are used to pay qualified medical expenses are not included in your income. How to file an amendment for taxes Distributions not used for qualified medical expenses are included in your income. How to file an amendment for taxes See Publication 969 for the requirements of an HSA. How to file an amendment for taxes   Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. How to file an amendment for taxes The contributions are treated as a distribution of money and are not included in the partner's gross income. How to file an amendment for taxes Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. How to file an amendment for taxes In both situations, the partner can deduct the contribution made to the partner's HSA. How to file an amendment for taxes   Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. How to file an amendment for taxes The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. How to file an amendment for taxes Qualified HSA funding distribution. How to file an amendment for taxes   You can make a one-time distribution from your individual retirement account (IRA) to an HSA and you generally will not include any of the distribution in your income. How to file an amendment for taxes See Publication 590 for the requirements for these qualified HSA funding distributions. How to file an amendment for taxes Failure to maintain eligibility. How to file an amendment for taxes   If your HSA received qualified HSA distributions from a health FSA or HRA (discussed earlier) or a qualified HSA funding distribution, you must be an eligible individual for HSA purposes for the period beginning with the month in which the qualified distribution was made and ending on the last day of the 12th month following that month. How to file an amendment for taxes If you fail to be an eligible individual during this period, other than because of death or disability, you must include the distribution in your income for the tax year in which you become ineligible. How to file an amendment for taxes This income is also subject to an additional 10% tax. How to file an amendment for taxes Adoption Assistance You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. How to file an amendment for taxes See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. How to file an amendment for taxes Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. How to file an amendment for taxes They also are included as social security and Medicare wages in boxes 3 and 5. How to file an amendment for taxes However, they are not included as wages in box 1. How to file an amendment for taxes To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. How to file an amendment for taxes File the form with your return. How to file an amendment for taxes De Minimis (Minimal) Benefits If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, the value is not included in your income. How to file an amendment for taxes In most cases, the value of benefits such as discounts at company cafeterias, cab fares home when working overtime, and company picnics are not included in your income. How to file an amendment for taxes Holiday gifts. How to file an amendment for taxes   If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, do not include the value of the gift in your income. How to file an amendment for taxes However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved. How to file an amendment for taxes Educational Assistance You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. How to file an amendment for taxes For more information, see Publication 970, Tax Benefits for Education. How to file an amendment for taxes Group-Term Life Insurance In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) is not included in your income. How to file an amendment for taxes However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. How to file an amendment for taxes For exceptions, see Entire cost excluded , and Entire cost taxed , later. How to file an amendment for taxes If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. How to file an amendment for taxes Also, it is shown separately in box 12 with code C. How to file an amendment for taxes Group-term life insurance. How to file an amendment for taxes   This insurance is term life insurance protection (insurance for a fixed period of time) that: Provides a general death benefit, Is provided to a group of employees, Is provided under a policy carried by the employer, and Provides an amount of insurance to each employee based on a formula that prevents individual selection. How to file an amendment for taxes Permanent benefits. How to file an amendment for taxes   If your group-term life insurance policy includes permanent benefits, such as a paid-up or cash surrender value, you must include in your income, as wages, the cost of the permanent benefits minus the amount you pay for them. How to file an amendment for taxes Your employer should be able to tell you the amount to include in your income. How to file an amendment for taxes Accidental death benefits. How to file an amendment for taxes   Insurance that provides accidental or other death benefits but does not provide general death benefits (travel insurance, for example) is not group-term life insurance. How to file an amendment for taxes Former employer. How to file an amendment for taxes   If your former employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in box 1 of Form W-2. How to file an amendment for taxes Also, it is shown separately in box 12 with code C. How to file an amendment for taxes Box 12 also will show the amount of uncollected social security and Medicare taxes on the excess coverage, with codes M and N. How to file an amendment for taxes You must pay these taxes with your income tax return. How to file an amendment for taxes Include them on line 60, Form 1040, and follow the instructions for line 60. How to file an amendment for taxes For more information, see the Instructions for Form 1040. How to file an amendment for taxes Two or more employers. How to file an amendment for taxes   Your exclusion for employer-provided group-term life insurance coverage cannot exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers. How to file an amendment for taxes If two or more employers provide insurance coverage that totals more than $50,000, the amounts reported as wages on your Forms W-2 will not be correct. How to file an amendment for taxes You must figure how much to include in your income. How to file an amendment for taxes Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages reported in box 1, and report the total on your return. How to file an amendment for taxes Figuring the taxable cost. How to file an amendment for taxes   Use the following worksheet to figure the amount to include in your income. How to file an amendment for taxes     Worksheet 5-1. How to file an amendment for taxes Figuring the Cost of Group-Term Life Insurance To Include in Income 1. How to file an amendment for taxes Enter the total amount of your insurance coverage from your employer(s) 1. How to file an amendment for taxes   2. How to file an amendment for taxes Limit on exclusion for employer-provided group-term life insurance coverage 2. How to file an amendment for taxes 50,000 3. How to file an amendment for taxes Subtract line 2 from line 1 3. How to file an amendment for taxes   4. How to file an amendment for taxes Divide line 3 by $1,000. How to file an amendment for taxes Figure to the nearest tenth 4. How to file an amendment for taxes   5. How to file an amendment for taxes Go to Table 5-1. How to file an amendment for taxes Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. How to file an amendment for taxes   6. How to file an amendment for taxes Multiply line 4 by line 5 6. How to file an amendment for taxes   7. How to file an amendment for taxes Enter the number of full months of coverage at this cost. How to file an amendment for taxes 7. How to file an amendment for taxes   8. How to file an amendment for taxes Multiply line 6 by line 7 8. How to file an amendment for taxes   9. How to file an amendment for taxes Enter the premiums you paid per month 9. How to file an amendment for taxes       10. How to file an amendment for taxes Enter the number of months you paid the premiums 10. How to file an amendment for taxes       11. How to file an amendment for taxes Multiply line 9 by line 10. How to file an amendment for taxes 11. How to file an amendment for taxes   12. How to file an amendment for taxes Subtract line 11 from line 8. How to file an amendment for taxes Include this amount in your income as wages 12. How to file an amendment for taxes      Table 5-1. How to file an amendment for taxes Cost of $1,000 of Group-Term Life Insurance for One Month Age Cost Under 25 $. How to file an amendment for taxes 05 25 through 29 . How to file an amendment for taxes 06 30 through 34 . How to file an amendment for taxes 08 35 through 39 . How to file an amendment for taxes 09 40 through 44 . How to file an amendment for taxes 10 45 through 49 . How to file an amendment for taxes 15 50 through 54 . How to file an amendment for taxes 23 55 through 59 . How to file an amendment for taxes 43 60 through 64 . How to file an amendment for taxes 66 65 through 69 1. How to file an amendment for taxes 27 70 and older 2. How to file an amendment for taxes 06 Example. How to file an amendment for taxes You are 51 years old and work for employers A and B. How to file an amendment for taxes Both employers provide group-term life insurance coverage for you for the entire year. How to file an amendment for taxes Your coverage is $35,000 with employer A and $45,000 with employer B. How to file an amendment for taxes You pay premiums of $4. How to file an amendment for taxes 15 a month under the employer B group plan. How to file an amendment for taxes You figure the amount to include in your income as shown in Worksheet 5-1. How to file an amendment for taxes Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated, later. How to file an amendment for taxes Worksheet 5-1. How to file an amendment for taxes Figuring the Cost of Group-Term Life Insurance to Include in Income—Illustrated 1. How to file an amendment for taxes Enter the total amount of your insurance coverage from your employer(s) 1. How to file an amendment for taxes 80,000 2. How to file an amendment for taxes Limit on exclusion for employer-provided group-term life insurance coverage 2. How to file an amendment for taxes 50,000 3. How to file an amendment for taxes Subtract line 2 from line 1 3. How to file an amendment for taxes 30,000 4. How to file an amendment for taxes Divide line 3 by $1,000. How to file an amendment for taxes Figure to the nearest tenth 4. How to file an amendment for taxes 30. How to file an amendment for taxes 0 5. How to file an amendment for taxes Go to Table 5-1. How to file an amendment for taxes Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group 5. How to file an amendment for taxes . How to file an amendment for taxes 23 6. How to file an amendment for taxes Multiply line 4 by line 5 6. How to file an amendment for taxes 6. How to file an amendment for taxes 90 7. How to file an amendment for taxes Enter the number of full months of coverage at this cost. How to file an amendment for taxes 7. How to file an amendment for taxes 12 8. How to file an amendment for taxes Multiply line 6 by line 7 8. How to file an amendment for taxes 82. How to file an amendment for taxes 80 9. How to file an amendment for taxes Enter the premiums you paid per month 9. How to file an amendment for taxes 4. How to file an amendment for taxes 15     10. How to file an amendment for taxes Enter the number of months you paid the premiums 10. How to file an amendment for taxes 12     11. How to file an amendment for taxes Multiply line 9 by line 10. How to file an amendment for taxes 11. How to file an amendment for taxes 49. How to file an amendment for taxes 80 12. How to file an amendment for taxes Subtract line 11 from line 8. How to file an amendment for taxes Include this amount in your income as wages 12. How to file an amendment for taxes 33. How to file an amendment for taxes 00 Entire cost excluded. How to file an amendment for taxes   You are not taxed on the cost of group-term life insurance if any of the following circumstances apply. How to file an amendment for taxes You are permanently and totally disabled and have ended your employment. How to file an amendment for taxes Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year. How to file an amendment for taxes A charitable organization (defined in chapter 24) to which contributions are deductible is the only beneficiary of the policy for the entire period the insurance is in force during the tax year. How to file an amendment for taxes (You are not entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy. How to file an amendment for taxes ) The plan existed on January 1, 1984, and You retired before January 2, 1984, and were covered by the plan when you retired, or You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983. How to file an amendment for taxes Entire cost taxed. How to file an amendment for taxes   You are taxed on the entire cost of group-term life insurance if either of the following circumstances apply: The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. How to file an amendment for taxes You are a key employee and your employer's plan discriminates in favor of key employees. How to file an amendment for taxes Retirement Planning Services If your employer has a qualified retirement plan, qualified retirement planning services provided to you (and your spouse) by your employer are not included in your income. How to file an amendment for taxes Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. How to file an amendment for taxes You cannot exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer. How to file an amendment for taxes Transportation If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. How to file an amendment for taxes A qualified transportation fringe benefit is: Transportation in a commuter highway vehicle (such as a van) between your home and work place, A transit pass, Qualified parking, or Qualified bicycle commuting reimbursement. How to file an amendment for taxes Cash reimbursement by your employer for these expenses under a bona fide reimbursement arrangement is also excludable. How to file an amendment for taxes However, cash reimbursement for a transit pass is excludable only if a voucher or similar item that can be exchanged only for a transit pass is not readily available for direct distribution to you. How to file an amendment for taxes Exclusion limit. How to file an amendment for taxes   The exclusion for commuter vehicle transportation and transit pass fringe benefits cannot be more than $245 a month. How to file an amendment for taxes   The exclusion for the qualified parking fringe benefit cannot be more than $245 a month. How to file an amendment for taxes   The exclusion for qualified bicycle commuting in a calendar year is $20 multiplied by the number of qualified bicycle commuting months that year. How to file an amendment for taxes   If the benefits have a value that is more than these limits, the excess must be included in your income. How to file an amendment for taxes You are not entitled to these exclusions if the reimbursements are made under a compensation reduction agreement. How to file an amendment for taxes Commuter highway vehicle. How to file an amendment for taxes   This is a highway vehicle that seats at least six adults (not including the driver). How to file an amendment for taxes At least 80% of the vehicle's mileage must reasonably be expected to be: For transporting employees between their homes and work place, and On trips during which employees occupy at least half of the vehicle's adult seating capacity (not including the driver). How to file an amendment for taxes Transit pass. How to file an amendment for taxes   This is any pass, token, farecard, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a commuter highway vehicle operated by a person in the business of transporting persons for compensation. How to file an amendment for taxes Qualified parking. How to file an amendment for taxes   This is parking provided to an employee at or near the employer's place of business. How to file an amendment for taxes It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a commuter highway vehicle, or by carpool. How to file an amendment for taxes It does not include parking at or near the employee's home. How to file an amendment for taxes Qualified bicycle commuting. How to file an amendment for taxes   This is reimbursement based on the number of qualified bicycle commuting months for the year. How to file an amendment for taxes A qualified bicycle commuting month is any month you use the bicycle regularly for a substantial portion of the travel between your home and place of employment and you do not receive any of the other qualified transportation fringe benefits. How to file an amendment for taxes The reimbursement can be for expenses you incurred during the year for the purchase of a bicycle and bicycle improvements, repair, and storage. How to file an amendment for taxes Retirement Plan Contributions Your employer's contributions to a qualified retirement plan for you are not included in income at the time contributed. How to file an amendment for taxes (Your employer can tell you whether your retirement plan is qualified. How to file an amendment for taxes ) However, the cost of life insurance coverage included in the plan may have to be included. How to file an amendment for taxes See Group-Term Life Insurance , earlier, under Fringe Benefits. How to file an amendment for taxes If your employer pays into a nonqualified plan for you, you generally must include the contributions in your income as wages for the tax year in which the contributions are made. How to file an amendment for taxes However, if your interest in the plan is not transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you do not have to include the value of your interest in your income until it is transferable or is no longer subject to a substantial risk of forfeiture. How to file an amendment for taxes For information on distributions from retirement plans, see Publication 575, Pension and Annuity Income (or Publication 721, Tax Guide to U. How to file an amendment for taxes S. How to file an amendment for taxes Civil Service Retirement Benefits, if you are a federal employee or retiree). How to file an amendment for taxes Elective deferrals. How to file an amendment for taxes   If you are covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. How to file an amendment for taxes The amount you set aside (called an elective deferral) is treated as an employer contribution to a qualified plan. How to file an amendment for taxes An elective deferral, other than a designated Roth contribution (discussed later), is not included in wages subject to income tax at the time contributed. How to file an amendment for taxes However, it is included in wages subject to social security and Medicare taxes. How to file an amendment for taxes   Elective deferrals include elective contributions to the following retirement plans. How to file an amendment for taxes Cash or deferred arrangements (section 401(k) plans). How to file an amendment for taxes The Thrift Savings Plan for federal employees. How to file an amendment for taxes Salary reduction simplified employee pension plans (SARSEP). How to file an amendment for taxes Savings incentive match plans for employees (SIMPLE plans). How to file an amendment for taxes Tax-sheltered annuity plans (403(b) plans). How to file an amendment for taxes Section 501(c)(18)(D) plans. How to file an amendment for taxes Section 457 plans. How to file an amendment for taxes Qualified automatic contribution arrangements. How to file an amendment for taxes   Under a qualified automatic contribution arrangement, your employer can treat you as having elected to have a part of your compensation contributed to a section 401(k) plan. How to file an amendment for taxes You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. How to file an amendment for taxes The notice must explain: Your rights to elect not to have elective contributions made, or to have contributions made at a different percentage, and How contributions made will be invested in the absence of any investment decision by you. How to file an amendment for taxes   You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions. How to file an amendment for taxes Overall limit on deferrals. How to file an amendment for taxes   For 2013, in most cases, you should not have deferred more than a total of $17,500 of contributions to the plans listed in (1) through (3) and (5) above. How to file an amendment for taxes The limit for SIMPLE plans is $12,000. How to file an amendment for taxes The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. How to file an amendment for taxes The limit for section 457 plans is the lesser of your includible compensation or $17,500. How to file an amendment for taxes Amounts deferred under specific plan limits are part of the overall limit on deferrals. How to file an amendment for taxes Designated Roth contributions. How to file an amendment for taxes   Employers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designated as after-tax Roth contributions. How to file an amendment for taxes Designated Roth contributions are treated as elective deferrals, except that they are included in income. How to file an amendment for taxes Excess deferrals. How to file an amendment for taxes   Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. How to file an amendment for taxes However, you are responsible for monitoring the total you defer to ensure that the deferrals are not more than the overall limit. How to file an amendment for taxes   If you set aside more than the limit, the excess generally must be included in your income for that year, unless you have an excess deferral of a designated Roth contribution. How to file an amendment for taxes See Publication 525 for a discussion of the tax treatment of excess deferrals. How to file an amendment for taxes Catch-up contributions. How to file an amendment for taxes   You may be allowed catch-up contributions (additional elective deferral) if you are age 50 or older by the end of your tax year. How to file an amendment for taxes Stock Options If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you usually will have income when you receive the option, when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option. How to file an amendment for taxes However, if your option is a statutory stock option, you will not have any income until you sell or exchange your stock. How to file an amendment for taxes Your employer can tell you which kind of option you hold. How to file an amendment for taxes For more information, see Publication 525. How to file an amendment for taxes Restricted Property In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. How to file an amendment for taxes However, if you receive stock or other property that has certain restrictions that affect its value, you do not include the value of the property in your income until it has substantially vested. How to file an amendment for taxes (You can choose to include the value of the property in your income in the year it is transferred to you. How to file an amendment for taxes ) For more information, see Restricted Property in Publication 525. How to file an amendment for taxes Dividends received on restricted stock. How to file an amendment for taxes   Dividends you receive on restricted stock are treated as compensation and not as dividend income. How to file an amendment for taxes Your employer should include these payments on your Form W-2. How to file an amendment for taxes Stock you chose to include in income. How to file an amendment for taxes   Dividends you receive on restricted stock you chose to include in your income in the year transferred are treated the same as any other dividends. How to file an amendment for taxes Report them on your return as dividends. How to file an amendment for taxes For a discussion of dividends, see chapter 8. How to file an amendment for taxes    For information on how to treat dividends reported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Publication 525. How to file an amendment for taxes Special Rules for Certain Employees This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers. How to file an amendment for taxes Clergy Generally, if you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. How to file an amendment for taxes , in addition to your salary. How to file an amendment for taxes If the offering is made to the religious institution, it is not taxable to you. How to file an amendment for taxes If you are a member of a religious organization and you give your outside earnings to the religious organization, you still must include the earnings in your income. How to file an amendment for taxes However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. How to file an amendment for taxes See chapter 24. How to file an amendment for taxes Pension. How to file an amendment for taxes    A pension or retirement pay for a member of the clergy usually is treated as any other pension or annuity. How to file an amendment for taxes It must be reported on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. How to file an amendment for taxes Housing. How to file an amendment for taxes    Special rules for housing apply to members of the clergy. How to file an amendment for taxes Under these rules, you do not include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. How to file an amendment for taxes However, the exclusion cannot be more than the reasonable pay for your service. How to file an amendment for taxes If you pay for the utilities, you can exclude any allowance designated for utility cost, up to your actual cost. How to file an amendment for taxes The home or allowance must be provided as compensation for your services as an ordained, licensed, or commissioned minister. How to file an amendment for taxes However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you are subject to the self-employment tax. How to file an amendment for taxes For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. How to file an amendment for taxes Members of Religious Orders If you are a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order. How to file an amendment for taxes Services performed for the order. How to file an amendment for taxes   If you are performing the services as an agent of the order in the exercise of duties required by the order, do not include in your income the amounts turned over to the order. How to file an amendment for taxes   If your order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to be performing the services as an agent of the order. How to file an amendment for taxes Any wages you earn as an agent of an order that you turn over to the order are not included in your income. How to file an amendment for taxes Example. How to file an amendment for taxes You are a member of a church order and have taken a vow of poverty. How to file an amendment for taxes You renounce any claims to your earnings and turn over to the order any salaries or wages you earn. How to file an amendment for taxes You are a registered nurse, so your order assigns you to work in a hospital that is an associated institution of the church. How to file an amendment for taxes However, you remain under the general direction and control of the order. How to file an amendment for taxes You are considered to be an agent of the order and any wages you earn at the hospital that you turn over to your order are not included in your income. How to file an amendment for taxes Services performed outside the order. How to file an amendment for taxes   If you are directed to work outside the order, your services are not an exercise of duties required by the order unless they meet both of the following requirements: They are the kind of services that are ordinarily the duties of members of the order. How to file an amendment for taxes They are part of the duties that you must exercise for, or on behalf of, the religious order as its agent. How to file an amendment for taxes If you are an employee of a third party, the services you perform for the third party will not be considered directed or required of you by the order. How to file an amendment for taxes Amounts you receive for these services are included in your income, even if you have taken a vow of poverty. How to file an amendment for taxes Example. How to file an amendment for taxes Mark Brown is a member of a religious order and has taken a vow of poverty. How to file an amendment for taxes He renounces all claims to his earnings and turns over his earnings to the order. How to file an amendment for taxes Mark is a schoolteacher. How to file an amendment for taxes He was instructed by the superiors of the order to get a job with a private tax-exempt school. How to file an amendment for taxes Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order. How to file an amendment for taxes Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. How to file an amendment for taxes The wages Mark earns working for the school are included in his income. How to file an amendment for taxes Foreign Employer Special rules apply if you work for a foreign employer. How to file an amendment for taxes U. How to file an amendment for taxes S. How to file an amendment for taxes citizen. How to file an amendment for taxes   If you are a U. How to file an amendment for taxes S. How to file an amendment for taxes citizen who works in the United States for a foreign government, an international organization, a foreign embassy, or any foreign employer, you must include your salary in your income. How to file an amendment for taxes Social security and Medicare taxes. How to file an amendment for taxes   You are exempt from social security and Medicare employee taxes if you are employed in the United States by an international organization or a foreign government. How to file an amendment for taxes However, you must pay self-employment tax on your earnings from services performed in the United States, even though you are not self-employed. How to file an amendment for taxes This rule also applies if you are an employee of a qualifying wholly owned instrumentality of a foreign government. How to file an amendment for taxes Employees of international organizations or foreign governments. How to file an amendment for taxes   Your compensation for official services to an international organization is exempt from federal income tax if you are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). How to file an amendment for taxes   Your compensation for official services to a foreign government is exempt from federal income tax if all of the following are true. How to file an amendment for taxes You are not a citizen of the United States or you are a citizen of the Philippines (whether or not you are a citizen of the United States). How to file an amendment for taxes Your work is like the work done by employees of the United States in foreign countries. How to file an amendment for taxes The foreign government gives an equal exemption to employees of the United States in its country. How to file an amendment for taxes Waiver of alien status. How to file an amendment for taxes   If you are an alien who works for a foreign government or international organization and you file a waiver under section 247(b) of the Immigration and Nationality Act to keep your immigrant status, different rules may apply. How to file an amendment for taxes See Foreign Employer in Publication 525. How to file an amendment for taxes Employment abroad. How to file an amendment for taxes   For information on the tax treatment of income earned abroad, see Publication 54. How to file an amendment for taxes Military Payments you receive as a member of a military service generally are taxed as wages except for retirement pay, which is taxed as a pension. How to file an amendment for taxes Allowances generally are not taxed. How to file an amendment for taxes For more information on the tax treatment of military allowances and benefits, see Publication 3, Armed Forces' Tax Guide. How to file an amendment for taxes Differential wage payments. How to file an amendment for taxes   Any payments made to you by an employer during the time you are performing service in the uniformed services are treated as compensation. How to file an amendment for taxes These wages are subject to income tax withholding and are reported on a Form W-2. How to file an amendment for taxes See the discussion under Miscellaneous Compensation , earlier. How to file an amendment for taxes Military retirement pay. How to file an amendment for taxes   If your retirement pay is based on age or length of service, it is taxable and must be included in your income as a pension on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. How to file an amendment for taxes Do not include in your income the amount of any reduction in retirement or retainer pay to provide a survivor annuity for your spouse or children under the Retired Serviceman's Family Protection Plan or the Survivor Benefit Plan. How to file an amendment for taxes   For more detailed discussion of survivor annuities, see chapter 10. How to file an amendment for taxes Disability. How to file an amendment for taxes   If you are retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later. How to file an amendment for taxes Veterans' benefits. How to file an amendment for taxes   Do not include in your income any veterans' benefits paid under any law, regulation, or administrative practice administered by the Department of Veterans Affairs (VA). How to file an amendment for taxes The following amounts paid to veterans or their families are not taxable. How to file an amendment for taxes Education, training, and subsistence allowances. How to file an amendment for taxes Disability compensation and pension payments for disabilities paid either to veterans or their families. How to file an amendment for taxes Grants for homes designed for wheelchair living. How to file an amendment for taxes Grants for motor vehicles for veterans who lost their sight or the use of their limbs. How to file an amendment for taxes Veterans' insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran's endowment policy paid before death. How to file an amendment for taxes Interest on insurance dividends you leave on deposit with the VA. How to file an amendment for taxes Benefits under a dependent-care assistance program. How to file an amendment for taxes The death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001. How to file an amendment for taxes Payments made under the compensated work therapy program. How to file an amendment for taxes Any bonus payment by a state or political subdivision because of service in a combat zone. How to file an amendment for taxes Volunteers The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions. How to file an amendment for taxes Peace Corps. How to file an amendment for taxes   Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are exempt from tax. How to file an amendment for taxes Taxable allowances. How to file an amendment for taxes   The following allowances must be included in your income and reported as wages: Allowances paid to your spouse and minor children while you are a volunteer leader training in the United States. How to file an amendment for taxes Living allowances designated by the Director of the Peace Corps as basic compensation. How to file an amendment for taxes These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other miscellaneous expenses. How to file an amendment for taxes Leave allowances. How to file an amendment for taxes Readjustment allowances or termination payments. How to file an amendment for taxes These are considered received by you when credited to your account. How to file an amendment for taxes Example. How to file an amendment for taxes Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. How to file an amendment for taxes Although the allowance is not available to him until the end of his service, Gary must include it in his income on a monthly basis as it is credited to his account. How to file an amendment for taxes Volunteers in Service to America (VISTA). How to file an amendment for taxes   If you are a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages. How to file an amendment for taxes National Senior Services Corps programs. How to file an amendment for taxes   Do not include in your income amounts you receive for supportive services or reimbursements for out-of-pocket expenses from the following programs. How to file an amendment for taxes Retired Senior Volunteer Program (RSVP). How to file an amendment for taxes Foster Grandparent Program. How to file an amendment for taxes Senior Companion Program. How to file an amendment for taxes Service Corps of Retired Executives (SCORE). How to file an amendment for taxes   If you receive amounts for supportive services or reimbursements for out-of-pocket expenses from SCORE, do not include these amounts in income. How to file an amendment for taxes Volunteer tax counseling. How to file an amendment for taxes   Do not include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE). How to file an amendment for taxes   You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assistance (VITA) program. How to file an amendment for taxes See chapter 24. How to file an amendment for taxes Sickness and Injury Benefits This section discusses sickness and injury benefits including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. How to file an amendment for taxes In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. How to file an amendment for taxes If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. How to file an amendment for taxes However, certain payments may not be taxable to you. How to file an amendment for taxes Your employer should be able to give you specific details about your pension plan and tell you the amount you paid for your disability pension. How to file an amendment for taxes In addition to disability pensions and annuities, you may be receiving other payments for sickness and injury. How to file an amendment for taxes Do not report as income any amounts paid to reimburse you for medical expenses you incurred after the plan was established. How to file an amendment for taxes Cost paid by you. How to file an amendment for taxes   If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive from the plan for personal injury or sickness as income on your tax return. How to file an amendment for taxes If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. How to file an amendment for taxes See Reimbursement in a later year in chapter 21. How to file an amendment for taxes Cafeteria plans. How to file an amendment for taxes   In most cases, if you are covered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums was not included in your income, you are not considered to have paid the premiums and you must include any benefits you receive in your income. How to file an amendment for taxes If the amount of the premiums was included in your income, you are considered to have paid the premiums, and any benefits you receive are not taxable. How to file an amendment for taxes Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. How to file an amendment for taxes You must report your taxable disability payments as wages on line 7 of Form 1040 or Form 1040A, until you reach minimum retirement age. How to file an amendment for taxes Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. How to file an amendment for taxes You may be entitled to a tax credit if you were permanently and totally disabled when you retired. How to file an amendment for taxes For information on this credit and the definition of permanent and total disability, see chapter 33. How to file an amendment for taxes Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. How to file an amendment for taxes Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A. How to file an amendment for taxes The rules for reporting pensions are explained in How To Report in chapter 10. How to file an amendment for taxes For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see chapter 12. How to file an amendment for taxes Retirement and profit-sharing plans. How to file an amendment for taxes   If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat the payments as a disability pension. How to file an amendment for taxes The payments must be reported as a pension or annuity. How to file an amendment for taxes For more information on pensions, see chapter 10. How to file an amendment for taxes Accrued leave payment. How to file an amendment for taxes   If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. How to file an amendment for taxes The payment is not a disability payment. How to file an amendment for taxes Include it in your income in the tax year you receive it. How to file an amendment for taxes Military and Government Disability Pensions Certain military and government disability pensions are not taxable. How to file an amendment for taxes Service-connected disability. How to file an amendment for taxes   You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services. How to file an amendment for taxes The armed forces of any country. How to file an amendment for taxes The National Oceanic and Atmospheric Administration. How to file an amendment for taxes The Public Health Service. How to file an amendment for taxes The Foreign Service. How to file an amendment for taxes Conditions for exclusion. How to file an amendment for taxes   Do not include the disability payments in your income if any of the following conditions apply. How to file an amendment for taxes You were entitled to receive a disability payment before September 25, 1975. How to file an amendment for taxes You were a member of a listed government service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975. How to file an amendment for taxes You receive the disability payments for a combat-related injury. How to file an amendment for taxes This is a personal injury or sickness that Results directly from armed conflict, Takes place while you are engaged in extra-hazardous service, Takes place under conditions simulating war, including training exercises such as maneuvers, or Is caused by an instrumentality of war. How to file an amendment for taxes You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. How to file an amendment for taxes Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA. How to file an amendment for taxes Pension based on years of service. How to file an amendment for taxes   If you receive a disability pension based on years of service, in most cases you must include it in your income. How to file an amendment for taxes However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), do not include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. How to file an amendment for taxes You must include the rest of your pension in your income. How to file an amendment for taxes Retroactive VA determination. How to file an amendment for taxes   If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. How to file an amendment for taxes You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. How to file an amendment for taxes You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. How to file an amendment for taxes The letter must show the amount withheld and the effective date of the benefit. How to file an amendment for taxes   If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. How to file an amendment for taxes However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA. How to file an amendment for taxes Special statute of limitations. How to file an amendment for taxes   In most cases, under the statute of limitations a claim for credit or refund must be filed within 3 years from the time a return was filed. How to file an amendment for taxes However, if you receive a retroactive service-connected disability rating determination, the statute of limitations is extended by a 1-year period beginning on the date of the determination. How to file an amendment for taxes This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and does not apply to any tax year that began more than 5 years before the date of the determination. How to file an amendment for taxes Example. How to file an amendment for taxes You retired in 2007 and receive a pension based on your years of service. How to file an amendment for taxes On August 1, 2013, you receive a determination of service-connected disability retroactive to 2007. How to file an amendment for taxes Generally, you could claim a refund for the taxes paid on your pension for 2010, 2011, and 2012. How to file an amendment for taxes However, under the special limitation period, you can also file a claim for 2009 as long as you file the claim by August 1, 2014. How to file an amendment for taxes You cannot file a claim for 2007 and 2008 because those tax years began more than 5 years before the determination. How to file an amendment for taxes Terrorist attack or military action. How to file an amendment for taxes   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. How to file an amendment for taxes Long-Term Care Insurance Contracts Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. How to file an amendment for taxes Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from income as amounts received for personal injury or sickness. How to file an amendment for taxes To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return. How to file an amendment for taxes A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. How to file an amendment for taxes The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract may be used only to reduce future premiums or increase future benefits, and In most cases, not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to expenses. How to file an amendment for taxes Qualified long-term care services. How to file an amendment for taxes   Qualified long-term care services are: Necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance and personal care services, and Required by a chronically ill individual and provided pursuant to a plan of care as prescribed by a licensed health care practitioner. How to file an amendment for taxes Chronically ill individual. How to file an amendment for taxes   A chronically ill individual is one who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: An individual who, for at least 90 days, is unable to perform at least two activities of daily living without substantial assistance due to loss of functional capacity. How to file an amendment for taxes Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. How to file an amendment for taxes An individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. How to file an amendment for taxes Limit on exclusion. How to file an amendment for taxes   You generally can exclude from gross income up to $320 a day for 2013. How to file an amendment for taxes See Limit on exclusion, under Long-Term Care Insurance Contracts, under Sickness and Injury Benefits in Publication 525 for more information. How to file an amendment for taxes Workers' Compensation Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act. How to file an amendment for taxes The exemption also applies to your survivors. How to file an amendment for taxes The exemption, however, does not apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. How to file an amendment for taxes If part of your workers' compensation reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. How to file an amendment for taxes For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. How to file an amendment for taxes Return to work. How to file an amendment for taxes    If you return to work after qualifying for workers' compensation, salary payments you receive for performing light duties are taxable as wages. How to file an amendment for taxes Other Sickness and Injury Benefits In addition to disability pensions and annuities, you may receive other payments for sickness or injury. How to file an amendment for taxes Railroad sick pay. How to file an amendment for taxes    Payments you receive as sick pay under the Railroad Unemployment Insurance Act are taxable and you must include them in your income. How to file an amendment for taxes However, do not include them in your income if they are for an on-the-job injury. How to file an amendment for taxes   If you received income because of a disability, see Disability Pensions , earlier. How to file an amendment for taxes Federal Employees' Compensation Act (FECA). How to file an amendment for taxes   Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, are not taxable. How to file an amendment for taxes However, you are taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. How to file an amendment for taxes Report this income on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040-EZ. How to file an amendment for taxes Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages. How to file an amendment for taxes    If part of the payments you receive under FECA reduces your social security or equivalent railroad retirement benefits received, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. How to file an amendment for taxes For a discussion of the taxability of these benefits, see Social security and equivalent railroad retirement benefits under Other Income, in Publication 525. How to file an amendment for taxes    You can deduct the amount you spend to buy back sick leave for an earlier year to be eligible for nontaxable FECA benefits for that period. How to file an amendment for taxes It is a miscellaneous deduction subject to the 2%-of-AGI limit on Schedule A (Form 1040). How to file an amendment for taxes If you buy back sick leave in the same year you used it, the amount reduces your taxable sick leave pay. How to file an amendment for taxes Do not deduct it separately. How to file an amendment for taxes Other compensation. How to file an amendment for taxes   Many other amounts you receive as compensation for sickness or injury are not taxable. How to file an amendment for taxes These include the following amounts. How to file an amendment for taxes Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments. How to file an amendment for taxes Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income. How to file an amendment for taxes Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance policy. How to file an amendment for taxes Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement. How to file an amendment for taxes This compensation must be based only on the injury and not on the period of your absence from work. How to file an amendment for taxes These benefits are not taxable even if your employer pays for the accident and health plan that provides these benefits. How to file an amendment for taxes Reimbursement for medical care. How to file an amendment for taxes    A reimbursement for medical care is generally not taxable. How to file an amendment for taxes However, it may reduce your medical expense deduction. How to file an amendment for taxes For more information, see chapter 21. How to file an amendment for taxes Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

IRS Criminal Investigation Combats Identity Theft Refund Fraud

IRS YouTube Videos
ID Theft: IRS Efforts on Identity Theft

FS-2014-3, January 2014

The Internal Revenue Service (IRS) has seen a significant increase in refund fraud that involves identity thieves who file false claims for refunds by stealing and using someone's Social Security number. The investigative work done by Criminal Investigation (CI) is a major component of the IRS’s efforts to combat tax-related identity theft. 

Statistical Data 

In Fiscal Year (FY) 2013, the IRS initiated approximately 1,492 identity theft related criminal investigations, an increase of 66 percent over investigations initiated in FY 2012. Direct investigative time applied to identity theft related investigations has increased 216 percent over the last two years. Prosecution recommendations, indictments, and those convicted and sentenced for identity theft violations have increased dramatically since FY 2011. Sentences handed down for convictions relating to identity theft have been significant, ranging from two months to 317 months.  
 

 

FY2013

FY 2012

  FY 2011

 Investigations Initiated

1492

898

276

 Prosecution Recommendations

1257

544

218

 Indictments/Informations

1050

494

165

 Sentenced

438

223

80


Enforcement Efforts 

Criminal Investigation is committed to investigating and prosecuting identity thieves who attempt to defraud the federal government by filing fraudulent refund claims using another person’s identifying information.

The IRS continues to seek out and identify additional tools and methods to combat the proliferation of tax-related identity theft.  FY 2013 efforts include: 

Identity Theft Enforcement Sweeps - In January 2013, Criminal Investigation conducted a coordinated identity theft enforcement sweep in collaboration with DOJ-Tax and United States Attorney’s Offices throughout the country.  This nationwide effort resulted in 734 enforcement actions related to identity theft and refund fraud and involved 389 individuals, 109 arrests, 48 search warrants, and 189 indictments, information and criminal complaints.

Law Enforcement Assistance Program - In March 2013, IRS announced to the public that the Law Enforcement Assistance Program, formerly known as the Identity Theft Pilot Disclosure Program, was expanded nationwide.  This program provides for the disclosure of federal tax return information associated with the accounts of known and suspected identity victims of identity theft with the express written consent of those victims.  There are currently more than 300 state/local law enforcement agencies from 35 states participating.  For FY 2013, more than 2,400 requests had been received from state and local law enforcement agencies.

Identify Theft Clearinghouse (ITC) - The Identity Theft Clearinghouse (ITC) continues to develop and refer identity theft refund fraud schemes to CI Field Offices for investigation.  For FY 2013 the ITC had received more than 1,400 identity theft related leads. 

Data Processing Center(DPC) Identity Theft Victims List Process - This process centralizes identity theft victims’ lists and information forwarded to IRS-CI by other federal, state and local agencies during nationwide investigative efforts.  The information is analyzed and necessary adjustments are made to accounts of taxpayers that are likely targets of ID theft.  The DPC processed over 71.7 percent more identity records in FY 2013 than it did in FY 2012.

Multi-Agency Task Forces and Working Groups - CI is the lead agency or actively involved in more than 30 multi-regional task forces or working groups including state/local and federal law enforcement agencies solely focusing on identity theft.      

The following are highlights from significant identity-theft cases. All details are based on court documents.

Self-Proclaimed “First Lady” of Tax Fraud Sentenced

On July 16, 2013, in Tampa, Fla., Rashia Wilson, was sentenced to 234 months in prison on wire fraud and aggravated identity theft charges stemming from her scheme to defraud the IRS, and to a consecutive 18 months in prison for being a felon in possession of a firearm.  Wilson was also ordered to forfeit $2,240,096, which constituted the proceeds traceable to the offense.  According to court documents, from at least April 2009 through their arrests in September 2012, Wilson and her co-conspirator, Maurice J. Larry, engaged in a scheme to defraud the IRS by negotiating fraudulently obtained tax refunds. They did so by receiving U.S. Treasury checks and pre-paid debit cards that were loaded with proceeds derived from filing false and fraudulent federal income tax returns in other persons' names, without those persons’ permission or knowledge.  Wilson and Larry filed these false and fraudulent federal income tax returns from multiple locations, including Wilson's residence and hotels in the Tampa area.  Wilson, Larry, and others then used these fraudulently obtained tax refunds to make hundreds of thousands of dollars’ worth of retail purchases, to purchase money orders, and to withdraw cash. Larry was sentenced to 174 months in prison and ordered to forfeit $2,240,096.

Woman Sentenced for Running Stolen Identity Tax Fraud Scheme
On July 30, 2013, in St. Louis, Mo., Tania Henderson was sentenced to 144 months in prison and ordered to pay $835,883 in restitution to the IRS. Henderson pleaded guilty on April 29, 2013, to theft of government funds and aggravated identity theft. According to her plea agreement and other court documents, Henderson stole the identities of more than 400 individuals, many of whom were deceased, and filed fraudulent tax returns using their names and Social Security account numbers. Between August and November 2012, Henderson filed 236 fraudulent tax returns. Using a network of family and friends, she would collect refund checks or prepaid debit cards for the refund amounts and liquidate the proceeds of her scheme.  

Leaders of Multi-Million Dollar Fraud Ring Sentenced
On May 8, 2012, in Montgomery, Ala., Veronica Dale and Alchico Grant, who jointly ran a stolen identity refund fraud ring that attempted to defraud the United States of millions of dollars over several years, were sentenced to prison. Veronica Dale was sentenced to 334 months in prison and Alchico Grant was sentenced to 310 months in prison.  Dale and Grant were both ordered to pay more than $2.8 million in restitution to the IRS. In September 2011, Grant pleaded guilty to five charges from two separate indictments, including conspiracy, wire fraud and aggravated identity theft. In October 2011, Dale pleaded guilty to seven charges from two indictments, including conspiracy, filing false claims, wire fraud and aggravated identity theft.  According to court documents, beginning in 2009 and continuing through 2010, the defendants were part of a scheme that involved fraudulently obtaining tax refunds by filing false tax returns using stolen identities. Dale admitted that she filed more than 500 fraudulent returns that sought at least $3,741,908 in tax refunds.  These returns were filed using the names of Medicaid beneficiaries, whose personal information Dale obtained while working for a company that serviced Medicaid programs.  Dale directed the refunds to different bank accounts that she and other co-conspirators controlled.

The latest information on Identity Theft enforcement efforts and individual cases are available on IRS.gov.

Page Last Reviewed or Updated: 07-Jan-2014

The How To File An Amendment For Taxes

How to file an amendment for taxes 3. How to file an amendment for taxes   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. How to file an amendment for taxes Form 4797. How to file an amendment for taxes Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. How to file an amendment for taxes Granting the right to remove deposits. How to file an amendment for taxes Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. How to file an amendment for taxes You must report the income from all the different sources on your tax return, unless it is excluded by law. How to file an amendment for taxes Where you report the income on your tax return depends on its source. How to file an amendment for taxes This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. How to file an amendment for taxes For information on where to report other income, see the Instructions for Form 1040, U. How to file an amendment for taxes S. How to file an amendment for taxes Individual Income Tax Return. How to file an amendment for taxes Accounting method. How to file an amendment for taxes   The rules discussed in this chapter assume you use the cash method of accounting. How to file an amendment for taxes Under the cash method, you generally include an item of income in gross income in the year you receive it. How to file an amendment for taxes See Cash Method in chapter 2. How to file an amendment for taxes   If you use an accrual method of accounting, different rules may apply to your situation. How to file an amendment for taxes See Accrual Method in chapter 2. How to file an amendment for taxes Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. How to file an amendment for taxes Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. How to file an amendment for taxes Use this schedule to figure the net profit or loss from regular farming operations. How to file an amendment for taxes Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. How to file an amendment for taxes This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. How to file an amendment for taxes It also includes income from the sale of crop shares if you materially participate in producing the crop. How to file an amendment for taxes See Rents (Including Crop Shares) , later. How to file an amendment for taxes Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. How to file an amendment for taxes Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. How to file an amendment for taxes Land. How to file an amendment for taxes Depreciable farm equipment. How to file an amendment for taxes Buildings and structures. How to file an amendment for taxes Livestock held for draft, breeding, sport, or dairy purposes. How to file an amendment for taxes Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. How to file an amendment for taxes Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. How to file an amendment for taxes Sales of Farm Products Where to report. How to file an amendment for taxes    Table 3-1 shows where to report the sale of farm products on your tax return. How to file an amendment for taxes Schedule F. How to file an amendment for taxes   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. How to file an amendment for taxes This includes money and the fair market value of any property or services you receive. How to file an amendment for taxes When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). How to file an amendment for taxes See chapter 6 for information on the basis of assets. How to file an amendment for taxes You generally report these amounts on Schedule F for the year you receive payment. How to file an amendment for taxes Example. How to file an amendment for taxes In 2012, you bought 20 feeder calves for $11,000 for resale. How to file an amendment for taxes You sold them in 2013 for $21,000. How to file an amendment for taxes You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. How to file an amendment for taxes Form 4797. How to file an amendment for taxes   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. How to file an amendment for taxes In either case, you should always report these sales on Form 4797 instead of Schedule F. How to file an amendment for taxes See Livestock under Ordinary or Capital Gain or Loss in chapter 8. How to file an amendment for taxes Animals you do not hold primarily for sale are considered business assets of your farm. How to file an amendment for taxes Table 3-1. How to file an amendment for taxes Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. How to file an amendment for taxes   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. How to file an amendment for taxes This applies even if your agent pays you in a later year. How to file an amendment for taxes For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. How to file an amendment for taxes Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. How to file an amendment for taxes You must meet all the following conditions to qualify. How to file an amendment for taxes Your principal trade or business is farming. How to file an amendment for taxes You use the cash method of accounting. How to file an amendment for taxes You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. How to file an amendment for taxes The weather-related condition caused an area to be designated as eligible for assistance by the federal government. How to file an amendment for taxes Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. How to file an amendment for taxes The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. How to file an amendment for taxes A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. How to file an amendment for taxes See Other Involuntary Conversions in chapter 11. How to file an amendment for taxes Usual business practice. How to file an amendment for taxes   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. How to file an amendment for taxes Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. How to file an amendment for taxes If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. How to file an amendment for taxes Connection with affected area. How to file an amendment for taxes   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. How to file an amendment for taxes However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. How to file an amendment for taxes This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. How to file an amendment for taxes Classes of livestock. How to file an amendment for taxes   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. How to file an amendment for taxes Do not separate animals into classes based on age, sex, or breed. How to file an amendment for taxes Amount to be postponed. How to file an amendment for taxes   Follow these steps to figure the amount of gain to be postponed for each class of animals. How to file an amendment for taxes Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. How to file an amendment for taxes For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. How to file an amendment for taxes Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. How to file an amendment for taxes Example. How to file an amendment for taxes You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. How to file an amendment for taxes As a result of drought, you sold 135 head during 2012. How to file an amendment for taxes You realized $70,200 from the sale. How to file an amendment for taxes On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. How to file an amendment for taxes The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. How to file an amendment for taxes How to postpone gain. How to file an amendment for taxes   To postpone gain, attach a statement to your tax return for the year of the sale. How to file an amendment for taxes The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. How to file an amendment for taxes A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). How to file an amendment for taxes Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. How to file an amendment for taxes A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. How to file an amendment for taxes The number of animals sold in each of the 3 preceding years. How to file an amendment for taxes The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. How to file an amendment for taxes The total number of animals sold and the number sold because of weather-related conditions during the tax year. How to file an amendment for taxes A computation, as described above, of the income to be postponed for each class of livestock. How to file an amendment for taxes   Generally, you must file the statement and the return by the due date of the return, including extensions. How to file an amendment for taxes However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. How to file an amendment for taxes For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). How to file an amendment for taxes Attach the statement to the amended return and write “Filed pursuant to section 301. How to file an amendment for taxes 9100-2” at the top of the amended return. How to file an amendment for taxes File the amended return at the same address you filed the original return. How to file an amendment for taxes Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. How to file an amendment for taxes Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. How to file an amendment for taxes However, if you materially participate in farming operations on the land, the rent is farm income. How to file an amendment for taxes See Landlord Participation in Farming in chapter 12. How to file an amendment for taxes Pasture income and rental. How to file an amendment for taxes   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. How to file an amendment for taxes You must enter it as Other income on Schedule F. How to file an amendment for taxes If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. How to file an amendment for taxes Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. How to file an amendment for taxes It does not matter whether you use the cash method of accounting or an accrual method of accounting. How to file an amendment for taxes If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. How to file an amendment for taxes See Landlord Participation in Farming in chapter 12. How to file an amendment for taxes Report the rental income on Schedule F. How to file an amendment for taxes If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). How to file an amendment for taxes The income is not included in self-employment income. How to file an amendment for taxes Crop shares you use to feed livestock. How to file an amendment for taxes   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. How to file an amendment for taxes You must include the fair market value of the crop shares in income at that time. How to file an amendment for taxes You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. How to file an amendment for taxes Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. How to file an amendment for taxes See  chapter 12. How to file an amendment for taxes Crop shares you give to others (gift). How to file an amendment for taxes   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. How to file an amendment for taxes You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. How to file an amendment for taxes Example. How to file an amendment for taxes A tenant farmed part of your land under a crop-share arrangement. How to file an amendment for taxes The tenant harvested and delivered the crop in your name to an elevator company. How to file an amendment for taxes Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. How to file an amendment for taxes They sell their crop shares in the following year and the elevator company makes payments directly to your children. How to file an amendment for taxes In this situation, you are considered to have received rental income and then made a gift of that income. How to file an amendment for taxes You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. How to file an amendment for taxes Crop share loss. How to file an amendment for taxes   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. How to file an amendment for taxes See Publication 925 for information on these rules. How to file an amendment for taxes Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. How to file an amendment for taxes However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. How to file an amendment for taxes See Cost-Sharing Exclusion (Improvements) , later. How to file an amendment for taxes Report the agricultural program payment on the appropriate line of Schedule F, Part I. How to file an amendment for taxes Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. How to file an amendment for taxes However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. How to file an amendment for taxes Claim the deduction on Schedule F for the year of repayment or reduction. How to file an amendment for taxes Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. How to file an amendment for taxes However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. How to file an amendment for taxes You do not need approval from the IRS to adopt this method of reporting CCC loans. How to file an amendment for taxes Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. How to file an amendment for taxes However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. How to file an amendment for taxes For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. How to file an amendment for taxes Revenue Procedure 2008-52, 2008-36 I. How to file an amendment for taxes R. How to file an amendment for taxes B. How to file an amendment for taxes 587, is available at  www. How to file an amendment for taxes irs. How to file an amendment for taxes gov/irb/2008-36_IRB/ar09. How to file an amendment for taxes html. How to file an amendment for taxes You can request income tax withholding from CCC loan payments you receive. How to file an amendment for taxes Use Form W-4V, Voluntary Withholding Request. How to file an amendment for taxes See chapter 16 for information about ordering the form. How to file an amendment for taxes To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. How to file an amendment for taxes Attach a statement to your return showing the details of the loan. How to file an amendment for taxes You must file the statement and the return by the due date of the return, including extensions. How to file an amendment for taxes If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). How to file an amendment for taxes Attach the statement to the amended return and write “Filed pursuant to section 301. How to file an amendment for taxes 9100-2” at the top of the return. How to file an amendment for taxes File the amended return at the same address you filed the original return. How to file an amendment for taxes When you make this election, the amount you report as income becomes your basis in the commodity. How to file an amendment for taxes See chapter 6 for information on the basis of assets. How to file an amendment for taxes If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. How to file an amendment for taxes If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. How to file an amendment for taxes If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. How to file an amendment for taxes If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. How to file an amendment for taxes Form 1099-A. How to file an amendment for taxes   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. How to file an amendment for taxes “CCC” should be shown in box 6. How to file an amendment for taxes The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. How to file an amendment for taxes Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. How to file an amendment for taxes If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. How to file an amendment for taxes Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. How to file an amendment for taxes Market gain should be reported as follows. How to file an amendment for taxes If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. How to file an amendment for taxes However, adjust the basis of the commodity for the amount of the market gain. How to file an amendment for taxes If you did not include the CCC loan in income in the year received, include the market gain in your income. How to file an amendment for taxes The following examples show how to report market gain. How to file an amendment for taxes Example 1. How to file an amendment for taxes Mike Green is a cotton farmer. How to file an amendment for taxes He uses the cash method of accounting and files his tax return on a calendar year basis. How to file an amendment for taxes He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. How to file an amendment for taxes In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. How to file an amendment for taxes 00 per pound). How to file an amendment for taxes In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. How to file an amendment for taxes 50 per pound (lower than the loan amount). How to file an amendment for taxes Later in 2013, he sold the cotton for $2,500. How to file an amendment for taxes The market gain on the redemption was $. How to file an amendment for taxes 50 ($2. How to file an amendment for taxes 00 – $1. How to file an amendment for taxes 50) per pound. How to file an amendment for taxes Mike realized total market gain of $500 ($. How to file an amendment for taxes 50 x 1,000 pounds). How to file an amendment for taxes How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. How to file an amendment for taxes Included CCC loan. How to file an amendment for taxes   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. How to file an amendment for taxes The $500 market gain is not recognized on the redemption. How to file an amendment for taxes He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. How to file an amendment for taxes   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. How to file an amendment for taxes His gain from the sale is $1,000 ($2,500 – $1,500). How to file an amendment for taxes He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. How to file an amendment for taxes Excluded CCC loan. How to file an amendment for taxes   Mike has income of $500 from market gain in 2013. How to file an amendment for taxes He reports it on Schedule F, lines 4a and 4b. How to file an amendment for taxes His basis in the cotton is zero, so his gain from its sale is $2,500. How to file an amendment for taxes He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. How to file an amendment for taxes Example 2. How to file an amendment for taxes The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. How to file an amendment for taxes Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. How to file an amendment for taxes In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. How to file an amendment for taxes How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. How to file an amendment for taxes Included CCC loan. How to file an amendment for taxes   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. How to file an amendment for taxes The $500 market gain is not recognized on the redemption. How to file an amendment for taxes Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. How to file an amendment for taxes   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. How to file an amendment for taxes Mike has no gain or loss on its sale to the cotton buyer for that amount. How to file an amendment for taxes Excluded CCC loan. How to file an amendment for taxes   As in Example 1, Mike has income of $500 from market gain in 2013. How to file an amendment for taxes He reports it on Schedule F, lines 4a and 4b. How to file an amendment for taxes His basis in the cotton is zero, so his gain from its sale is $1,500. How to file an amendment for taxes He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. How to file an amendment for taxes Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. How to file an amendment for taxes You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. How to file an amendment for taxes Cost-share payments you receive may qualify for the cost-sharing exclusion. How to file an amendment for taxes See Cost-Sharing Exclusion (Improvements) , later. How to file an amendment for taxes CRP payments are reported to you on Form 1099-G. How to file an amendment for taxes Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. How to file an amendment for taxes See the instructions for Schedule SE (Form 1040). How to file an amendment for taxes Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. How to file an amendment for taxes You generally include them in the year you receive them. How to file an amendment for taxes Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. How to file an amendment for taxes You can request income tax withholding from crop disaster payments you receive from the federal government. How to file an amendment for taxes Use Form W-4V, Voluntary Withholding Request. How to file an amendment for taxes See chapter 16 for information about ordering the form. How to file an amendment for taxes Election to postpone reporting until the following year. How to file an amendment for taxes   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. How to file an amendment for taxes You use the cash method of accounting. How to file an amendment for taxes You receive the crop insurance proceeds in the same tax year the crops are damaged. How to file an amendment for taxes You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. How to file an amendment for taxes   Deferral is not permitted for proceeds received from revenue insurance policies. How to file an amendment for taxes   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. How to file an amendment for taxes Check the box on line 8c and attach a statement to your tax return. How to file an amendment for taxes The statement must include your name and address and contain the following information. How to file an amendment for taxes A statement that you are making an election under IRC section 451(d) and Regulations section 1. How to file an amendment for taxes 451-6. How to file an amendment for taxes The specific crop or crops physically destroyed or damaged. How to file an amendment for taxes A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. How to file an amendment for taxes The cause of the physical destruction or damage and the date or dates it occurred. How to file an amendment for taxes The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. How to file an amendment for taxes The name of each insurance carrier from whom you received payments. How to file an amendment for taxes   One election covers all crops representing a single trade or business. How to file an amendment for taxes If you have more than one farming business, make a separate election for each one. How to file an amendment for taxes For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. How to file an amendment for taxes   An election is binding for the year unless the IRS approves your request to change it. How to file an amendment for taxes To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. How to file an amendment for taxes Ogden Submission Processing Center P. How to file an amendment for taxes O. How to file an amendment for taxes Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. How to file an amendment for taxes These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. How to file an amendment for taxes They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. How to file an amendment for taxes Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. How to file an amendment for taxes You must include these benefits in income in the year you receive them. How to file an amendment for taxes You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. How to file an amendment for taxes Report the benefits on Schedule F, Part I, as agricultural program payments. How to file an amendment for taxes You can usually take a current deduction for the same amount as a feed expense. How to file an amendment for taxes Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. How to file an amendment for taxes A payment is any economic benefit you get as a result of an improvement. How to file an amendment for taxes However, this exclusion applies only to that part of a payment that meets all three of the following tests. How to file an amendment for taxes It was for a capital expense. How to file an amendment for taxes You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. How to file an amendment for taxes You must include the payment for a deductible expense in income, and you can take any offsetting deduction. How to file an amendment for taxes See chapter 5 for information on deducting soil and water conservation expenses. How to file an amendment for taxes It does not substantially increase your annual income from the property for which it is made. How to file an amendment for taxes An increase in annual income is substantial if it is more than the greater of the following amounts. How to file an amendment for taxes 10% of the average annual income derived from the affected property before receiving the improvement. How to file an amendment for taxes $2. How to file an amendment for taxes 50 times the number of affected acres. How to file an amendment for taxes The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. How to file an amendment for taxes Qualifying programs. How to file an amendment for taxes   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. How to file an amendment for taxes The rural clean water program authorized by the Federal Water Pollution Control Act. How to file an amendment for taxes The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. How to file an amendment for taxes The water bank program authorized by the Water Bank Act. How to file an amendment for taxes The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. How to file an amendment for taxes The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. How to file an amendment for taxes The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. How to file an amendment for taxes The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. How to file an amendment for taxes Certain small watershed programs, listed later. How to file an amendment for taxes Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. How to file an amendment for taxes Several state programs have been approved. How to file an amendment for taxes For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). How to file an amendment for taxes Small watershed programs. How to file an amendment for taxes   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. How to file an amendment for taxes The programs under the Watershed Protection and Flood Prevention Act. How to file an amendment for taxes The flood prevention projects under the Flood Control Act of 1944. How to file an amendment for taxes The Emergency Watershed Protection Program under the Flood Control Act of 1950. How to file an amendment for taxes Certain programs under the Colorado River Basin Salinity Control Act. How to file an amendment for taxes The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. How to file an amendment for taxes The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. How to file an amendment for taxes The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. How to file an amendment for taxes The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. How to file an amendment for taxes The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. How to file an amendment for taxes The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. How to file an amendment for taxes The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. How to file an amendment for taxes The Conservation Security Program authorized by the Food Security Act of 1985. How to file an amendment for taxes The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. How to file an amendment for taxes Income realized. How to file an amendment for taxes   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). How to file an amendment for taxes Value of the improvement. How to file an amendment for taxes   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. How to file an amendment for taxes The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. How to file an amendment for taxes Any government payments under a program not listed earlier. How to file an amendment for taxes Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. How to file an amendment for taxes Any government payment to you for rent or for your services. How to file an amendment for taxes The denominator of the fraction is the total cost of the improvement. How to file an amendment for taxes Excludable portion. How to file an amendment for taxes   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. How to file an amendment for taxes 10% of the prior average annual income from the affected acreage. How to file an amendment for taxes The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. How to file an amendment for taxes $2. How to file an amendment for taxes 50 times the number of affected acres. How to file an amendment for taxes The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. How to file an amendment for taxes You may need to consult your tax advisor for assistance. How to file an amendment for taxes Example. How to file an amendment for taxes One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. How to file an amendment for taxes The total cost of the improvement was $500,000. How to file an amendment for taxes The USDA paid $490,000. How to file an amendment for taxes You paid $10,000. How to file an amendment for taxes The value of the cost-sharing improvement is $15,000. How to file an amendment for taxes The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. How to file an amendment for taxes The excludable portion is the greater amount, $1,550. How to file an amendment for taxes You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. How to file an amendment for taxes   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. How to file an amendment for taxes Any payment excluded from income is not part of your basis. How to file an amendment for taxes In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. How to file an amendment for taxes   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. How to file an amendment for taxes How to report the exclusion. How to file an amendment for taxes   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. How to file an amendment for taxes The statement must include the following information. How to file an amendment for taxes The dollar amount of the cost funded by the government payment. How to file an amendment for taxes The value of the improvement. How to file an amendment for taxes The amount you are excluding. How to file an amendment for taxes   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. How to file an amendment for taxes Recapture. How to file an amendment for taxes   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. How to file an amendment for taxes In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. How to file an amendment for taxes You must report the recapture on Form 4797. How to file an amendment for taxes See Section 1255 property under Other Gains in chapter 9. How to file an amendment for taxes Electing not to exclude payments. How to file an amendment for taxes   You can elect not to exclude all or part of any payments you receive under these programs. How to file an amendment for taxes If you make this election for all of these payments, none of the above restrictions and rules apply. How to file an amendment for taxes You must make this election by the due date, including extensions, for filing your return. How to file an amendment for taxes In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. How to file an amendment for taxes If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). How to file an amendment for taxes Write “Filed pursuant to section 301. How to file an amendment for taxes 9100-2” at the top of the amended return and file it at the same address you filed the original return. How to file an amendment for taxes Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. How to file an amendment for taxes You must include these payments on Schedule F, lines 4a and 4b. How to file an amendment for taxes The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. How to file an amendment for taxes You must include these payments on Schedule F, lines 6a and 6b. How to file an amendment for taxes The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. How to file an amendment for taxes Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. How to file an amendment for taxes As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. How to file an amendment for taxes If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. How to file an amendment for taxes If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. How to file an amendment for taxes Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. How to file an amendment for taxes Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. How to file an amendment for taxes The gain or loss is capital or ordinary depending on how you used the quota. How to file an amendment for taxes See Capital or ordinary gain or loss , later. How to file an amendment for taxes Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. How to file an amendment for taxes Adjusted basis. How to file an amendment for taxes   The adjusted basis of your quota is determined differently depending on how you obtained the quota. How to file an amendment for taxes The basis of a quota derived from an original grant by the federal government is zero. How to file an amendment for taxes The basis of a purchased quota is the purchase price. How to file an amendment for taxes The basis of a quota received as a gift is generally the same as the donor's basis. How to file an amendment for taxes However, under certain circumstances, the basis is increased by the amount of gift taxes paid. How to file an amendment for taxes If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. How to file an amendment for taxes The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. How to file an amendment for taxes Reduction of basis. How to file an amendment for taxes   You are required to reduce the basis of your tobacco quota by the following amounts. How to file an amendment for taxes Deductions you took for amortization, depletion, or depreciation. How to file an amendment for taxes Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. How to file an amendment for taxes The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). How to file an amendment for taxes Amount treated as interest. How to file an amendment for taxes   You must reduce your tobacco quota buyout program payment by the amount treated as interest. How to file an amendment for taxes The interest is reportable as ordinary income. How to file an amendment for taxes If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. How to file an amendment for taxes   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. How to file an amendment for taxes You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. How to file an amendment for taxes For more information, see Notice 2005-57, 2005-32 I. How to file an amendment for taxes R. How to file an amendment for taxes B. How to file an amendment for taxes 267, available at www. How to file an amendment for taxes irs. How to file an amendment for taxes gov/irb/2005-32_IRB/ar13. How to file an amendment for taxes html. How to file an amendment for taxes Installment method. How to file an amendment for taxes   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. How to file an amendment for taxes Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. How to file an amendment for taxes See chapter 10 for more information. How to file an amendment for taxes Capital or ordinary gain or loss. How to file an amendment for taxes   Whether your gain or loss is ordinary or capital depends on how you used the quota. How to file an amendment for taxes Quota used in the trade or business of farming. How to file an amendment for taxes   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. How to file an amendment for taxes See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. How to file an amendment for taxes Quota held for investment. How to file an amendment for taxes   If you held the quota for investment purposes, any gain or loss is capital gain or loss. How to file an amendment for taxes The same result also applies if you held the quota for the production of income, though not connected with a trade or business. How to file an amendment for taxes Gain treated as ordinary income. How to file an amendment for taxes   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. How to file an amendment for taxes Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. How to file an amendment for taxes The cost of acquiring a quota. How to file an amendment for taxes Amounts for amortization, depletion, or depreciation. How to file an amendment for taxes Amounts to reflect a reduction in the quota pounds. How to file an amendment for taxes   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. How to file an amendment for taxes Self-employment income. How to file an amendment for taxes   The tobacco quota buyout payments are not self-employment income. How to file an amendment for taxes Income averaging for farmers. How to file an amendment for taxes   The gain or loss resulting from the quota payments does not qualify for income averaging. How to file an amendment for taxes A tobacco quota is considered an interest in land. How to file an amendment for taxes Income averaging is not available for gain or loss arising from the sale or other disposition of land. How to file an amendment for taxes Involuntary conversion. How to file an amendment for taxes   The buyout of the tobacco quota is not an involuntary conversion. How to file an amendment for taxes Form 1099-S. How to file an amendment for taxes   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. How to file an amendment for taxes The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. How to file an amendment for taxes Like-kind exchange of quota. How to file an amendment for taxes   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. How to file an amendment for taxes See Notice 2005-57 for more information. How to file an amendment for taxes Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. How to file an amendment for taxes Taxation of payments to tobacco growers. How to file an amendment for taxes   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. How to file an amendment for taxes Individuals will generally report the payments as an Agricultural program payment on Schedule F. How to file an amendment for taxes If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. How to file an amendment for taxes Self-employment income. How to file an amendment for taxes   Payments to growers generally represent self-employment income. How to file an amendment for taxes If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. How to file an amendment for taxes Income averaging for farmers. How to file an amendment for taxes   Payments to growers who are individuals qualify for farm income averaging. How to file an amendment for taxes Form 1099-G. How to file an amendment for taxes   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. How to file an amendment for taxes Other Payments You must include most other government program payments in income. How to file an amendment for taxes Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. How to file an amendment for taxes How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. How to file an amendment for taxes Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. How to file an amendment for taxes You must also capitalize the full cost of the improvement. How to file an amendment for taxes Since you have included the payments in income, they do not reduce your basis. How to file an amendment for taxes However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. How to file an amendment for taxes National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. How to file an amendment for taxes You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. How to file an amendment for taxes If you produce a tobacco crop, report the payments as income from farming on your Schedule F. How to file an amendment for taxes If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. How to file an amendment for taxes Payment to More Than One Person The USDA reports program payments to the IRS. How to file an amendment for taxes It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). How to file an amendment for taxes If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. How to file an amendment for taxes You should file Form 1099-G to report the identity of the actual recipient to the IRS. How to file an amendment for taxes You should also give this information to the recipient. How to file an amendment for taxes You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. How to file an amendment for taxes Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. How to file an amendment for taxes However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. How to file an amendment for taxes See chapter 16 for information about ordering Form 1099-G. How to file an amendment for taxes Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). How to file an amendment for taxes If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. How to file an amendment for taxes Form 1099-PATR. How to file an amendment for taxes   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. How to file an amendment for taxes Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. How to file an amendment for taxes For information on the alternative minimum tax, see the Instructions for Form 6251. How to file an amendment for taxes Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. How to file an amendment for taxes They include the following items. How to file an amendment for taxes Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). How to file an amendment for taxes The stated dollar value of qualified written notices of allocation. How to file an amendment for taxes The fair market value of other property. How to file an amendment for taxes Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. How to file an amendment for taxes You must reduce the cost or other basis of these items by the amount of such patronage dividends received. How to file an amendment for taxes Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. How to file an amendment for taxes If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. How to file an amendment for taxes Qualified written notice of allocation. How to file an amendment for taxes   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. How to file an amendment for taxes A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. How to file an amendment for taxes The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. How to file an amendment for taxes You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. How to file an amendment for taxes Signing and giving a written agreement to the cooperative. How to file an amendment for taxes Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. How to file an amendment for taxes The cooperative must notify you in writing of this bylaw and give you a copy. How to file an amendment for taxes Endorsing and cashing a qualified check paid as part of the same patronage dividend. How to file an amendment for taxes You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. How to file an amendment for taxes Qualified check. How to file an amendment for taxes   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. How to file an amendment for taxes It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. How to file an amendment for taxes It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. How to file an amendment for taxes Loss on redemption. How to file an amendment for taxes   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. How to file an amendment for taxes The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. How to file an amendment for taxes Nonqualified notice of allocation. How to file an amendment for taxes   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. How to file an amendment for taxes Your basis in the notice is zero. How to file an amendment for taxes You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. How to file an amendment for taxes Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. How to file an amendment for taxes However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. How to file an amendment for taxes   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. How to file an amendment for taxes For example, if it represents interest income, report it on your return as interest. How to file an amendment for taxes Buying or selling capital assets or depreciable property. How to file an amendment for taxes   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. How to file an amendment for taxes You must, however, reduce the basis of these assets by the dividends. How to file an amendment for taxes This reduction is taken into account as of the first day of the tax year in which the dividends are received. How to file an amendment for taxes If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. How to file an amendment for taxes   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. How to file an amendment for taxes Example. How to file an amendment for taxes On July 1, 2012, Mr. How to file an amendment for taxes Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. How to file an amendment for taxes The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). How to file an amendment for taxes Mr. How to file an amendment for taxes Brown files his return on a calendar year basis. How to file an amendment for taxes For 2012, he claimed a depreciation deduction of $311, using the 10. How to file an amendment for taxes 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). How to file an amendment for taxes On July 2, 2013, the cooperative association paid Mr. How to file an amendment for taxes Brown a $300 cash patronage dividend for buying the machine. How to file an amendment for taxes Mr. How to file an amendment for taxes Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. How to file an amendment for taxes Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. How to file an amendment for taxes 38% × 1. How to file an amendment for taxes 5 = 23. How to file an amendment for taxes 07% Depreciation deduction for 2013 ($2,289 × 23. How to file an amendment for taxes 07%) $528 Exceptions. How to file an amendment for taxes   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. How to file an amendment for taxes If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. How to file an amendment for taxes If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). How to file an amendment for taxes   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. How to file an amendment for taxes Personal purchases. How to file an amendment for taxes   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). How to file an amendment for taxes This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. How to file an amendment for taxes Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. How to file an amendment for taxes A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. How to file an amendment for taxes These allocations can be paid in money, other property, or qualified certificates. How to file an amendment for taxes Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. How to file an amendment for taxes Qualified certificates. How to file an amendment for taxes   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. How to file an amendment for taxes The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. How to file an amendment for taxes If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. How to file an amendment for taxes Nonqualified certificates. How to file an amendment for taxes   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. How to file an amendment for taxes Your basis in the certificate is zero. How to file an amendment for taxes You must include in income any amount you receive from its sale, redemption, or other disposition. How to file an amendment for taxes Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. How to file an amendment for taxes Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. How to file an amendment for taxes For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. How to file an amendment for taxes General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. How to file an amendment for taxes Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. How to file an amendment for taxes It is excluded from taxable income (see Exclusions , later). How to file an amendment for taxes Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. How to file an amendment for taxes If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. How to file an amendment for taxes Election to defer income from discharge of indebtedness. How to file an amendment for taxes   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. How to file an amendment for taxes Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. How to file an amendment for taxes See IRC section 108(i) and Publication 4681 for details. How to file an amendment for taxes Form 1099-C. How to file an amendment for taxes   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. How to file an amendment for taxes The amount of debt canceled is shown in box 2. How to file an amendment for taxes Exceptions The following discussion covers some exceptions to the general rule for canceled debt. How to file an amendment for taxes These exceptions apply before the exclusions discussed below. How to file an amendment for taxes Price reduced after purchase. How to file an amendment for taxes   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. How to file an amendment for taxes Reduce your basis in the property by the amount of the reduction in the debt. How to file an amendment for taxes The rules that apply to bankruptcy and insolvency are explained below under Exclusions . How to file an amendment for taxes Deductible debt. How to file an amendment for taxes   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. How to file an amendment for taxes This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. How to file an amendment for taxes Example. How to file an amendment for taxes You get accounting services for your farm on credit. How to file an amendment for taxes Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. How to file an amendment for taxes Your accountant forgives part of the amount you owe for the accounting services. How to file an amendment for taxes How you treat the canceled debt depends on your method of accounting. How to file an amendment for taxes Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. How to file an amendment for taxes Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. How to file an amendment for taxes Exclusions Do not include canceled debt in income in the following situations. How to file an amendment for taxes The cancellation takes place in a bankruptcy case under title 11 of the U. How to file an amendment for taxes S. How to file an amendment for taxes Code. How to file an amendment for taxes The cancellation takes place when you are insolvent. How to file an amendment for taxes The canceled debt is a qualified farm debt. How to file an amendment for taxes The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). How to file an amendment for taxes See Publication 334, Tax Guide for Small Business, chapter 5. How to file an amendment for taxes The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. How to file an amendment for taxes The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. How to file an amendment for taxes If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. How to file an amendment for taxes If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. How to file an amendment for taxes See Form 982 , later, for information on how to claim an exclusion for a canceled debt. How to file an amendment for taxes Debt. How to file an amendment for taxes   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. How to file an amendment for taxes Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. How to file an amendment for taxes Bankruptcy. How to file an amendment for taxes   A bankruptcy case is a case under title 11 of the U. How to file an amendment for taxes S. How to file an amendment for taxes Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. How to file an amendment for taxes   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. How to file an amendment for taxes Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . How to file an amendment for taxes Insolvency. How to file an amendment for taxes   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. How to file an amendment for taxes   You can exclude canceled debt from gross income up to the amount by which you are insolvent. How to file an amendment for taxes If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. How to file an amendment for taxes Otherwise, you include the difference in gross income. How to file an amendment for taxes Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . How to file an amendment for taxes You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. How to file an amendment for taxes Example. How to file an amendment for taxes You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. How to file an amendment for taxes Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. How to file an amendment for taxes Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). How to file an amendment for taxes You can exclude this amount from income. How to file an amendment for taxes The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. How to file an amendment for taxes If not, you must include it in income. How to file an amendment for taxes Reduction of tax attributes. How to file an amendment for taxes   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. How to file an amendment for taxes Order of reduction. How to file an amendment for taxes   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. How to file an amendment for taxes Net operating loss (NOL). How to file an amendment for taxes Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. How to file an amendment for taxes Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. How to file an amendment for taxes General business credit carryover. How to file an amendment for taxes Reduce the credit carryover to or from the tax year of the debt cancellation. How to file an amendment for taxes Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. How to file an amendment for taxes Minimum tax credit. How to file an amendment for taxes Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. How to file an amendment for taxes Reduce the credit 331/3 cents for each dollar of excluded canceled debt. How to file an amendment for taxes Capital loss. How to file an amendment for taxes Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. How to file an amendment for taxes Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. How to file an amendment for taxes Basis. How to file an amendment for taxes Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. How to file an amendment for taxes Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. How to file an amendment for taxes Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. How to file an amendment for taxes Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. How to file an amendment for taxes Inventory and accounts and notes receivable. How to file an amendment for taxes Other property. How to file an amendment for taxes Reduce the basis one dollar for each dollar of excluded canceled debt. How to file an amendment for taxes However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. How to file an amendment for taxes For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. How to file an amendment for taxes 1017-1(b)(2). How to file an amendment for taxes Also see Electing to reduce the basis of depreciable property