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How To File Self Employed Taxes Step By Step

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How To File Self Employed Taxes Step By Step

How to file self employed taxes step by step Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. How to file self employed taxes step by step Proc. How to file self employed taxes step by step 2013-16 Table of Contents SECTION 1. How to file self employed taxes step by step PURPOSE SECTION 2. How to file self employed taxes step by step BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. How to file self employed taxes step by step BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. How to file self employed taxes step by step FEDERAL INCOME TAX TREATMENT SECTION 5. How to file self employed taxes step by step INFORMATION-REPORTING OBLIGATIONS SECTION 6. How to file self employed taxes step by step HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. How to file self employed taxes step by step PENALTY RELIEF FOR 2012 SECTION 8. How to file self employed taxes step by step SCOPE AND EFFECTIVE DATE SECTION 9. How to file self employed taxes step by step DRAFTING INFORMATION SECTION 1. How to file self employed taxes step by step PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). How to file self employed taxes step by step Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). How to file self employed taxes step by step In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. How to file self employed taxes step by step Current plans call for HAMP to continue accepting new borrowers through the end of 2013. How to file self employed taxes step by step The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. How to file self employed taxes step by step SECTION 2. How to file self employed taxes step by step BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . How to file self employed taxes step by step 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). How to file self employed taxes step by step A description of the program can be found at www. How to file self employed taxes step by step makinghomeaffordable. How to file self employed taxes step by step gov. How to file self employed taxes step by step . How to file self employed taxes step by step 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. How to file self employed taxes step by step These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. How to file self employed taxes step by step . How to file self employed taxes step by step 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. How to file self employed taxes step by step The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. How to file self employed taxes step by step However, as noted in section 2. How to file self employed taxes step by step 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. How to file self employed taxes step by step (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. How to file self employed taxes step by step ”) . How to file self employed taxes step by step 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. How to file self employed taxes step by step . How to file self employed taxes step by step 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. How to file self employed taxes step by step The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. How to file self employed taxes step by step (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. How to file self employed taxes step by step ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). How to file self employed taxes step by step Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. How to file self employed taxes step by step Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. How to file self employed taxes step by step . How to file self employed taxes step by step 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. How to file self employed taxes step by step (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. How to file self employed taxes step by step ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. How to file self employed taxes step by step . How to file self employed taxes step by step 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). How to file self employed taxes step by step If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. How to file self employed taxes step by step These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. How to file self employed taxes step by step The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. How to file self employed taxes step by step The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. How to file self employed taxes step by step For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. How to file self employed taxes step by step ” . How to file self employed taxes step by step 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). How to file self employed taxes step by step . How to file self employed taxes step by step 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. How to file self employed taxes step by step 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. How to file self employed taxes step by step . How to file self employed taxes step by step 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. How to file self employed taxes step by step SECTION 3. How to file self employed taxes step by step BACKGROUND—APPLICABLE PROVISIONS OF LAW . How to file self employed taxes step by step 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. How to file self employed taxes step by step See § 61(a)(12). How to file self employed taxes step by step . How to file self employed taxes step by step 02 Under § 1. How to file self employed taxes step by step 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. How to file self employed taxes step by step In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. How to file self employed taxes step by step However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. How to file self employed taxes step by step See § 1. How to file self employed taxes step by step 1001-3(c)(6). How to file self employed taxes step by step . How to file self employed taxes step by step 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. How to file self employed taxes step by step 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. How to file self employed taxes step by step If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. How to file self employed taxes step by step See also § 1. How to file self employed taxes step by step 61-12(c). How to file self employed taxes step by step . How to file self employed taxes step by step 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. How to file self employed taxes step by step If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. How to file self employed taxes step by step See, e. How to file self employed taxes step by step g. How to file self employed taxes step by step , §§ 1. How to file self employed taxes step by step 1272-1(c)(5) and 1. How to file self employed taxes step by step 1274-2(d). How to file self employed taxes step by step . How to file self employed taxes step by step 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. How to file self employed taxes step by step Section 108(a)(1)(E) and 108(a)(1)(B). How to file self employed taxes step by step (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. How to file self employed taxes step by step ) . How to file self employed taxes step by step 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. How to file self employed taxes step by step . How to file self employed taxes step by step 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. How to file self employed taxes step by step See §§ 108(h) and 163(h)(3)(B)(i). How to file self employed taxes step by step . How to file self employed taxes step by step 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). How to file self employed taxes step by step Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. How to file self employed taxes step by step . How to file self employed taxes step by step 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. How to file self employed taxes step by step . How to file self employed taxes step by step 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. How to file self employed taxes step by step Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. How to file self employed taxes step by step . How to file self employed taxes step by step 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. How to file self employed taxes step by step See § 108(h)(1). How to file self employed taxes step by step If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). How to file self employed taxes step by step See § 108(b). How to file self employed taxes step by step For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). How to file self employed taxes step by step . How to file self employed taxes step by step 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). How to file self employed taxes step by step See Form 982 instructions and Publication 4681. How to file self employed taxes step by step This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. How to file self employed taxes step by step . How to file self employed taxes step by step 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. How to file self employed taxes step by step See Notice 2003-18, 2003-1 C. How to file self employed taxes step by step B. How to file self employed taxes step by step 699, and Rev. How to file self employed taxes step by step Rul. How to file self employed taxes step by step 79-356, 1979-2 C. How to file self employed taxes step by step B. How to file self employed taxes step by step 28. How to file self employed taxes step by step However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). How to file self employed taxes step by step See Rev. How to file self employed taxes step by step Rul. How to file self employed taxes step by step 2005-46, 2005-2 C. How to file self employed taxes step by step B. How to file self employed taxes step by step 120, and Rev. How to file self employed taxes step by step Rul. How to file self employed taxes step by step 75-246, 1975-1 C. How to file self employed taxes step by step B. How to file self employed taxes step by step 24. How to file self employed taxes step by step . How to file self employed taxes step by step 14 Under § 451 and § 1. How to file self employed taxes step by step 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. How to file self employed taxes step by step . How to file self employed taxes step by step 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. How to file self employed taxes step by step See § 6041(a) and (d) and § 1. How to file self employed taxes step by step 6041-1(a)(1) and (b). How to file self employed taxes step by step . How to file self employed taxes step by step 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. How to file self employed taxes step by step See § 6050P(a)-(c) and §§ 1. How to file self employed taxes step by step 6050P-1(a) and 1. How to file self employed taxes step by step 6050P-2(a) and (d). How to file self employed taxes step by step . How to file self employed taxes step by step 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. How to file self employed taxes step by step These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. How to file self employed taxes step by step Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. How to file self employed taxes step by step ” . How to file self employed taxes step by step 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. How to file self employed taxes step by step These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. How to file self employed taxes step by step Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. How to file self employed taxes step by step SECTION 4. How to file self employed taxes step by step FEDERAL INCOME TAX TREATMENT . How to file self employed taxes step by step 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. How to file self employed taxes step by step See § 1. How to file self employed taxes step by step 1001-3. How to file self employed taxes step by step At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. How to file self employed taxes step by step See also § 61(a)(12) and § 1. How to file self employed taxes step by step 61-12(c). How to file self employed taxes step by step . How to file self employed taxes step by step 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. How to file self employed taxes step by step Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. How to file self employed taxes step by step Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. How to file self employed taxes step by step . How to file self employed taxes step by step 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. How to file self employed taxes step by step Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. How to file self employed taxes step by step . How to file self employed taxes step by step 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. How to file self employed taxes step by step Therefore, for purposes of § 1. How to file self employed taxes step by step 1001-3, the date of the modification is the date of the permanent modification. How to file self employed taxes step by step . How to file self employed taxes step by step 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. How to file self employed taxes step by step 01 of this revenue procedure for the taxable year in which the permanent modification occurs. How to file self employed taxes step by step Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. How to file self employed taxes step by step The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. How to file self employed taxes step by step . How to file self employed taxes step by step 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. How to file self employed taxes step by step . How to file self employed taxes step by step 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. How to file self employed taxes step by step This is consistent with Rev. How to file self employed taxes step by step Rul. How to file self employed taxes step by step 2009-19, 2009-28 I. How to file self employed taxes step by step R. How to file self employed taxes step by step B. How to file self employed taxes step by step 111, which addressed the treatment of Pay-for-Performance Success Payments. How to file self employed taxes step by step . How to file self employed taxes step by step 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. How to file self employed taxes step by step If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. How to file self employed taxes step by step . How to file self employed taxes step by step 09 As described in section 2. How to file self employed taxes step by step 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. How to file self employed taxes step by step To the extent that the HAMP-PRA borrower is described in section 4. How to file self employed taxes step by step 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. How to file self employed taxes step by step To the extent that the HAMP-PRA borrower is described in section 4. How to file self employed taxes step by step 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. How to file self employed taxes step by step SECTION 5. How to file self employed taxes step by step INFORMATION-REPORTING OBLIGATIONS . How to file self employed taxes step by step 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. How to file self employed taxes step by step A copy of this form is required to be furnished to the borrower. How to file self employed taxes step by step . How to file self employed taxes step by step 02 As stated in sections 4. How to file self employed taxes step by step 01 and 4. How to file self employed taxes step by step 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. How to file self employed taxes step by step . How to file self employed taxes step by step 03 An investor is an applicable entity that is required under § 1. How to file self employed taxes step by step 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. How to file self employed taxes step by step Under § 1. How to file self employed taxes step by step 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. How to file self employed taxes step by step Identifiable events determine when Forms 1099-C have to be issued. How to file self employed taxes step by step Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. How to file self employed taxes step by step This rule under § 1. How to file self employed taxes step by step 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. How to file self employed taxes step by step . How to file self employed taxes step by step 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. How to file self employed taxes step by step That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). How to file self employed taxes step by step . How to file self employed taxes step by step 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. How to file self employed taxes step by step 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. How to file self employed taxes step by step Under § 6041, these payments are not subject to information reporting. How to file self employed taxes step by step See Notice 2011-14, 2011-11 I. How to file self employed taxes step by step R. How to file self employed taxes step by step B. How to file self employed taxes step by step 544, 546. How to file self employed taxes step by step . How to file self employed taxes step by step 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. How to file self employed taxes step by step 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. How to file self employed taxes step by step The payment is subject to the information reporting requirements of § 6041, as described in section 3. How to file self employed taxes step by step 15 of this revenue procedure. How to file self employed taxes step by step Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. How to file self employed taxes step by step SECTION 6. How to file self employed taxes step by step HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . How to file self employed taxes step by step 01 In general. How to file self employed taxes step by step The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). How to file self employed taxes step by step As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. How to file self employed taxes step by step Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. How to file self employed taxes step by step A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. How to file self employed taxes step by step 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. How to file self employed taxes step by step Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. How to file self employed taxes step by step 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. How to file self employed taxes step by step . How to file self employed taxes step by step 02 HAMP-PRA borrower options. How to file self employed taxes step by step A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. How to file self employed taxes step by step 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. How to file self employed taxes step by step If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. How to file self employed taxes step by step 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. How to file self employed taxes step by step . How to file self employed taxes step by step 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. How to file self employed taxes step by step (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. How to file self employed taxes step by step (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. How to file self employed taxes step by step 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. How to file self employed taxes step by step 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. How to file self employed taxes step by step This section 6. How to file self employed taxes step by step 03(2) applies only if the change to reporting the discharge using the method described in section 6. How to file self employed taxes step by step 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. How to file self employed taxes step by step To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. How to file self employed taxes step by step (3) Example. How to file self employed taxes step by step The following example illustrates the application of section 6. How to file self employed taxes step by step 03(2) of this revenue procedure. How to file self employed taxes step by step In 2010, B’s basis in B’s principal residence was $330,000. How to file self employed taxes step by step In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. How to file self employed taxes step by step B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). How to file self employed taxes step by step The trial period plan effective date also fell in 2010. How to file self employed taxes step by step B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. How to file self employed taxes step by step 02(2) of this revenue procedure. How to file self employed taxes step by step That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. How to file self employed taxes step by step The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. How to file self employed taxes step by step For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. How to file self employed taxes step by step 02(1) of this revenue procedure. How to file self employed taxes step by step Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. How to file self employed taxes step by step 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). How to file self employed taxes step by step (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. How to file self employed taxes step by step 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. How to file self employed taxes step by step 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. How to file self employed taxes step by step Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. How to file self employed taxes step by step 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. How to file self employed taxes step by step Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. How to file self employed taxes step by step (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. How to file self employed taxes step by step 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. How to file self employed taxes step by step The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. How to file self employed taxes step by step (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. How to file self employed taxes step by step The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). How to file self employed taxes step by step The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. How to file self employed taxes step by step . How to file self employed taxes step by step 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. How to file self employed taxes step by step (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. How to file self employed taxes step by step Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. How to file self employed taxes step by step Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. How to file self employed taxes step by step If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. How to file self employed taxes step by step (2) A HAMP-PRA borrower who has been using the method described in section 6. How to file self employed taxes step by step 02(1) of this revenue procedure may change to the method described in section 6. How to file self employed taxes step by step 02(2) but must comply with the consistency and open-year requirements described in section 6. How to file self employed taxes step by step 01 of this revenue procedure. How to file self employed taxes step by step SECTION 7. How to file self employed taxes step by step PENALTY RELIEF FOR 2012 . How to file self employed taxes step by step 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. How to file self employed taxes step by step 03 through 5. How to file self employed taxes step by step 04 and section 8. How to file self employed taxes step by step 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. How to file self employed taxes step by step 01 through 4. How to file self employed taxes step by step 04 of this revenue procedure) that is required to be reported for 2012. How to file self employed taxes step by step (2) Not later than March 28, 2013, a statement is sent to the Service. How to file self employed taxes step by step It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. How to file self employed taxes step by step 01(1) of this revenue procedure. How to file self employed taxes step by step The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . How to file self employed taxes step by step 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. How to file self employed taxes step by step 06 and 8. How to file self employed taxes step by step 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. How to file self employed taxes step by step . How to file self employed taxes step by step 03 Section 8. How to file self employed taxes step by step 03 and 8. How to file self employed taxes step by step 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. How to file self employed taxes step by step SECTION 8. How to file self employed taxes step by step SCOPE AND EFFECTIVE DATE . How to file self employed taxes step by step 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. How to file self employed taxes step by step . How to file self employed taxes step by step 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. How to file self employed taxes step by step . How to file self employed taxes step by step 03 Because of the effective date in section 8. How to file self employed taxes step by step 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. How to file self employed taxes step by step 03 through 5. How to file self employed taxes step by step 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. How to file self employed taxes step by step 03 through 5. How to file self employed taxes step by step 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. How to file self employed taxes step by step . How to file self employed taxes step by step 04 Because of the effective date in section 8. How to file self employed taxes step by step 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. How to file self employed taxes step by step 06 of this revenue procedure. How to file self employed taxes step by step SECTION 9. How to file self employed taxes step by step DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. How to file self employed taxes step by step Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. How to file self employed taxes step by step Pflanz and Sheldon A. How to file self employed taxes step by step Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. How to file self employed taxes step by step Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). How to file self employed taxes step by step For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). How to file self employed taxes step by step Prev  Up  Next   Home   More Internal Revenue Bulletins
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Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions

The following questions and answers provide information to individuals of the same sex and opposite sex who are in registered domestic partnerships, civil unions or other similar formal relationships that are not marriages under state law. These individuals are not considered as married or spouses for federal tax purposes. For convenience, these individuals are referred to as “registered domestic partners” in these questions and answers. Questions and answers 9 through 27 concern registered domestic partners who reside in community property states and who are subject to their state’s community property laws. These questions and answers have been updated since the Supreme Court issued its decision in United States v. Windsor. As a result of the Court’s decision, the Service has ruled that same-sex couples who are married under state law are married for federal tax purposes. See Revenue Ruling 2013-17 in 2013‑38 IRB 201.

Q1. Can registered domestic partners file federal tax returns using a married filing jointly or married filing separately status?

A1. No. Registered domestic partners may not file a federal return using a married filing separately or jointly filing status. Registered domestic partners are not married under state law. Therefore, these taxpayers are not married for federal tax purposes.

Q2. Can a taxpayer use the head-of-household filing status if the taxpayer’s only dependent is his or her registered domestic partner?

A2. No. A taxpayer cannot file as head of household if the taxpayer’s only dependent is his or her registered domestic partner. A taxpayer’s registered domestic partner is not one of the specified related individuals in section 152(c) or (d) that qualifies the taxpayer to file as head of household, even if the registered domestic partner is the taxpayer’s dependent.

Q3. If registered domestic partners have a child, which parent may claim the child as a dependent?

A3. If a child is a qualifying child under section 152(c) of both parents who are registered domestic partners, either parent, but not both, may claim a dependency deduction for the qualifying child. If both parents claim a dependency deduction for the child on their income tax returns, the IRS will treat the child as the qualifying child of the parent with whom the child resides for the longer period of time during the taxable year. If the child resides with each parent for the same amount of time during the taxable year, the IRS will treat the child as the qualifying child of the parent with the higher adjusted gross income.

Q4. Can a registered domestic partner itemize deductions if his or her partner claims a standard deduction? 

A4. Yes. A registered domestic partner may itemize or claim the standard deduction regardless of whether his or her partner itemizes or claims the standard deduction. Although the law prohibits a taxpayer from itemizing deductions if the taxpayer’s spouse claims the standard deduction (section 63(c)(6)(A)), this provision does not apply to registered domestic partners, because registered domestic partners are not spouses for federal tax purposes.

Q5. If registered domestic partners adopt a child together, can one or both of the registered domestic partners qualify for the adoption credit?

A5. Yes. Each registered domestic partner may qualify to claim the adoption credit for the amount of the qualified adoption expenses paid for the adoption. The partners may not both claim a credit for the same qualified adoption expenses, and the sum of the credit taken by each registered domestic partner may not exceed the total amount paid. The adoption credit is limited to $12,970 per child in 2013. Thus, if both registered domestic partners paid qualified adoption expenses to adopt the same child, and the total of those expenses exceeds $12,970, the maximum credit available for the adoption is $12,970. The registered domestic partners may allocate this maximum between them in any way they agree, and the amount of credit claimed by one registered domestic partner can exceed the adoption expenses paid by that person, as long as the total credit claimed by both registered domestic partners does not exceed the total amount paid by them. The same rules generally apply in the case of a special needs adoption. 

Q6. If a taxpayer adopts the child of his or her registered domestic partner as a second parent or co-parent, may the taxpayer (“adopting parent”) claim the adoption credit for the qualifying adoption expenses he or she pays to adopt the child?

A6. Yes. The adopting parent may be eligible to claim an adoption credit. A taxpayer may not claim an adoption credit for the expenses of adopting the child of the taxpayer’s spouse (section 23) .  However, this limitation does not apply to adoptions by registered domestic partners because registered domestic partners are not spouses for federal tax purposes.

Q7. Do provisions of the federal tax law such as section 66 (treatment of community income) and section 469(i)(5) ($25,000 offset for passive activity losses for rental real estate activities) that apply to married taxpayers apply to registered domestic partners?

A7. No. Like other provisions of the federal tax law that apply only to married taxpayers, section 66 and section 469(i)(5) do not apply to registered domestic partners because registered domestic partners are not married for federal tax purposes.

Q8. Is a registered domestic partner the stepparent of his or her partner’s child?

A8. If a registered domestic partner is the stepparent of his or her partner’s child under state law, the registered domestic partner is the stepparent of the child for federal income tax purposes.


Publication 555, Community Property, provides general information for taxpayers, including registered domestic partners, who reside in community property states. The following questions and answers provide additional information to registered domestic partners (including same-sex and opposite-sex registered domestic partners) who reside in community property states and are subject to community property laws.

Q9. How do registered domestic partners determine their gross income?

A9. Registered domestic partners must each report half the combined community income earned by the partners.  In addition to half of the community income, a partner who has income that is not community income must report that separate income. 

Q10.  Can a registered domestic partner qualify to file his or her tax return using head-of-household filing status?

A10. Generally, to qualify as a head-of-household, a taxpayer must provide more than half the cost of maintaining his or her household during the taxable year, and that household must be the principal place of abode of the taxpayer’s dependent for more than half of the taxable year (section 2(b)). If registered domestic partners pay all of the costs of maintaining the household from community funds, each partner is considered to have incurred half the cost and neither can qualify as head of household. Even if one of the partners pays more than half by contributing separate funds, that partner cannot file as head of household if the only dependent is his or her registered domestic partner. A taxpayer’s registered domestic partner is not one of the specified related individuals in section 152(c) or (d) that qualifies the taxpayer to file as head of household, even if the partner is the taxpayer’s dependent.    

Q11. Can a registered domestic partner be a dependent of his or her partner for purposes of the dependency deduction under section 151?

A11. A registered domestic partner can be a dependent of his or her partner if the requirements of sections 151 and 152 are met. However, it is unlikely that registered domestic partners will satisfy the gross income requirement of section 152(d)(1)(B) and the support requirement of section 152(d)(1)(C). To satisfy the gross income requirement, the gross income of the individual claimed as a dependent must be less than the exemption amount ($3,900 for 2013). Because registered domestic partners each report half the combined community income earned by both partners, it is unlikely that a registered domestic partner will have gross income that is less than the exemption amount.   

To satisfy the support requirement, more than half of an individual’s support for the year must be provided by the person seeking the dependency deduction. If a registered domestic partner’s (Partner A’s) support comes entirely from community funds, that partner is considered to have provided half of his or her own support and cannot be claimed as a dependent by another. However, if the other registered domestic partner (Partner B) pays more than half of the support of Partner A by contributing separate funds, Partner A may be a dependent of Partner B for purposes of section 151, provided the other requirements of sections 151 and 152 are satisfied. 

Q12. Can a registered domestic partner be a dependent of his or her partner for purposes of the exclusion in section 105(b) for reimbursements of expenses for medical care?

A12. A registered domestic partner (Partner A) may be a dependent of his or her partner (Partner B) for purposes of the exclusion in section 105(b) only if the support requirement (discussed in Question 11, above) is satisfied. Unlike the requirements for section 152(d) (dependency deduction for a qualifying relative), section 105(b) does not require that Partner A's gross income be less than the exemption amount in order for Partner A to qualify as a dependent.                   

Q13. How should registered domestic partners report wages, other income items, and deductions on their federal income tax returns?

A13. Registered domestic partners should report wages, other income items, and deductions according to the instructions to Form 1040, U.S. Individual Income Tax Return, and related schedules, and Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States. Form 8958 is used to determine the allocation of tax amounts between registered domestic partners. Each partner must complete and attach Form 8958 to his or her Form 1040.

Q14. Should registered domestic partners report social security benefits as community income for federal tax purposes? 

A14. Generally, state law determines whether an item of income constitutes community income. Accordingly, if Social Security benefits are community income under state law, then they are also community income for federal income tax purposes. If Social Security benefits are not community income under state law, then they are not community income for federal income tax purposes. 

Q15. How should registered domestic partners report community income from a business on Schedule C, Profit or Loss From Business?

A15. Half of the income, deductions, and net earnings of a business operated by a registered domestic partner must be reported by each registered domestic partner on a Schedule C (or Schedule C-EZ). In addition, each registered domestic partner owes self-employment tax on half of the net earnings of the business. The self-employment tax rule under section 1402(a)(5) that overrides community income treatment and attributes the income, deductions, and net earnings to the spouse who carries on the trade or business does not apply to registered domestic partners.

Q16.  Are registered domestic partners each entitled to half of the credits for income tax withholding from the combined wages of the registered domestic partners?

A16. Yes. Because each registered domestic partner is taxed on half the combined community income earned by the partners, each is entitled to a credit for half of the income tax withheld on the combined wages.

Q17.  Are registered domestic partners each entitled to take credit for half of the total estimated tax payments paid by the partners?

A17. No. Unlike withholding credits, which are allowed to the person who is taxed on the income from which the tax is withheld, a registered domestic partner can take credit only for the estimated tax payments that he or she made.       

Q18. Are community property laws taken into account in determining earned income for purposes of the dependent care credit, the refundable portion of the child tax credit, the earned income credit, and the making work pay credit?   

A18. No. The federal tax laws governing these credits specifically provide that earned income is computed without regard to community property laws in determining the earned income amounts described in section 21(d) (dependent care credit), section 24(d) (the refundable portion of the child tax credit), section 32(a) (earned income credit), and section 36A(d) (making work pay credit).

Q19. Are community property laws taken into account in determining adjusted gross income (or modified adjusted gross income) for purposes of the dependent care credit, the child tax credit, the earned income credit, and the making work pay credit?

A19. Yes. Community property laws must be taken into account in determining the adjusted gross income (or modified adjusted gross income) amounts in section 21(a) (dependent care credit), section 24(b) (child tax credit), section 32(a) (earned income credit), and section 36A(b) (making work pay credit).

Q20. Are amounts a registered domestic partner receives for education expenses that cannot be excluded from the partner’s gross income (includible education benefits) considered to be community income? 

A20. Generally, state law determines whether an item of income constitutes community income. Accordingly, whether includible education benefits are community income for federal income tax purposes depends on whether they are community income under state law. If the includible education benefits are community income under state law, then they are community income for federal income tax purposes. If not community income under state law, they are not community income for federal income tax purposes. 

Q21. If only one registered domestic partner is a teacher and pays qualified out-of-pocket educator expenses from community funds, do the registered domestic partners split the educator expense deduction?

A21. No. Section 62(a)(2)(D) allows only eligible educators to take a deduction for qualified out-of-pocket educator expenses. If only one registered domestic partner is an eligible educator (the eligible partner), then only the eligible partner may claim a section 62(a)(2)(D) deduction. If the eligible partner uses community funds to pay educator expenses, the eligible partner may determine the deduction as if he or she made the entire expenditure. In that case, the eligible partner has received a gift from his or her partner equal to one-half of the expenditure.  

Q22. If a registered domestic partner incurs indebtedness for his or her qualified education expenses or the expenses of a dependent and pays interest on the indebtedness out of community funds, do the registered domestic partners split the interest deduction?

A22. No. To be a qualified education loan, the indebtedness must be incurred by a taxpayer to pay the qualified education expenses of the taxpayer, the taxpayer’s spouse, or a dependent of the taxpayer (section 221(d)(1)). Thus, only the partner who incurs debt to pay his or her own education expenses or the expenses of a dependent may deduct interest on a qualified education loan (the student partner). If the student partner uses community funds to pay the interest on the qualified education loan, the student partner may determine the deduction as if he or she made the entire expenditure. In that case, the student partner has received a gift from his or her partner equal to one-half of the expenditure. 

Q23.  If registered domestic partners pay the qualified educational expenses of one of the partners or a dependent of one of the partners with community funds, do the registered domestic partners split the section 25A credits (education credits)?

A23. No. Only the partner who pays his or her own education expenses or the expenses of his or her dependent is eligible for an education credit (the student partner). If the student partner uses community funds to pay the education expenses, the student partner may determine the credit as if he or she made the entire expenditure. In that case, the student partner has received a gift from his or her partner equal to one-half of the expenditure. Similarly, if the student partner is allowed a deduction under section 222 (deduction for qualified tuition and related expenses), and uses community funds to pay the education expenses, the student partner may determine the qualified tuition expense deduction as if he or she made the entire expenditure. In that case, the student partner has received a gift from his or her partner equal to one-half of the expenditure.     

Q24. Are community property laws taken into account in determining compensation for purposes of the IRA deduction?

A24. No. The federal tax laws governing the IRA deduction (section 219(f)(2)) specifically provide that the maximum IRA deduction (under section 219(b)) is computed separately for each individual, and that these IRA deduction rules are applied without regard to any community property laws. Thus, each individual determines whether he or she is eligible for an IRA deduction by computing his or her individual compensation (determined without application of community property laws). 

Q25. If a registered domestic partner is self-employed and pays health insurance premiums for both partners out of community property funds, are both partners allowed a deduction under section 162(l) (deduction for self-employed health insurance)?

A25. If one of the registered domestic partners is a self-employed individual treated as an employee within the meaning of section 401(c)(1)(the employee partner) and the other partner is not (the non-employee partner), the employee partner may be allowed a deduction under section 162(l) for the cost of the employee partner’s health insurance paid out of community funds. If the non-employee partner is also covered by the health insurance, the portion of the cost attributable to the non-employee partner’s coverage is not deductible by either the employee partner or the non-employee partner under section 162(l).  

Q26. If a registered domestic partner has a dependent and incurs employment-related expenses that are paid out of community funds, how does the registered domestic partner calculate the dependent care credit?  How about the child tax credit?

A26. If a registered domestic partner has a qualifying individual as defined in section 21(b)(1) and incurs employment-related expenses as defined in section 21(b)(2) for the care of the qualifying individual that are paid with community funds, the partner (employee partner) may determine the dependent care credit as if he or she made the entire expenditure. In that case, the employee partner has received a gift from his or her partner equal to one-half of the expenditure. In computing the dependent care credit, the following rules apply:

  • The employee partner must reduce the employment-related expenses by any amounts he or she excludes from income under section 129 (exclusion for employees for dependent care assistance furnished pursuant to a program described in section 129(d));
  • The earned income limitation described in section 21(d) is determined without regard to community property laws; and
  • The adjusted gross income of the employee partner is determined by taking into account community property laws.

A child tax credit is allowed for each qualifying child of a taxpayer for whom the taxpayer is allowed a personal exemption deduction. Thus, if a registered domestic partner has one or more dependents who is a qualifying child, the registered domestic partner may be allowed a child tax credit for each qualifying child. In determining the amount of the allowable credit, the modified adjusted gross income of the registered domestic partner with the qualifying child is determined by taking into account community property laws. Community property laws are ignored, however, in determining the refundable portion of the child tax credit.

Q27. Does Rev. Proc. 2002-69, 2002-2 C.B. 831, apply to registered domestic partners?

A27. No. Rev. Proc. 2002-69 allows spouses to classify certain entities solely owned by the spouses as community property, as either a disregarded entity or a partnership for federal tax purposes. Rev. Proc. 2002-69 applies only to spouses. Because registered domestic partners are not spouses for federal tax purposes, Rev. Proc. 2002-69 does not apply to registered domestic partners.

Related Item: Forms and Publications

Page Last Reviewed or Updated: 19-Sep-2013

The How To File Self Employed Taxes Step By Step

How to file self employed taxes step by step Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). How to file self employed taxes step by step Low Income Taxpayer Clinics (LITCs). How to file self employed taxes step by step Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. How to file self employed taxes step by step All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. How to file self employed taxes step by step The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). How to file self employed taxes step by step After notice and hearing, the bankruptcy court may extend the period for another 30 days. How to file self employed taxes step by step Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. How to file self employed taxes step by step Note. How to file self employed taxes step by step Individual debtors should use their home address when filing Form 1040 with the IRS. How to file self employed taxes step by step Returns should not be filed “in care of” the trustee's address. How to file self employed taxes step by step Ordering tax transcripts and copies of returns. How to file self employed taxes step by step   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. How to file self employed taxes step by step The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. How to file self employed taxes step by step If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. How to file self employed taxes step by step Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. How to file self employed taxes step by step Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. How to file self employed taxes step by step A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. How to file self employed taxes step by step To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. How to file self employed taxes step by step It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. How to file self employed taxes step by step 00 per tax return for copies of the returns. How to file self employed taxes step by step Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. How to file self employed taxes step by step If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. How to file self employed taxes step by step Tax returns and payment of taxes in chapter 11 cases. How to file self employed taxes step by step   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. How to file self employed taxes step by step Disclosure of debtor's return information to trustee. How to file self employed taxes step by step   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. How to file self employed taxes step by step If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. How to file self employed taxes step by step    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. How to file self employed taxes step by step Material interest is generally defined as a financial or monetary interest. How to file self employed taxes step by step Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. How to file self employed taxes step by step   However, the U. How to file self employed taxes step by step S. How to file self employed taxes step by step Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. How to file self employed taxes step by step Disclosure of bankruptcy estate's return information to debtor. How to file self employed taxes step by step    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. How to file self employed taxes step by step Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. How to file self employed taxes step by step Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. How to file self employed taxes step by step Chapter 13 relief is not available to corporations or partnerships. How to file self employed taxes step by step The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. How to file self employed taxes step by step In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. How to file self employed taxes step by step S. How to file self employed taxes step by step Individual Income Tax Return. How to file self employed taxes step by step On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. How to file self employed taxes step by step Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. How to file self employed taxes step by step To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. How to file self employed taxes step by step See Debt Cancellation, later. How to file self employed taxes step by step Interest on trust accounts in chapter 13 cases. How to file self employed taxes step by step   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. How to file self employed taxes step by step This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. How to file self employed taxes step by step S. How to file self employed taxes step by step Trustee system. How to file self employed taxes step by step The interest is also not taxable to the trustee as income. How to file self employed taxes step by step Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. How to file self employed taxes step by step The bankruptcy estate in a chapter 7 case is represented by a trustee. How to file self employed taxes step by step The trustee is appointed to administer the estate and liquidate any nonexempt assets. How to file self employed taxes step by step In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. How to file self employed taxes step by step However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. How to file self employed taxes step by step During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. How to file self employed taxes step by step The bankruptcy trustee files a Form 1041 for the bankruptcy estate. How to file self employed taxes step by step However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). How to file self employed taxes step by step Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. How to file self employed taxes step by step Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). How to file self employed taxes step by step For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. How to file self employed taxes step by step Debtor's Election To End Tax Year – Form 1040 Short tax years. How to file self employed taxes step by step   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. How to file self employed taxes step by step If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. How to file self employed taxes step by step The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. How to file self employed taxes step by step   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. How to file self employed taxes step by step Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. How to file self employed taxes step by step    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. How to file self employed taxes step by step Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. How to file self employed taxes step by step Note. How to file self employed taxes step by step The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. How to file self employed taxes step by step Making the Election - Filing Requirements First short tax year. How to file self employed taxes step by step   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. How to file self employed taxes step by step The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. How to file self employed taxes step by step Second short tax year. How to file self employed taxes step by step   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. How to file self employed taxes step by step   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. How to file self employed taxes step by step To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. How to file self employed taxes step by step Example. How to file self employed taxes step by step Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. How to file self employed taxes step by step If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. How to file self employed taxes step by step Jane's second short year runs from May 8, 2012, through December 31, 2012. How to file self employed taxes step by step To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. How to file self employed taxes step by step To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. How to file self employed taxes step by step The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. How to file self employed taxes step by step S. How to file self employed taxes step by step Individual Tax Return. How to file self employed taxes step by step The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. How to file self employed taxes step by step The debtor must file Form 4868 by the due date of the return for the first short tax year. How to file self employed taxes step by step The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. How to file self employed taxes step by step Election by debtor's spouse. How to file self employed taxes step by step   If the debtor is married, the debtor's spouse may join in the election to end the tax year. How to file self employed taxes step by step If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. How to file self employed taxes step by step The debtor must elect by the due date for filing the return for the first short tax year. How to file self employed taxes step by step Once the election is made, it cannot be revoked for the first short tax year. How to file self employed taxes step by step However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. How to file self employed taxes step by step Later bankruptcy of spouse. How to file self employed taxes step by step    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. How to file self employed taxes step by step   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. How to file self employed taxes step by step If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. How to file self employed taxes step by step However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. How to file self employed taxes step by step The debtor and the spouse are precluded from this election because they have different tax years. How to file self employed taxes step by step This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. How to file self employed taxes step by step Example 1. How to file self employed taxes step by step Paul and Mary Harris are calendar-year taxpayers. How to file self employed taxes step by step Paul's voluntary chapter 7 bankruptcy case begins on March 4. How to file self employed taxes step by step If Paul does not make an election, his tax year does not end on March 3. How to file self employed taxes step by step If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. How to file self employed taxes step by step Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. How to file self employed taxes step by step They must make the election by July 15, the due date for filing the joint return. How to file self employed taxes step by step Example 2. How to file self employed taxes step by step Fred and Ethel Barnes are calendar-year taxpayers. How to file self employed taxes step by step Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. How to file self employed taxes step by step Ethel could elect to end her tax year on October 31. How to file self employed taxes step by step If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. How to file self employed taxes step by step Her first tax year is January 1–October 31, and her second year is November 1–December 31. How to file self employed taxes step by step If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. How to file self employed taxes step by step If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. How to file self employed taxes step by step Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. How to file self employed taxes step by step Example 3. How to file self employed taxes step by step Jack and Karen Thomas are calendar-year taxpayers. How to file self employed taxes step by step Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. How to file self employed taxes step by step Karen elected to close her tax year on April 9 and Jack joins in Karen's election. How to file self employed taxes step by step Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. How to file self employed taxes step by step The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. How to file self employed taxes step by step Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). How to file self employed taxes step by step If Karen does join in, she would have the same 3 short tax years as Jack. How to file self employed taxes step by step Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. How to file self employed taxes step by step Annualizing taxable income. How to file self employed taxes step by step   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. How to file self employed taxes step by step See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. How to file self employed taxes step by step Dismissal of bankruptcy case. How to file self employed taxes step by step   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. How to file self employed taxes step by step It is as if no bankruptcy estate was created for tax purposes. How to file self employed taxes step by step In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. How to file self employed taxes step by step Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. How to file self employed taxes step by step Attach a statement to the amended returns explaining why the debtor is filing an amended return. How to file self employed taxes step by step Taxes and the Bankruptcy Estate Property of the bankruptcy estate. How to file self employed taxes step by step   At the commencement of a bankruptcy case a bankruptcy estate is created. How to file self employed taxes step by step Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. How to file self employed taxes step by step This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. How to file self employed taxes step by step However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. How to file self employed taxes step by step Note. How to file self employed taxes step by step Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. How to file self employed taxes step by step Excluded property is never included in the estate. How to file self employed taxes step by step Transfer of assets between debtor and bankruptcy estate. How to file self employed taxes step by step   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. How to file self employed taxes step by step The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. How to file self employed taxes step by step For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. How to file self employed taxes step by step The estate assumes the same basis, holding period, and character of the transferred assets. How to file self employed taxes step by step Also, the estate generally accounts for the transferred assets in the same manner as debtor. How to file self employed taxes step by step   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. How to file self employed taxes step by step The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. How to file self employed taxes step by step Abandoned property. How to file self employed taxes step by step    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. How to file self employed taxes step by step If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. How to file self employed taxes step by step Separate taxable entity. How to file self employed taxes step by step   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. How to file self employed taxes step by step The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. How to file self employed taxes step by step S. How to file self employed taxes step by step Income Tax Return for Estates and Trusts, and paying its taxes. How to file self employed taxes step by step The debtor remains responsible for filing his or her own returns on Form 1040, U. How to file self employed taxes step by step S. How to file self employed taxes step by step Individual Income Tax Return, and paying taxes on income that does not belong to the estate. How to file self employed taxes step by step Employer identification number. How to file self employed taxes step by step   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. How to file self employed taxes step by step The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. How to file self employed taxes step by step See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. How to file self employed taxes step by step    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. How to file self employed taxes step by step Income, deductions, and credits – Form 1040. How to file self employed taxes step by step   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). How to file self employed taxes step by step Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. How to file self employed taxes step by step The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. How to file self employed taxes step by step See Debt Cancellation, below. How to file self employed taxes step by step Note. How to file self employed taxes step by step The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. How to file self employed taxes step by step Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. How to file self employed taxes step by step However, other exclusions, such as the insolvency exclusion, may apply. How to file self employed taxes step by step Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. How to file self employed taxes step by step    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. How to file self employed taxes step by step Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. How to file self employed taxes step by step   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. How to file self employed taxes step by step Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. How to file self employed taxes step by step Income of the estate in individual chapter 11 cases. How to file self employed taxes step by step    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. How to file self employed taxes step by step Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. How to file self employed taxes step by step S. How to file self employed taxes step by step C. How to file self employed taxes step by step section 1115). How to file self employed taxes step by step Note. How to file self employed taxes step by step A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. How to file self employed taxes step by step Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). How to file self employed taxes step by step Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. How to file self employed taxes step by step See Administrative expenses, below. How to file self employed taxes step by step Conversion or dismissal of chapter 11 cases. How to file self employed taxes step by step   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. How to file self employed taxes step by step If the chapter 11 case is converted to a chapter 7 case, 11 U. How to file self employed taxes step by step S. How to file self employed taxes step by step C. How to file self employed taxes step by step section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. How to file self employed taxes step by step Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. How to file self employed taxes step by step If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. How to file self employed taxes step by step Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. How to file self employed taxes step by step Note. How to file self employed taxes step by step Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). How to file self employed taxes step by step Administrative expenses. How to file self employed taxes step by step   Allowable expenses include administrative expenses. How to file self employed taxes step by step    Administrative expenses can only be deducted by the estate, never by the debtor. How to file self employed taxes step by step   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. How to file self employed taxes step by step These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. How to file self employed taxes step by step See IRC section 67(e). How to file self employed taxes step by step Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. How to file self employed taxes step by step Note. How to file self employed taxes step by step The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. How to file self employed taxes step by step See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. How to file self employed taxes step by step Administrative expense loss. How to file self employed taxes step by step   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. How to file self employed taxes step by step The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. How to file self employed taxes step by step The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. How to file self employed taxes step by step For a discussion of NOLs, see Publication 536. How to file self employed taxes step by step Attribute carryovers. How to file self employed taxes step by step   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. How to file self employed taxes step by step These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. How to file self employed taxes step by step The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. How to file self employed taxes step by step   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. How to file self employed taxes step by step See Debt Cancellation, later. How to file self employed taxes step by step   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. How to file self employed taxes step by step The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. How to file self employed taxes step by step Note. How to file self employed taxes step by step The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. How to file self employed taxes step by step See Administrative expense loss, above. How to file self employed taxes step by step Passive and at-risk activities. How to file self employed taxes step by step   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. How to file self employed taxes step by step Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. How to file self employed taxes step by step These transfers include the return of exempt property and abandonment of estate property to the debtor. How to file self employed taxes step by step Carrybacks from the debtor's activities. How to file self employed taxes step by step   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. How to file self employed taxes step by step Carrybacks from the bankruptcy estate. How to file self employed taxes step by step   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. How to file self employed taxes step by step The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. How to file self employed taxes step by step Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. How to file self employed taxes step by step    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. How to file self employed taxes step by step The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. How to file self employed taxes step by step These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. How to file self employed taxes step by step The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. How to file self employed taxes step by step The same method must be used to allocate the income and the withheld tax. How to file self employed taxes step by step Example. How to file self employed taxes step by step If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. How to file self employed taxes step by step Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. How to file self employed taxes step by step See IRC section 31(a). How to file self employed taxes step by step   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. How to file self employed taxes step by step In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. How to file self employed taxes step by step    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. How to file self employed taxes step by step The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. How to file self employed taxes step by step Note. How to file self employed taxes step by step The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). How to file self employed taxes step by step   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. How to file self employed taxes step by step Self-employment taxes in individual chapter 11 cases. How to file self employed taxes step by step   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. How to file self employed taxes step by step Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. How to file self employed taxes step by step   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. How to file self employed taxes step by step Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. How to file self employed taxes step by step This schedule includes self-employment income earned post-petition and the attributable deductions. How to file self employed taxes step by step The debtor must pay any self-employment tax imposed by IRC section 1401. How to file self employed taxes step by step Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. How to file self employed taxes step by step   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. How to file self employed taxes step by step However, section 1115 of the Bankruptcy Code (11 U. How to file self employed taxes step by step S. How to file self employed taxes step by step C. How to file self employed taxes step by step section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. How to file self employed taxes step by step See Notice 2006-83. How to file self employed taxes step by step   The reporting and withholding obligations of a debtor's employer also do not change. How to file self employed taxes step by step An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. How to file self employed taxes step by step Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. How to file self employed taxes step by step   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. How to file self employed taxes step by step See IRC section 6109(a)(2). How to file self employed taxes step by step As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). How to file self employed taxes step by step   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. How to file self employed taxes step by step See Notice 2006-83. How to file self employed taxes step by step An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. How to file self employed taxes step by step   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. How to file self employed taxes step by step However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. How to file self employed taxes step by step See Employment Tax Regulations section 31. How to file self employed taxes step by step 3402(f)(2)-1. How to file self employed taxes step by step Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. How to file self employed taxes step by step See IRC section 6654(a). How to file self employed taxes step by step Notice required in converted and dismissed cases. How to file self employed taxes step by step   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. How to file self employed taxes step by step The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. How to file self employed taxes step by step This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. How to file self employed taxes step by step   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. How to file self employed taxes step by step Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. How to file self employed taxes step by step However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. How to file self employed taxes step by step After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. How to file self employed taxes step by step Employment taxes. How to file self employed taxes step by step   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. How to file self employed taxes step by step See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. How to file self employed taxes step by step   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. How to file self employed taxes step by step For a further discussion of employment taxes, see Employment Taxes, later. How to file self employed taxes step by step Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . How to file self employed taxes step by step The bankruptcy court case number is . How to file self employed taxes step by step Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. How to file self employed taxes step by step   Year Taxpayer   Estate 1. How to file self employed taxes step by step Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. How to file self employed taxes step by step Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. How to file self employed taxes step by step Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. How to file self employed taxes step by step Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. How to file self employed taxes step by step   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. How to file self employed taxes step by step This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. How to file self employed taxes step by step   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). How to file self employed taxes step by step   These amounts are generally adjusted annually. How to file self employed taxes step by step See the present year Form 1041 Instructions at www. How to file self employed taxes step by step irs. How to file self employed taxes step by step gov/form1041 for the current dollar amounts. How to file self employed taxes step by step Accounting period. How to file self employed taxes step by step   A bankruptcy estate may have a fiscal year. How to file self employed taxes step by step However, this period cannot be longer than 12 months. How to file self employed taxes step by step Change of accounting period. How to file self employed taxes step by step   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. How to file self employed taxes step by step This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. How to file self employed taxes step by step The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. How to file self employed taxes step by step Employer identification number. How to file self employed taxes step by step   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. How to file self employed taxes step by step The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. How to file self employed taxes step by step    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. How to file self employed taxes step by step   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. How to file self employed taxes step by step irs. How to file self employed taxes step by step gov/businesses/small. How to file self employed taxes step by step The EIN is issued immediately once the application information is validated. How to file self employed taxes step by step By telephone at 1-800-829-4933 from 7:00 a. How to file self employed taxes step by step m. How to file self employed taxes step by step to 7:00 p. How to file self employed taxes step by step m. How to file self employed taxes step by step in the trustee's or debtor-in-possession's local time zone. How to file self employed taxes step by step Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. How to file self employed taxes step by step   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. How to file self employed taxes step by step For more details, see Pub. How to file self employed taxes step by step 583, Starting a Business and Keeping Records. How to file self employed taxes step by step   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. How to file self employed taxes step by step Figuring tax due. How to file self employed taxes step by step   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. How to file self employed taxes step by step However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. How to file self employed taxes step by step The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. How to file self employed taxes step by step The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. How to file self employed taxes step by step Tax rate schedule. How to file self employed taxes step by step The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. How to file self employed taxes step by step When to file. How to file self employed taxes step by step   Calendar year bankruptcy estates must file Form 1041 by April 15th. How to file self employed taxes step by step Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. How to file self employed taxes step by step For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. How to file self employed taxes step by step If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. How to file self employed taxes step by step Note. How to file self employed taxes step by step The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. How to file self employed taxes step by step Transmittal for Form 1040. How to file self employed taxes step by step   Form 1041 is used as a transmittal for Form 1040. How to file self employed taxes step by step If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. How to file self employed taxes step by step   Prepare the bankruptcy estate's return by completing Form 1040. How to file self employed taxes step by step In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. How to file self employed taxes step by step ” Then, attach Form 1040 to the Form 1041 transmittal. How to file self employed taxes step by step Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. How to file self employed taxes step by step An example of a bankruptcy estate's tax return is prepared below. How to file self employed taxes step by step Note. How to file self employed taxes step by step The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. How to file self employed taxes step by step Payment of Tax Due Payment methods. How to file self employed taxes step by step   Payment of tax due may be made by check or money order or by credit or debit card. How to file self employed taxes step by step For information on how to make payments electronically by credit or debit card, go to irs. How to file self employed taxes step by step gov/e-pay. How to file self employed taxes step by step      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. How to file self employed taxes step by step To enroll in EFTPS, go to eftps. How to file self employed taxes step by step gov or call 1-800-555-4477. How to file self employed taxes step by step For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. How to file self employed taxes step by step Payment voucher – Form 1041-V. How to file self employed taxes step by step   Form 1041-V accompanies payments made by check or money order for Form 1041. How to file self employed taxes step by step The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. How to file self employed taxes step by step Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. How to file self employed taxes step by step We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. How to file self employed taxes step by step Estimated tax – Form 1041-ES. How to file self employed taxes step by step   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. How to file self employed taxes step by step See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. How to file self employed taxes step by step Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. How to file self employed taxes step by step Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. How to file self employed taxes step by step If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. How to file self employed taxes step by step   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. How to file self employed taxes step by step Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. How to file self employed taxes step by step The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. How to file self employed taxes step by step If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. How to file self employed taxes step by step , with their individual income tax returns. How to file self employed taxes step by step Tax Return Example – Form 1041 This publication is not revised annually. How to file self employed taxes step by step Future changes to the forms and their instructions may not be reflected in this example. How to file self employed taxes step by step Note. How to file self employed taxes step by step The following return was prepared for tax year 2011. How to file self employed taxes step by step In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). How to file self employed taxes step by step Facts and circumstances. How to file self employed taxes step by step   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. How to file self employed taxes step by step Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. How to file self employed taxes step by step   The estate received the following assets from Mr. How to file self employed taxes step by step Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. How to file self employed taxes step by step   Also, the estate received a $251,500 capital loss carryover. How to file self employed taxes step by step   Mr. How to file self employed taxes step by step Smith's bankruptcy case was closed on December 31, 2011. How to file self employed taxes step by step During 2011, Mr. How to file self employed taxes step by step Smith was relieved of $70,000 of debt by the bankruptcy court. How to file self employed taxes step by step The estate chose a calendar year as its tax year. How to file self employed taxes step by step Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. How to file self employed taxes step by step Schedule B (Form 1040). How to file self employed taxes step by step    The certificate of deposit earned $5,500 of interest during 2011. How to file self employed taxes step by step Joan reports this interest on Schedule B. How to file self employed taxes step by step She completes this schedule and enters the result on Form 1040. How to file self employed taxes step by step Form 4562. How to file self employed taxes step by step   Joan enters the depreciation allowed on Form 4562. How to file self employed taxes step by step She completes the form and enters the result on Schedule E. How to file self employed taxes step by step Schedule E (Form 1040). How to file self employed taxes step by step   The commercial real estate was rented through the date of sale. How to file self employed taxes step by step Joan reports the income and expenses on Schedule E. How to file self employed taxes step by step She enters the net income on Form 1040. How to file self employed taxes step by step Form 4797. How to file self employed taxes step by step   The commercial real estate was sold on July 1, 2011, for $280,000. How to file self employed taxes step by step The property was purchased in 2001 at a cost of $250,000. How to file self employed taxes step by step The total depreciation allowable as of the date of sale was $120,000. How to file self employed taxes step by step Additionally, $25,000 of selling expenses were incurred. How to file self employed taxes step by step Joan reports the gain or loss from the sale on Form 4797. How to file self employed taxes step by step She completes the form and enters the gain on Schedule D (Form 1040). How to file self employed taxes step by step   Mr. How to file self employed taxes step by step Smith's former residence was sold on September 30, 2011. How to file self employed taxes step by step The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. How to file self employed taxes step by step This sale is excluded from gross income under IRC section 121. How to file self employed taxes step by step Note. How to file self employed taxes step by step Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). How to file self employed taxes step by step Bankruptcy estates succeed to this exclusion at the commencement of the case. How to file self employed taxes step by step See Regulation section 1. How to file self employed taxes step by step 1398-3. How to file self employed taxes step by step Schedule D (Form 1040). How to file self employed taxes step by step   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). How to file self employed taxes step by step She enters the results on Form 1040. How to file self employed taxes step by step Form 1040, page 1. How to file self employed taxes step by step   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. How to file self employed taxes step by step Schedule A (Form 1040). How to file self employed taxes step by step   During 2011, the estate paid mortgage interest and real property tax on Mr. How to file self employed taxes step by step Smith's former residence. How to file self employed taxes step by step It also paid income tax to the state. How to file self employed taxes step by step Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. How to file self employed taxes step by step Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. How to file self employed taxes step by step She completes the Schedule A and enters the result on page 2 of Form 1040. How to file self employed taxes step by step Form 1040, page 2. How to file self employed taxes step by step   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. How to file self employed taxes step by step She then enters the estate's estimated tax payments and figures the amount the estate still owes. How to file self employed taxes step by step Form 982. How to file self employed taxes step by step   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. How to file self employed taxes step by step Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. How to file self employed taxes step by step See Debt Cancellation, later. How to file self employed taxes step by step After the bankruptcy case ends, Mr. How to file self employed taxes step by step Smith will assume the estate's tax attributes. How to file self employed taxes step by step Mr. How to file self employed taxes step by step Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). How to file self employed taxes step by step Note. How to file self employed taxes step by step If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. How to file self employed taxes step by step Form 1041. How to file self employed taxes step by step   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. How to file self employed taxes step by step She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. How to file self employed taxes step by step This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Schedule A This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Schedule B This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Schedule D This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Schedule E This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 2119 This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 4562 This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. How to file self employed taxes step by step Please click the link to view the image. How to file self employed taxes step by step Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. How to file self employed taxes step by step Otherwise, you do not have any carryovers. How to file self employed taxes step by step 1. How to file self employed taxes step by step Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. How to file self employed taxes step by step If a loss, enclose the amount in parentheses 1. How to file self employed taxes step by step 19,880   2. How to file self employed taxes step by step Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. How to file self employed taxes step by step 1,500   3. How to file self employed taxes step by step Combine lines 1 and 2. How to file self employed taxes step by step If zero or less, enter -0- 3. How to file self employed taxes step by step 21,380   4. How to file self employed taxes step by step Enter the smaller of line 2 or line 3 4. How to file self employed taxes step by step 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. How to file self employed taxes step by step       5. How to file self employed taxes step by step Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. How to file self employed taxes step by step 0   6. How to file self employed taxes step by step Enter any gain from your 2010 Schedule D, line 15. How to file self employed taxes step by step If a loss, enter -0- 6. How to file self employed taxes step by step         7. How to file self employed taxes step by step Add lines 4 and 6 7. How to file self employed taxes step by step 1,500   8. How to file self employed taxes step by step Short-term capital loss carryover for 2011. How to file self employed taxes step by step Subtract line 7 from line 5. How to file self employed taxes step by step If zero or less, enter -0-. How to file self employed taxes step by step If more than zero, also enter this amount on Schedule D, line 6 8. How to file self employed taxes step by step 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. How to file self employed taxes step by step       9. How to file self employed taxes step by step Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. How to file self employed taxes step by step 251,500   10. How to file self employed taxes step by step Enter any gain from your 2010 Schedule D, line 7. How to file self employed taxes step by step If a loss, enter -0- 10. How to file self employed taxes step by step 0       11. How to file self employed taxes step by step Subtract line 5 from line 4. How to file self employed taxes step by step If zero or less, enter -0- 11. How to file self employed taxes step by step 1,500       12. How to file self employed taxes step by step Add lines 10 and 11 12. How to file self employed taxes step by step 1,500   13. How to file self employed taxes step by step Long-term capital loss carryover for 2011. How to file self employed taxes step by step Subtract line 12 from line 9. How to file self employed taxes step by step If zero or less, enter -0-. How to file self employed taxes step by step If more than zero, also enter this amount on Schedule D, line 14 13. How to file self employed taxes step by step 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. How to file self employed taxes step by step The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. How to file self employed taxes step by step In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. How to file self employed taxes step by step The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. How to file self employed taxes step by step Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. How to file self employed taxes step by step However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. How to file self employed taxes step by step A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. How to file self employed taxes step by step However, It may or may not be included in the individual partners' income. How to file self employed taxes step by step See Partnerships, below under Debt Cancellation. How to file self employed taxes step by step Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. How to file self employed taxes step by step A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. How to file self employed taxes step by step The following discussion only highlights bankruptcy tax rules applying to corporations. How to file self employed taxes step by step The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. How to file self employed taxes step by step Therefore, you may wish to seek the help of a professional tax advisor. How to file self employed taxes step by step See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. How to file self employed taxes step by step Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. How to file self employed taxes step by step However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. How to file self employed taxes step by step A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. How to file self employed taxes step by step In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. How to file self employed taxes step by step In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. How to file self employed taxes step by step Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. How to file self employed taxes step by step In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. How to file self employed taxes step by step IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. How to file self employed taxes step by step IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. How to file self employed taxes step by step In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. How to file self employed taxes step by step No loss is recognized in this situation. How to file self employed taxes step by step Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. How to file self employed taxes step by step To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. How to file self employed taxes step by step The exemption request must be submitted to the local IRS Insolvency Office handling the case. How to file self employed taxes step by step The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. How to file self employed taxes step by step The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. How to file self employed taxes step by step ” The statement must be signed by the trustee, receiver or assignee. How to file self employed taxes step by step The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). How to file self employed taxes step by step The IRS will act on your request within 90 days. How to file self employed taxes step by step Disclosure of return information to trustee. How to file self employed taxes step by step   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. How to file self employed taxes step by step However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. How to file self employed taxes step by step Material interest is generally defined as a financial or monetary interest. How to file self employed taxes step by step Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. How to file self employed taxes step by step Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. How to file self employed taxes step by step Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. How to file self employed taxes step by step QSFs are required to file an annual income tax return, Form 1120-SF, U. How to file self employed taxes step by step S. How to file self employed taxes step by step Income Tax Return for Settlement Funds. How to file self employed taxes step by step More information about QSFs may be found in Treasury Regulation sections 1. How to file self employed taxes step by step 468B-1 through -5. How to file self employed taxes step by step Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. How to file self employed taxes step by step After a return is filed, the IRS will either accept the return as filed or select the return for examination. How to file self employed taxes step by step Under examination the IRS may redetermine the tax liability shown on the return. How to file self employed taxes step by step If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. How to file self employed taxes step by step See Court Jurisdiction over Tax Matters, later. How to file self employed taxes step by step Prompt Determination Requests Pursuant to Rev. How to file self employed taxes step by step Proc. How to file self employed taxes step by step 2006-24, 2006-22 I. How to file self employed taxes step by step R. How to file self employed taxes step by step B. How to file self employed taxes step by step 943, www. How to file self employed taxes step by step irs. How to file self employed taxes step by step gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. How to file self employed taxes step by step irs. How to file self employed taxes step by step gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. How to file self employed taxes step by step Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). How to file self employed taxes step by step Making the request for determination. How to file self employed taxes step by step   As detailed in Rev. How to file self employed taxes step by step Proc. How to file self employed taxes step by step 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. How to file self employed taxes step by step O. How to file self employed taxes step by step Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). How to file self employed taxes step by step   The request must be submitted in duplicate and must be executed under penalties of perjury. How to file self employed taxes step by step In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. How to file self employed taxes step by step The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. How to file self employed taxes step by step The name and location of the office where the return was filed. How to file self employed taxes step by step The name of the debtor. How to file self employed taxes step by step Debtor's social security number, TIN, or EIN. How to file self employed taxes step by step Type of bankruptcy estate. How to file self employed taxes step by step Bankruptcy case number. How to file self employed taxes step by step Court where the bankruptcy case is pending. How to file self employed taxes step by step   The copy of the return(s) submitted with the request must be an exact copy of a valid return. How to file self employed taxes step by step A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. How to file self employed taxes step by step    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. How to file self employed taxes step by step A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. How to file self employed taxes step by step Examination of return. How to file self employed taxes step by step   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. How to file self employed taxes step by step If the return is selected for examination, it will be examined as soon as possible. How to file self employed taxes step by step The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. How to file self employed taxes step by step   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. How to file self employed taxes step by step   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. How to file self employed taxes step by step   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. How to file self employed taxes step by step Note. How to file self employed taxes step by step An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. How to file self employed taxes step by step   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei