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Tax Filing For 2012

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Tax Filing For 2012

Tax filing for 2012 Publication 501 - Main Content Table of Contents Who Must FileSelf-employed persons. Tax filing for 2012 Filing Requirements for Most Taxpayers Dependents Other Situations Who Should File Filing StatusMarital Status Single Married Filing Jointly Married Filing Separately Head of Household Qualifying Widow(er) With Dependent Child ExemptionsForm 1040EZ filers. Tax filing for 2012 Form 1040A filers. Tax filing for 2012 Form 1040 filers. Tax filing for 2012 More information. Tax filing for 2012 Personal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. Tax filing for 2012 Taxpayer identification numbers for aliens. Tax filing for 2012 Taxpayer identification numbers for adoptees. Tax filing for 2012 Standard DeductionStandard Deduction Amount Standard Deduction for Dependents Who Should Itemize How To Get Tax HelpLow Income Taxpayer Clinics Who Must File If you are a U. Tax filing for 2012 S. Tax filing for 2012 citizen or resident alien, whether you must file a federal income tax return depends on your gross income, your filing status, your age, and whether you are a dependent. Tax filing for 2012 For details, see Table 1 and Table 2. Tax filing for 2012 You also must file if one of the situations described in Table 3 applies. Tax filing for 2012 The filing requirements apply even if you owe no tax. Tax filing for 2012 Table 1. Tax filing for 2012 2013 Filing Requirements Chart for Most Taxpayers IF your filing status is. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 AND at the end of 2013 you were. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 * THEN file a return if your gross income was at least. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 ** single under 65  $10,000 65 or older $11,500 head of household under 65 $12,850 65 or older $14,350 married, filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 married, filing separately any age  $3,900 qualifying widow(er) with dependent child under 65 $16,100 65 or older $17,300 * If you were born before January 2, 1949, you are considered to be 65 or older at the end of 2013. Tax filing for 2012 ** Gross income means all income you receive in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Tax filing for 2012 Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2013 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Tax filing for 2012 If (a) or (b) applies, see the Form 1040 instructions to figure the taxable part of social security benefits you must include in gross income. Tax filing for 2012 Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Tax filing for 2012 Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. Tax filing for 2012 But in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. Tax filing for 2012 *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Tax filing for 2012 You may have to pay a penalty if you are required to file a return but fail to do so. Tax filing for 2012 If you willfully fail to file a return, you may be subject to criminal prosecution. Tax filing for 2012 For information on what form to use — Form 1040EZ, Form 1040A, or Form 1040 — see the instructions for your tax return. Tax filing for 2012 Gross income. Tax filing for 2012    Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Tax filing for 2012 If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. Tax filing for 2012 For a list of community property states, see Community property states under Married Filing Separately, later. Tax filing for 2012 Self-employed persons. Tax filing for 2012    If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. Tax filing for 2012 If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. Tax filing for 2012 In either case, you must add any income from investments and from incidental or outside operations or sources. Tax filing for 2012    You must file Form 1040 if you owe any self-employment tax. Tax filing for 2012 Filing status. Tax filing for 2012    Your filing status generally depends on whether you are single or married. Tax filing for 2012 Whether you are single or married is determined at the end of your tax year, which is December 31 for most taxpayers. Tax filing for 2012 Filing status is discussed in detail later in this publication. Tax filing for 2012 Age. Tax filing for 2012    Age is a factor in determining if you must file a return only if you are 65 or older at the end of your tax year. Tax filing for 2012 For 2013, you are 65 or older if you were born before January 2, 1949. Tax filing for 2012 Filing Requirements for Most Taxpayers You must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1. Tax filing for 2012 Dependents should see Table 2 instead. Tax filing for 2012 Deceased Persons You must file an income tax return for a decedent (a person who died) if both of the following are true. Tax filing for 2012 You are the surviving spouse, executor, administrator, or legal representative. Tax filing for 2012 The decedent met the filing requirements described in this publication at the time of his or her death. Tax filing for 2012 For more information, see Final Income Tax Return for Decedent — Form 1040 in Publication 559. Tax filing for 2012 Table 2. Tax filing for 2012 2013 Filing Requirements for Dependents See Exemptions for Dependents to find out if you are a dependent. Tax filing for 2012 If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Tax filing for 2012  In this table, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Tax filing for 2012 It also includes unemployment compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Tax filing for 2012 Earned income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. Tax filing for 2012 Gross income is the total of your unearned and earned income. Tax filing for 2012 If your gross income was $3,900 or more, you usually cannot be claimed as a dependent unless you are a qualifying child. Tax filing for 2012 For details, see Exemptions for Dependents. Tax filing for 2012 Single dependents—Were you either age 65 or older or blind? □ No. Tax filing for 2012 You must file a return if any of the following apply. Tax filing for 2012 Your unearned income was more than $1,000. Tax filing for 2012 Your earned income was more than $6,100. Tax filing for 2012 Your gross income was more than the larger of— $1,000, or Your earned income (up to $5,750) plus $350. Tax filing for 2012     □ Yes. Tax filing for 2012 You must file a return if any of the following apply. Tax filing for 2012 Your unearned income was more than $2,500 ($4,000 if 65 or older and blind). Tax filing for 2012 Your earned income was more than $7,600 ($9,100 if 65 or older and blind). Tax filing for 2012 Your gross income was more than the larger of—  $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Tax filing for 2012     Married dependents—Were you either age 65 or older or blind? □ No. Tax filing for 2012 You must file a return if any of the following apply. Tax filing for 2012 Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Tax filing for 2012 Your unearned income was more than $1,000. Tax filing for 2012 Your earned income was more than $6,100. Tax filing for 2012 Your gross income was more than the larger of— $1,000, or Your earned income (up to $5,750 plus $350. Tax filing for 2012     □ Yes. Tax filing for 2012 You must file a return if any of the following apply. Tax filing for 2012 Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Tax filing for 2012 Your unearned income was more than $2,200 ($3,400 if 65 or older and blind). Tax filing for 2012 Your earned income was more than $7,300 ($8,500 if 65 or older and blind). Tax filing for 2012 Your gross income was more than the larger of— $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Tax filing for 2012     U. Tax filing for 2012 S. Tax filing for 2012 Citizens or Resident Aliens Living Abroad To determine whether you must file a return, include in your gross income any income you earned or received abroad, including any income you can exclude under the foreign earned income exclusion. Tax filing for 2012 For more information on special tax rules that may apply to you, see Publication 54, Tax Guide for U. Tax filing for 2012 S. Tax filing for 2012 Citizens and Resident Aliens Abroad. Tax filing for 2012 Residents of Puerto Rico If you are a U. Tax filing for 2012 S. Tax filing for 2012 citizen and also a bona fide resident of Puerto Rico, you generally must file a U. Tax filing for 2012 S. Tax filing for 2012 income tax return for any year in which you meet the income requirements. Tax filing for 2012 This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico. Tax filing for 2012 If you are a bona fide resident of Puerto Rico for the whole year, your U. Tax filing for 2012 S. Tax filing for 2012 gross income does not include income from sources within Puerto Rico. Tax filing for 2012 It does, however, include any income you received for your services as an employee of the United States or any U. Tax filing for 2012 S. Tax filing for 2012 agency. Tax filing for 2012 If you receive income from Puerto Rican sources that is not subject to U. Tax filing for 2012 S. Tax filing for 2012 tax, you must reduce your standard deduction, which reduces the amount of income you can have before you must file a U. Tax filing for 2012 S. Tax filing for 2012 income tax return. Tax filing for 2012 For more information, see Publication 570, Tax Guide for Individuals With Income From U. Tax filing for 2012 S. Tax filing for 2012 Possessions. Tax filing for 2012 Individuals With Income From U. Tax filing for 2012 S. Tax filing for 2012 Possessions If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U. Tax filing for 2012 S. Tax filing for 2012 Virgin Islands, special rules may apply when determining whether you must file a U. Tax filing for 2012 S. Tax filing for 2012 federal income tax return. Tax filing for 2012 In addition, you may have to file a return with the individual possession government. Tax filing for 2012 See Publication 570 for more information. Tax filing for 2012 Dependents A person who is a dependent may still have to file a return. Tax filing for 2012 It depends on his or her earned income, unearned income, and gross income. Tax filing for 2012 For details, see Table 2. Tax filing for 2012 A dependent must also file if one of the situations described in Table 3 applies. Tax filing for 2012 Responsibility of parent. Tax filing for 2012    If a dependent child must file an income tax return but cannot file due to age or any other reason, a parent, guardian, or other legally responsible person must file it for the child. Tax filing for 2012 If the child cannot sign the return, the parent or guardian must sign the child's name followed by the words “By (your signature), parent for minor child. Tax filing for 2012 ” Earned income. Tax filing for 2012    Earned income includes salaries, wages, professional fees, and other amounts received as pay for work you actually perform. Tax filing for 2012 Earned income (only for purposes of filing requirements and the standard deduction) also includes any part of a scholarship that you must include in your gross income. Tax filing for 2012 See chapter 1 of Publication 970, Tax Benefits for Education, for more information on taxable and nontaxable scholarships. Tax filing for 2012 Child's earnings. Tax filing for 2012    Amounts a child earns by performing services are included in his or her gross income and not the gross income of the parent. Tax filing for 2012 This is true even if under local law the child's parent has the right to the earnings and may actually have received them. Tax filing for 2012 But if the child does not pay the tax due on this income, the parent is liable for the tax. Tax filing for 2012 Unearned income. Tax filing for 2012    Unearned income includes income such as interest, dividends, and capital gains. Tax filing for 2012 Trust distributions of interest, dividends, capital gains, and survivor annuities are also considered unearned income. Tax filing for 2012 Election to report child's unearned income on parent's return. Tax filing for 2012    You may be able to include your child's interest and dividend income on your tax return. Tax filing for 2012 If you do this, your child will not have to file a return. Tax filing for 2012 To make this election, all of the following conditions must be met. Tax filing for 2012 Your child was under age 19 (or under age 24 if a student) at the end of 2013. Tax filing for 2012 (A child born on January 1, 1995, is considered to be age 19 at the end of 2013; you cannot make the election for this child unless the child was a student. Tax filing for 2012 Similarly, a child born on January 1, 1990, is considered to be age 24 at the end of 2013; you cannot make the election for this child. Tax filing for 2012 ) Your child had gross income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Tax filing for 2012 The interest and dividend income was less than $10,000. Tax filing for 2012 Your child is required to file a return for 2013 unless you make this election. Tax filing for 2012 Your child does not file a joint return for 2013. Tax filing for 2012 No estimated tax payment was made for 2013 and no 2012 overpayment was applied to 2013 under your child's name and social security number. Tax filing for 2012 No federal income tax was withheld from your child's income under the backup withholding rules. Tax filing for 2012 You are the parent whose return must be used when making the election to report your child's unearned income. Tax filing for 2012   For more information, see Form 8814 and Parent's Election To Report Child's Interest and Dividends in Publication 929. Tax filing for 2012 Other Situations You may have to file a tax return even if your gross income is less than the amount shown in Table 1 or Table 2 for your filing status. Tax filing for 2012 See Table 3 for those other situations when you must file. Tax filing for 2012 Table 3. Tax filing for 2012 Other Situations When You Must File a 2013 Return If any of the four conditions listed below applied to you for 2013, you must file a return. Tax filing for 2012 1. Tax filing for 2012 You owe any special taxes, including any of the following. Tax filing for 2012   a. Tax filing for 2012 Alternative minimum tax. Tax filing for 2012 (See Form 6251. Tax filing for 2012 )   b. Tax filing for 2012 Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Tax filing for 2012 (See Publication 590, Individual Retirement Arrangements (IRAs), and Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Tax filing for 2012 ) But if you are filing a return only because you owe this tax, you can file Form 5329 by itself. Tax filing for 2012   c. Tax filing for 2012 Social security or Medicare tax on tips you did not report to your employer (see Publication 531, Reporting Tip Income) or on wages you received from an employer who did not withhold these taxes (see Form 8919). Tax filing for 2012   d. Tax filing for 2012 Write-in taxes, including uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer or on group-term life insurance and additional tax on health savings accounts. Tax filing for 2012 (See Publication 531, Publication 969, and the Form 1040 instructions for line 60. Tax filing for 2012 )   e. Tax filing for 2012 Household employment taxes. Tax filing for 2012 But if you are filing a return only because you owe these taxes, you can file Schedule H (Form 1040) by itself. Tax filing for 2012   f. Tax filing for 2012 Recapture taxes. Tax filing for 2012 (See the Form 1040 instructions for lines 44, 59b, and 60. Tax filing for 2012 ) 2. Tax filing for 2012 You (or your spouse if filing jointly) received Archer MSA, Medicare Advantage MSA, or health savings account distributions. Tax filing for 2012 3. Tax filing for 2012 You had net earnings from self-employment of at least $400. Tax filing for 2012 (See Schedule SE (Form 1040) and its instructions. Tax filing for 2012 ) 4. Tax filing for 2012 You had wages of $108. Tax filing for 2012 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Tax filing for 2012 (See Schedule SE (Form 1040) and its instructions. Tax filing for 2012 ) Who Should File Even if you do not have to file, you should file a tax return if you can get money back. Tax filing for 2012 For example, you should file if one of the following applies. Tax filing for 2012 You had income tax withheld from your pay. Tax filing for 2012 You made estimated tax payments for the year or had any of your overpayment for last year applied to this year's estimated tax. Tax filing for 2012 You qualify for the earned income credit. Tax filing for 2012 See Publication 596, Earned Income Credit (EIC), for more information. Tax filing for 2012 You qualify for the additional child tax credit. Tax filing for 2012 See the instructions for the tax form you file (Form 1040 or 1040A) for more information. Tax filing for 2012 You qualify for the refundable American opportunity education credit. Tax filing for 2012 See Form 8863, Education Credits. Tax filing for 2012 You qualify for the health coverage tax credit. Tax filing for 2012 For information about this credit, see Form 8885, Health Coverage Tax Credit. Tax filing for 2012 You qualify for the credit for federal tax on fuels. Tax filing for 2012 See Form 4136, Credit for Federal Tax Paid on Fuels. Tax filing for 2012 Form 1099-B received. Tax filing for 2012    Even if you are not required to file a return, you should consider filing if all of the following apply. Tax filing for 2012 You received a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions (or substitute statement). Tax filing for 2012 The amount in box 2a of Form 1099-B (or substitute statement), when added to your other gross income, means you have to file a tax return because of the filing requirement in Table 1 or Table 2 that applies to you. Tax filing for 2012 Box 3 of Form 1099-B (or substitute statement) is blank. Tax filing for 2012 In this case, filing a return may keep you from getting a notice from the IRS. Tax filing for 2012 Filing Status You must determine your filing status before you can determine whether you must file a tax return, your standard deduction (discussed later), and your tax. Tax filing for 2012 You also use your filing status to determine whether you are eligible to claim certain other deductions and credits. Tax filing for 2012 There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. Tax filing for 2012 If more than one filing status applies to you, choose the one that will give you the lowest tax. Tax filing for 2012 Marital Status In general, your filing status depends on whether you are considered unmarried or married. Tax filing for 2012 Unmarried persons. Tax filing for 2012    You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Tax filing for 2012   State law governs whether you are married or legally separated under a divorce or separate maintenance decree. Tax filing for 2012 Divorced persons. Tax filing for 2012    If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year. Tax filing for 2012 Divorce and remarriage. Tax filing for 2012    If you obtain a divorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years. Tax filing for 2012 Annulled marriages. Tax filing for 2012    If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. Tax filing for 2012 You must file amended returns (Form 1040X) claiming single or head of household status for all tax years that are affected by the annulment and not closed by the statute of limitations for filing a tax return. Tax filing for 2012 Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Tax filing for 2012 If you filed your original tax return early (for example, March 1), your return is considered filed on the due date (generally April 15). Tax filing for 2012 However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1. Tax filing for 2012 Head of household or qualifying widow(er) with dependent child. Tax filing for 2012    If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. Tax filing for 2012 See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify. Tax filing for 2012 Married persons. Tax filing for 2012    If you are considered married, you and your spouse can file a joint return or separate returns. Tax filing for 2012 Considered married. Tax filing for 2012    You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. Tax filing for 2012 You are married and living together. Tax filing for 2012 You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began. Tax filing for 2012 You are married and living apart but not legally separated under a decree of divorce or separate maintenance. Tax filing for 2012 You are separated under an interlocutory (not final) decree of divorce. Tax filing for 2012 Same-sex marriage. Tax filing for 2012    For federal tax purposes, individuals of the same sex are married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Tax filing for 2012 The term "spouse" includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Tax filing for 2012 However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not called a marriage under state (or foreign) law are not married for federal tax purposes. Tax filing for 2012   The word “state” as used here includes the District of Columbia, Puerto Rico, and U. Tax filing for 2012 S. Tax filing for 2012 territories and possessions. Tax filing for 2012 It means any domestic jurisdiction that has the legal authority to sanction marriages. Tax filing for 2012 The term “foreign country” means any foreign jurisdiction that has the legal authority to sanction marriages. Tax filing for 2012   If individuals of the same sex are married, they generally must use the married filing jointly or married filing separately filing status. Tax filing for 2012 However, if they did not live together during the last 6 months of the year, one or both of them may be able to use the head of household filing status, as explained later. Tax filing for 2012   For more details, see Answers to Frequently Asked Questions For Individuals of the Same Sex Who Are Married Under State Law on IRS. Tax filing for 2012 gov. Tax filing for 2012 Spouse died during the year. Tax filing for 2012    If your spouse died during the year, you are considered married for the whole year for filing status purposes. Tax filing for 2012   If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. Tax filing for 2012 For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child . Tax filing for 2012   If you remarried before the end of the tax year, you can file a joint return with your new spouse. Tax filing for 2012 Your deceased spouse's filing status is married filing separately for that year. Tax filing for 2012 Married persons living apart. Tax filing for 2012    If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you are not divorced or legally separated. Tax filing for 2012 If you qualify to file as head of household instead of as married filing separately, your standard deduction will be higher. Tax filing for 2012 Also, your tax may be lower, and you may be able to claim the earned income credit. Tax filing for 2012 See Head of Household , later. Tax filing for 2012 Single Your filing status is single if you are considered unmarried and you do not qualify for another filing status. Tax filing for 2012 To determine your marital status, see Marital Status , earlier. Tax filing for 2012 Widow(er). Tax filing for 2012    Your filing status may be single if you were widowed before January 1, 2013, and did not remarry before the end of 2013. Tax filing for 2012 You may, however, be able to use another filing status that will give you a lower tax. Tax filing for 2012 See Head of Household and Qualifying Widow(er) With Dependent Child , later, to see if you qualify. Tax filing for 2012 How to file. Tax filing for 2012    You can file Form 1040. Tax filing for 2012 If you have taxable income of less than $100,000, you may be able to file Form 1040A. Tax filing for 2012 If, in addition, you have no dependents, are under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Tax filing for 2012 If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Tax filing for 2012 Use the Single column of the Tax Table, or Section A of the Tax Computation Worksheet, to figure your tax. Tax filing for 2012 Married Filing Jointly You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. Tax filing for 2012 On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. Tax filing for 2012 You can file a joint return even if one of you had no income or deductions. Tax filing for 2012 If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Tax filing for 2012 Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses. Tax filing for 2012 If you and your spouse each have income, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). Tax filing for 2012 You can choose the method that gives the two of you the lower combined tax. Tax filing for 2012 How to file. Tax filing for 2012    If you file as married filing jointly, you can use Form 1040. Tax filing for 2012 If you and your spouse have taxable income of less than $100,000, you may be able to file Form 1040A. Tax filing for 2012 If, in addition, you and your spouse have no dependents, are both under 65 and not blind, and meet other requirements, you can file Form 1040EZ. Tax filing for 2012 If you file Form 1040 or Form 1040A, show this filing status by checking the box on line 2. Tax filing for 2012 Use the Married filing jointly column of the Tax Table, or Section B of the Tax Computation Worksheet, to figure your tax. Tax filing for 2012 Spouse died. Tax filing for 2012    If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. Tax filing for 2012 See Spouse died during the year , under Married persons, earlier. Tax filing for 2012   If your spouse died in 2014 before filing a 2013 return, you can choose married filing jointly as your filing status on your 2013 return. Tax filing for 2012 Divorced persons. Tax filing for 2012    If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you cannot choose married filing jointly as your filing status. Tax filing for 2012 Filing a Joint Return Both you and your spouse must include all of your income, exemptions, and deductions on your joint return. Tax filing for 2012 Accounting period. Tax filing for 2012    Both of you must use the same accounting period, but you can use different accounting methods. Tax filing for 2012 Joint responsibility. Tax filing for 2012    Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Tax filing for 2012 This means that if one spouse does not pay the tax due, the other may have to. Tax filing for 2012 Or, if one spouse does not report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. Tax filing for 2012 One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse. Tax filing for 2012   You may want to file separately if: You believe your spouse is not reporting all of his or her income, or You do not want to be responsible for any taxes due if your spouse does not have enough tax withheld or does not pay enough estimated tax. Tax filing for 2012 Divorced taxpayer. Tax filing for 2012    You may be held jointly and individually responsible for any tax, interest, and penalties due on a joint return filed before your divorce. Tax filing for 2012 This responsibility may apply even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Tax filing for 2012 Relief from joint responsibility. Tax filing for 2012    In some cases, one spouse may be relieved of joint responsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Tax filing for 2012 You can ask for relief no matter how small the liability. Tax filing for 2012   There are three types of relief available. Tax filing for 2012 Innocent spouse relief. Tax filing for 2012 Separation of liability (available only to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date the election for this relief is filed). Tax filing for 2012 Equitable relief. Tax filing for 2012    You must file Form 8857, Request for Innocent Spouse Relief, to request relief from joint responsibility. Tax filing for 2012 Publication 971, Innocent Spouse Relief, explains the kinds of relief and who may qualify for them. Tax filing for 2012 Signing a joint return. Tax filing for 2012    For a return to be considered a joint return, both spouses generally must sign the return. Tax filing for 2012 Spouse died before signing. Tax filing for 2012    If your spouse died before signing the return, the executor or administrator must sign the return for your spouse. Tax filing for 2012 If neither you nor anyone else has been appointed as executor or administrator, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return. Tax filing for 2012 Spouse away from home. Tax filing for 2012    If your spouse is away from home, you should prepare the return, sign it, and send it to your spouse to sign so it can be filed on time. Tax filing for 2012 Injury or disease prevents signing. Tax filing for 2012    If your spouse cannot sign because of injury or disease and tells you to sign for him or her, you can sign your spouse's name in the proper space on the return followed by the words “By (your name), Husband (or Wife). Tax filing for 2012 ” Be sure to also sign in the space provided for your signature. Tax filing for 2012 Attach a dated statement, signed by you, to the return. Tax filing for 2012 The statement should include the form number of the return you are filing, the tax year, and the reason your spouse cannot sign, and should state that your spouse has agreed to your signing for him or her. Tax filing for 2012 Signing as guardian of spouse. Tax filing for 2012    If you are the guardian of your spouse who is mentally incompetent, you can sign the return for your spouse as guardian. Tax filing for 2012 Spouse in combat zone. Tax filing for 2012    You can sign a joint return for your spouse if your spouse cannot sign because he or she is serving in a combat zone (such as the Persian Gulf area, Serbia, Montenegro, Albania, or Afghanistan), even if you do not have a power of attorney or other statement. Tax filing for 2012 Attach a signed statement to your return explaining that your spouse is serving in a combat zone. Tax filing for 2012 For more information on special tax rules for persons who are serving in a combat zone, or who are in missing status as a result of serving in a combat zone, see Publication 3, Armed Forces' Tax Guide. Tax filing for 2012 Other reasons spouse cannot sign. Tax filing for 2012    If your spouse cannot sign the joint return for any other reason, you can sign for your spouse only if you are given a valid power of attorney (a legal document giving you permission to act for your spouse). Tax filing for 2012 Attach the power of attorney (or a copy of it) to your tax return. Tax filing for 2012 You can use Form 2848. Tax filing for 2012 Nonresident alien or dual-status alien. Tax filing for 2012    Generally, a married couple cannot file a joint return if either one is a nonresident alien at any time during the tax year. Tax filing for 2012 However, if one spouse was a nonresident alien or dual-status alien who was married to a U. Tax filing for 2012 S. Tax filing for 2012 citizen or resident alien at the end of the year, the spouses can choose to file a joint return. Tax filing for 2012 If you do file a joint return, you and your spouse are both treated as U. Tax filing for 2012 S. Tax filing for 2012 residents for the entire tax year. Tax filing for 2012 See chapter 1 of Publication 519. Tax filing for 2012 Married Filing Separately You can choose married filing separately as your filing status if you are married. Tax filing for 2012 This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Tax filing for 2012 If you and your spouse do not agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. Tax filing for 2012 You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained later, under Head of Household ). Tax filing for 2012 This can apply to you even if you are not divorced or legally separated. Tax filing for 2012 If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. Tax filing for 2012 The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. Tax filing for 2012 See Head of Household , later, for more information. Tax filing for 2012 You will generally pay more combined tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. Tax filing for 2012 However, unless you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). Tax filing for 2012 This way you can make sure you are using the filing status that results in the lowest combined tax. Tax filing for 2012 When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes. Tax filing for 2012 How to file. Tax filing for 2012    If you file a separate return, you generally report only your own income, exemptions, credits, and deductions. Tax filing for 2012 You can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another person. Tax filing for 2012   You can file Form 1040. Tax filing for 2012 If your taxable income is less than $100,000, you may be able to file Form 1040A. Tax filing for 2012 Select this filing status by checking the box on line 3 of either form. Tax filing for 2012 Enter your spouse's full name and SSN or ITIN in the spaces provided. Tax filing for 2012 If your spouse does not have and is not required to have an SSN or ITIN, enter “NRA” in the space for your spouse's SSN. Tax filing for 2012 Use the Married filing separately column of the Tax Table or Section C of the Tax Computation Worksheet to figure your tax. Tax filing for 2012 Special Rules If you choose married filing separately as your filing status, the following special rules apply. Tax filing for 2012 Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for. Tax filing for 2012 Your tax rate generally is higher than on a joint return. Tax filing for 2012 Your exemption amount for figuring the alternative minimum tax is half that allowed on a joint return. Tax filing for 2012 You cannot take the credit for child and dependent care expenses in most cases, and the amount you can exclude from income under an employer's dependent care assistance program is limited to $2,500 (instead of $5,000 on a joint return). Tax filing for 2012 If you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Tax filing for 2012 See Joint Return Test in Publication 503, Child and Dependent Care Expenses, for more information. Tax filing for 2012 You cannot take the earned income credit. Tax filing for 2012 You cannot take the exclusion or credit for adoption expenses in most cases. Tax filing for 2012 You cannot take the education credits (the American opportunity credit and lifetime learning credit), the deduction for student loan interest, or the tuition and fees deduction. Tax filing for 2012 You cannot exclude any interest income from qualified U. Tax filing for 2012 S. Tax filing for 2012 savings bonds you used for higher education expenses. Tax filing for 2012 If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You must include in income a greater percentage (up to 85%) of any social security or equivalent railroad retirement benefits you received. Tax filing for 2012 The following credits and deductions are reduced at income levels half those for a joint return: The child tax credit, The retirement savings contributions credit, The deduction for personal exemptions, and Itemized deductions. Tax filing for 2012 Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Tax filing for 2012 If your spouse itemizes deductions, you cannot claim the standard deduction. Tax filing for 2012 If you can claim the standard deduction, your basic standard deduction is half the amount allowed on a joint return. Tax filing for 2012 Adjusted gross income (AGI) limits. Tax filing for 2012    If your AGI on a separate return is lower than it would have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expenses. Tax filing for 2012 Individual retirement arrangements (IRAs). Tax filing for 2012    You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retirement plan at work during the year. Tax filing for 2012 Your deduction is reduced or eliminated if your income is more than a certain amount. Tax filing for 2012 This amount is much lower for married individuals who file separately and lived together at any time during the year. Tax filing for 2012 For more information, see How Much Can You Deduct? in chapter 1 of Publication 590. Tax filing for 2012 Rental activity losses. Tax filing for 2012    If you actively participated in a passive rental real estate activity that produced a loss, you generally can deduct the loss from your nonpassive income up to $25,000. Tax filing for 2012 This is called a special allowance. Tax filing for 2012 However, married persons filing separate returns who lived together at any time during the year cannot claim this special allowance. Tax filing for 2012 Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. Tax filing for 2012 See Rental Activities in Publication 925, Passive Activity and At-Risk Rules. Tax filing for 2012 Community property states. Tax filing for 2012    If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin and file separately, your income may be considered separate income or community income for income tax purposes. Tax filing for 2012 See Publication 555, Community Property. Tax filing for 2012 Joint Return After Separate Returns You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040X. Tax filing for 2012 You generally can change to a joint return any time within 3 years from the due date of the separate return or returns. Tax filing for 2012 This does not include any extensions. Tax filing for 2012 A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status. Tax filing for 2012 Separate Returns After Joint Return Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. Tax filing for 2012 Exception. Tax filing for 2012    A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Tax filing for 2012 The personal representative has 1 year from the due date (including extensions) of the return to make the change. Tax filing for 2012 See Publication 559 for more information on filing income tax returns for a decedent. Tax filing for 2012 Head of Household You may be able to file as head of household if you meet all the following requirements. Tax filing for 2012 You are unmarried or considered unmarried on the last day of the year. Tax filing for 2012 See Marital Status , earlier, and Considered Unmarried , later. Tax filing for 2012 You paid more than half the cost of keeping up a home for the year. Tax filing for 2012 A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). Tax filing for 2012 However, if the qualifying person is your dependent parent, he or she does not have to live with you. Tax filing for 2012 See Special rule for parent , later, under Qualifying Person. Tax filing for 2012 If you qualify to file as head of household, your tax rate usually will be lower than the rates for single or married filing separately. Tax filing for 2012 You will also receive a higher standard deduction than if you file as single or married filing separately. Tax filing for 2012 How to file. Tax filing for 2012    If you file as head of household, you can use Form 1040. Tax filing for 2012 If you have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Tax filing for 2012 Indicate your choice of this filing status by checking the box on line 4 of either form. Tax filing for 2012 Use the Head of a household column of the Tax Table or Section D of the Tax Computation Worksheet to figure your tax. Tax filing for 2012 Considered Unmarried To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. Tax filing for 2012 You are considered unmarried on the last day of the tax year if you meet all the following tests. Tax filing for 2012 You file a separate return (defined earlier under Joint Return After Separate Returns ). Tax filing for 2012 You paid more than half the cost of keeping up your home for the tax year. Tax filing for 2012 Your spouse did not live in your home during the last 6 months of the tax year. Tax filing for 2012 Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Tax filing for 2012 See Temporary absences , later. Tax filing for 2012 Your home was the main home of your child, stepchild, or foster child for more than half the year. Tax filing for 2012 (See Home of qualifying person , later, for rules applying to a child's birth, death, or temporary absence during the year. Tax filing for 2012 ) You must be able to claim an exemption for the child. Tax filing for 2012 However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rules described later in Children of divorced or separated parents (or parents who live apart) under Qualifying Child or in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative. Tax filing for 2012 The general rules for claiming an exemption for a dependent are explained later under Exemptions for Dependents . Tax filing for 2012 If you were considered married for part of the year and lived in a community property state (listed earlier under Married Filing Separately), special rules may apply in determining your income and expenses. Tax filing for 2012 See Publication 555 for more information. Tax filing for 2012 Nonresident alien spouse. Tax filing for 2012    You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. Tax filing for 2012 However, your spouse is not a qualifying person for head of household purposes. Tax filing for 2012 You must have another qualifying person and meet the other tests to be eligible to file as a head of household. Tax filing for 2012 Choice to treat spouse as resident. Tax filing for 2012    You are considered married if you choose to treat your spouse as a resident alien. Tax filing for 2012 See chapter 1 of Publication 519. Tax filing for 2012 Keeping Up a Home To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. Tax filing for 2012 You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 1. Tax filing for 2012 Worksheet 1. Tax filing for 2012 Cost of Keeping Up a Home         Amount You  Paid Total  Cost Property taxes $ $ Mortgage interest expense     Rent     Utility charges     Repairs/maintenance     Property insurance     Food consumed on the premises     Other household expenses     Totals $ $       Minus total amount you paid   ()       Amount others paid   $       If the total amount you paid is more than the amount others paid, you meet the requirement of paying more than half the cost of keeping up the home. Tax filing for 2012 Costs you include. Tax filing for 2012    Include in the cost of keeping up a home expenses such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Tax filing for 2012   If you used payments you received under Temporary Assistance for Needy Families (TANF) or other public assistance programs to pay part of the cost of keeping up your home, you cannot count them as money you paid. Tax filing for 2012 However, you must include them in the total cost of keeping up your home to figure if you paid over half the cost. Tax filing for 2012 Costs you do not include. Tax filing for 2012    Do not include the cost of clothing, education, medical treatment, vacations, life insurance, or transportation. Tax filing for 2012 Also, do not include the rental value of a home you own or the value of your services or those of a member of your household. Tax filing for 2012 Qualifying Person See Table 4 to see who is a qualifying person. Tax filing for 2012 Any person not described in Table 4 is not a qualifying person. Tax filing for 2012 Example 1—child. Tax filing for 2012 Your unmarried son lived with you all year and was 18 years old at the end of the year. Tax filing for 2012 He did not provide more than half of his own support and does not meet the tests to be a qualifying child of anyone else. Tax filing for 2012 As a result, he is your qualifying child (see Qualifying Child , later) and, because he is single, your qualifying person for head of household purposes. Tax filing for 2012 Example 2—child who is not qualifying person. Tax filing for 2012 The facts are the same as in Example 1 except your son was 25 years old at the end of the year and his gross income was $5,000. Tax filing for 2012 Because he does not meet the age test (explained later under Qualifying Child), your son is not your qualifying child. Tax filing for 2012 Because he does not meet the gross income test (explained later under Qualifying Relative), he is not your qualifying relative. Tax filing for 2012 As a result, he is not your qualifying person for head of household purposes. Tax filing for 2012 Example 3—girlfriend. Tax filing for 2012 Your girlfriend lived with you all year. Tax filing for 2012 Even though she may be your qualifying relative if the gross income and support tests (explained later) are met, she is not your qualifying person for head of household purposes because she is not related to you in one of the ways listed under Relatives who do not have to live with you . Tax filing for 2012 See Table 4. Tax filing for 2012 Example 4—girlfriend's child. Tax filing for 2012 The facts are the same as in Example 3 except your girlfriend's 10-year-old son also lived with you all year. Tax filing for 2012 He is not your qualifying child and, because he is your girlfriend's qualifying child, he is not your qualifying relative (see Not a Qualifying Child Test , later). Tax filing for 2012 As a result, he is not your qualifying person for head of household purposes. Tax filing for 2012 Home of qualifying person. Tax filing for 2012    Generally, the qualifying person must live with you for more than half of the year. Tax filing for 2012 Special rule for parent. Tax filing for 2012    If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Tax filing for 2012 However, you must be able to claim an exemption for your father or mother. Tax filing for 2012 Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Tax filing for 2012   You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Tax filing for 2012 Death or birth. Tax filing for 2012    You may be eligible to file as head of household even if the qualifying person who qualifies you for this filing status is born or dies during the year. Tax filing for 2012 To qualify you for head of household filing status, the qualifying person (as defined in Table 4) must be one of the following. Tax filing for 2012 Your qualifying child or qualifying relative who lived with you for more than half the part of the year he or she was alive. Tax filing for 2012 Your parent for whom you paid, for the entire part of the year he or she was alive, more than half the cost of keeping up the home he or she lived in. Tax filing for 2012 Example. Tax filing for 2012 You are unmarried. Tax filing for 2012 Your mother, for whom you can claim an exemption, lived in an apartment by herself. Tax filing for 2012 She died on September 2. Tax filing for 2012 The cost of the upkeep of her apartment for the year until her death was $6,000. Tax filing for 2012 You paid $4,000 and your brother paid $2,000. Tax filing for 2012 Your brother made no other payments towards your mother's support. Tax filing for 2012 Your mother had no income. Tax filing for 2012 Because you paid more than half of the cost of keeping up your mother's apartment from January 1 until her death, and you can claim an exemption for her, you can file as a head of household. Tax filing for 2012 Temporary absences. Tax filing for 2012    You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Tax filing for 2012 It must be reasonable to assume the absent person will return to the home after the temporary absence. Tax filing for 2012 You must continue to keep up the home during the absence. Tax filing for 2012 Kidnapped child. Tax filing for 2012    You may be eligible to file as head of household even if the child who is your qualifying person has been kidnapped. Tax filing for 2012 You can claim head of household filing status if all the following statements are true. Tax filing for 2012 The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Tax filing for 2012 In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping. Tax filing for 2012 You would have qualified for head of household filing status if the child had not been kidnapped. Tax filing for 2012   This treatment applies for all years until the earliest of: The year the child is returned, The year there is a determination that the child is dead, or The year the child would have reached age 18. Tax filing for 2012 Qualifying Widow(er) With Dependent Child If your spouse died in 2013, you can use married filing jointly as your filing status for 2013 if you otherwise qualify to use that status. Tax filing for 2012 The year of death is the last year for which you can file jointly with your deceased spouse. Tax filing for 2012 See Married Filing Jointly , earlier. Tax filing for 2012 You may be eligible to use qualifying widow(er) with dependent child as your filing status for 2 years following the year your spouse died. Tax filing for 2012 For example, if your spouse died in 2012 and you have not remarried, you may be able to use this filing status for 2013 and 2014. Tax filing for 2012 The rules for using this filing status are explained in detail here. Tax filing for 2012 This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). Tax filing for 2012 It does not entitle you to file a joint return. Tax filing for 2012 How to file. Tax filing for 2012    If you file as a qualifying widow(er) with dependent child, you can use Form 1040. Tax filing for 2012 If you also have taxable income of less than $100,000 and meet certain other conditions, you may be able to file Form 1040A. Tax filing for 2012 Check the box on line 5 of either form. Tax filing for 2012 Use the Married filing jointly column of the Tax Table or Section B of the Tax Computation Worksheet to figure your tax. Tax filing for 2012 Table 4. Tax filing for 2012 Who Is a Qualifying Person Qualifying You To File as Head of Household?1 See the text of this publication for the other requirements you must meet to claim head of household filing status. Tax filing for 2012 IF the person is your . Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012   AND . Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012   THEN that person is . Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2   he or she is single   a qualifying person, whether or not you can claim an exemption for the person. Tax filing for 2012   he or she is married and you can claim an exemption for him or her   a qualifying person. Tax filing for 2012   he or she is married and you cannot claim an exemption for him or her   not a qualifying person. Tax filing for 2012 3 qualifying relative4 who is your father or mother   you can claim an exemption for him or her5   a qualifying person. Tax filing for 2012 6   you cannot claim an exemption for him or her   not a qualifying person. Tax filing for 2012 qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests). Tax filing for 2012   he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you , later, and you can claim an exemption for him or her5   a qualifying person. Tax filing for 2012   he or she did not live with you more than half the year   not a qualifying person. Tax filing for 2012   he or she is not related to you in one of the ways listed under Relatives who do not have to live with you , later, and is your qualifying relative only because he or she lived with you all year as a member of your household   not a qualifying person. Tax filing for 2012   you cannot claim an exemption for him or her   not a qualifying person. Tax filing for 2012 1 A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Tax filing for 2012 2 The term “qualifying child” is defined under Exemptions for Dependents, later. Tax filing for 2012 Note: If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child, later. Tax filing for 2012 If you are the custodial parent and those rules apply, the child generally is your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Tax filing for 2012 3 This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Tax filing for 2012 4 The term “qualifying relative” is defined under Exemptions for Dependents, later. Tax filing for 2012 5 If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Tax filing for 2012 See Multiple Support Agreement . Tax filing for 2012 6 See Special rule for parent . Tax filing for 2012 Eligibility rules. Tax filing for 2012    You are eligible to file your 2013 return as a qualifying widow(er) with dependent child if you meet all the following tests. Tax filing for 2012 You were entitled to file a joint return with your spouse for the year your spouse died. Tax filing for 2012 It does not matter whether you actually filed a joint return. Tax filing for 2012 Your spouse died in 2011 or 2012 and you did not remarry before the end of 2013. Tax filing for 2012 You have a child or stepchild for whom you can claim an exemption. Tax filing for 2012 This does not include a foster child. Tax filing for 2012 This child lived in your home all year, except for temporary absences. Tax filing for 2012 See Temporary absences , earlier, under Head of Household. Tax filing for 2012 There are also exceptions, described later, for a child who was born or died during the year and for a kidnapped child. Tax filing for 2012 You paid more than half the cost of keeping up a home for the year. Tax filing for 2012 See Keeping Up a Home , earlier, under Head of Household. Tax filing for 2012 Example. Tax filing for 2012 John's wife died in 2011. Tax filing for 2012 John has not remarried. Tax filing for 2012 He has continued during 2012 and 2013 to keep up a home for himself and his child, who lives with him and for whom he can claim an exemption. Tax filing for 2012 For 2011 he was entitled to file a joint return for himself and his deceased wife. Tax filing for 2012 For 2012 and 2013, he can file as a qualifying widower with a dependent child. Tax filing for 2012 After 2013, he can file as head of household if he qualifies. Tax filing for 2012 Death or birth. Tax filing for 2012    You may be eligible to file as a qualifying widow(er) with dependent child if the child who qualifies you for this filing status is born or dies during the year. Tax filing for 2012 You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive. Tax filing for 2012 Kidnapped child. Tax filing for 2012    You may be eligible to file as a qualifying widow(er) with dependent child even if the child who qualifies you for this filing status has been kidnapped. Tax filing for 2012 You can claim qualifying widow(er) with dependent child filing status if all the following statements are true. Tax filing for 2012 The child is presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Tax filing for 2012 In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping. Tax filing for 2012 You would have qualified for qualifying widow(er) with dependent child filing status if the child had not been kidnapped. Tax filing for 2012 As mentioned earlier, this filing status is available for only 2 years following the year your spouse died. Tax filing for 2012 Exemptions Exemptions reduce your taxable income. Tax filing for 2012 You can deduct $3,900 for each exemption you claim in 2013. Tax filing for 2012 If you are entitled to two exemptions for 2013, you can deduct $7,800 ($3,900 × 2). Tax filing for 2012 But you may lose the benefit of part or all of your exemptions if your adjusted gross income is above a certain amount. Tax filing for 2012 See Phaseout of Exemptions , later. Tax filing for 2012 Types of exemptions. Tax filing for 2012    There are two types of exemptions you may be able to take: Personal exemptions for yourself and your spouse, and Exemptions for dependents (dependency exemptions). Tax filing for 2012 While each is worth the same amount ($3,900 for 2013), different rules, discussed later, apply to each type. Tax filing for 2012 Dependent cannot claim a personal exemption. Tax filing for 2012    If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim a personal exemption on his or her own tax return. Tax filing for 2012 How to claim exemptions. Tax filing for 2012    How you claim an exemption on your tax return depends on which form you file. Tax filing for 2012 Form 1040EZ filers. Tax filing for 2012    If you file Form 1040EZ, the exemption amount is combined with the standard deduction and entered on line 5. Tax filing for 2012 Form 1040A filers. Tax filing for 2012    If you file Form 1040A, complete lines 6a through 6d. Tax filing for 2012 The total number of exemptions you can claim is the total in the box on line 6d. Tax filing for 2012 Also complete line 26. Tax filing for 2012 Form 1040 filers. Tax filing for 2012    If you file Form 1040, complete lines 6a through 6d. Tax filing for 2012 The total number of exemptions you can claim is the total in the box on line 6d. Tax filing for 2012 Also complete line 42. Tax filing for 2012 If your adjusted gross income is more than $150,000, see Phaseout of Exemptions , later. Tax filing for 2012 U. Tax filing for 2012 S. Tax filing for 2012 citizen or resident alien. Tax filing for 2012    If you are a U. Tax filing for 2012 S. Tax filing for 2012 citizen, U. Tax filing for 2012 S. Tax filing for 2012 resident alien, U. Tax filing for 2012 S. Tax filing for 2012 national (defined later) or a resident of Canada or Mexico, you may qualify for any of the exemptions discussed here. Tax filing for 2012 Nonresident aliens. Tax filing for 2012    Generally, if you are a nonresident alien (other than a resident of Canada or Mexico, or certain residents of India or Korea), you can qualify for only one personal exemption for yourself. Tax filing for 2012 You cannot claim exemptions for a spouse or dependents. Tax filing for 2012   These restrictions do not apply if you are a nonresident alien married to a U. Tax filing for 2012 S. Tax filing for 2012 citizen or resident alien and have chosen to be treated as a resident of the United States. Tax filing for 2012 More information. Tax filing for 2012    For more information on exemptions if you are a nonresident alien, see chapter 5 in Publication 519. Tax filing for 2012 Dual-status taxpayers. Tax filing for 2012    If you have been both a nonresident alien and a resident alien in the same tax year, you should see Publication 519 for information on determining your exemptions. Tax filing for 2012 Personal Exemptions You are generally allowed one exemption for yourself. Tax filing for 2012 If you are married, you may be allowed one exemption for your spouse. Tax filing for 2012 These are called personal exemptions. Tax filing for 2012 Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. Tax filing for 2012 If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent. Tax filing for 2012 Your Spouse's Exemption Your spouse is never considered your dependent. Tax filing for 2012 Joint return. Tax filing for 2012    On a joint return, you can claim one exemption for yourself and one for your spouse. Tax filing for 2012 Separate return. Tax filing for 2012    If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. Tax filing for 2012 This is true even if the other taxpayer does not actually claim your spouse as a dependent. Tax filing for 2012 You can claim an exemption for your spouse even if he or she is a nonresident alien; in that case, your spouse must have no gross income for U. Tax filing for 2012 S. Tax filing for 2012 tax purposes and satisfy the other conditions listed above. Tax filing for 2012 Head of household. Tax filing for 2012    If you qualify for head of household filing status because you are considered unmarried, you can claim an exemption for your spouse if the conditions described in the preceding paragraph are satisfied. Tax filing for 2012   To claim the exemption for your spouse, check the box on line 6b of Form 1040 or Form 1040A and enter the name of your spouse in the space to the right of the box. Tax filing for 2012 Enter the SSN or ITIN of your spouse in the space provided at the top of Form 1040 or Form 1040A. Tax filing for 2012 Death of spouse. Tax filing for 2012    If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained in Joint return . Tax filing for 2012 If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return . Tax filing for 2012   If you remarried during the year, you cannot take an exemption for your deceased spouse. Tax filing for 2012   If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. Tax filing for 2012 If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. Tax filing for 2012 Divorced or separated spouse. Tax filing for 2012    If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. Tax filing for 2012 This rule applies even if you provided all of your former spouse's support. Tax filing for 2012 Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. Tax filing for 2012 You can claim an exemption for a dependent even if your dependent files a return. Tax filing for 2012 The term “dependent” means: A qualifying child, or A qualifying relative. Tax filing for 2012 The terms “ qualifying child ” and “ qualifying relative ” are defined later. Tax filing for 2012 You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. Tax filing for 2012 Dependent taxpayer test. Tax filing for 2012 Joint return test. Tax filing for 2012 Citizen or resident test. Tax filing for 2012 These three tests are explained in detail later. Tax filing for 2012 All the requirements for claiming an exemption for a dependent are summarized in Table 5. Tax filing for 2012 Table 5. Tax filing for 2012 Overview of the Rules for Claiming an Exemption for a Dependent This table is only an overview of the rules. Tax filing for 2012 For details, see the rest of this publication. Tax filing for 2012 You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer. Tax filing for 2012   You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid. Tax filing for 2012   You cannot claim a person as a dependent unless that person is a U. Tax filing for 2012 S. Tax filing for 2012 citizen, U. Tax filing for 2012 S. Tax filing for 2012 resident alien, U. Tax filing for 2012 S. Tax filing for 2012 national, or a resident of Canada or Mexico. Tax filing for 2012 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. Tax filing for 2012   Tests To Be a Qualifying Child Tests To Be a Qualifying Relative The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Tax filing for 2012   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled. Tax filing for 2012   The child must have lived with you for more than half of the year. Tax filing for 2012 2  The child must not have provided more than half of his or her own support for the year. Tax filing for 2012   The child is not filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid). Tax filing for 2012  If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. Tax filing for 2012 See the Special Rule for Qualifying Child of More Than One Person described later to find out which person is the person entitled to claim the child as a qualifying child. Tax filing for 2012 The person cannot be your qualifying child or the qualifying child of any other taxpayer. Tax filing for 2012   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you , or (b) must live with you all year as a member of your household2 (and your relationship must not violate local law). Tax filing for 2012   The person's gross income for the year must be less than $3,900. Tax filing for 2012 3  You must provide more than half of the person's total support for the year. Tax filing for 2012 4  1 There is an exception for certain adopted children. Tax filing for 2012 2 There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. Tax filing for 2012 3 There is an exception if the person is disabled and has income from a sheltered workshop. Tax filing for 2012 4 There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. Tax filing for 2012 Dependent not allowed a personal exemption. Tax filing for 2012 If you can claim an exemption for your dependent, the dependent cannot claim his or her own personal exemption on his or her own tax return. Tax filing for 2012 This is true even if you do not claim the dependent's exemption on your return. Tax filing for 2012 It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. Tax filing for 2012 Housekeepers, maids, or servants. Tax filing for 2012    If these people work for you, you cannot claim exemptions for them. Tax filing for 2012 Child tax credit. Tax filing for 2012    You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. Tax filing for 2012 For more information, see the instructions for the tax form you file (Form 1040 or 1040A). Tax filing for 2012 Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. Tax filing for 2012 Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. Tax filing for 2012 If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return. Tax filing for 2012 Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. Tax filing for 2012 Exception. Tax filing for 2012    You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid. Tax filing for 2012 Example 1—child files joint return. Tax filing for 2012 You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Tax filing for 2012 He earned $25,000 for the year. Tax filing for 2012 The couple files a joint return. Tax filing for 2012 You cannot take an exemption for your daughter. Tax filing for 2012 Example 2—child files joint return only as claim for refund of withheld tax. Tax filing for 2012 Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Tax filing for 2012 Neither is required to file a tax return. Tax filing for 2012 They do not have a child. Tax filing for 2012 Taxes were taken out of their pay so they file a joint return only to get a refund of the withheld taxes. Tax filing for 2012 The exception to the joint return test applies, so you are not disqualified from claiming an exemption for each of them just because they file a joint return. Tax filing for 2012 You can claim exemptions for each of them if all the other tests to do so are met. Tax filing for 2012 Example 3—child files joint return to claim American opportunity credit. Tax filing for 2012 The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Tax filing for 2012 He and his wife are not required to file a tax return. Tax filing for 2012 However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Tax filing for 2012 Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income
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The Tax Filing For 2012

Tax filing for 2012 Publication 583 - Main Content Table of Contents What New Business Owners Need To Know Forms of BusinessMore information. Tax filing for 2012 More information. Tax filing for 2012 Exception—Community Income. Tax filing for 2012 Exception—Qualified joint venture. Tax filing for 2012 More information. Tax filing for 2012 More information. Tax filing for 2012 Identification NumbersEmployer Identification Number (EIN) Payee's Identification Number Tax Year Accounting Method Business TaxesIncome Tax Self-Employment Tax Employment Taxes Excise Taxes Depositing Taxes Information Returns PenaltiesWaiver of penalty. Tax filing for 2012 Business ExpensesBusiness Start-Up Costs Depreciation Business Use of Your Home Car and Truck Expenses RecordkeepingWhy Keep Records? Kinds of Records To Keep How Long To Keep Records Sample Record System How to Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What New Business Owners Need To Know As a new business owner, you need to know your federal tax responsibilities. Tax filing for 2012 Table 1 can help you learn what those responsibilities are. Tax filing for 2012 Ask yourself each question listed in the table, then see the related discussion to find the answer. Tax filing for 2012 In addition to knowing about federal taxes, you need to make some basic business decisions. Tax filing for 2012 Ask yourself: What are my financial resources? What products and services will I sell? How will I market my products and services? How will I develop a strategic business plan? How will I manage my business on a day-to-day basis? How will I recruit employees? The Small Business Administration (SBA) is a federal agency that can help you answer these types of questions. Tax filing for 2012 For information on how to contact the SBA, see How to Get More Information, later. Tax filing for 2012 Forms of Business The most common forms of business are the sole proprietorship, partnership, and corporation. Tax filing for 2012 When beginning a business, you must decide which form of business to use. Tax filing for 2012 Legal and tax considerations enter into this decision. Tax filing for 2012 Only tax considerations are discussed in this publication. Tax filing for 2012 Your form of business determines which income tax return form you have to file. Tax filing for 2012 See Table 2 to find out which form you have to file. Tax filing for 2012 Sole proprietorships. Tax filing for 2012   A sole proprietorship is an unincorporated business that is owned by one individual. Tax filing for 2012 It is the simplest form of business organization to start and maintain. Tax filing for 2012 The business has no existence apart from you, the owner. Tax filing for 2012 Its liabilities are your personal liabilities. Tax filing for 2012 You undertake the risks of the business for all assets owned, whether or not used in the business. Tax filing for 2012 You include the income and expenses of the business on your personal tax return. Tax filing for 2012 More information. Tax filing for 2012   For more information on sole proprietorships, see Publication 334, Tax Guide for Small Business. Tax filing for 2012 If you are a farmer, see Publication 225, Farmer's Tax Guide. Tax filing for 2012 Partnerships. Tax filing for 2012   A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Tax filing for 2012 Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business. Tax filing for 2012   A partnership must file an annual information return to report the income, deductions, gains, losses, etc. Tax filing for 2012 , from its operations, but it does not pay income tax. Tax filing for 2012 Instead, it “passes through” any profits or losses to its partners. Tax filing for 2012 Each partner includes his or her share of the partnership's items on his or her tax return. Tax filing for 2012 More information. Tax filing for 2012   For more information on partnerships, see Publication 541, Partnerships. Tax filing for 2012 Husband and wife business. Tax filing for 2012   If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Tax filing for 2012 Do not use Schedule C or C-EZ. Tax filing for 2012 Instead, file Form 1065, U. Tax filing for 2012 S. Tax filing for 2012 Return of Partnership Income. Tax filing for 2012 For more information, see Publication 541, Partnerships. Tax filing for 2012 Exception—Community Income. Tax filing for 2012   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. Tax filing for 2012 S. Tax filing for 2012 possession, you can treat the business either as a sole proprietorship or a partnership. Tax filing for 2012 The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Tax filing for 2012 A change in your reporting position will be treated as a conversion of the entity. Tax filing for 2012 Exception—Qualified joint venture. Tax filing for 2012   If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Tax filing for 2012 Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. Tax filing for 2012 For an explanation of "material participation," see the Instructions for Schedule C, line G. Tax filing for 2012   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Tax filing for 2012 Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. Tax filing for 2012 For more information, see Qualified Joint Venture in the Instructions for Schedule SE. Tax filing for 2012 Corporations. Tax filing for 2012   In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. Tax filing for 2012 A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. Tax filing for 2012 A corporation can also take special deductions. Tax filing for 2012   The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. Tax filing for 2012 However, shareholders cannot deduct any loss of the corporation. Tax filing for 2012 More information. Tax filing for 2012   For more information on corporations, see Publication 542, Corporations. Tax filing for 2012 S corporations. Tax filing for 2012   An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. Tax filing for 2012 Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. Tax filing for 2012 On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss. Tax filing for 2012 More information. Tax filing for 2012   For more information on S corporations, see the instructions for Form 2553, Election by a Small Business Corporation, and Form 1120S, U. Tax filing for 2012 S. Tax filing for 2012 Income Tax Return for an S Corporation. Tax filing for 2012 Limited liability company. Tax filing for 2012   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Tax filing for 2012 The members of an LLC are not personally liable for its debts. Tax filing for 2012 An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in regulations section 301. Tax filing for 2012 7701-3. Tax filing for 2012 For more information, see the instructions for Form 8832, Entity Classification Election. Tax filing for 2012 Identification Numbers You must have a taxpayer identification number so the IRS can process your returns. Tax filing for 2012 The two most common kinds of taxpayer identification numbers are the social security number (SSN) and the employer identification number (EIN). Tax filing for 2012 An SSN is issued to individuals by the Social Security Administration (SSA) and is in the following format: 000–00–0000. Tax filing for 2012 An EIN is issued to individuals (sole proprietors), partnerships, corporations, and other entities by the IRS and is in the following format: 00–0000000. Tax filing for 2012 You must include your taxpayer identification number (SSN or EIN) on all returns and other documents you send to the IRS. Tax filing for 2012 You must also furnish your number to other persons who use your identification number on any returns or documents they send to the IRS. Tax filing for 2012 This includes returns or documents filed to report the following information. Tax filing for 2012 Interest, dividends, royalties, etc. Tax filing for 2012 , paid to you. Tax filing for 2012 Any amount paid to you as a dependent care provider. Tax filing for 2012 Certain other amounts paid to you that total $600 or more for the year. Tax filing for 2012 If you do not furnish your identification number as required, you may be subject to penalties. Tax filing for 2012 See Penalties, later. Tax filing for 2012 Employer Identification Number (EIN) EINs are used to identify the tax accounts of employers, certain sole proprietors, corporations, partnerships, estates, trusts, and other entities. Tax filing for 2012 If you don't already have an EIN, you need to get one if you: Have employees, Have a qualified retirement plan, Operate your business as a corporation or partnership, or File returns for: Employment taxes, or Excise taxes. Tax filing for 2012 Applying for an EIN. Tax filing for 2012   You may apply for an EIN: Online—Click on the EIN link at www. Tax filing for 2012 irs. Tax filing for 2012 gov/businesses/small. Tax filing for 2012 The EIN is issued immediately once the application information is validated. Tax filing for 2012 By telephone at 1-800-829-4933. Tax filing for 2012 By mailing or faxing Form SS-4, Application for Employer Identification Number. Tax filing for 2012 When to apply. Tax filing for 2012   You should apply for an EIN early enough to receive the number by the time you must file a return or statement or make a tax deposit. Tax filing for 2012 If you apply by mail, file Form SS-4 at least 4 weeks before you need an EIN. Tax filing for 2012 If you apply by telephone or through the IRS website, you can get an EIN immediately. Tax filing for 2012 If you apply by fax, you can get an EIN within 4 business days. Tax filing for 2012   If you do not receive your EIN by the time a return is due, file your return anyway. Tax filing for 2012 Write “Applied for” and the date you applied for the number in the space for the EIN. Tax filing for 2012 Do not use your social security number as a substitute for an EIN on your tax returns. Tax filing for 2012 More than one EIN. Tax filing for 2012   You should have only one EIN. Tax filing for 2012 If you have more than one EIN and are not sure which to use, contact the Internal Revenue Service Center where you file your return. Tax filing for 2012 Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. Tax filing for 2012 The IRS will tell you which number to use. Tax filing for 2012 More information. Tax filing for 2012   For more information about EINs, see Publication 1635, Understanding Your EIN. Tax filing for 2012 Payee's Identification Number In the operation of a business, you will probably make certain payments you must report on information returns (discussed later under Information Returns). Tax filing for 2012 The forms used to report these payments must include the payee's identification number. Tax filing for 2012 Employee. Tax filing for 2012   If you have employees, you must get an SSN from each of them. Tax filing for 2012 Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Tax filing for 2012 If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Tax filing for 2012 This may occur, for example, if the employee's name has changed due to marriage or divorce. Tax filing for 2012   If your employee does not have an SSN, he or she should file Form SS-5, Application for a Social Security Card, with the SSA. Tax filing for 2012 This form is available at SSA offices or by calling 1-800-772-1213. Tax filing for 2012 It is also available from the SSA website at www. Tax filing for 2012 ssa. Tax filing for 2012 gov. Tax filing for 2012 Other payee. Tax filing for 2012   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Tax filing for 2012 If you make reportable payments to an organization, such as a corporation or partnership, you must get its EIN. Tax filing for 2012   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Tax filing for 2012 This form is available from IRS offices or by calling 1-800-829-3676. Tax filing for 2012 It is also available from the IRS website at IRS. Tax filing for 2012 gov. Tax filing for 2012    If the payee does not provide you with an identification number, you may have to withhold part of the payments as backup withholding. Tax filing for 2012 For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Tax filing for 2012 Tax Year You must figure your taxable income and file an income tax return based on an annual accounting period called a tax year. Tax filing for 2012 A tax year is usually 12 consecutive months. Tax filing for 2012 There are two kinds of tax years. Tax filing for 2012 Calendar tax year. Tax filing for 2012 A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Tax filing for 2012 Fiscal tax year. Tax filing for 2012 A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Tax filing for 2012 A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Tax filing for 2012 If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Tax filing for 2012 You must use a calendar tax year if: You keep no books. Tax filing for 2012 You have no annual accounting period. Tax filing for 2012 Your present tax year does not qualify as a fiscal year. Tax filing for 2012 You are required to use a calendar year by a provision of the Internal Revenue Code or the Income Tax Regulations. Tax filing for 2012 For more information, see Publication 538, Accounting Periods and Methods. Tax filing for 2012 First-time filer. Tax filing for 2012   If you have never filed an income tax return, you can adopt either a calendar tax year or a fiscal tax year. Tax filing for 2012 You adopt a tax year by filing your first income tax return using that tax year. Tax filing for 2012 You have not adopted a tax year if you merely did any of the following. Tax filing for 2012 Filed an application for an extension of time to file an income tax return. Tax filing for 2012 Filed an application for an employer identification number. Tax filing for 2012 Paid estimated taxes for that tax year. Tax filing for 2012 Changing your tax year. Tax filing for 2012   Once you have adopted your tax year, you may have to get IRS approval to change it. Tax filing for 2012 To get approval, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year. Tax filing for 2012 You may have to pay a fee. Tax filing for 2012 For more information, see Publication 538. Tax filing for 2012 Accounting Method An accounting method is a set of rules used to determine when and how income and expenses are reported. Tax filing for 2012 You choose an accounting method for your business when you file your first income tax return. Tax filing for 2012 There are two basic accounting methods. Tax filing for 2012 Cash method. Tax filing for 2012 Under the cash method, you report income in the tax year you receive it. Tax filing for 2012 You usually deduct or capitalize expenses in the tax year you pay them. Tax filing for 2012 Accrual method. Tax filing for 2012 Under an accrual method, you generally report income in the tax year you earn it, even though you may receive payment in a later year. Tax filing for 2012 You deduct or capitalize expenses in the tax year you incur them, whether or not you pay them that year. Tax filing for 2012 For other methods, see Publication 538. Tax filing for 2012 If you need inventories to show income correctly, you must generally use an accrual method of accounting for purchases and sales. Tax filing for 2012 Inventories include goods held for sale in the normal course of business. Tax filing for 2012 They also include raw materials and supplies that will physically become a part of merchandise intended for sale. Tax filing for 2012 Inventories are explained in Publication 538. Tax filing for 2012 Certain small business taxpayers can use the cash method of accounting and can also account for inventoriable items as materials and supplies that are not incidental. Tax filing for 2012 For more information, see Publication 538. Tax filing for 2012 You must use the same accounting method to figure your taxable income and to keep your books. Tax filing for 2012 Also, you must use an accounting method that clearly shows your income. Tax filing for 2012 In general, any accounting method that consistently uses accounting principles suitable for your trade or business clearly shows income. Tax filing for 2012 An accounting method clearly shows income only if it treats all items of gross income and expense the same from year to year. Tax filing for 2012 More than one business. Tax filing for 2012   When you own more than one business, you can use a different accounting method for each business if the method you use for each clearly shows your income. Tax filing for 2012 You must keep a complete and separate set of books and records for each business. Tax filing for 2012 Changing your method of accounting. Tax filing for 2012   Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Tax filing for 2012 A change in accounting method not only includes a change in your overall system of accounting, but also a change in the treatment of any material item. Tax filing for 2012 For examples of changes that require approval and information on how to get approval for the change, see Publication 538. Tax filing for 2012 Business Taxes The form of business you operate determines what taxes you must pay and how you pay them. Tax filing for 2012 The following are the four general kinds of business taxes. Tax filing for 2012 Income tax. Tax filing for 2012 Self-employment tax. Tax filing for 2012 Employment taxes. Tax filing for 2012 Excise taxes. Tax filing for 2012 See Table 2 for the forms you file to report these taxes. Tax filing for 2012 You may want to get Publication 509. Tax filing for 2012 It has tax calendars that tell you when to file returns and make tax payments. Tax filing for 2012 Income Tax All businesses except partnerships must file an annual income tax return. Tax filing for 2012 Partnerships file an information return. Tax filing for 2012 Which form you use depends on how your business is organized. Tax filing for 2012 See Table 2 to find out which return you have to file. Tax filing for 2012 The federal income tax is a pay-as-you-go tax. Tax filing for 2012 You must pay the tax as you earn or receive income during the year. Tax filing for 2012 An employee usually has income tax withheld from his or her pay. Tax filing for 2012 If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Tax filing for 2012 If you are not required to make estimated tax payments, you may pay any tax due when you file your return. Tax filing for 2012 Table 2. Tax filing for 2012 Which Forms Must I File? IF you are a. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012   THEN you may be liable for. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012   Use Form. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 Sole proprietor   Income tax   1040 and Schedule C 1 or C-EZ (Schedule F 1 for farm business)     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES     Employment taxes:         • Social security and Medicare   taxes and income tax   withholding   941 or 944 (943 for farm employees)     • Federal unemployment (FUTA)   tax   940     Excise taxes   See Excise Taxes Partnership   Annual return of income   1065     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes Partner in a partnership (individual)   Income tax   1040 and Schedule E 2     Self-employment tax   1040 and Schedule SE     Estimated tax   1040-ES Corporation or S corporation   Income tax   1120 (corporation) 2  1120S (S corporation) 2     Estimated tax   1120-W (corporation only)     Employment taxes   Same as sole proprietor     Excise taxes   See Excise Taxes S corporation shareholder   Income tax   1040 and Schedule E 2     Estimated tax   1040-ES 1 File a separate schedule for each business. Tax filing for 2012 2 Various other schedules may be needed. Tax filing for 2012 Estimated tax. Tax filing for 2012   Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Tax filing for 2012 Sole proprietors, partners, and S corporation shareholders. Tax filing for 2012   You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Tax filing for 2012 Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. Tax filing for 2012 For more information, see Publication 505, Tax Withholding and Estimated Tax. Tax filing for 2012 Corporations. Tax filing for 2012   You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Tax filing for 2012 Use Form 1120-W, Estimated Tax for Corporations, to figure the estimated tax. Tax filing for 2012 You must deposit the payments as explained later under Depositing Taxes. Tax filing for 2012 For more information, see Publication 542. Tax filing for 2012 Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Tax filing for 2012 Your payments of SE tax contribute to your coverage under the social security system. Tax filing for 2012 Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Tax filing for 2012 You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Tax filing for 2012 Your net earnings from self-employment were $400 or more. Tax filing for 2012 You had church employee income of $108. Tax filing for 2012 28 or more. Tax filing for 2012 Use Schedule SE (Form 1040) to figure your SE tax. Tax filing for 2012 For more information, see Publication 334, Tax Guide for Small Business. Tax filing for 2012 You can deduct a portion of your SE tax as an adjustment to income on your Form 1040. Tax filing for 2012 The Social Security Administration (SSA) time limit for posting self-employment income. Tax filing for 2012   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Tax filing for 2012 If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Tax filing for 2012 The SSA will not change its records to increase your self-employment income. Tax filing for 2012 Employment Taxes This section briefly discusses the employment taxes you must pay, the forms you must file to report them, and other forms that must be filed when you have employees. Tax filing for 2012 Employment taxes include the following. Tax filing for 2012 Social security and Medicare taxes. Tax filing for 2012 Federal income tax withholding. Tax filing for 2012 Federal unemployment (FUTA) tax. Tax filing for 2012 If you have employees, you will need to get Publication 15, Circular E, Employer's Tax Guide. Tax filing for 2012 If you have agricultural employees, get Publication 51, Circular A, Agricultural Employer's Tax Guide. Tax filing for 2012 These publications explain your tax responsibilities as an employer. Tax filing for 2012 If you are not sure whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Tax filing for 2012 That publication has information to help you determine whether an individual is an employee or an independent contractor. Tax filing for 2012 If you classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty. Tax filing for 2012 An independent contractor is someone who is self-employed. Tax filing for 2012 Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. Tax filing for 2012 Federal Income, Social Security, and Medicare Taxes You generally must withhold federal income tax from your employee's wages. Tax filing for 2012 To figure how much federal income tax to withhold from each wage payment, use the employee's Form W-4 (discussed later under Hiring Employees) and the methods described in Publication 15. Tax filing for 2012 Social security and Medicare taxes pay for benefits that workers and their families receive under the Federal Insurance Contributions Act (FICA). Tax filing for 2012 Social security tax pays for benefits under the old-age, survivors, and disability insurance part of FICA. Tax filing for 2012 Medicare tax pays for benefits under the hospital insurance part of FICA. Tax filing for 2012 You withhold part of these taxes from your employee's wages and you pay a part yourself. Tax filing for 2012 To find out how much social security and Medicare tax to withhold and to pay, see Publication 15. Tax filing for 2012 Which form do I file?   Report these taxes on Form 941, Employer's QUARTERLY Federal Tax Return, or Form 944, Employer's ANNUAL Federal Tax Return. Tax filing for 2012 (Farm employers use Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Tax filing for 2012 ) Federal Unemployment (FUTA) Tax The federal unemployment tax is part of the federal and state program under the Federal Unemployment Tax Act (FUTA) that pays unemployment compensation to workers who lose their jobs. Tax filing for 2012 You report and pay FUTA tax separately from social security and Medicare taxes and withheld income tax. Tax filing for 2012 You pay FUTA tax only from your own funds. Tax filing for 2012 Employees do not pay this tax or have it withheld from their pay. Tax filing for 2012 Which form do I file?   Report federal unemployment tax on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Tax filing for 2012 See Publication 15 to find out if you can use this form. Tax filing for 2012 Hiring Employees Have the employees you hire fill out Form I-9 and Form W-4. Tax filing for 2012 Form I-9. Tax filing for 2012   You must verify that each new employee is legally eligible to work in the United States. Tax filing for 2012 Both you and the employee must complete the U. Tax filing for 2012 S. Tax filing for 2012 Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Tax filing for 2012 You can get the form from USCIS offices or from the USCIS website at www. Tax filing for 2012 uscis. Tax filing for 2012 gov. Tax filing for 2012 Call the USCIS at 1-800-375-5283 for more information about your responsibilities. Tax filing for 2012 Form W-4. Tax filing for 2012   Each employee must fill out Form W-4, Employee's Withholding Allowance Certificate. Tax filing for 2012 You will use the filing status and withholding allowances shown on this form to figure the amount of income tax to withhold from your employee's wages. Tax filing for 2012 For more information, see Publication 15. Tax filing for 2012 Employees claiming more than 10 withholding allowances. Tax filing for 2012   An employer of an employee who claims more than 10 withholding allowances for wages paid can use several methods of withholding. Tax filing for 2012 See section 16 of Publication 15. Tax filing for 2012 Form W-2 Wage Reporting After the calendar year is over, you must furnish copies of Form W-2, Wage and Tax Statement, to each employee to whom you paid wages during the year. Tax filing for 2012 You must also send copies to the Social Security Administration. Tax filing for 2012 See Information Returns, later, for more information on Form W-2. Tax filing for 2012 Excise Taxes This section describes the excise taxes you may have to pay and the forms you have to file if you do any of the following. Tax filing for 2012 Manufacture or sell certain products. Tax filing for 2012 Operate certain kinds of businesses. Tax filing for 2012 Use various kinds of equipment, facilities, or products. Tax filing for 2012 Receive payment for certain services. Tax filing for 2012 For more information on excise taxes, see Publication 510, Excise Taxes. Tax filing for 2012 Form 720. Tax filing for 2012   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Tax filing for 2012 Environmental taxes. Tax filing for 2012 Communications and air transportation taxes. Tax filing for 2012 Fuel taxes. Tax filing for 2012 Tax on the first retail sale of heavy trucks, trailers, and tractors. Tax filing for 2012 Manufacturers taxes on the sale or use of a variety of different articles. Tax filing for 2012 Form 2290. Tax filing for 2012   There is a federal excise tax on certain trucks, truck tractors, and buses used on public highways. Tax filing for 2012 The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Tax filing for 2012 Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Tax filing for 2012 For more information, see the instructions for Form 2290. Tax filing for 2012 Form 730. Tax filing for 2012   If you are in the business of accepting wagers or conducting a wagering pool or lottery, you may be liable for the federal excise tax on wagering. Tax filing for 2012 Use Form 730, Monthly Tax Return for Wagers, to figure the tax on the wagers you receive. Tax filing for 2012 Form 11-C. Tax filing for 2012   Use Form 11-C, Occupational Tax and Registration Return for Wagering, to register for any wagering activity and to pay the federal occupational tax on wagering. Tax filing for 2012 Depositing Taxes You generally have to deposit employment taxes, certain excise taxes, corporate income tax, and S corporation taxes before you file your return. Tax filing for 2012 Generally, taxpayers are required to deposit taxes through the Electronic Federal Tax Payment System (EFTPS). Tax filing for 2012 Any business that has a federal tax obligation and requests a new EIN will automatically be enrolled in EFTPS. Tax filing for 2012 Through the mail, the business will receive an EFTPS PIN package that contains instructions for activating its EFTPS enrollment. Tax filing for 2012 Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Tax filing for 2012 The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Tax filing for 2012 You must give a copy of each information return you are required to file to the recipient or payer. Tax filing for 2012 In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Tax filing for 2012 For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Tax filing for 2012 Form 1099-MISC. Tax filing for 2012   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. Tax filing for 2012 These payments include the following items. Tax filing for 2012 Payments of $600 or more for services performed for your business by people not treated as your employees, such as subcontractors, attorneys, accountants, or directors. Tax filing for 2012 Rent payments of $600 or more, other than rents paid to real estate agents. Tax filing for 2012 Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Tax filing for 2012 Royalty payments of $10 or more. Tax filing for 2012 Payments to certain crew members by operators of fishing boats. Tax filing for 2012 You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Tax filing for 2012 Form W-2. Tax filing for 2012   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Tax filing for 2012 For more information on what to report on Form W-2, see the Instructions for Forms W-2 and W-3. Tax filing for 2012 Form 8300. Tax filing for 2012   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction or two or more related business transactions. Tax filing for 2012 Cash includes U. Tax filing for 2012 S. Tax filing for 2012 and foreign coin and currency. Tax filing for 2012 It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Tax filing for 2012 For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Tax filing for 2012 Penalties The law provides penalties for not filing returns or paying taxes as required. Tax filing for 2012 Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement. Tax filing for 2012 Failure to file tax returns. Tax filing for 2012   If you do not file your tax return by the due date, you may have to pay a penalty. Tax filing for 2012 The penalty is based on the tax not paid by the due date. Tax filing for 2012 See your tax return instructions for more information about this penalty. Tax filing for 2012 Failure to pay tax. Tax filing for 2012   If you do not pay your taxes by the due date, you will have to pay a penalty for each month, or part of a month, that your taxes are not paid. Tax filing for 2012 For more information, see your tax return instructions. Tax filing for 2012 Failure to withhold, deposit, or pay taxes. Tax filing for 2012   If you do not withhold income, social security, or Medicare taxes from employees, or if you withhold taxes but do not deposit them or pay them to the IRS, you may be subject to a penalty of the unpaid tax, plus interest. Tax filing for 2012 You may also be subject to penalties if you deposit the taxes late. Tax filing for 2012 For more information, see Publication 15. Tax filing for 2012 Failure to follow information reporting requirements. Tax filing for 2012   The following penalties apply if you are required to file information returns. Tax filing for 2012 For more information, see the General Instructions for Certain Information Returns. Tax filing for 2012 Failure to file information returns. Tax filing for 2012 A penalty applies if you do not file information returns by the due date, if you do not include all required information, or if you report incorrect information. Tax filing for 2012 Failure to furnish correct payee statements. Tax filing for 2012 A penalty applies if you do not furnish a required statement to a payee by the due date, if you do not include all required information, or if you report incorrect information. Tax filing for 2012 Waiver of penalty. Tax filing for 2012   These penalties will not apply if you can show that the failures were due to reasonable cause and not willful neglect. Tax filing for 2012   In addition, there is no penalty for failure to include all the required information, or for including incorrect information, on a de minimis number of information returns if you correct the errors by August 1 of the year the returns are due. Tax filing for 2012 (To be considered de minimis, the number of returns cannot exceed the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Tax filing for 2012 ) Failure to supply taxpayer identification number. Tax filing for 2012   If you do not include your taxpayer identification number (SSN or EIN) or the taxpayer identification number of another person where required on a return, statement, or other document, you may be subject to a penalty of $50 for each failure. Tax filing for 2012 You may also be subject to the $50 penalty if you do not give your taxpayer identification number to another person when it is required on a return, statement, or other document. Tax filing for 2012 Business Expenses You can deduct business expenses on your income tax return. Tax filing for 2012 These are the current operating costs of running your business. Tax filing for 2012 To be deductible, a business expense must be both ordinary and necessary. Tax filing for 2012 An ordinary expense is one that is common and accepted in your field of business, trade, or profession. Tax filing for 2012 A necessary expense is one that is helpful and appropriate for your business, trade, or profession. Tax filing for 2012 An expense does not have to be indispensable to be considered necessary. Tax filing for 2012 The following are brief explanations of some expenses that are of interest to people starting a business. Tax filing for 2012 There are many other expenses that you may be able to deduct. Tax filing for 2012 See your form instructions and Publication 535, Business Expenses. Tax filing for 2012 Business Start-Up Costs Business start-up costs are the expenses you incur before you actually begin business operations. Tax filing for 2012 Your business start-up costs will depend on the type of business you are starting. Tax filing for 2012 They may include costs for advertising, travel, surveys, and training. Tax filing for 2012 These costs are generally capital expenses. Tax filing for 2012 You usually recover costs for a particular asset (such as machinery or office equipment) through depreciation (discussed next). Tax filing for 2012 You can elect to deduct up to $5,000 of business start-up costs and $5,000 of organizational costs paid or incurred after October 22, 2004. Tax filing for 2012 The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Tax filing for 2012 Any remaining cost must be amortized. Tax filing for 2012 For more information about amortizing start-up and organizational costs, see chapter 7 in Publication 535. Tax filing for 2012 Depreciation If property you acquire to use in your business has a useful life that extends substantially beyond the year it is placed in service, you generally cannot deduct the entire cost as a business expense in the year you acquire it. Tax filing for 2012 You must spread the cost over more than one tax year and deduct part of it each year. Tax filing for 2012 This method of deducting the cost of business property is called depreciation. Tax filing for 2012 Business property you must depreciate includes the following items. Tax filing for 2012 Office furniture. Tax filing for 2012 Buildings. Tax filing for 2012 Machinery and equipment. Tax filing for 2012 You can choose to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. Tax filing for 2012 This deduction is known as the “section 179 deduction. Tax filing for 2012 ” For more information about depreciation and the section 179 deduction, see Publication 946, How To Depreciate Property. Tax filing for 2012 Depreciation must be taken in the year it is allowable. Tax filing for 2012 Allowable depreciation not taken in a prior year cannot be taken in the current year. Tax filing for 2012 If you do not deduct the correct depreciation, you may be able to make a correction by filing Form 1040X, Amended U. Tax filing for 2012 S. Tax filing for 2012 Individual Income Tax Return, or by changing your accounting method. Tax filing for 2012 For more information on how to correct depreciation deductions, see chapter 1 in Publication 946. Tax filing for 2012 Business Use of Your Home To deduct expenses related to the business use of part of your home, you must meet specific requirements. Tax filing for 2012 Even then, your deduction may be limited. Tax filing for 2012 To qualify to claim expenses for business use of your home, you must meet both the following tests. Tax filing for 2012 Your use of the business part of your home must be: Exclusive (however, see Exceptions to exclusive use, later), Regular, For your trade or business, AND The business part of your home must be one of the following: Your principal place of business (defined later), A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or A separate structure (not attached to your home) you use in connection with your trade or business. Tax filing for 2012 Exclusive use. Tax filing for 2012   To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. Tax filing for 2012 The area used for business can be a room or other separately identifiable space. Tax filing for 2012 The space does not need to be marked off by a permanent partition. Tax filing for 2012   You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes. Tax filing for 2012 Exceptions to exclusive use. Tax filing for 2012   You do not have to meet the exclusive use test if either of the following applies. Tax filing for 2012 You use part of your home for the storage of inventory or product samples. Tax filing for 2012 You use part of your home as a daycare facility. Tax filing for 2012 For an explanation of these exceptions, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Tax filing for 2012 Principal place of business. Tax filing for 2012   Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements. Tax filing for 2012 You use it exclusively and regularly for administrative or management activities of your trade or business. Tax filing for 2012 You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. Tax filing for 2012   Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors. Tax filing for 2012 The relative importance of the activities performed at each location. Tax filing for 2012 If the relative importance factor does not determine your principal place of business, the time spent at each location. Tax filing for 2012    If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. Tax filing for 2012 However, for other ways to qualify to deduct home office expenses, see Publication 587. Tax filing for 2012 Which form do I file?   If you file Schedule C (Form 1040), use Form 8829, Expenses for Business Use of Your Home, to figure your deduction. Tax filing for 2012 If you file Schedule F (Form 1040) or you are a partner, you can use the worksheet in Publication 587. Tax filing for 2012 More information. Tax filing for 2012   For more information about business use of your home, see Publication 587. Tax filing for 2012 Car and Truck Expenses If you use your car or truck in your business, you can deduct the costs of operating and maintaining it. Tax filing for 2012 You generally can deduct either your actual expenses or the standard mileage rate. Tax filing for 2012 Actual expenses. Tax filing for 2012   If you deduct actual expenses, you can deduct the cost of the following items: Depreciation Lease payments Registration Garage rent Licenses Repairs Gas Oil Tires Insurance Parking fees Tolls   If you use your vehicle for both business and personal purposes, you must divide your expenses between business and personal use. Tax filing for 2012 You can divide your expenses based on the miles driven for each purpose. Tax filing for 2012 Example. Tax filing for 2012 You are the sole proprietor of a flower shop. Tax filing for 2012 You drove your van 20,000 miles during the year. Tax filing for 2012 16,000 miles were for delivering flowers to customers and 4,000 miles were for personal use. Tax filing for 2012 You can claim only 80% (16,000 ÷ 20,000) of the cost of operating your van as a business expense. Tax filing for 2012 Standard mileage rate. Tax filing for 2012   Instead of figuring actual expenses, you may be able to use the standard mileage rate to figure the deductible costs of operating your car, van, pickup, or panel truck for business purposes. Tax filing for 2012 You can use the standard mileage rate for a vehicle you own or lease. Tax filing for 2012 The standard mileage rate is a specified amount of money you can deduct for each business mile you drive. Tax filing for 2012 It is announced annually by the IRS. Tax filing for 2012 To figure your deduction, multiply your business miles by the standard mileage rate for the year. Tax filing for 2012    Generally, if you use the standard mileage rate, you cannot deduct your actual expenses. Tax filing for 2012 However, you may be able to deduct business-related parking fees, tolls, interest on your car loan, and certain state and local taxes. Tax filing for 2012 Choosing the standard mileage rate. Tax filing for 2012   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Tax filing for 2012 In later years, you can choose to use either the standard mileage rate or actual expenses. Tax filing for 2012   If you use the standard mileage rate for a car you lease, you must choose to use it for the entire lease period (including renewals). Tax filing for 2012 Additional information. Tax filing for 2012   For more information about the rules for claiming car and truck expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Tax filing for 2012 Recordkeeping This part explains why you must keep records, what kinds of records you must keep, and how to keep them. Tax filing for 2012 It also explains how long you must keep your records for federal tax purposes. Tax filing for 2012 A sample recordkeeping system is illustrated at the end of this part. Tax filing for 2012 Why Keep Records? Everyone in business must keep records. Tax filing for 2012 Good records will help you do the following. Tax filing for 2012 Monitor the progress of your business. Tax filing for 2012   You need good records to monitor the progress of your business. Tax filing for 2012 Records can show whether your business is improving, which items are selling, or what changes you need to make. Tax filing for 2012 Good records can increase the likelihood of business success. Tax filing for 2012 Prepare your financial statements. Tax filing for 2012   You need good records to prepare accurate financial statements. Tax filing for 2012 These include income (profit and loss) statements and balance sheets. Tax filing for 2012 These statements can help you in dealing with your bank or creditors and help you manage your business. Tax filing for 2012 An income statement shows the income and expenses of the business for a given period of time. Tax filing for 2012 A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Tax filing for 2012 Identify source of receipts. Tax filing for 2012   You will receive money or property from many sources. Tax filing for 2012 Your records can identify the source of your receipts. Tax filing for 2012 You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. Tax filing for 2012 Keep track of deductible expenses. Tax filing for 2012   You may forget expenses when you prepare your tax return unless you record them when they occur. Tax filing for 2012 Prepare your tax returns. Tax filing for 2012   You need good records to prepare your tax returns. Tax filing for 2012 These records must support the income, expenses, and credits you report. Tax filing for 2012 Generally, these are the same records you use to monitor your business and prepare your financial statements. Tax filing for 2012 Support items reported on tax returns. Tax filing for 2012   You must keep your business records available at all times for inspection by the IRS. Tax filing for 2012 If the IRS examines any of your tax returns, you may be asked to explain the items reported. Tax filing for 2012 A complete set of records will speed up the examination. Tax filing for 2012 Kinds of Records To Keep Except in a few cases, the law does not require any specific kind of records. Tax filing for 2012 You can choose any recordkeeping system suited to your business that clearly shows your income and expenses. Tax filing for 2012 The business you are in affects the type of records you need to keep for federal tax purposes. Tax filing for 2012 You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. Tax filing for 2012 See Accounting Method, earlier. Tax filing for 2012 If you are in more than one business, you should keep a complete and separate set of records for each business. Tax filing for 2012 A corporation should keep minutes of board of directors' meetings. Tax filing for 2012 Your recordkeeping system should include a summary of your business transactions. Tax filing for 2012 This summary is ordinarily made in your books (for example, accounting journals and ledgers). Tax filing for 2012 Your books must show your gross income, as well as your deductions and credits. Tax filing for 2012 For most small businesses, the business checkbook (discussed later) is the main source for entries in the business books. Tax filing for 2012 In addition, you must keep supporting documents, explained later. Tax filing for 2012 Electronic records. Tax filing for 2012   All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. Tax filing for 2012 When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law. Tax filing for 2012 An electronic storage system is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media. Tax filing for 2012 The electronic storage system must index, store, preserve, retrieve and reproduce the electronically stored books and records in legible format. Tax filing for 2012 All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Tax filing for 2012 Electronic storage systems are also subject to the same controls and retention guidelines as those imposed on your original hard copy books and records. Tax filing for 2012   The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. Tax filing for 2012 You still have the responsibility of retaining any other books and records that are required to be retained. Tax filing for 2012   The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. Tax filing for 2012 This test is not considered an examination and the results must be shared with you. Tax filing for 2012 If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. Tax filing for 2012 If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax. Tax filing for 2012 For details on electronic storage system requirements, see Revenue Procedure 97-22, available in Internal Revenue Bulletin 1997-13. Tax filing for 2012 Supporting Documents Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. Tax filing for 2012 Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Tax filing for 2012 These documents contain information you need to record in your books. Tax filing for 2012 It is important to keep these documents because they support the entries in your books and on your tax return. Tax filing for 2012 Keep them in an orderly fashion and in a safe place. Tax filing for 2012 For instance, organize them by year and type of income or expense. Tax filing for 2012 Gross receipts. Tax filing for 2012   Gross receipts are the income you receive from your business. Tax filing for 2012 You should keep supporting documents that show the amounts and sources of your gross receipts. Tax filing for 2012 Documents that show gross receipts include the following. Tax filing for 2012 Cash register tapes. Tax filing for 2012 Bank deposit slips. Tax filing for 2012 Receipt books. Tax filing for 2012 Invoices. Tax filing for 2012 Credit card charge slips. Tax filing for 2012 Forms 1099-MISC. Tax filing for 2012 Purchases. Tax filing for 2012   Purchases are the items you buy and resell to customers. Tax filing for 2012 If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Tax filing for 2012 Your supporting documents should show the amount paid and that the amount was for purchases. Tax filing for 2012 Documents for purchases include the following. Tax filing for 2012 Canceled checks. Tax filing for 2012 Cash register tape receipts. Tax filing for 2012 Credit card sales slips. Tax filing for 2012 Invoices. Tax filing for 2012 These records will help you determine the value of your inventory at the end of the year. Tax filing for 2012 See Publication 538 for information on methods for valuing inventory. Tax filing for 2012 Expenses. Tax filing for 2012   Expenses are the costs you incur (other than purchases) to carry on your business. Tax filing for 2012 Your supporting documents should show the amount paid and that the amount was for a business expense. Tax filing for 2012 Documents for expenses include the following. Tax filing for 2012 Canceled checks. Tax filing for 2012 Cash register tapes. Tax filing for 2012 Account statements. Tax filing for 2012 Credit card sales slips. Tax filing for 2012 Invoices. Tax filing for 2012 Petty cash slips for small cash payments. Tax filing for 2012    A petty cash fund allows you to make small payments without having to write checks for small amounts. Tax filing for 2012 Each time you make a payment from this fund, you should make out a petty cash slip and attach it to your receipt as proof of payment. Tax filing for 2012 Travel, transportation, entertainment, and gift expenses. Tax filing for 2012   Specific recordkeeping rules apply to these expenses. Tax filing for 2012 For more information, see Publication 463. Tax filing for 2012 Employment taxes. Tax filing for 2012   There are specific employment tax records you must keep. Tax filing for 2012 For a list, see Publication 15. Tax filing for 2012 Assets. Tax filing for 2012   Assets are the property, such as machinery and furniture you own and use in your business. Tax filing for 2012 You must keep records to verify certain information about your business assets. Tax filing for 2012 You need records to figure the annual depreciation and the gain or loss when you sell the assets. Tax filing for 2012 Your records should show the following information. Tax filing for 2012 When and how you acquired the asset. Tax filing for 2012 Purchase price. Tax filing for 2012 Cost of any improvements. Tax filing for 2012 Section 179 deduction taken. Tax filing for 2012 Deductions taken for depreciation. Tax filing for 2012 Deductions taken for casualty losses, such as losses resulting from fires or storms. Tax filing for 2012 How you used the asset. Tax filing for 2012 When and how you disposed of the asset. Tax filing for 2012 Selling price. Tax filing for 2012 Expenses of sale. Tax filing for 2012   The following documents may show this information. Tax filing for 2012 Purchase and sales invoices. Tax filing for 2012 Real estate closing statements. Tax filing for 2012 Canceled checks. Tax filing for 2012 What if I don't have a canceled check?   If you do not have a canceled check, you may be able to prove payment with certain financial account statements prepared by financial institutions. Tax filing for 2012 These include account statements prepared for the financial institution by a third party. Tax filing for 2012 These account statements must be highly legible. Tax filing for 2012 The following table lists acceptable account statements. Tax filing for 2012  IF payment is by. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 THEN the statement must show the. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 Check Check number. Tax filing for 2012 Amount. Tax filing for 2012 Payee's name. Tax filing for 2012 Date the check amount was posted to the account by the financial institution. Tax filing for 2012 Electronic funds transfer Amount transferred. Tax filing for 2012 Payee's name. Tax filing for 2012 Date the transfer was posted to the account by the financial institution. Tax filing for 2012 Credit card Amount charged. Tax filing for 2012 Payee's name. Tax filing for 2012 Transaction date. Tax filing for 2012    Proof of payment of an amount, by itself, does not establish you are entitled to a tax deduction. Tax filing for 2012 You should also keep other documents, such as credit card sales slips and invoices, to show that you also incurred the cost. Tax filing for 2012 Recording Business Transactions A good recordkeeping system includes a summary of your business transactions. Tax filing for 2012 (Your business transactions are shown on the supporting documents just discussed. Tax filing for 2012 ) Business transactions are ordinarily summarized in books called journals and ledgers. Tax filing for 2012 You can buy them at your local stationery or office supply store. Tax filing for 2012 A journal is a book where you record each business transaction shown on your supporting documents. Tax filing for 2012 You may have to keep separate journals for transactions that occur frequently. Tax filing for 2012 A ledger is a book that contains the totals from all of your journals. Tax filing for 2012 It is organized into different accounts. Tax filing for 2012 Whether you keep journals and ledgers and how you keep them depends on the type of business you are in. Tax filing for 2012 For example, a recordkeeping system for a small business might include the following items. Tax filing for 2012 Business checkbook. Tax filing for 2012 Daily summary of cash receipts. Tax filing for 2012 Monthly summary of cash receipts. Tax filing for 2012 Check disbursements journal. Tax filing for 2012 Depreciation worksheet. Tax filing for 2012 Employee compensation record. Tax filing for 2012 The business checkbook is explained next. Tax filing for 2012 The other items are illustrated later under Sample Record System. Tax filing for 2012 The system you use to record business transactions will be more effective if you follow good recordkeeping practices. Tax filing for 2012 For example, record expenses when they occur, and identify the source of recorded receipts. Tax filing for 2012 Generally, it is best to record transactions on a daily basis. Tax filing for 2012 Business checkbook. Tax filing for 2012   One of the first things you should do when you start a business is open a business checking account. Tax filing for 2012 You should keep your business account separate from your personal checking account. Tax filing for 2012   The business checkbook is your basic source of information for recording your business expenses. Tax filing for 2012 You should deposit all daily receipts in your business checking account. Tax filing for 2012 You should check your account for errors by reconciling it. Tax filing for 2012 See Reconciling the checking account, later. Tax filing for 2012   Consider using a checkbook that allows enough space to identify the source of deposits as business income, personal funds, or loans. Tax filing for 2012 You should also note on the deposit slip the source of the deposit and keep copies of all slips. Tax filing for 2012   You should make all payments by check to document business expenses. Tax filing for 2012 Write checks payable to yourself only when making withdrawals from your business for personal use. Tax filing for 2012 Avoid writing checks payable to cash. Tax filing for 2012 If you must write a check for cash to pay a business expense, include the receipt for the cash payment in your records. Tax filing for 2012 If you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment. Tax filing for 2012    Use the business account for business purposes only. Tax filing for 2012 Indicate the source of deposits and the type of expense in the checkbook. Tax filing for 2012 Reconciling the checking account. Tax filing for 2012   When you receive your bank statement, make sure the statement, your checkbook, and your books agree. Tax filing for 2012 The statement balance may not agree with the balance in your checkbook and books if the statement: Includes bank charges you did not enter in your books and subtract from your checkbook balance, or Does not include deposits made after the statement date or checks that did not clear your account before the statement date. Tax filing for 2012   By reconciling your checking account, you will: Verify how much money you have in the account, Make sure that your checkbook and books reflect all bank charges and the correct balance in the checking account, and Correct any errors in your bank statement, checkbook, and books. Tax filing for 2012    You should reconcile your checking account each month. Tax filing for 2012     Before you reconcile your monthly bank statement, check your own figures. Tax filing for 2012 Begin with the balance shown in your checkbook at the end of the previous month. Tax filing for 2012 To this balance, add the total cash deposited during the month and subtract the total cash disbursements. Tax filing for 2012   After checking your figures, the result should agree with your checkbook balance at the end of the month. Tax filing for 2012 If the result does not agree, you may have made an error in recording a check or deposit. Tax filing for 2012 You can find the error by doing the following. Tax filing for 2012 Adding the amounts on your check stubs and comparing that total with the total in the “amount of check” column in your check disbursements journal. Tax filing for 2012 If the totals do not agree, check the individual amounts to see if an error was made in your check stub record or in the related entry in your check disbursements journal. Tax filing for 2012 Adding the deposit amounts in your checkbook. Tax filing for 2012 Compare that total with the monthly total in your cash receipt book, if you have one. Tax filing for 2012 If the totals do not agree, check the individual amounts to find any errors. Tax filing for 2012   If your checkbook and journal entries still disagree, then refigure the running balance in your checkbook to make sure additions and subtractions are correct. Tax filing for 2012   When your checkbook balance agrees with the balance figured from the journal entries, you may begin reconciling your checkbook with the bank statement. Tax filing for 2012 Many banks print a reconciliation worksheet on the back of the statement. Tax filing for 2012   To reconcile your account, follow these steps. Tax filing for 2012 Compare the deposits listed on the bank statement with the deposits shown in your checkbook. Tax filing for 2012 Note all differences in the dollar amounts. Tax filing for 2012 Compare each canceled check, including both check number and dollar amount, with the entry in your checkbook. Tax filing for 2012 Note all differences in the dollar amounts. Tax filing for 2012 Mark the check number in the checkbook as having cleared the bank. Tax filing for 2012 After accounting for all checks returned by the bank, those not marked in your checkbook are your outstanding checks. Tax filing for 2012 Prepare a bank reconciliation. Tax filing for 2012 One is illustrated later under Sample Record System. Tax filing for 2012 Update your checkbook and journals for items shown on the reconciliation as not recorded (such as service charges) or recorded incorrectly. Tax filing for 2012 At this point, the adjusted bank statement balance should equal your adjusted checkbook balance. Tax filing for 2012 If you still have differences, check the previous steps to find the errors. Tax filing for 2012   Table 3. Tax filing for 2012 Period of Limitations IF you. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012   THEN the period is. Tax filing for 2012 . Tax filing for 2012 . Tax filing for 2012 1. Tax filing for 2012 Owe additional tax and situations (2), (3), and (4), below, do not apply to you   3 years 2. Tax filing for 2012 Do not report income that you should report and it is more than 25% of the gross income shown on the return   6 years 3. Tax filing for 2012 File a fraudulent return   Not limited 4. Tax filing for 2012 Do not file a return   Not limited 5. Tax filing for 2012 File a claim for credit or refund after you filed your return   Later of: 3 years or  2 years after tax   was paid 6. Tax filing for 2012 File a claim for a loss from worthless securities or a bad debt deduction   7 years Bookkeeping System You must decide whether to use a single-entry or a double-entry bookkeeping system. Tax filing for 2012 The single-entry system of bookkeeping is the simplest to maintain, but it may not be suitable for everyone. Tax filing for 2012 You may find the double-entry system better because it has built-in checks and balances to assure accuracy and control. Tax filing for 2012 Single-entry. Tax filing for 2012   A single-entry system is based on the income statement (profit or loss statement). Tax filing for 2012 It can be a simple and practical system if you are starting a small business. Tax filing for 2012 The system records the flow of income and expenses through the use of: A daily summary of cash receipts, and Monthly summaries of cash receipts and disbursements. Tax filing for 2012 Double-entry. Tax filing for 2012   A double-entry bookkeeping system uses journals and ledgers. Tax filing for 2012 Transactions are first entered in a journal and then posted to ledger accounts. Tax filing for 2012 These accounts show income, expenses, assets (property a business owns), liabilities (debts of a business), and net worth (excess of assets over liabilities). Tax filing for 2012 You close income and expense accounts at the end of each tax year. Tax filing for 2012 You keep asset, liability, and net worth accounts open on a permanent basis. Tax filing for 2012   In the double-entry system, each account has a left side for debits and a right side for credits. Tax filing for 2012 It is self-balancing because you record every transaction as a debit entry in one account and as a credit entry in another. Tax filing for 2012   Under this system, the total debits must equal the total credits after you post the journal entries to the ledger accounts. Tax filing for 2012 If the amounts do not balance, you have made an error and you must find and correct it. Tax filing for 2012   An example of a journal entry exhibiting a payment of rent in October is shown next. Tax filing for 2012 General Journal Date Description of Entry Debit  Credit Oct. Tax filing for 2012 5 Rent expense 780. Tax filing for 2012 00     Cash   780. Tax filing for 2012 00                 Computerized System There are computer software packages you can use for recordkeeping. Tax filing for 2012 They can be purchased in many retail stores. Tax filing for 2012 These packages are very helpful and relatively easy to use; they require very little knowledge of bookkeeping and accounting. Tax filing for 2012 If you use a computerized system, you must be able to produce sufficient legible records to support and verify entries made on your return and determine your correct tax liability. Tax filing for 2012 To meet this qualification, the machine-sensible records must reconcile with your books and return. Tax filing for 2012 These records must provide enough detail to identify the underlying source documents. Tax filing for 2012 You must also keep all machine-sensible records and a complete description of the computerized portion of your recordkeeping system. Tax filing for 2012 This documentation must be sufficiently detailed to show all of the following items. Tax filing for 2012 Functions being performed as the data flows through the system. Tax filing for 2012 Controls used to ensure accurate and reliable processing. Tax filing for 2012 Controls used to prevent the unauthorized addition, alteration, or deletion of retained records. Tax filing for 2012 Charts of accounts and detailed account descriptions. Tax filing for 2012 See Revenue Procedure 98-25 in Cumulative Bulletin 1998-1 for more information. Tax filing for 2012 How Long To Keep Records You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Tax filing for 2012 Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out. Tax filing for 2012 The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax. Tax filing for 2012 Table 3 contains the periods of limitations that apply to income tax returns. Tax filing for 2012 Unless otherwise stated, the years refer to the period after the return was filed. Tax filing for 2012 Returns filed before the due date are treated as filed on the due date. Tax filing for 2012 Keep copies of your filed tax returns. Tax filing for 2012 They help in preparing future tax returns and making computations if you file an amended return. Tax filing for 2012 Employment taxes. Tax filing for 2012   If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. Tax filing for 2012 For more information about recordkeeping for employment taxes, see Publication 15. Tax filing for 2012 Assets. Tax filing for 2012   Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. Tax filing for 2012 You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property. Tax filing for 2012   Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. Tax filing for 2012 You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition. Tax filing for 2012 Records for nontax purposes. Tax filing for 2012   When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. Tax filing for 2012 For example, your insurance company or creditors may require you to keep them longer than the IRS does. Tax filing for 2012 Sample Record System This example illustrates a single-entry system used by Henry Brown, who is the sole proprietor of a small automobile body shop. Tax filing for 2012 Henry uses part-time help, has no inventory of items held for sale, and uses the cash method of accounting. Tax filing for 2012 These sample records should not be viewed as a recommendation of how to keep your records. Tax filing for 2012 They are intended only to show how one business keeps its records. Tax filing for 2012 1. Tax filing for 2012 Daily Summary of Cash Receipts This summary is a record of cash sales for the day. Tax filing for 2012 It accounts for cash at the end of the day over the amount in the Change and Petty Cash Fund at the beginning of the day. Tax filing for 2012 Henry takes the cash sales entry from his cash register tape. Tax filing for 2012 If he had no cash register, he would simply total his cash sale slips and any other cash received that day. Tax filing for 2012 He carries the total receipts shown in this summary for January 3 ($267. Tax filing for 2012 80), including cash sales ($263. Tax filing for 2012 60) and sales tax ($4. Tax filing for 2012 20), to the Monthly Summary of Cash Receipts. Tax filing for 2012 Petty cash fund. Tax filing for 2012   Henry uses a petty cash fund to make small payments without having to write checks for small amounts. Tax filing for 2012 Each time he makes a payment from this fund, he makes out a petty cash slip and attaches it to his receipt as proof of payment. Tax filing for 2012 He sets up a fixed amount ($50) in his petty cash fund. Tax filing for 2012 The total of the unspent petty cash and the amounts on the petty cash slips should equal the fixed amount of the fund. Tax filing for 2012 When the totals on the petty cash slips approach the fixed amount, he brings the cash in the fund back to the fixed amount by writing a check to “Petty Cash” for the total of the outstanding slips. Tax filing for 2012 (See the Check Disbursements Journal entry for check number 92. Tax filing for 2012 ) This restores the fund to its fixed amount of $50. Tax filing for 2012 He then summarizes the slips and enters them in the proper columns in the monthly check disbursements journal. Tax filing for 2012 2. Tax filing for 2012 Monthly Summary of Cash Receipts This shows the income activity for the month. Tax filing for 2012 Henry carries the total monthly net sales shown in this summary for January ($4,865. Tax filing for 2012 05) to his Annual Summary. Tax filing for 2012 To figure total monthly net sales, Henry reduces the total monthly receipts by the sales tax imposed on his customers and turned over to the state. Tax filing for 2012 He cannot take a deduction for sales tax turned over to the state because he only collected the tax. Tax filing for 2012 He does not include the tax in his income. Tax filing for 2012 3. Tax filing for 2012 Check Disbursements Journal Henry enters checks drawn on the business checking account in the Check Disbursements Journal each day. Tax filing for 2012 All checks are prenumbered and each check number is listed and accounted for in the column provided in the journal. Tax filing for 2012 Frequent expenses have their own headings across the sheet. Tax filing for 2012 He enters in a separate column expenses that require comparatively numerous or large payments each month, such as materials, gross payroll, and rent. Tax filing for 2012 Under the General Accounts column, he enters small expenses that normally have only one or two monthly payments, such as licenses and postage. Tax filing for 2012 Henry does not pay personal or nonbusiness expenses by checks drawn on the business account. Tax filing for 2012 If he did, he would record them in the journal, even though he could not deduct them as business expenses. Tax filing for 2012 Henry carries the January total of expenses for materials ($1,083. Tax filing for 2012 50) to the Annual Summary. Tax filing for 2012 Similarly, he enters the monthly total of expenses for telephone, truck/auto, etc. Tax filing for 2012 , in the appropriate columns of that summary. Tax filing for 2012 4. Tax filing for 2012 Employee Compensation Record This record shows the following information. Tax filing for 2012 The number of hours Henry's employee worked in a pay period. Tax filing for 2012 The employee's total pay for the period. Tax filing for 2012 The deductions Henry withheld in figuring the employee's net pay. Tax filing for 2012 The monthly gross payroll. Tax filing for 2012 Henry carries the January gross payroll ($520) to the Annual Summary. Tax filing for 2012 5. Tax filing for 2012 Annual Summary This annual summary of monthly cash receipts and expense totals provides the final amounts to enter on Henry's tax return. Tax filing for 2012 He figures the cash receipts total from the total of monthly cash receipts shown in the Monthly Summary of Cash Receipts. Tax filing for 2012 He figures the expense totals from the totals of monthly expense items shown in the Check Disbursements Journal. Tax filing for 2012 As in the journal, he keeps each major expense in a separate column. Tax filing for 2012 Henry carries the cash receipts total shown in the annual summary ($47,440. Tax filing for 2012 9