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10 Ez Form

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10 Ez Form

10 ez form Index A Acknowledgment of contributions, Acknowledgment of Charitable Contributions of $250 or More Adverse determination, Adverse determination. 10 ez form Affordable Care Act Hospitals, What's New, New Requirements for section 501(c)(3) Hospitals Under the Affordable Care Act. 10 ez form Aged, home for, Home for the aged. 10 ez form Agricultural organization, Agricultural and Horticultural Organizations Airport, Other organizations. 10 ez form Alumni association, Alumni association. 10 ez form Amateur athletic organizations, Amateur Athletic Organizations Animals, prevention of cruelty to, Prevention of Cruelty to Children or Animals Appeal procedures, Appeal Procedures Application procedures, Application Procedures, Required Inclusions Bylaws, Bylaws. 10 ez form Conformed copy, Conformed copy. 10 ez form Description of activities, Description of activities. 10 ez form Employer identification number, Required Inclusions Financial data, Financial data. 10 ez form Organizing documents, Organizing documents. 10 ez form Aquatic resources, Agricultural and Horticultural Organizations Articles of organization, Articles of Organization Assistance (see Tax help) Athletic organization, Athletic organization. 10 ez form , Amateur Athletic Organizations Attorney's fees, Acceptance of attorneys' fees. 10 ez form Attribution, special rules, Special rules of attribution. 10 ez form B Black lung benefit trust, 501(c)(21) - Black Lung Benefit Trusts Board of trade, Board of trade. 10 ez form Bureau defined, Bureau defined. 10 ez form Burial benefit insurance, Burial and funeral benefit insurance organization. 10 ez form Business income, unrelated, Unrelated Business Income Tax Return Business league, 501(c)(6) - Business Leagues, etc. 10 ez form C Cemetery company, 501(c)(13) - Cemetery Companies Chamber of commerce, Chamber of commerce. 10 ez form Change in legal structure, Organizational Changes and Exempt Status Charitable contributions, Acknowledgment of Charitable Contributions of $250 or More, Contributions to 501(c)(3) Organizations Charitable organization, Section 501(c)(3) Organizations, Charitable Organizations Charitable risk pools, Charitable Risk Pools Child care organization, Child care organizations. 10 ez form Children, prevention of cruelty to, Prevention of Cruelty to Children or Animals Church, Churches. 10 ez form Integrated auxiliaries, Integrated auxiliaries. 10 ez form Civic leagues, 501(c)(4) - Civic Leagues and Social Welfare Organizations Clinic, Clinic. 10 ez form CO-OP Health Insurance Issuers, 501(c)(29) - CO-OP Health Insurance Issuers College bookstore, restaurant, College book stores, cafeterias, restaurants, etc. 10 ez form Comments, Comments and suggestions. 10 ez form Community association, Other organizations. 10 ez form Community nursing bureau, Community nursing bureau. 10 ez form Community trust, Community Trusts Contributions, charitable, Acknowledgment of Charitable Contributions of $250 or More, Contributions to 501(c)(3) Organizations Court appeals, Appeal to Courts Credit union, 501(c)(14) - Credit Unions and Other Mutual Financial Organizations D Determination letter, Rulings and Determination Letters Disclosures, required, Disclosure of Quid Pro Quo Contributions Dues used for lobbying, Dues Used for Lobbying or Political Activities Nondeductible contributions, Solicitation of Nondeductible Contributions Quid pro quo contributions, Disclosure of Quid Pro Quo Contributions Services available from government, Penalties. 10 ez form Dispositions of donated property, Donee Information Return Disqualified persons, Disqualified persons. 10 ez form Domestic fraternal society, Domestic Fraternal Societies (501(c)(10)) Donor advised funds Excess benefit transaction, Donor advised fund transactions occurring after August 17, 2006. 10 ez form Dues used for political or legislative activities, Dues Used for Lobbying or Political Activities, Deduction not allowed for dues used for political or legislative activities. 10 ez form E Educational organizations, Educational Organizations, Educational organizations. 10 ez form Employees' association, 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' Associations Employment taxes, Employment Tax Returns Endowment fund, Endowment funds. 10 ez form Estimated tax, Estimated tax. 10 ez form Excess benefit transaction, Excess Benefit Transaction, Supporting organization transactions occurring after July 25, 2006. 10 ez form Disqualified person, Tax on Disqualified Persons, Disqualified Person Controlled entity, 35%, 35% controlled entity. 10 ez form Family members, Family members. 10 ez form Substantial influence, Persons not considered to have substantial influence. 10 ez form Disregarded benefits, Disregarded benefits. 10 ez form Donor advised funds, Donor advised fund transactions occurring after August 17, 2006. 10 ez form , Exception. 10 ez form Excise tax, Excise tax on excess benefit transactions. 10 ez form Initial contracts, Special Exception for Initial Contracts Reasonable compensation, Reasonable Compensation. 10 ez form Rebuttable presumption, Rebuttable presumption that a transaction is not an excess benefit transaction. 10 ez form Excise tax Black lung benefit trust, Excise taxes. 10 ez form Lobbying expenditures, Tax on excess expenditures to influence legislation. 10 ez form , Tax on disqualifying lobbying expenditures. 10 ez form Political expenditures, Excise taxes on political expenditures. 10 ez form Private foundations, Excise taxes on private foundations. 10 ez form , Excise Taxes on Private Foundations Exempt function, Political Organization Income Tax Return Exempt purposes, Section 501(c)(3) Organizations Exemption for terrorist organization, Non-exemption for terrorist organizations. 10 ez form Extensions of time, Extensions of time for filing. 10 ez form F Facts and circumstances test, Facts and circumstances test. 10 ez form Fair market value, estimate of, Good faith estimate of fair market value (FMV). 10 ez form Filing requirements, Annual Information Returns Annual information returns, Annual Information Returns Donee information return, Donee Information Return Due date, Political Organization Income Tax Return Employment tax, Employment Tax Returns Excise tax, Excise taxes on private foundations. 10 ez form , Excise Taxes on Private Foundations Political organization, Political Organization Income Tax Return Private foundations, Form 990-PF Unrelated business income, Unrelated Business Income Tax Return Form 990-N, Annual Electronic Filing Requirement for Small Tax-Exempt Organizations Forms, Forms Required 1023, Forms Required, Administrative Remedies, 270-day period. 10 ez form , Information required for subordinate organizations. 10 ez form , Annual Information Return, Form 1023. 10 ez form , Organizations Not Required To File Form 1023, Private Schools, When to file application. 10 ez form , Lobbying Expenditures, Volunteer fire companies. 10 ez form 1024, Forms Required, Application made under wrong paragraph of section 501(c). 10 ez form , Annual Information Return, 501(c)(4) - Civic Leagues and Social Welfare Organizations, 501(c)(6) - Business Leagues, etc. 10 ez form , 501(c)(7) - Social and Recreation Clubs, 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal Societies, Fraternal Beneficiary Societies (501(c)(8)), Domestic Fraternal Societies (501(c)(10)), Local Employees' Associations (501(c)(4)), Voluntary Employees' Beneficiary Associations (501(c)(9)), Supplemental Unemployment Benefit Trusts (501(c)(17)), 501(c)(13) - Cemetery Companies, 501(c)(19) - Veterans' Organizations, 501(c)(20) - Group Legal Services Plan Organizations, 501(c)(2) - Title-Holding Corporations for Single Parent Corporations, 501(c)(25) - Title-Holding Corporations or Trusts for Multiple Parent Corporations 1040, Effect on employees. 10 ez form 1065, Annual Information Returns 1120–POL, Political Organization Income Tax Return 1128, Central organizations. 10 ez form 2848, Power of attorney. 10 ez form , Representation. 10 ez form 4720, Tax on excess expenditures to influence legislation. 10 ez form 5578, Certification. 10 ez form 5768, Making the election. 10 ez form 6069, Tax treatment of donations. 10 ez form 8274, FICA tax exemption election. 10 ez form 8282, Dispositions of donated property. 10 ez form 8283, Form 8283. 10 ez form 8300, Report of Cash Received 8718, Forms Required, Power of attorney. 10 ez form 8821, Representation. 10 ez form 8871, Reporting Requirements for a Political Organization, Annual Information Return 8872, Reporting Requirements for a Political Organization, Annual Information Return 990, Keeping the Group Exemption Letter in Force, Forms 990 and 990-EZ, Annual Information Return, Making the election. 10 ez form 990-BL, Annual Information Returns, 990-EZ, Forms 990 and 990-EZ, Form 990-EZ. 10 ez form 990-PF, Form 990-PF, Excise taxes on private foundations. 10 ez form , Excise Taxes on Private Foundations 990-T, Unrelated Business Income Tax Return SS-4, Required Inclusions, Employer identification number. 10 ez form W–2, Revoking the election. 10 ez form Fraternal beneficiary society, Fraternal Beneficiary Societies (501(c)(8)) Fraternal societies, Organizations subject to requirements. 10 ez form , 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal Societies Free tax services, Free help with your tax return. 10 ez form Funeral benefit insurance, Burial and funeral benefit insurance organization. 10 ez form G Gifts and contributions, public charity, Gifts, contributions, and grants distinguished from gross receipts. 10 ez form Good faith determinations, What's New, New organization. 10 ez form Governmental unit, Governmental units. 10 ez form Grant Distinguished from gross receipts, Grants. 10 ez form Exclusion for unusual grant, Unusual grants. 10 ez form , Unusual grants. 10 ez form From public charity, Grants from public charities. 10 ez form , Grants from public charities. 10 ez form Grantor and contributor, reliance on ruling, Reliance by grantors and contributors. 10 ez form Gross receipts from nonmembership sources, Gross receipts from nonmembership sources. 10 ez form Group exemption letter, Group Exemption Letter H Health coverage organization, 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations Help (see Tax help) High-risk health coverage organization, 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations Home for the aged, Home for the aged. 10 ez form Homeowners' association, Homeowners' associations. 10 ez form Horticultural organization, Agricultural and Horticultural Organizations Hospital, Hospital. 10 ez form , Hospitals and medical research organizations. 10 ez form I Inactive organization, Organizational Changes and Exempt Status Industrial development, Other organizations. 10 ez form Instrumentalities, Instrumentalities. 10 ez form Insurance, organizations providing, Organizations Providing Insurance L Labor organization, Organizations subject to requirements. 10 ez form , Labor Organizations Law, public interest, Public-interest law firms. 10 ez form Legislative activity, Lobbying Expenditures, Legislative activity. 10 ez form Listed transaction, Prohibited tax shelter transaction. 10 ez form Literary organizations, Literary Organizations Loans, organizations providing, Organization providing loans. 10 ez form Lobbying expenditures, Lobbying Expenditures Local benevolent life insurance associations, Local Life Insurance Associations Local employees' association, Local Employees' Associations (501(c)(4)) Lodge system, Lodge system. 10 ez form M Medical research organization, Medical research organization. 10 ez form Medicare and Medicaid payments, Medicare and Medicaid payments. 10 ez form Membership fee, Membership fees. 10 ez form , Membership fees distinguished from gross receipts. 10 ez form Modification of exemption, Revocation or Modification of Exemption Mutual financial organization, 501(c)(14) - Credit Unions and Other Mutual Financial Organizations Mutual or cooperative association, Mutual or Cooperative Associations N Nursing bureau, Community nursing bureau. 10 ez form O One-third support test, One-third support test. 10 ez form Organization assets, Dedication and Distribution of Assets Dedication, Dedication. 10 ez form Distribution, Distribution. 10 ez form Organizational changes, Organizational Changes and Exempt Status P Penalties, Penalties for failure to file. 10 ez form Failure to allow public inspection, Penalties Failure to disclose, Penalty for failure to disclose. 10 ez form , Penalties. 10 ez form , Penalty. 10 ez form Failure to file, Penalties for failure to file. 10 ez form Perpetual care organization, Perpetual care organization. 10 ez form Political activity, Dues Used for Lobbying or Political Activities, Political activity. 10 ez form , Political activity. 10 ez form Political organization Income tax return, Political Organization Income Tax Return Taxable income, Political Organization Income Tax Return Power of attorney, Power of attorney. 10 ez form Preferred stock, Common and preferred stock. 10 ez form Prevention of cruelty to children or animals, Prevention of Cruelty to Children or Animals Private delivery service, Private delivery service. 10 ez form Private foundations, Private Foundations Private operating foundation, Private Operating Foundations Private school, Private Schools, Racially Nondiscriminatory Policy Prohibited tax shelter transactions Entity managers, Entity manager. 10 ez form Entity managers excise tax, Manager Level Tax Listed transaction, Prohibited tax shelter transaction. 10 ez form Prohibited reportable transactions, Prohibited tax shelter transaction. 10 ez form Subsequently listed transaction, Subsequently listed transaction. 10 ez form Tax-exempt entities, Tax-exempt entities. 10 ez form Public charity Gifts and contributions, Gifts, contributions, and grants distinguished from gross receipts. 10 ez form Grant from, Grants from public charities. 10 ez form Section 509(a)(1), Section 509(a)(1) Organizations Section 509(a)(2), Section 509(a)(2) Organizations Section 509(a)(3), Section 509(a)(3) Organizations Section 509(a)(4), Section 509(a)(4) Organizations Support test, One-third support test. 10 ez form , One-third support test. 10 ez form Public inspection Annual return, Annual Information Return Exemption applications, Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms Forms 8871 and 8872, Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms Public-interest law firm, Public-interest law firms. 10 ez form Publications (see Tax help) Publicly supported organization, Publicly supported organizations. 10 ez form , Qualifying as Publicly Supported Attraction of public support, Attraction of public support requirement. 10 ez form Ten-percent-of-support, Ten-percent-of-support requirement. 10 ez form R Racial composition, How to determine racial composition. 10 ez form Racially nondiscriminatory policy, Racially Nondiscriminatory Policy Real estate board, Real estate board. 10 ez form Recognition of exemption, application, Application for Recognition of Exemption Religious organizations, Religious Organizations Requests other than applications, Miscellaneous Procedures Responsiveness test, Responsiveness test. 10 ez form Revocation of exemption, Revocation or Modification of Exemption Ruling letter, Rulings and Determination Letters S Scholarship Private school, Scholarship and loan programs. 10 ez form Scholarships, Scholarships. 10 ez form School, private, Private Schools Scientific organizations, Scientific Organizations Section 501(c)(3) organizations Amateur athletic, Amateur Athletic Organizations Literary, Literary Organizations Prevention of cruelty, Prevention of Cruelty to Children or Animals Private foundations, Private Foundations and Public Charities Public charities, Public Charities Qualifications, Section 501(c)(3) Organizations Religious, Religious Organizations Scientific, Scientific Organizations Section 501(c)(3) Organizations Charitable, Charitable Organizations Educational, Educational Organizations and Private Schools Single entity, Single entity. 10 ez form Social clubs, Organizations subject to requirements. 10 ez form , 501(c)(7) - Social and Recreation Clubs Social welfare organization, Organizations subject to requirements. 10 ez form , 501(c)(4) - Civic Leagues and Social Welfare Organizations Specified organizations, Specified organizations. 10 ez form Sports organization, amateur, Qualified amateur sports organization. 10 ez form State-sponsored, 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations High-risk health coverage organization, 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations Workers' compensation reinsurance organization, 501(c)(27) - Qualified State-Sponsored Workers' Compensation Organizations Stock or commodity exchange, Stock or commodity exchange. 10 ez form Suggestions, Comments and suggestions. 10 ez form Supplemental unemployment benefit trust, Supplemental Unemployment Benefit Trusts (501(c)(17)) Support, Support. 10 ez form , Support from a governmental unit. 10 ez form , Support from the general public. 10 ez form Support test, One-third support test. 10 ez form Facts and circumstances, Facts and circumstances test. 10 ez form One-third, One-third support test. 10 ez form Public charity, One-third support test. 10 ez form Supporting organization, Supporting organization transactions occurring after July 25, 2006. 10 ez form T Tax help, Technical advice, Appeals Office Consideration Testing for public safety, Section 509(a)(4) Organizations Title-holding corporation, 501(c)(2) - Title-Holding Corporations for Single Parent Corporations U Unemployment benefit trust, Supplemental Unemployment Benefit Trusts (501(c)(17)) Unrelated business income, Unrelated Business Income Tax Return Unusual grants, Unusual grants. 10 ez form , Unusual grants. 10 ez form User fee, Power of attorney. 10 ez form , User fee. 10 ez form V Veterans' organization, 501(c)(19) - Veterans' Organizations Voluntary employees' beneficiary association, Voluntary Employees' Beneficiary Associations (501(c)(9)) Volunteer fire company, Volunteer fire companies. 10 ez form W War veterans' organization, 501(c)(19) - Veterans' Organizations Withdrawal of application, Withdrawal of application. 10 ez form Withholding information from public, Requests for withholding of information from the public. 10 ez form Work Opportunity Tax Credit, Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans. 10 ez form Workers' compensation reinsurance organization, 501(c)(27) - Qualified State-Sponsored Workers' Compensation Organizations Prev  Up     Home   More Online Publications
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The 10 Ez Form

10 ez form 2. 10 ez form   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. 10 ez form Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. 10 ez form Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. 10 ez form Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. 10 ez form The annual accounting period for your income tax return is called a tax year. 10 ez form You can use one of the following tax years. 10 ez form A calendar tax year. 10 ez form A fiscal tax year. 10 ez form Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. 10 ez form A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. 10 ez form Calendar tax year. 10 ez form   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. 10 ez form   You must adopt the calendar tax year if any of the following apply. 10 ez form You do not keep books. 10 ez form You have no annual accounting period. 10 ez form Your present tax year does not qualify as a fiscal year. 10 ez form Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. 10 ez form   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. 10 ez form For more information, see Change in tax year, later. 10 ez form   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. 10 ez form Fiscal tax year. 10 ez form   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. 10 ez form 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. 10 ez form   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. 10 ez form   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. 10 ez form Change in tax year. 10 ez form   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. 10 ez form See the Instructions for Form 1128 for exceptions. 10 ez form If you qualify for an automatic approval request, a user fee is not required. 10 ez form If you do not qualify for automatic approval, a ruling must be requested. 10 ez form See the instructions for Form 1128 for information about user fees if you are requesting a ruling. 10 ez form Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. 10 ez form Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. 10 ez form You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. 10 ez form After that, if you want to change your accounting method, you must generally get IRS approval. 10 ez form See Change in Accounting Method, later. 10 ez form Kinds of methods. 10 ez form   Generally, you can use any of the following accounting methods. 10 ez form Cash method. 10 ez form An accrual method. 10 ez form Special methods of accounting for certain items of income and expenses. 10 ez form Combination method using elements of two or more of the above. 10 ez form You must use the same accounting method to figure your taxable income and to keep your books. 10 ez form Also, you must use an accounting method that clearly shows your income. 10 ez form Business and personal items. 10 ez form   You can account for business and personal items under different accounting methods. 10 ez form For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. 10 ez form Two or more businesses. 10 ez form   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. 10 ez form They are separate and distinct only if you maintain complete and separate books and records for each business. 10 ez form Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. 10 ez form However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. 10 ez form For more information, see Inventories, later. 10 ez form Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. 10 ez form If you receive property or services, you must include their fair market value in income. 10 ez form Example. 10 ez form On December 30, 2012, Mrs. 10 ez form Sycamore sent you a check for interior decorating services you provided to her. 10 ez form You received the check on January 2, 2013. 10 ez form You must include the amount of the check in income for 2013. 10 ez form Constructive receipt. 10 ez form   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. 10 ez form You do not need to have possession of it. 10 ez form If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. 10 ez form Example. 10 ez form Interest is credited to your bank account in December 2013. 10 ez form You do not withdraw it or enter it into your passbook until 2014. 10 ez form You must include it in your gross income for 2013. 10 ez form Delaying receipt of income. 10 ez form   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. 10 ez form You must report the income in the year the property is received or made available to you without restriction. 10 ez form Example. 10 ez form Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. 10 ez form She was told in December that her payment was available. 10 ez form At her request, she was not paid until January 2014. 10 ez form She must include this payment in her 2013 income because it was constructively received in 2013. 10 ez form Checks. 10 ez form   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. 10 ez form Example. 10 ez form Dr. 10 ez form Redd received a check for $500 on December 31, 2013, from a patient. 10 ez form She could not deposit the check in her business account until January 2, 2014. 10 ez form She must include this fee in her income for 2013. 10 ez form Debts paid by another person or canceled. 10 ez form   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. 10 ez form If you receive income in this way, you constructively receive the income when the debt is canceled or paid. 10 ez form For more information, see Canceled Debt under Kinds of Income in chapter 5. 10 ez form Repayment of income. 10 ez form   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. 10 ez form If the amount you repay is over $3,000, a special rule applies. 10 ez form For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. 10 ez form Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. 10 ez form This includes business expenses for which you contest liability. 10 ez form However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. 10 ez form Expenses paid in advance. 10 ez form   You can deduct an expense you pay in advance only in the year to which it applies. 10 ez form Example. 10 ez form You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. 10 ez form You can deduct $500 in 2013 and $500 in 2014. 10 ez form Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. 10 ez form The purpose of an accrual method of accounting is to match income and expenses in the correct year. 10 ez form Income—General Rule Under an accrual method, you generally include an amount in your gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. 10 ez form Example. 10 ez form You are a calendar year accrual method taxpayer. 10 ez form You sold a computer on December 28, 2013. 10 ez form You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. 10 ez form You must include the amount received for the computer in your 2013 income. 10 ez form Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. 10 ez form Estimated income. 10 ez form   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. 10 ez form Change in payment schedule for services. 10 ez form   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. 10 ez form Advance payments for services. 10 ez form   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. 10 ez form However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. 10 ez form However, you cannot postpone including any payment beyond that tax year. 10 ez form   For more information, see Advance Payment for Services under Accrual Method in Publication 538. 10 ez form That publication also explains special rules for reporting the following types of income. 10 ez form Advance payments for service agreements. 10 ez form Prepaid rent. 10 ez form Advance payments for sales. 10 ez form   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. 10 ez form If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. 10 ez form An agreement includes a gift certificate that can be redeemed for goods. 10 ez form Treat amounts that are due and payable as amounts you received. 10 ez form   You generally include an advance payment in income for the tax year in which you receive it. 10 ez form However, you can use an alternative method. 10 ez form For information about the alternative method, see Publication 538. 10 ez form Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. 10 ez form The all-events test has been met. 10 ez form The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. 10 ez form Economic performance has occurred. 10 ez form Economic performance. 10 ez form   You generally cannot deduct or capitalize a business expense until economic performance occurs. 10 ez form If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. 10 ez form If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. 10 ez form An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. 10 ez form For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. 10 ez form Example. 10 ez form You are a calendar year taxpayer and use an accrual method of accounting. 10 ez form You buy office supplies in December 2013. 10 ez form You receive the supplies and the bill in December, but you pay the bill in January 2014. 10 ez form You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. 10 ez form Your office supplies may qualify as a recurring expense. 10 ez form In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). 10 ez form Keeping inventories. 10 ez form   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. 10 ez form If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. 10 ez form For more information, see Inventories , later. 10 ez form Special rule for related persons. 10 ez form   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. 10 ez form Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. 10 ez form If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. 10 ez form   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. 10 ez form For a list of other related persons, see section 267 of the Internal Revenue Code. 10 ez form Combination Method You can generally use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. 10 ez form However, the following restrictions apply. 10 ez form If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. 10 ez form (See, however, Inventories, later. 10 ez form ) You can use the cash method for all other items of income and expenses. 10 ez form If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. 10 ez form If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. 10 ez form If you use a combination method that includes the cash method, treat that combination method as the cash method. 10 ez form Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. 10 ez form However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. 10 ez form These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). 10 ez form A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. 10 ez form A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. 10 ez form Qualifying taxpayer. 10 ez form   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. 10 ez form (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. 10 ez form ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. 10 ez form Qualifying small business taxpayer. 10 ez form   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. 10 ez form (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. 10 ez form ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. 10 ez form Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). 10 ez form Business not owned or not in existence for 3 years. 10 ez form   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. 10 ez form If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. 10 ez form Materials and supplies that are not incidental. 10 ez form   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. 10 ez form If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. 10 ez form Changing accounting method. 10 ez form   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. 10 ez form See Change in Accounting Method, later. 10 ez form More information. 10 ez form    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. 10 ez form For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. 10 ez form Items included in inventory. 10 ez form   If you are required to account for inventories, include the following items when accounting for your inventory. 10 ez form Merchandise or stock in trade. 10 ez form Raw materials. 10 ez form Work in process. 10 ez form Finished products. 10 ez form Supplies that physically become a part of the item intended for sale. 10 ez form Valuing inventory. 10 ez form   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). 10 ez form To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. 10 ez form   Inventory valuation rules cannot be the same for all kinds of businesses. 10 ez form The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. 10 ez form Your inventory practices must be consistent from year to year. 10 ez form More information. 10 ez form   For more information about inventories, see Publication 538. 10 ez form Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. 10 ez form Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. 10 ez form You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. 10 ez form Activities subject to the uniform capitalization rules. 10 ez form   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. 10 ez form Produce real or tangible personal property. 10 ez form For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. 10 ez form Acquire property for resale. 10 ez form Exceptions. 10 ez form   These rules do not apply to the following property. 10 ez form Personal property you acquire for resale if your average annual gross receipts are $10 million or less. 10 ez form Property you produce if you meet either of the following conditions. 10 ez form Your indirect costs of producing the property are $200,000 or less. 10 ez form You use the cash method of accounting and do not account for inventories. 10 ez form For more information, see Inventories, earlier. 10 ez form Special Methods There are special methods of accounting for certain items of income or expense. 10 ez form These include the following. 10 ez form Amortization, discussed in chapter 8 of Publication 535, Business Expenses. 10 ez form Bad debts, discussed in chapter 10 of Publication 535. 10 ez form Depletion, discussed in chapter 9 of Publication 535. 10 ez form Depreciation, discussed in Publication 946, How To Depreciate Property. 10 ez form Installment sales, discussed in Publication 537, Installment Sales. 10 ez form Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. 10 ez form A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. 10 ez form To get approval, you must file Form 3115, Application for Change in Accounting Method. 10 ez form You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. 10 ez form You may have to pay a user fee. 10 ez form For more information, see the form instructions. 10 ez form Automatic change procedures. 10 ez form   Certain taxpayers can presume to have IRS approval to change their method of accounting. 10 ez form The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. 10 ez form No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. 10 ez form   Generally, you must use Form 3115 to request an automatic change. 10 ez form For more information, see the Instructions for Form 3115. 10 ez form Prev  Up  Next   Home   More Online Publications