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Filing 2012 Tax Return

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Filing 2012 Tax Return

Filing 2012 tax return 11. Filing 2012 tax return   Social Security and Equivalent Railroad Retirement Benefits Table of Contents Introduction Useful Items - You may want to see: Are Any of Your Benefits Taxable? How To Report Your BenefitsHow Much Is Taxable? Examples Deductions Related to Your BenefitsRepayments More Than Gross Benefits Introduction This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. Filing 2012 tax return It explains the following topics. Filing 2012 tax return How to figure whether your benefits are taxable. Filing 2012 tax return How to use the social security benefits worksheet (with examples). Filing 2012 tax return How to report your taxable benefits. Filing 2012 tax return How to treat repayments that are more than the benefits you received during the year. Filing 2012 tax return Social security benefits include monthly retirement, survivor, and disability benefits. Filing 2012 tax return They do not include supplemental security income (SSI) payments, which are not taxable. Filing 2012 tax return Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. Filing 2012 tax return They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. Filing 2012 tax return If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board. Filing 2012 tax return These forms show the amounts received and repaid, and taxes withheld for the year. Filing 2012 tax return You may receive more than one of these forms for the same year. Filing 2012 tax return You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. Filing 2012 tax return See the Appendix at the end of Publication 915 for more information. Filing 2012 tax return Note. Filing 2012 tax return When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. Filing 2012 tax return What is not covered in this chapter. Filing 2012 tax return   This chapter does not cover the tax rules for the following railroad retirement benefits. Filing 2012 tax return Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits. Filing 2012 tax return Tier 2 benefits. Filing 2012 tax return Vested dual benefits. Filing 2012 tax return Supplemental annuity benefits. Filing 2012 tax return For information on these benefits, see Publication 575, Pension and Annuity Income. Filing 2012 tax return   This chapter does not cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. Filing 2012 tax return For information about these benefits, see Publication 519, U. Filing 2012 tax return S. Filing 2012 tax return Tax Guide for Aliens, and Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Filing 2012 tax return   This chapter also does not cover the tax rules for foreign social security benefits. Filing 2012 tax return These benefits are taxable as annuities, unless they are exempt from U. Filing 2012 tax return S. Filing 2012 tax return tax or treated as a U. Filing 2012 tax return S. Filing 2012 tax return social security benefit under a tax treaty. Filing 2012 tax return Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) 915 Social Security and Equivalent Railroad Retirement Benefits Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request Are Any of Your Benefits Taxable? To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of: One-half of your benefits, plus All your other income, including tax-exempt interest. Filing 2012 tax return When making this comparison, do not reduce your other income by any exclusions for: Interest from qualified U. Filing 2012 tax return S. Filing 2012 tax return savings bonds, Employer-provided adoption benefits, Foreign earned income or foreign housing, or Income earned by bona fide residents of American Samoa or Puerto Rico. Filing 2012 tax return Children's benefits. Filing 2012 tax return   The rules in this chapter apply to benefits received by children. Filing 2012 tax return See Who is taxed , later. Filing 2012 tax return Figuring total income. Filing 2012 tax return   To figure the total of one-half of your benefits plus your other income, use Worksheet 11-1 later in this discussion. Filing 2012 tax return If the total is more than your base amount, part of your benefits may be taxable. Filing 2012 tax return    If you are married and file a joint return for 2013, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Filing 2012 tax return Even if your spouse did not receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. Filing 2012 tax return    If the only income you received during 2013 was your social security or the SSEB portion of tier 1 railroad retirement benefits, your benefits generally are not taxable and you probably do not have to file a return. Filing 2012 tax return If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. Filing 2012 tax return Base amount. Filing 2012 tax return   Your base amount is: $25,000 if you are single, head of household, or qualifying widow(er), $25,000 if you are married filing separately and lived apart from your spouse for all of 2013, $32,000 if you are married filing jointly, or $-0- if you are married filing separately and lived with your spouse at any time during 2013. Filing 2012 tax return Worksheet 11-1. Filing 2012 tax return   You can use Worksheet 11-1 to figure the amount of income to compare with your base amount. Filing 2012 tax return This is a quick way to check whether some of your benefits may be taxable. Filing 2012 tax return Worksheet 11-1. Filing 2012 tax return A Quick Way To Check if Your Benefits May Be Taxable A. Filing 2012 tax return Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Filing 2012 tax return Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Filing 2012 tax return (If you received more than one form, combine the amounts from box 5 and enter the total. Filing 2012 tax return ) A. Filing 2012 tax return   Note. Filing 2012 tax return If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Filing 2012 tax return B. Filing 2012 tax return Enter one-half of the amount on line A B. Filing 2012 tax return   C. Filing 2012 tax return Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Filing 2012 tax return   D. Filing 2012 tax return Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Filing 2012 tax return   E. Filing 2012 tax return Add lines B, C, and D E. Filing 2012 tax return   Note. Filing 2012 tax return Compare the amount on line E to your base amount for your filing status. Filing 2012 tax return If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Filing 2012 tax return If the amount on line E is more than your base amount, some of your benefits may be taxable. Filing 2012 tax return You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Filing 2012 tax return If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Filing 2012 tax return Example. Filing 2012 tax return You and your spouse (both over 65) are filing a joint return for 2013 and you both received social security benefits during the year. Filing 2012 tax return In January 2014, you received a Form SSA-1099 showing net benefits of $7,500 in box 5. Filing 2012 tax return Your spouse received a Form SSA-1099 showing net benefits of $3,500 in box 5. Filing 2012 tax return You also received a taxable pension of $22,800 and interest income of $500. Filing 2012 tax return You did not have any tax-exempt interest income. Filing 2012 tax return Your benefits are not taxable for 2013 because your income, as figured in Worksheet 11-1, is not more than your base amount ($32,000) for married filing jointly. Filing 2012 tax return Even though none of your benefits are taxable, you must file a return for 2013 because your taxable gross income ($23,300) exceeds the minimum filing requirement amount for your filing status. Filing 2012 tax return Filled-in Worksheet 11-1. Filing 2012 tax return A Quick Way To Check if Your Benefits May Be Taxable A. Filing 2012 tax return Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Filing 2012 tax return Include the full amount of any lump-sum benefit payments received in 2013, for 2013 and earlier years. Filing 2012 tax return (If you received more than one form, combine the amounts from box 5 and enter the total. Filing 2012 tax return ) A. Filing 2012 tax return $11,000 Note. Filing 2012 tax return If the amount on line A is zero or less, stop here; none of your benefits are taxable this year. Filing 2012 tax return B. Filing 2012 tax return Enter one-half of the amount on line A B. Filing 2012 tax return 5,500 C. Filing 2012 tax return Enter your taxable pensions, wages, interest, dividends, and other taxable income C. Filing 2012 tax return 23,300 D. Filing 2012 tax return Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income (listed earlier) D. Filing 2012 tax return -0- E. Filing 2012 tax return Add lines B, C, and D E. Filing 2012 tax return $28,800 Note. Filing 2012 tax return Compare the amount on line E to your base amount for your filing status. Filing 2012 tax return If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. Filing 2012 tax return If the amount on line E is more than your base amount, some of your benefits may be taxable. Filing 2012 tax return You need to complete Worksheet 1 in Publication 915 (or the Social Security Benefits Worksheet in your tax form instructions). Filing 2012 tax return If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable , later, under How To Report Your Benefits. Filing 2012 tax return Who is taxed. Filing 2012 tax return   Benefits are included in the taxable income (to the extent they are taxable) of the person who has the legal right to receive the benefits. Filing 2012 tax return For example, if you and your child receive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. Filing 2012 tax return One-half of the part that belongs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child. Filing 2012 tax return Repayment of benefits. Filing 2012 tax return   Any repayment of benefits you made during 2013 must be subtracted from the gross benefits you received in 2013. Filing 2012 tax return It does not matter whether the repayment was for a benefit you received in 2013 or in an earlier year. Filing 2012 tax return If you repaid more than the gross benefits you received in 2013, see Repayments More Than Gross Benefits , later. Filing 2012 tax return   Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Filing 2012 tax return Your repayments are shown in box 4. Filing 2012 tax return The amount in box 5 shows your net benefits for 2013 (box 3 minus box 4). Filing 2012 tax return Use the amount in box 5 to figure whether any of your benefits are taxable. Filing 2012 tax return Tax withholding and estimated tax. Filing 2012 tax return   You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. Filing 2012 tax return If you choose to do this, you must complete a Form W-4V. Filing 2012 tax return   If you do not choose to have income tax withheld, you may have to request additional withholding from other income or pay estimated tax during the year. Filing 2012 tax return For details, see Publication 505 or the instructions for Form 1040-ES. Filing 2012 tax return How To Report Your Benefits If part of your benefits are taxable, you must use Form 1040 or Form 1040A. Filing 2012 tax return You cannot use Form 1040EZ. Filing 2012 tax return Reporting on Form 1040. Filing 2012 tax return   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 20a and the taxable part on line 20b. Filing 2012 tax return If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 20a. Filing 2012 tax return Reporting on Form 1040A. Filing 2012 tax return   Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 14a and the taxable part on line 14b. Filing 2012 tax return If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on line 14a. Filing 2012 tax return Benefits not taxable. Filing 2012 tax return   If you are filing Form 1040EZ, do not report any benefits on your tax return. Filing 2012 tax return If you are filing Form 1040 or Form 1040A, report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040, line 20a, or Form 1040A, line 14a. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Filing 2012 tax return If you are married filing separately and you lived apart from your spouse for all of 2013, also enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Filing 2012 tax return How Much Is Taxable? If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Filing 2012 tax return Generally, the higher that total amount, the greater the taxable part of your benefits. Filing 2012 tax return Maximum taxable part. Filing 2012 tax return   Generally, up to 50% of your benefits will be taxable. Filing 2012 tax return However, up to 85% of your benefits can be taxable if either of the following situations applies to you. Filing 2012 tax return The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly). Filing 2012 tax return You are married filing separately and lived with your spouse at any time during 2013. Filing 2012 tax return Which worksheet to use. Filing 2012 tax return   A worksheet you can use to figure your taxable benefits is in the instructions for your Form 1040 or Form 1040A. Filing 2012 tax return You can use either that worksheet or Worksheet 1 in Publication 915, unless any of the following situations applies to you. Filing 2012 tax return You contributed to a traditional individual retirement arrangement (IRA) and you or your spouse is covered by a retirement plan at work. Filing 2012 tax return In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits. Filing 2012 tax return Situation (1) does not apply and you take an exclusion for interest from qualified U. Filing 2012 tax return S. Filing 2012 tax return savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555 or Form 2555-EZ), or for income earned in American Samoa (Form 4563) or Puerto Rico by bona fide residents. Filing 2012 tax return In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits. Filing 2012 tax return You received a lump-sum payment for an earlier year. Filing 2012 tax return In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915. Filing 2012 tax return See Lump-sum election next. Filing 2012 tax return Lump-sum election. Filing 2012 tax return   You must include the taxable part of a lump-sum (retroactive) payment of benefits received in 2013 in your 2013 income, even if the payment includes benefits for an earlier year. Filing 2012 tax return    This type of lump-sum benefit payment should not be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficiaries. Filing 2012 tax return No part of the lump-sum death benefit is subject to tax. Filing 2012 tax return   Generally, you use your 2013 income to figure the taxable part of the total benefits received in 2013. Filing 2012 tax return However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your income for the earlier year. Filing 2012 tax return You can elect this method if it lowers your taxable benefits. Filing 2012 tax return Making the election. Filing 2012 tax return   If you received a lump-sum benefit payment in 2013 that includes benefits for one or more earlier years, follow the instructions in Publication 915 under Lump-Sum Election to see whether making the election will lower your taxable benefits. Filing 2012 tax return That discussion also explains how to make the election. Filing 2012 tax return    Because the earlier year's taxable benefits are included in your 2013 income, no adjustment is made to the earlier year's return. Filing 2012 tax return Do not file an amended return for the earlier year. Filing 2012 tax return Examples The following are a few examples you can use as a guide to figure the taxable part of your benefits. Filing 2012 tax return Example 1. Filing 2012 tax return George White is single and files Form 1040 for 2013. Filing 2012 tax return He received the following income in 2013: Fully taxable pension $18,600 Wages from part-time job 9,400 Taxable interest income 990 Total $28,990 George also received social security benefits during 2013. Filing 2012 tax return The Form SSA-1099 he received in January 2014 shows $5,980 in box 5. Filing 2012 tax return To figure his taxable benefits, George completes the worksheet shown here. Filing 2012 tax return Filled-in Worksheet 1. Filing 2012 tax return Figuring Your Taxable Benefits 1. Filing 2012 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Filing 2012 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,980 2. Filing 2012 tax return Enter one-half of line 1 2,990 3. Filing 2012 tax return Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Filing 2012 tax return     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 28,990 4. Filing 2012 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Filing 2012 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Filing 2012 tax return Combine lines 2, 3, 4, and 5 31,980 7. Filing 2012 tax return Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Filing 2012 tax return     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Filing 2012 tax return Is the amount on line 7 less than the amount on line 6?     No. Filing 2012 tax return None of your social security benefits are taxable. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Filing 2012 tax return   Yes. Filing 2012 tax return Subtract line 7 from line 6 31,980 9. Filing 2012 tax return If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 25,000   Note. Filing 2012 tax return If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Filing 2012 tax return 85) and enter the result on line 17. Filing 2012 tax return Then go to line 18. Filing 2012 tax return   10. Filing 2012 tax return Is the amount on line 9 less than the amount on line 8?     No. Filing 2012 tax return None of your benefits are taxable. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Filing 2012 tax return If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Filing 2012 tax return     Yes. Filing 2012 tax return Subtract line 9 from line 8 6,980 11. Filing 2012 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 9,000 12. Filing 2012 tax return Subtract line 11 from line 10. Filing 2012 tax return If zero or less, enter -0- -0- 13. Filing 2012 tax return Enter the smaller of line 10 or line 11 6,980 14. Filing 2012 tax return Enter one-half of line 13 3,490 15. Filing 2012 tax return Enter the smaller of line 2 or line 14 2,990 16. Filing 2012 tax return Multiply line 12 by 85% (. Filing 2012 tax return 85). Filing 2012 tax return If line 12 is zero, enter -0- -0- 17. Filing 2012 tax return Add lines 15 and 16 2,990 18. Filing 2012 tax return Multiply line 1 by 85% (. Filing 2012 tax return 85) 5,083 19. Filing 2012 tax return Taxable benefits. Filing 2012 tax return Enter the smaller of line 17 or line 18. Filing 2012 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $2,990 The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. Filing 2012 tax return On line 20a of his Form 1040, George enters his net benefits of $5,980. Filing 2012 tax return On line 20b, he enters his taxable benefits of $2,990. Filing 2012 tax return Example 2. Filing 2012 tax return Ray and Alice Hopkins file a joint return on Form 1040A for 2013. Filing 2012 tax return Ray is retired and received a fully taxable pension of $15,500. Filing 2012 tax return He also received social security benefits, and his Form SSA-1099 for 2013 shows net benefits of $5,600 in box 5. Filing 2012 tax return Alice worked during the year and had wages of $14,000. Filing 2012 tax return She made a deductible payment to her IRA account of $1,000. Filing 2012 tax return Ray and Alice have two savings accounts with a total of $250 in taxable interest income. Filing 2012 tax return They complete Worksheet 1, entering $29,750 ($15,500 + $14,000 + $250) on line 3. Filing 2012 tax return They find none of Ray's social security benefits are taxable. Filing 2012 tax return On Form 1040A, they enter $5,600 on line 14a and -0- on line 14b. Filing 2012 tax return Filled-in Worksheet 1. Filing 2012 tax return Figuring Your Taxable Benefits 1. Filing 2012 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Filing 2012 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $5,600 2. Filing 2012 tax return Enter one-half of line 1 2,800 3. Filing 2012 tax return Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Filing 2012 tax return     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 29,750 4. Filing 2012 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Filing 2012 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Filing 2012 tax return Combine lines 2, 3, 4, and 5 32,550 7. Filing 2012 tax return Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Filing 2012 tax return     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 1,000 8. Filing 2012 tax return Is the amount on line 7 less than the amount on line 6?     No. Filing 2012 tax return None of your social security benefits are taxable. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Filing 2012 tax return   Yes. Filing 2012 tax return Subtract line 7 from line 6 31,550 9. Filing 2012 tax return If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Filing 2012 tax return If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Filing 2012 tax return 85) and enter the result on line 17. Filing 2012 tax return Then go to line 18. Filing 2012 tax return   10. Filing 2012 tax return Is the amount on line 9 less than the amount on line 8?     No. Filing 2012 tax return None of your benefits are taxable. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Filing 2012 tax return If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Filing 2012 tax return     Yes. Filing 2012 tax return Subtract line 9 from line 8   11. Filing 2012 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013   12. Filing 2012 tax return Subtract line 11 from line 10. Filing 2012 tax return If zero or less, enter -0-   13. Filing 2012 tax return Enter the smaller of line 10 or line 11   14. Filing 2012 tax return Enter one-half of line 13   15. Filing 2012 tax return Enter the smaller of line 2 or line 14   16. Filing 2012 tax return Multiply line 12 by 85% (. Filing 2012 tax return 85). Filing 2012 tax return If line 12 is zero, enter -0-   17. Filing 2012 tax return Add lines 15 and 16   18. Filing 2012 tax return Multiply line 1 by 85% (. Filing 2012 tax return 85)   19. Filing 2012 tax return Taxable benefits. Filing 2012 tax return Enter the smaller of line 17 or line 18. Filing 2012 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b   Example 3. Filing 2012 tax return Joe and Betty Johnson file a joint return on Form 1040 for 2013. Filing 2012 tax return Joe is a retired railroad worker and in 2013 received the social security equivalent benefit (SSEB) portion of tier 1 railroad retirement benefits. Filing 2012 tax return Joe's Form RRB-1099 shows $10,000 in box 5. Filing 2012 tax return Betty is a retired government worker and receives a fully taxable pension of $38,000. Filing 2012 tax return They had $2,300 in taxable interest income plus interest of $200 on a qualified U. Filing 2012 tax return S. Filing 2012 tax return savings bond. Filing 2012 tax return The savings bond interest qualified for the exclusion. Filing 2012 tax return They figure their taxable benefits by completing Worksheet 1. Filing 2012 tax return Because they have qualified U. Filing 2012 tax return S. Filing 2012 tax return savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040A or 1040) on line 3 of the worksheet instead of the amount from line 8a of their Form 1040. Filing 2012 tax return On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500). Filing 2012 tax return Filled-in Worksheet 1. Filing 2012 tax return Figuring Your Taxable Benefits Before you begin: • If you are married filing separately and you lived apart from your spouse for all of 2013, enter “D” to the right of the word “benefits” on Form 1040, line 20a, or Form 1040A, line 14a. Filing 2012 tax return • Do not use this worksheet if you repaid benefits in 2013 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2013 (box 3 of Forms SSA-1099 and RRB-1099). Filing 2012 tax return None of your benefits are taxable for 2013. Filing 2012 tax return For more information, see Repayments More Than Gross Benefits. Filing 2012 tax return • If you are filing Form 8815, Exclusion of Interest From Series EE and I U. Filing 2012 tax return S. Filing 2012 tax return Savings Bonds Issued After 1989, do not include the amount from line 8a of Form 1040 or Form 1040A on line 3 of this worksheet. Filing 2012 tax return Instead, include the amount from Schedule B (Form 1040A or 1040), line 2. Filing 2012 tax return 1. Filing 2012 tax return Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Filing 2012 tax return Also enter this amount on Form 1040, line 20a, or Form 1040A, line 14a $10,000 2. Filing 2012 tax return Enter one-half of line 1 5,000 3. Filing 2012 tax return Combine the amounts from:     Form 1040: Lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19, and 21. Filing 2012 tax return     Form 1040A: Lines 7, 8a, 9a, 10, 11b, 12b, and 13 40,500 4. Filing 2012 tax return Enter the amount, if any, from Form 1040 or 1040A, line 8b -0-       5. Filing 2012 tax return Enter the total of any exclusions/adjustments for: Adoption benefits (Form 8839, line 28), Foreign earned income or housing (Form 2555, lines 45 and 50, or Form 2555-EZ, line 18), and Certain income of bona fide residents of American Samoa (Form 4563, line 15) or Puerto Rico -0-       6. Filing 2012 tax return Combine lines 2, 3, 4, and 5 45,500 7. Filing 2012 tax return Form 1040 filers: Enter the amount from Form 1040, lines 23 through 32, and any write-in adjustments you entered on the dotted line next to line 36. Filing 2012 tax return     Form 1040A filers: Enter the amount from Form 1040A, lines 16 and 17 -0- 8. Filing 2012 tax return Is the amount on line 7 less than the amount on line 6?     No. Filing 2012 tax return None of your social security benefits are taxable. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or Form 1040A, line 14b. Filing 2012 tax return   Yes. Filing 2012 tax return Subtract line 7 from line 6 45,500 9. Filing 2012 tax return If you are: Married filing jointly, enter $32,000 Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013, enter $25,000 32,000   Note. Filing 2012 tax return If you are married filing separately and you lived with your spouse at any time in 2013, skip lines 9 through 16; multiply line 8 by 85% (. Filing 2012 tax return 85) and enter the result on line 17. Filing 2012 tax return Then go to line 18. Filing 2012 tax return   10. Filing 2012 tax return Is the amount on line 9 less than the amount on line 8?     No. Filing 2012 tax return None of your benefits are taxable. Filing 2012 tax return Enter -0- on Form 1040, line 20b, or on Form 1040A, line 14b. Filing 2012 tax return If you are married filing separately and you lived apart from your spouse for all of 2013, be sure you entered “D” to the right of the word “benefits” on Form 1040, line 20a, or on Form 1040A, line 14a. Filing 2012 tax return     Yes. Filing 2012 tax return Subtract line 9 from line 8 13,500 11. Filing 2012 tax return Enter $12,000 if married filing jointly; $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2013 12,000 12. Filing 2012 tax return Subtract line 11 from line 10. Filing 2012 tax return If zero or less, enter -0- 1,500 13. Filing 2012 tax return Enter the smaller of line 10 or line 11 12,000 14. Filing 2012 tax return Enter one-half of line 13 6,000 15. Filing 2012 tax return Enter the smaller of line 2 or line 14 5,000 16. Filing 2012 tax return Multiply line 12 by 85% (. Filing 2012 tax return 85). Filing 2012 tax return If line 12 is zero, enter -0- 1,275 17. Filing 2012 tax return Add lines 15 and 16 6,275 18. Filing 2012 tax return Multiply line 1 by 85% (. Filing 2012 tax return 85) 8,500 19. Filing 2012 tax return Taxable benefits. Filing 2012 tax return Enter the smaller of line 17 or line 18. Filing 2012 tax return Also enter this amount on Form 1040, line 20b, or Form 1040A, line 14b $6,275 More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. Filing 2012 tax return Joe and Betty enter $10,000 on Form 1040, line 20a, and $6,275 on Form 1040, line 20b. Filing 2012 tax return Deductions Related to Your Benefits You may be entitled to deduct certain amounts related to the benefits you receive. Filing 2012 tax return Disability payments. Filing 2012 tax return   You may have received disability payments from your employer or an insurance company that you included as income on your tax return in an earlier year. Filing 2012 tax return If you received a lump-sum payment from SSA or RRB, and you had to repay the employer or insurance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. Filing 2012 tax return If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Filing 2012 tax return Claim the deduction or credit in the same way explained under Repayments More Than Gross Benefits , later. Filing 2012 tax return Legal expenses. Filing 2012 tax return   You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Filing 2012 tax return   Legal expenses for collecting the taxable part of your benefits are deductible as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Filing 2012 tax return Repayments More Than Gross Benefits In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. Filing 2012 tax return If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Filing 2012 tax return Do not use a worksheet in this case. Filing 2012 tax return If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. Filing 2012 tax return If you have any questions about this negative figure, contact your local SSA office or your local RRB field office. Filing 2012 tax return Joint return. Filing 2012 tax return   If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spouse's does not, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. Filing 2012 tax return You do this to get your net benefits when figuring if your combined benefits are taxable. Filing 2012 tax return Example. Filing 2012 tax return John and Mary file a joint return for 2013. Filing 2012 tax return John received Form SSA-1099 showing $3,000 in box 5. Filing 2012 tax return Mary also received Form SSA-1099 and the amount in box 5 was ($500). Filing 2012 tax return John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable. Filing 2012 tax return Repayment of benefits received in an earlier year. Filing 2012 tax return   If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you can take an itemized deduction for the part of this negative figure that represents benefits you included in gross income in an earlier year. Filing 2012 tax return Deduction $3,000 or less. Filing 2012 tax return   If this deduction is $3,000 or less, it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions. Filing 2012 tax return Claim it on Schedule A (Form 1040), line 23. Filing 2012 tax return Deduction more than $3,000. Filing 2012 tax return    If this deduction is more than $3,000, you should figure your tax two ways: Figure your tax for 2013 with the itemized deduction included on Schedule A, line 28. Filing 2012 tax return Figure your tax for 2013 in the following steps. Filing 2012 tax return Figure the tax without the itemized deduction included on Schedule A, line 28. Filing 2012 tax return For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total benefits for the year were reduced by that part of the negative figure. Filing 2012 tax return Then refigure the tax for that year. Filing 2012 tax return Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts. Filing 2012 tax return Subtract the result in (c) from the result in (a). Filing 2012 tax return Compare the tax figured in methods (1) and (2). Filing 2012 tax return Your tax for 2013 is the smaller of the two amounts. Filing 2012 tax return If method (1) results in less tax, take the itemized deduction on Schedule A (Form 1040), line 28. Filing 2012 tax return If method (2) results in less tax, claim a credit for the amount from step 2(c) above on Form 1040, line 71. Filing 2012 tax return Check box d and enter “I. Filing 2012 tax return R. Filing 2012 tax return C. Filing 2012 tax return 1341” in the space next to that box. Filing 2012 tax return If both methods produce the same tax, deduct the repayment on Schedule A (Form 1040), line 28. Filing 2012 tax return Prev  Up  Next   Home   More Online Publications
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The Filing 2012 Tax Return

Filing 2012 tax return 3. Filing 2012 tax return   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Filing 2012 tax return Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Filing 2012 tax return Certain contracts held by a charitable remainder trust. Filing 2012 tax return Excise Taxes. Filing 2012 tax return Indoor tanning services. Filing 2012 tax return Application for Recognition of ExemptionPolitical activity. Filing 2012 tax return Private delivery service. Filing 2012 tax return Amendments to organizing documents required. Filing 2012 tax return How to show reasonable action and good faith. Filing 2012 tax return Not acting reasonably and in good faith. Filing 2012 tax return Prejudicing the interest of the Government. Filing 2012 tax return Procedure for requesting extension. Filing 2012 tax return More information. Filing 2012 tax return Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. Filing 2012 tax return Grass roots expenditures. Filing 2012 tax return Lobbying nontaxable amount. Filing 2012 tax return Grass roots nontaxable amount. Filing 2012 tax return Organization that no longer qualifies. Filing 2012 tax return Tax on organization. Filing 2012 tax return Tax on managers. Filing 2012 tax return Taxes on organizations. Filing 2012 tax return Taxes on managers. Filing 2012 tax return Political expenditures. Filing 2012 tax return Correction of expenditure. Filing 2012 tax return Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. Filing 2012 tax return Religious. Filing 2012 tax return Charitable. Filing 2012 tax return Scientific. Filing 2012 tax return Testing for public safety. Filing 2012 tax return Literary. Filing 2012 tax return Educational. Filing 2012 tax return Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). Filing 2012 tax return The prevention of cruelty to children or animals. Filing 2012 tax return To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Filing 2012 tax return A trust is a fund or foundation and will qualify. Filing 2012 tax return However, an individual or a partnership will not qualify. Filing 2012 tax return Examples. Filing 2012 tax return   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. Filing 2012 tax return Child care organizations. Filing 2012 tax return   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. Filing 2012 tax return Instrumentalities. Filing 2012 tax return   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). Filing 2012 tax return Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Filing 2012 tax return However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Filing 2012 tax return A state or municipality itself does not qualify for exemption. Filing 2012 tax return Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. Filing 2012 tax return Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. Filing 2012 tax return Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. Filing 2012 tax return Fundraising events. Filing 2012 tax return   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. Filing 2012 tax return This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. Filing 2012 tax return   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. Filing 2012 tax return If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. Filing 2012 tax return You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. Filing 2012 tax return See Disclosure of Quid Pro Quo Contributions in chapter 2. Filing 2012 tax return Exemption application not filed. Filing 2012 tax return   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Filing 2012 tax return Separate fund—contributions that are deductible. Filing 2012 tax return   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. Filing 2012 tax return   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. Filing 2012 tax return A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. Filing 2012 tax return Personal benefit contracts. Filing 2012 tax return   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. Filing 2012 tax return   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. Filing 2012 tax return Certain annuity contracts. Filing 2012 tax return   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). Filing 2012 tax return Certain contracts held by a charitable remainder trust. Filing 2012 tax return   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. Filing 2012 tax return Excise tax. Filing 2012 tax return   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. Filing 2012 tax return The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Filing 2012 tax return Excise Taxes. Filing 2012 tax return   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Filing 2012 tax return Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. Filing 2012 tax return Indoor tanning services. Filing 2012 tax return   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Filing 2012 tax return For more information, go to IRS. Filing 2012 tax return gov and select Affordable Care Act Tax Provisions. Filing 2012 tax return Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. Filing 2012 tax return For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. Filing 2012 tax return See the organization headings that follow for specific information your organization may need to provide. Filing 2012 tax return Form 1023. Filing 2012 tax return   Your organization must file its application for recognition of exemption on Form 1023. Filing 2012 tax return See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Filing 2012 tax return Some organizations are not required to file Form 1023. Filing 2012 tax return See Organizations Not Required To File Form 1023, later. Filing 2012 tax return    Additional information to help you complete your application can be found online. Filing 2012 tax return Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. Filing 2012 tax return See Exemption Requirements - Section 501(c)(3) Organizations. Filing 2012 tax return   Form 1023 and accompanying statements must show that all of the following are true. Filing 2012 tax return The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Filing 2012 tax return ) specified in the introduction to this chapter. Filing 2012 tax return No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Filing 2012 tax return You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. Filing 2012 tax return The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. Filing 2012 tax return See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Filing 2012 tax return Political activity. Filing 2012 tax return   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). Filing 2012 tax return Such participation or intervention includes the publishing or distributing of statements. Filing 2012 tax return   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Filing 2012 tax return Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. Filing 2012 tax return Effective date of exemption. Filing 2012 tax return   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. Filing 2012 tax return These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. Filing 2012 tax return If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. Filing 2012 tax return Otherwise, exemption will be recognized only from the date of receipt. Filing 2012 tax return The date of receipt is the date of the U. Filing 2012 tax return S. Filing 2012 tax return postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. Filing 2012 tax return Private delivery service. Filing 2012 tax return   If a private delivery service designated by the IRS, rather than the U. Filing 2012 tax return S. Filing 2012 tax return Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Filing 2012 tax return The following private delivery services have been designated by the IRS. Filing 2012 tax return DHL Express (DHL): DHL “Same Day” Service. Filing 2012 tax return Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Filing 2012 tax return United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Filing 2012 tax return M. Filing 2012 tax return , UPS Worldwide Express Plus, and UPS Worldwide Express. Filing 2012 tax return Amendments to organizing documents required. Filing 2012 tax return   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. Filing 2012 tax return If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. Filing 2012 tax return Extensions of time for filing. Filing 2012 tax return   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Filing 2012 tax return Automatic 12-month extension. Filing 2012 tax return Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. Filing 2012 tax return To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Filing 2012 tax return 9100-2. Filing 2012 tax return ” Discretionary extensions. Filing 2012 tax return An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. Filing 2012 tax return How to show reasonable action and good faith. Filing 2012 tax return   An organization acted reasonably and showed good faith if at least one of the following is true. Filing 2012 tax return The organization requests relief before its failure to file is discovered by the IRS. Filing 2012 tax return The organization failed to file because of intervening events beyond its control. Filing 2012 tax return The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. Filing 2012 tax return The organization reasonably relied upon the written advice of the IRS. Filing 2012 tax return The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Filing 2012 tax return An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. Filing 2012 tax return Not acting reasonably and in good faith. Filing 2012 tax return   An organization has not acted reasonably and in good faith under the following circumstances. Filing 2012 tax return It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. Filing 2012 tax return It was informed of the requirement to file and related tax consequences, but chose not to file. Filing 2012 tax return It uses hindsight in requesting relief. Filing 2012 tax return The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. Filing 2012 tax return Prejudicing the interest of the Government. Filing 2012 tax return   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. Filing 2012 tax return Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. Filing 2012 tax return The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. Filing 2012 tax return The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. Filing 2012 tax return Procedure for requesting extension. Filing 2012 tax return   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Filing 2012 tax return A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Filing 2012 tax return Any documents relevant to the application. Filing 2012 tax return An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Filing 2012 tax return If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. Filing 2012 tax return This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Filing 2012 tax return ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. Filing 2012 tax return This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Filing 2012 tax return The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Filing 2012 tax return These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Filing 2012 tax return ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. Filing 2012 tax return The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. Filing 2012 tax return The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Filing 2012 tax return   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Filing 2012 tax return Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Filing 2012 tax return More information. Filing 2012 tax return   For more information about these procedures, see Regulations sections 301. Filing 2012 tax return 9100-1, 301. Filing 2012 tax return 9100-2, 301. Filing 2012 tax return 9100-3, Revenue Procedure 2013-4, section 6. Filing 2012 tax return 04, 2013-1 I. Filing 2012 tax return R. Filing 2012 tax return B. Filing 2012 tax return 126, and Revenue Procedure 2013-8, 2013-1 I. Filing 2012 tax return R. Filing 2012 tax return B. Filing 2012 tax return 237. Filing 2012 tax return See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Filing 2012 tax return Notification from the IRS. Filing 2012 tax return   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Filing 2012 tax return Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Filing 2012 tax return These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. Filing 2012 tax return Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Filing 2012 tax return These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Filing 2012 tax return Filing Form 1023 to establish exemption. Filing 2012 tax return   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. Filing 2012 tax return By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Filing 2012 tax return A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Filing 2012 tax return Private foundations. Filing 2012 tax return   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. Filing 2012 tax return Gross receipts test. Filing 2012 tax return   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. Filing 2012 tax return   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. Filing 2012 tax return For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. Filing 2012 tax return The organization must file Form 1023 within 90 days after the end of its second tax year. Filing 2012 tax return   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. Filing 2012 tax return However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. Filing 2012 tax return Example. Filing 2012 tax return   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Filing 2012 tax return It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Filing 2012 tax return It did not file a Form 1023. Filing 2012 tax return The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. Filing 2012 tax return Therefore, it did not have to file Form 1023 and is exempt for those years. Filing 2012 tax return However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Filing 2012 tax return Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Filing 2012 tax return If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. Filing 2012 tax return The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Filing 2012 tax return   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Filing 2012 tax return See the procedures for this extension discussed earlier. Filing 2012 tax return Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Filing 2012 tax return This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Filing 2012 tax return Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. Filing 2012 tax return These conditions for exemption are referred to as the organizational test. Filing 2012 tax return Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Filing 2012 tax return Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). Filing 2012 tax return The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. Filing 2012 tax return Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Filing 2012 tax return Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Filing 2012 tax return In interpreting an organization's articles, the law of the state where the organization was created is controlling. Filing 2012 tax return If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. Filing 2012 tax return The following are examples illustrating the organizational test. Filing 2012 tax return Example 1. Filing 2012 tax return Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Filing 2012 tax return These articles appropriately limit the organization's purposes. Filing 2012 tax return The organization meets the organizational test. Filing 2012 tax return Example 2. Filing 2012 tax return An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Filing 2012 tax return The organization will not be properly limited as to its purposes since all research is not scientific. Filing 2012 tax return The organization does not meet the organizational test. Filing 2012 tax return Example 3. Filing 2012 tax return An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). Filing 2012 tax return The organization meets the organizational test. Filing 2012 tax return Example 4. Filing 2012 tax return If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. Filing 2012 tax return Example 5. Filing 2012 tax return If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. Filing 2012 tax return On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. Filing 2012 tax return Example 6. Filing 2012 tax return If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. Filing 2012 tax return Such purposes are vague and may be accomplished other than in an exempt manner. Filing 2012 tax return Example 7. Filing 2012 tax return A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Filing 2012 tax return A hospital may or may not be exempt depending on the manner in which it is operated. Filing 2012 tax return Example 8. Filing 2012 tax return An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. Filing 2012 tax return Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Filing 2012 tax return This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. Filing 2012 tax return If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Filing 2012 tax return Dedication. Filing 2012 tax return   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. Filing 2012 tax return Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. Filing 2012 tax return Distribution. Filing 2012 tax return   Revenue Procedure 82-2, 1982-1 C. Filing 2012 tax return B. Filing 2012 tax return 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. Filing 2012 tax return The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Filing 2012 tax return   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. Filing 2012 tax return Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. Filing 2012 tax return Sample articles of organization. Filing 2012 tax return   See sample articles of organization in the Appendix in the back of this publication. Filing 2012 tax return Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. Filing 2012 tax return In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. Filing 2012 tax return You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Filing 2012 tax return If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. Filing 2012 tax return See also Private Schools , discussed later. Filing 2012 tax return Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. Filing 2012 tax return Advocacy of a position. Filing 2012 tax return   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. Filing 2012 tax return The mere presentation of unsupported opinion is not educational. Filing 2012 tax return Method not educational. Filing 2012 tax return   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). Filing 2012 tax return The following factors may indicate that the method is not educational. Filing 2012 tax return The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Filing 2012 tax return The facts that purport to support the viewpoint are distorted. Filing 2012 tax return The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. Filing 2012 tax return The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. Filing 2012 tax return   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. Filing 2012 tax return Qualifying organizations. Filing 2012 tax return   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. Filing 2012 tax return College book stores, cafeterias, restaurants, etc. Filing 2012 tax return   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. Filing 2012 tax return Alumni association. Filing 2012 tax return   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. Filing 2012 tax return If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . Filing 2012 tax return Athletic organization. Filing 2012 tax return   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. Filing 2012 tax return If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Filing 2012 tax return Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. Filing 2012 tax return If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Filing 2012 tax return Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. Filing 2012 tax return The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Filing 2012 tax return (This information also must be projected, so far as may be feasible, for the next academic year. Filing 2012 tax return ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Filing 2012 tax return A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Filing 2012 tax return A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. Filing 2012 tax return The public school district and county in which the school is located. Filing 2012 tax return How to determine racial composition. Filing 2012 tax return   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. Filing 2012 tax return Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Filing 2012 tax return The identity of individual students or members of the faculty and administrative staff should not be included with this information. Filing 2012 tax return   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. Filing 2012 tax return Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. Filing 2012 tax return Also, the school must circulate information that clearly states the school's admission policies. Filing 2012 tax return A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. Filing 2012 tax return The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Filing 2012 tax return The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. Filing 2012 tax return Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Filing 2012 tax return A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. Filing 2012 tax return A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. Filing 2012 tax return Policy statement. Filing 2012 tax return   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Filing 2012 tax return Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. Filing 2012 tax return Publicity requirement. Filing 2012 tax return   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Filing 2012 tax return Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. Filing 2012 tax return To satisfy this requirement, the school must use one of the following two methods. Filing 2012 tax return Method one. Filing 2012 tax return   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. Filing 2012 tax return Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Filing 2012 tax return When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. Filing 2012 tax return If this method is used, the notice must meet the following printing requirements. Filing 2012 tax return It must appear in a section of the newspaper likely to be read by prospective students and their families. Filing 2012 tax return It must occupy at least 3 column inches. Filing 2012 tax return It must have its title printed in at least 12 point bold face type. Filing 2012 tax return It must have the remaining text printed in at least 8 point type. Filing 2012 tax return The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. Filing 2012 tax return It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. Filing 2012 tax return   Method two. Filing 2012 tax return   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. Filing 2012 tax return If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. Filing 2012 tax return In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. Filing 2012 tax return The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. Filing 2012 tax return Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Filing 2012 tax return Exceptions. Filing 2012 tax return   The publicity requirements will not apply in the following situations. Filing 2012 tax return First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. Filing 2012 tax return These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. Filing 2012 tax return If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. Filing 2012 tax return Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . Filing 2012 tax return   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. Filing 2012 tax return The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. Filing 2012 tax return   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. Filing 2012 tax return Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. Filing 2012 tax return   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. Filing 2012 tax return The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Filing 2012 tax return In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Filing 2012 tax return Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. Filing 2012 tax return Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. Filing 2012 tax return Facilities and programs. Filing 2012 tax return   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Filing 2012 tax return Scholarship and loan programs. Filing 2012 tax return   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Filing 2012 tax return This must be known throughout the general community being served by the school and should be referred to in its publicity. Filing 2012 tax return Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. Filing 2012 tax return Certification. Filing 2012 tax return   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. Filing 2012 tax return   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Filing 2012 tax return Recordkeeping requirements. Filing 2012 tax return With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. Filing 2012 tax return Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Filing 2012 tax return Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Filing 2012 tax return Copies of all materials used by or on behalf of the school to solicit contributions. Filing 2012 tax return Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Filing 2012 tax return (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. Filing 2012 tax return ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. Filing 2012 tax return However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. Filing 2012 tax return The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. Filing 2012 tax return Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Filing 2012 tax return Exceptions. Filing 2012 tax return   The school does not have to independently maintain these records for IRS use if both of the following are true. Filing 2012 tax return Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. Filing 2012 tax return The school maintains copies of these reports from which this information is readily obtainable. Filing 2012 tax return If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. Filing 2012 tax return Failure to maintain records. Filing 2012 tax return   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. Filing 2012 tax return Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. Filing 2012 tax return However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. Filing 2012 tax return Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). Filing 2012 tax return Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. Filing 2012 tax return Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. Filing 2012 tax return Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. Filing 2012 tax return The rest of this section contains a description of the information to be provided by certain specific organizations. Filing 2012 tax return This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Filing 2012 tax return Each of the following organizations must submit the information described. Filing 2012 tax return Charitable organization supporting education. Filing 2012 tax return   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. Filing 2012 tax return Scholarships. Filing 2012 tax return   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Filing 2012 tax return Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Filing 2012 tax return How and by whom the recipients are or will be selected. Filing 2012 tax return If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Filing 2012 tax return If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. Filing 2012 tax return A copy of the scholarship application form and any brochures or literature describing the scholarship program. Filing 2012 tax return Hospital. Filing 2012 tax return   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Filing 2012 tax return   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Filing 2012 tax return You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. Filing 2012 tax return Submit also an appraisal showing the fair rental value of the rented space. Filing 2012 tax return Clinic. Filing 2012 tax return   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. Filing 2012 tax return Home for the aged. Filing 2012 tax return   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Filing 2012 tax return Community nursing bureau. Filing 2012 tax return   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. Filing 2012 tax return Organization providing loans. Filing 2012 tax return   If you make, or will make, loans for charitable and educational purposes, submit the following information. Filing 2012 tax return An explanation of the circumstances under which such loans are, or will be, made. Filing 2012 tax return Criteria for selection, including the rules of eligibility. Filing 2012 tax return How and by whom the recipients are or will be selected. Filing 2012 tax return Manner of repayment of the loan. Filing 2012 tax return Security required, if any. Filing 2012 tax return Interest charged, if any, and when payable. Filing 2012 tax return Copies in duplicate of the loan application and any brochures or literature describing the loan program. Filing 2012 tax return Public-interest law firms. Filing 2012 tax return   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. Filing 2012 tax return How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Filing 2012 tax return Whether the organization will accept fees for its services. Filing 2012 tax return A description of the cases litigated or to be litigated and how they benefit the public generally. Filing 2012 tax return Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. Filing 2012 tax return Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. Filing 2012 tax return Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. Filing 2012 tax return Acceptance of attorneys' fees. Filing 2012 tax return   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. Filing 2012 tax return Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Filing 2012 tax return   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. Filing 2012 tax return All fee awards must be paid to the organization and not to its individual staff attorneys. Filing 2012 tax return Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Filing 2012 tax return Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. Filing 2012 tax return   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. Filing 2012 tax return   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. Filing 2012 tax return Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Filing 2012 tax return That the particular religious beliefs of the organization are truly and sincerely held. Filing 2012 tax return That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Filing 2012 tax return Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. Filing 2012 tax return If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. Filing 2012 tax return Churches. Filing 2012 tax return   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. Filing 2012 tax return In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. Filing 2012 tax return   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Filing 2012 tax return Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Filing 2012 tax return The IRS considers the facts and circumstances of each organization applying for church status. Filing 2012 tax return Convention or association of churches. Filing 2012 tax return   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. Filing 2012 tax return Integrated auxiliaries. Filing 2012 tax return   An organization is an integrated auxiliary of a church if all the following are true. Filing 2012 tax return The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Filing 2012 tax return It is affiliated with a church or a convention or association of churches. Filing 2012 tax return It is internally supported. Filing 2012 tax return An organization is internally supported unless both of the following are true. Filing 2012 tax return It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). Filing 2012 tax return It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. Filing 2012 tax return Special rule. Filing 2012 tax return   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. Filing 2012 tax return   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. Filing 2012 tax return   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. Filing 2012 tax return Scientific Organizations You must show that your organization's research will be carried on in the public interest. Filing 2012 tax return Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. Filing 2012 tax return Aiding in the scientific education of college or university students. Filing 2012 tax return Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th