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Free income tax help 5. Free income tax help   How To Get Tax Help Table of Contents Low Income Taxpayer Clinics Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free income tax help Free help with your tax return. Free income tax help   You can get free help preparing your return nationwide from IRS-certified volunteers. Free income tax help The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free income tax help The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free income tax help Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free income tax help In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free income tax help To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free income tax help gov, download the IRS2Go app, or call 1-800-906-9887. Free income tax help   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free income tax help To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free income tax help aarp. Free income tax help org/money/taxaide or call 1-888-227-7669. Free income tax help For more information on these programs, go to IRS. Free income tax help gov and enter “VITA” in the search box. Free income tax help Internet. Free income tax help    IRS. Free income tax help gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free income tax help Download the free IRS2Go app from the iTunes app store or from Google Play. Free income tax help Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free income tax help Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free income tax help gov or download the IRS2Go app and select the Refund Status option. Free income tax help The IRS issues more than 9 out of 10 refunds in less than 21 days. Free income tax help Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free income tax help You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free income tax help The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free income tax help Use the Interactive Tax Assistant (ITA) to research your tax questions. Free income tax help No need to wait on the phone or stand in line. Free income tax help The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free income tax help When you reach the response screen, you can print the entire interview and the final response for your records. Free income tax help New subject areas are added on a regular basis. Free income tax help  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free income tax help gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free income tax help You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free income tax help The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free income tax help When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free income tax help Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free income tax help You can also ask the IRS to mail a return or an account transcript to you. Free income tax help Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free income tax help gov or by calling 1-800-908-9946. Free income tax help Tax return and tax account transcripts are generally available for the current year and the past three years. Free income tax help Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free income tax help Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free income tax help If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free income tax help Check the status of your amended return using Where's My Amended Return? Go to IRS. Free income tax help gov and enter Where's My Amended Return? in the search box. Free income tax help You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free income tax help It can take up to 3 weeks from the date you mailed it to show up in our system. Free income tax help Make a payment using one of several safe and convenient electronic payment options available on IRS. Free income tax help gov. Free income tax help Select the Payment tab on the front page of IRS. Free income tax help gov for more information. Free income tax help Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free income tax help Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free income tax help gov. Free income tax help Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free income tax help Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free income tax help gov. Free income tax help Request an Electronic Filing PIN by going to IRS. Free income tax help gov and entering Electronic Filing PIN in the search box. Free income tax help Download forms, instructions and publications, including accessible versions for people with disabilities. Free income tax help Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free income tax help gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free income tax help An employee can answer questions about your tax account or help you set up a payment plan. Free income tax help Before you visit, check the Office Locator on IRS. Free income tax help gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free income tax help If you have a special need, such as a disability, you can request an appointment. Free income tax help Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Free income tax help Apply for an Employer Identification Number (EIN). Free income tax help Go to IRS. Free income tax help gov and enter Apply for an EIN in the search box. Free income tax help Read the Internal Revenue Code, regulations, or other official guidance. Free income tax help Read Internal Revenue Bulletins. Free income tax help Sign up to receive local and national tax news and more by email. Free income tax help Just click on “subscriptions” above the search box on IRS. Free income tax help gov and choose from a variety of options. Free income tax help    Phone. Free income tax help You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Free income tax help Download the free IRS2Go app from the iTunes app store or from Google Play. Free income tax help Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Free income tax help gov, or download the IRS2Go app. Free income tax help Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free income tax help The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free income tax help Most VITA and TCE sites offer free electronic filing. Free income tax help Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Free income tax help Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Free income tax help Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Free income tax help If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free income tax help The IRS issues more than 9 out of 10 refunds in less than 21 days. Free income tax help Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free income tax help Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Free income tax help The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free income tax help Note, the above information is for our automated hotline. Free income tax help Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Free income tax help Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Free income tax help You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free income tax help It can take up to 3 weeks from the date you mailed it to show up in our system. Free income tax help Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Free income tax help You should receive your order within 10 business days. Free income tax help Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Free income tax help If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Free income tax help Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Free income tax help The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Free income tax help These individuals can also contact the IRS through relay services such as the Federal Relay Service. Free income tax help    Walk-in. Free income tax help You can find a selection of forms, publications and services — in-person. Free income tax help Products. Free income tax help You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free income tax help Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free income tax help Services. Free income tax help You can walk in to your local TAC for face-to-face tax help. Free income tax help An employee can answer questions about your tax account or help you set up a payment plan. Free income tax help Before visiting, use the Office Locator tool on IRS. Free income tax help gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Free income tax help    Mail. Free income tax help You can send your order for forms, instructions, and publications to the address below. Free income tax help You should receive a response within 10 business days after your request is received. Free income tax help Internal Revenue Service 1201 N. Free income tax help Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Free income tax help The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free income tax help Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Free income tax help   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Free income tax help We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Free income tax help You face (or your business is facing) an immediate threat of adverse action. Free income tax help You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Free income tax help   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Free income tax help Here's why we can help: TAS is an independent organization within the IRS. Free income tax help Our advocates know how to work with the IRS. Free income tax help Our services are free and tailored to meet your needs. Free income tax help We have offices in every state, the District of Columbia, and Puerto Rico. Free income tax help   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Free income tax help   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Free income tax help If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Free income tax help Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Free income tax help Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Free income tax help Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Free income tax help Prev  Up  Next   Home   More Online Publications
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Free income tax help Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). Free income tax help Low Income Taxpayer Clinics (LITCs). Free income tax help Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. Free income tax help All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. Free income tax help The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). Free income tax help After notice and hearing, the bankruptcy court may extend the period for another 30 days. Free income tax help Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. Free income tax help Note. Free income tax help Individual debtors should use their home address when filing Form 1040 with the IRS. Free income tax help Returns should not be filed “in care of” the trustee's address. Free income tax help Ordering tax transcripts and copies of returns. Free income tax help   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. Free income tax help The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. Free income tax help If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. Free income tax help Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. Free income tax help Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. Free income tax help A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. Free income tax help To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. Free income tax help It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. Free income tax help 00 per tax return for copies of the returns. Free income tax help Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. Free income tax help If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. Free income tax help Tax returns and payment of taxes in chapter 11 cases. Free income tax help   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. Free income tax help Disclosure of debtor's return information to trustee. Free income tax help   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. Free income tax help If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. Free income tax help    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. Free income tax help Material interest is generally defined as a financial or monetary interest. Free income tax help Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Free income tax help   However, the U. Free income tax help S. Free income tax help Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. Free income tax help Disclosure of bankruptcy estate's return information to debtor. Free income tax help    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. Free income tax help Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. Free income tax help Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Free income tax help Chapter 13 relief is not available to corporations or partnerships. Free income tax help The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. Free income tax help In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. Free income tax help S. Free income tax help Individual Income Tax Return. Free income tax help On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. Free income tax help Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. Free income tax help To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. Free income tax help See Debt Cancellation, later. Free income tax help Interest on trust accounts in chapter 13 cases. Free income tax help   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. Free income tax help This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. Free income tax help S. Free income tax help Trustee system. Free income tax help The interest is also not taxable to the trustee as income. Free income tax help Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. Free income tax help The bankruptcy estate in a chapter 7 case is represented by a trustee. Free income tax help The trustee is appointed to administer the estate and liquidate any nonexempt assets. Free income tax help In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. Free income tax help However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. Free income tax help During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. Free income tax help The bankruptcy trustee files a Form 1041 for the bankruptcy estate. Free income tax help However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). Free income tax help Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. Free income tax help Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). Free income tax help For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Free income tax help Debtor's Election To End Tax Year – Form 1040 Short tax years. Free income tax help   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. Free income tax help If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. Free income tax help The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. Free income tax help   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Free income tax help Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. Free income tax help    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. Free income tax help Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. Free income tax help Note. Free income tax help The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. Free income tax help Making the Election - Filing Requirements First short tax year. Free income tax help   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. Free income tax help The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. Free income tax help Second short tax year. Free income tax help   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. Free income tax help   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. Free income tax help To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. Free income tax help Example. Free income tax help Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. Free income tax help If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. Free income tax help Jane's second short year runs from May 8, 2012, through December 31, 2012. Free income tax help To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. Free income tax help To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. Free income tax help The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. Free income tax help S. Free income tax help Individual Tax Return. Free income tax help The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. Free income tax help The debtor must file Form 4868 by the due date of the return for the first short tax year. Free income tax help The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. Free income tax help Election by debtor's spouse. Free income tax help   If the debtor is married, the debtor's spouse may join in the election to end the tax year. Free income tax help If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. Free income tax help The debtor must elect by the due date for filing the return for the first short tax year. Free income tax help Once the election is made, it cannot be revoked for the first short tax year. Free income tax help However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. Free income tax help Later bankruptcy of spouse. Free income tax help    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. Free income tax help   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. Free income tax help If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. Free income tax help However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. Free income tax help The debtor and the spouse are precluded from this election because they have different tax years. Free income tax help This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. Free income tax help Example 1. Free income tax help Paul and Mary Harris are calendar-year taxpayers. Free income tax help Paul's voluntary chapter 7 bankruptcy case begins on March 4. Free income tax help If Paul does not make an election, his tax year does not end on March 3. Free income tax help If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. Free income tax help Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. Free income tax help They must make the election by July 15, the due date for filing the joint return. Free income tax help Example 2. Free income tax help Fred and Ethel Barnes are calendar-year taxpayers. Free income tax help Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. Free income tax help Ethel could elect to end her tax year on October 31. Free income tax help If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. Free income tax help Her first tax year is January 1–October 31, and her second year is November 1–December 31. Free income tax help If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. Free income tax help If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. Free income tax help Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. Free income tax help Example 3. Free income tax help Jack and Karen Thomas are calendar-year taxpayers. Free income tax help Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. Free income tax help Karen elected to close her tax year on April 9 and Jack joins in Karen's election. Free income tax help Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. Free income tax help The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. Free income tax help Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). Free income tax help If Karen does join in, she would have the same 3 short tax years as Jack. Free income tax help Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. Free income tax help Annualizing taxable income. Free income tax help   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. Free income tax help See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. Free income tax help Dismissal of bankruptcy case. Free income tax help   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. Free income tax help It is as if no bankruptcy estate was created for tax purposes. Free income tax help In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. Free income tax help Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. Free income tax help Attach a statement to the amended returns explaining why the debtor is filing an amended return. Free income tax help Taxes and the Bankruptcy Estate Property of the bankruptcy estate. Free income tax help   At the commencement of a bankruptcy case a bankruptcy estate is created. Free income tax help Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. Free income tax help This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. Free income tax help However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. Free income tax help Note. Free income tax help Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. Free income tax help Excluded property is never included in the estate. Free income tax help Transfer of assets between debtor and bankruptcy estate. Free income tax help   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. Free income tax help The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. Free income tax help For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. Free income tax help The estate assumes the same basis, holding period, and character of the transferred assets. Free income tax help Also, the estate generally accounts for the transferred assets in the same manner as debtor. Free income tax help   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. Free income tax help The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. Free income tax help Abandoned property. Free income tax help    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. Free income tax help If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. Free income tax help Separate taxable entity. Free income tax help   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. Free income tax help The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. Free income tax help S. Free income tax help Income Tax Return for Estates and Trusts, and paying its taxes. Free income tax help The debtor remains responsible for filing his or her own returns on Form 1040, U. Free income tax help S. Free income tax help Individual Income Tax Return, and paying taxes on income that does not belong to the estate. Free income tax help Employer identification number. Free income tax help   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Free income tax help The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Free income tax help See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Free income tax help    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Free income tax help Income, deductions, and credits – Form 1040. Free income tax help   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). Free income tax help Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. Free income tax help The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. Free income tax help See Debt Cancellation, below. Free income tax help Note. Free income tax help The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. Free income tax help Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. Free income tax help However, other exclusions, such as the insolvency exclusion, may apply. Free income tax help Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. Free income tax help    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. Free income tax help Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. Free income tax help   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. Free income tax help Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. Free income tax help Income of the estate in individual chapter 11 cases. Free income tax help    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. Free income tax help Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. Free income tax help S. Free income tax help C. Free income tax help section 1115). Free income tax help Note. Free income tax help A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. Free income tax help Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). Free income tax help Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. Free income tax help See Administrative expenses, below. Free income tax help Conversion or dismissal of chapter 11 cases. Free income tax help   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. Free income tax help If the chapter 11 case is converted to a chapter 7 case, 11 U. Free income tax help S. Free income tax help C. Free income tax help section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. Free income tax help Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. Free income tax help If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. Free income tax help Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. Free income tax help Note. Free income tax help Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). Free income tax help Administrative expenses. Free income tax help   Allowable expenses include administrative expenses. Free income tax help    Administrative expenses can only be deducted by the estate, never by the debtor. Free income tax help   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. Free income tax help These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. Free income tax help See IRC section 67(e). Free income tax help Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. Free income tax help Note. Free income tax help The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. Free income tax help See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. Free income tax help Administrative expense loss. Free income tax help   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. Free income tax help The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. Free income tax help The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. Free income tax help For a discussion of NOLs, see Publication 536. Free income tax help Attribute carryovers. Free income tax help   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. Free income tax help These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. Free income tax help The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. Free income tax help   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. Free income tax help See Debt Cancellation, later. Free income tax help   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. Free income tax help The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. Free income tax help Note. Free income tax help The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. Free income tax help See Administrative expense loss, above. Free income tax help Passive and at-risk activities. Free income tax help   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. Free income tax help Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. Free income tax help These transfers include the return of exempt property and abandonment of estate property to the debtor. Free income tax help Carrybacks from the debtor's activities. Free income tax help   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. Free income tax help Carrybacks from the bankruptcy estate. Free income tax help   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. Free income tax help The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. Free income tax help Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. Free income tax help    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. Free income tax help The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. Free income tax help These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. Free income tax help The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. Free income tax help The same method must be used to allocate the income and the withheld tax. Free income tax help Example. Free income tax help If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. Free income tax help Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. Free income tax help See IRC section 31(a). Free income tax help   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. Free income tax help In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. Free income tax help    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. Free income tax help The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. Free income tax help Note. Free income tax help The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). Free income tax help   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. Free income tax help Self-employment taxes in individual chapter 11 cases. Free income tax help   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. Free income tax help Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. Free income tax help   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. Free income tax help Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. Free income tax help This schedule includes self-employment income earned post-petition and the attributable deductions. Free income tax help The debtor must pay any self-employment tax imposed by IRC section 1401. Free income tax help Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Free income tax help   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. Free income tax help However, section 1115 of the Bankruptcy Code (11 U. Free income tax help S. Free income tax help C. Free income tax help section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. Free income tax help See Notice 2006-83. Free income tax help   The reporting and withholding obligations of a debtor's employer also do not change. Free income tax help An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. Free income tax help Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. Free income tax help   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. Free income tax help See IRC section 6109(a)(2). Free income tax help As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). Free income tax help   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. Free income tax help See Notice 2006-83. Free income tax help An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. Free income tax help   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. Free income tax help However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. Free income tax help See Employment Tax Regulations section 31. Free income tax help 3402(f)(2)-1. Free income tax help Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. Free income tax help See IRC section 6654(a). Free income tax help Notice required in converted and dismissed cases. Free income tax help   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. Free income tax help The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. Free income tax help This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. Free income tax help   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. Free income tax help Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. Free income tax help However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. Free income tax help After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. Free income tax help Employment taxes. Free income tax help   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Free income tax help See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. Free income tax help   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Free income tax help For a further discussion of employment taxes, see Employment Taxes, later. Free income tax help Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . Free income tax help The bankruptcy court case number is . Free income tax help Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. Free income tax help   Year Taxpayer   Estate 1. Free income tax help Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. Free income tax help Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. Free income tax help Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. Free income tax help Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. Free income tax help   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. Free income tax help This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. Free income tax help   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). Free income tax help   These amounts are generally adjusted annually. Free income tax help See the present year Form 1041 Instructions at www. Free income tax help irs. Free income tax help gov/form1041 for the current dollar amounts. Free income tax help Accounting period. Free income tax help   A bankruptcy estate may have a fiscal year. Free income tax help However, this period cannot be longer than 12 months. Free income tax help Change of accounting period. Free income tax help   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. Free income tax help This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. Free income tax help The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. Free income tax help Employer identification number. Free income tax help   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Free income tax help The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Free income tax help    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Free income tax help   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. Free income tax help irs. Free income tax help gov/businesses/small. Free income tax help The EIN is issued immediately once the application information is validated. Free income tax help By telephone at 1-800-829-4933 from 7:00 a. Free income tax help m. Free income tax help to 7:00 p. Free income tax help m. Free income tax help in the trustee's or debtor-in-possession's local time zone. Free income tax help Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. Free income tax help   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. Free income tax help For more details, see Pub. Free income tax help 583, Starting a Business and Keeping Records. Free income tax help   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. Free income tax help Figuring tax due. Free income tax help   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. Free income tax help However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. Free income tax help The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. Free income tax help The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. Free income tax help Tax rate schedule. Free income tax help The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. Free income tax help When to file. Free income tax help   Calendar year bankruptcy estates must file Form 1041 by April 15th. Free income tax help Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. Free income tax help For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. Free income tax help If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Free income tax help Note. Free income tax help The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Free income tax help Transmittal for Form 1040. Free income tax help   Form 1041 is used as a transmittal for Form 1040. Free income tax help If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. Free income tax help   Prepare the bankruptcy estate's return by completing Form 1040. Free income tax help In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. Free income tax help ” Then, attach Form 1040 to the Form 1041 transmittal. Free income tax help Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. Free income tax help An example of a bankruptcy estate's tax return is prepared below. Free income tax help Note. Free income tax help The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. Free income tax help Payment of Tax Due Payment methods. Free income tax help   Payment of tax due may be made by check or money order or by credit or debit card. Free income tax help For information on how to make payments electronically by credit or debit card, go to irs. Free income tax help gov/e-pay. Free income tax help      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. Free income tax help To enroll in EFTPS, go to eftps. Free income tax help gov or call 1-800-555-4477. Free income tax help For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Free income tax help Payment voucher – Form 1041-V. Free income tax help   Form 1041-V accompanies payments made by check or money order for Form 1041. Free income tax help The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. Free income tax help Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. Free income tax help We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. Free income tax help Estimated tax – Form 1041-ES. Free income tax help   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. Free income tax help See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. Free income tax help Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Free income tax help Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. Free income tax help If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. Free income tax help   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. Free income tax help Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. Free income tax help The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Free income tax help If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free income tax help , with their individual income tax returns. Free income tax help Tax Return Example – Form 1041 This publication is not revised annually. Free income tax help Future changes to the forms and their instructions may not be reflected in this example. Free income tax help Note. Free income tax help The following return was prepared for tax year 2011. Free income tax help In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). Free income tax help Facts and circumstances. Free income tax help   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. Free income tax help Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. Free income tax help   The estate received the following assets from Mr. Free income tax help Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. Free income tax help   Also, the estate received a $251,500 capital loss carryover. Free income tax help   Mr. Free income tax help Smith's bankruptcy case was closed on December 31, 2011. Free income tax help During 2011, Mr. Free income tax help Smith was relieved of $70,000 of debt by the bankruptcy court. Free income tax help The estate chose a calendar year as its tax year. Free income tax help Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. Free income tax help Schedule B (Form 1040). Free income tax help    The certificate of deposit earned $5,500 of interest during 2011. Free income tax help Joan reports this interest on Schedule B. Free income tax help She completes this schedule and enters the result on Form 1040. Free income tax help Form 4562. Free income tax help   Joan enters the depreciation allowed on Form 4562. Free income tax help She completes the form and enters the result on Schedule E. Free income tax help Schedule E (Form 1040). Free income tax help   The commercial real estate was rented through the date of sale. Free income tax help Joan reports the income and expenses on Schedule E. Free income tax help She enters the net income on Form 1040. Free income tax help Form 4797. Free income tax help   The commercial real estate was sold on July 1, 2011, for $280,000. Free income tax help The property was purchased in 2001 at a cost of $250,000. Free income tax help The total depreciation allowable as of the date of sale was $120,000. Free income tax help Additionally, $25,000 of selling expenses were incurred. Free income tax help Joan reports the gain or loss from the sale on Form 4797. Free income tax help She completes the form and enters the gain on Schedule D (Form 1040). Free income tax help   Mr. Free income tax help Smith's former residence was sold on September 30, 2011. Free income tax help The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. Free income tax help This sale is excluded from gross income under IRC section 121. Free income tax help Note. Free income tax help Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). Free income tax help Bankruptcy estates succeed to this exclusion at the commencement of the case. Free income tax help See Regulation section 1. Free income tax help 1398-3. Free income tax help Schedule D (Form 1040). Free income tax help   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). Free income tax help She enters the results on Form 1040. Free income tax help Form 1040, page 1. Free income tax help   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. Free income tax help Schedule A (Form 1040). Free income tax help   During 2011, the estate paid mortgage interest and real property tax on Mr. Free income tax help Smith's former residence. Free income tax help It also paid income tax to the state. Free income tax help Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. Free income tax help Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. Free income tax help She completes the Schedule A and enters the result on page 2 of Form 1040. Free income tax help Form 1040, page 2. Free income tax help   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. Free income tax help She then enters the estate's estimated tax payments and figures the amount the estate still owes. Free income tax help Form 982. Free income tax help   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. Free income tax help Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. Free income tax help See Debt Cancellation, later. Free income tax help After the bankruptcy case ends, Mr. Free income tax help Smith will assume the estate's tax attributes. Free income tax help Mr. Free income tax help Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). Free income tax help Note. Free income tax help If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. Free income tax help Form 1041. Free income tax help   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. Free income tax help She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. Free income tax help This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Schedule A This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Schedule B This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Schedule D This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Schedule E This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 2119 This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 4562 This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. Free income tax help Please click the link to view the image. Free income tax help Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. Free income tax help Otherwise, you do not have any carryovers. Free income tax help 1. Free income tax help Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. Free income tax help If a loss, enclose the amount in parentheses 1. Free income tax help 19,880   2. Free income tax help Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. Free income tax help 1,500   3. Free income tax help Combine lines 1 and 2. Free income tax help If zero or less, enter -0- 3. Free income tax help 21,380   4. Free income tax help Enter the smaller of line 2 or line 3 4. Free income tax help 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. Free income tax help       5. Free income tax help Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. Free income tax help 0   6. Free income tax help Enter any gain from your 2010 Schedule D, line 15. Free income tax help If a loss, enter -0- 6. Free income tax help         7. Free income tax help Add lines 4 and 6 7. Free income tax help 1,500   8. Free income tax help Short-term capital loss carryover for 2011. Free income tax help Subtract line 7 from line 5. Free income tax help If zero or less, enter -0-. Free income tax help If more than zero, also enter this amount on Schedule D, line 6 8. Free income tax help 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. Free income tax help       9. Free income tax help Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. Free income tax help 251,500   10. Free income tax help Enter any gain from your 2010 Schedule D, line 7. Free income tax help If a loss, enter -0- 10. Free income tax help 0       11. Free income tax help Subtract line 5 from line 4. Free income tax help If zero or less, enter -0- 11. Free income tax help 1,500       12. Free income tax help Add lines 10 and 11 12. Free income tax help 1,500   13. Free income tax help Long-term capital loss carryover for 2011. Free income tax help Subtract line 12 from line 9. Free income tax help If zero or less, enter -0-. Free income tax help If more than zero, also enter this amount on Schedule D, line 14 13. Free income tax help 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. Free income tax help The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. Free income tax help In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. Free income tax help The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. Free income tax help Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. Free income tax help However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. Free income tax help A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. Free income tax help However, It may or may not be included in the individual partners' income. Free income tax help See Partnerships, below under Debt Cancellation. Free income tax help Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. Free income tax help A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. Free income tax help The following discussion only highlights bankruptcy tax rules applying to corporations. Free income tax help The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. Free income tax help Therefore, you may wish to seek the help of a professional tax advisor. Free income tax help See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. Free income tax help Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. Free income tax help However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. Free income tax help A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. Free income tax help In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. Free income tax help In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. Free income tax help Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. Free income tax help In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. Free income tax help IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. Free income tax help IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. Free income tax help In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. Free income tax help No loss is recognized in this situation. Free income tax help Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. Free income tax help To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. Free income tax help The exemption request must be submitted to the local IRS Insolvency Office handling the case. Free income tax help The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. Free income tax help The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. Free income tax help ” The statement must be signed by the trustee, receiver or assignee. Free income tax help The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). Free income tax help The IRS will act on your request within 90 days. Free income tax help Disclosure of return information to trustee. Free income tax help   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. Free income tax help However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. Free income tax help Material interest is generally defined as a financial or monetary interest. Free income tax help Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Free income tax help Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. Free income tax help Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. Free income tax help QSFs are required to file an annual income tax return, Form 1120-SF, U. Free income tax help S. Free income tax help Income Tax Return for Settlement Funds. Free income tax help More information about QSFs may be found in Treasury Regulation sections 1. Free income tax help 468B-1 through -5. Free income tax help Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. Free income tax help After a return is filed, the IRS will either accept the return as filed or select the return for examination. Free income tax help Under examination the IRS may redetermine the tax liability shown on the return. Free income tax help If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. Free income tax help See Court Jurisdiction over Tax Matters, later. Free income tax help Prompt Determination Requests Pursuant to Rev. Free income tax help Proc. Free income tax help 2006-24, 2006-22 I. Free income tax help R. Free income tax help B. Free income tax help 943, www. Free income tax help irs. Free income tax help gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. Free income tax help irs. Free income tax help gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. Free income tax help Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). Free income tax help Making the request for determination. Free income tax help   As detailed in Rev. Free income tax help Proc. Free income tax help 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. Free income tax help O. Free income tax help Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). Free income tax help   The request must be submitted in duplicate and must be executed under penalties of perjury. Free income tax help In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. Free income tax help The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. Free income tax help The name and location of the office where the return was filed. Free income tax help The name of the debtor. Free income tax help Debtor's social security number, TIN, or EIN. Free income tax help Type of bankruptcy estate. Free income tax help Bankruptcy case number. Free income tax help Court where the bankruptcy case is pending. Free income tax help   The copy of the return(s) submitted with the request must be an exact copy of a valid return. Free income tax help A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. Free income tax help    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. Free income tax help A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. Free income tax help Examination of return. Free income tax help   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. Free income tax help If the return is selected for examination, it will be examined as soon as possible. Free income tax help The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. Free income tax help   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. Free income tax help   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. Free income tax help   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. Free income tax help Note. Free income tax help An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. Free income tax help   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei