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Free State Tax Filling

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Free State Tax Filling

Free state tax filling 2. Free state tax filling   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. Free state tax filling Providing information. Free state tax filling Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. Free state tax filling Fuel used between airfield and farm. Free state tax filling Fuel not used for farming. Free state tax filling Vehicles not considered highway vehicles. Free state tax filling Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. Free state tax filling This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. Free state tax filling Information on the refund of second tax is included. Free state tax filling This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. Free state tax filling Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. Free state tax filling Exported taxable fuel. Free state tax filling   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. Free state tax filling Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. Free state tax filling Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. Free state tax filling Gasoline and Aviation Gasoline Ultimate Purchasers. Free state tax filling   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Free state tax filling On a farm for farming purposes (credit only). Free state tax filling Off-highway business use. Free state tax filling Export. Free state tax filling In a boat engaged in commercial fishing. Free state tax filling In certain intercity and local buses. Free state tax filling In a school bus. Free state tax filling Exclusive use by a qualified blood collector organization. Free state tax filling In a highway vehicle owned by the United States that is not used on a highway. Free state tax filling Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). Free state tax filling Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). Free state tax filling In an aircraft or vehicle owned by an aircraft museum. Free state tax filling   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. Free state tax filling On a farm for farming purposes (credit only). Free state tax filling Export. Free state tax filling In foreign trade. Free state tax filling Certain helicopter and fixed-wing air ambulance uses. Free state tax filling In commercial aviation (other than foreign trade). Free state tax filling Exclusive use by a qualified blood collector organization. Free state tax filling Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). Free state tax filling Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). Free state tax filling In an aircraft owned by an aircraft museum. Free state tax filling In military aircraft. Free state tax filling Claims by persons who paid the tax to the government. Free state tax filling   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. Free state tax filling See Filing Claims, later. Free state tax filling Sales by registered ultimate vendors. Free state tax filling   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. Free state tax filling A state or local government for its exclusive use (including essential government use by an Indian tribal government). Free state tax filling A nonprofit educational organization for its exclusive use. Free state tax filling   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. Free state tax filling A sample certificate is included as Model Certificate M in the Appendix. Free state tax filling The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. Free state tax filling   The ultimate vendor must be registered by the IRS. Free state tax filling See Registration Requirements, earlier. Free state tax filling Credit card purchases. Free state tax filling   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free state tax filling   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free state tax filling How to make the claim. Free state tax filling   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). Free state tax filling Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. Free state tax filling Ultimate purchasers. Free state tax filling   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Free state tax filling On a farm for farming purposes. Free state tax filling Off-highway business use. Free state tax filling Export. Free state tax filling In a qualified local bus. Free state tax filling In a school bus. Free state tax filling Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). Free state tax filling Exclusive use by a qualified blood collector organization. Free state tax filling In a highway vehicle owned by the United States that is not used on a highway. Free state tax filling Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Free state tax filling Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Free state tax filling In a vehicle owned by an aircraft museum. Free state tax filling As a fuel in a propulsion engine of a diesel-powered train. Free state tax filling Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. Free state tax filling Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Free state tax filling Registered ultimate vendor (state use). Free state tax filling   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Free state tax filling The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. Free state tax filling The ultimate vendor must be registered by the IRS. Free state tax filling See Registration Requirements, earlier. Free state tax filling Registered ultimate vendor (blocked pump). Free state tax filling   This is an ultimate vendor that sells undyed kerosene from a blocked pump. Free state tax filling   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. Free state tax filling Blocked pump. Free state tax filling   A blocked pump is a fuel pump that meets all the following requirements. Free state tax filling It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. Free state tax filling It is at a fixed location. Free state tax filling It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. Free state tax filling ” It meets either of the following conditions. Free state tax filling It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. Free state tax filling It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. Free state tax filling Registered ultimate vendor (certain intercity and local buses). Free state tax filling   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. Free state tax filling   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Free state tax filling A sample waiver is included as Model Waiver N in the Appendix. Free state tax filling The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Free state tax filling Credit Card Purchases. Free state tax filling   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free state tax filling   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free state tax filling Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. Free state tax filling The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. Free state tax filling 198 per gallon is $. Free state tax filling 197 (if exported, the claim rate is $. Free state tax filling 198). Free state tax filling The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. Free state tax filling On a farm for farming purposes. Free state tax filling Off-highway business use. Free state tax filling Export. Free state tax filling In a qualified local bus. Free state tax filling In a school bus. Free state tax filling Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). Free state tax filling Exclusive use by a qualified blood collector organization. Free state tax filling In a highway vehicle owned by the United States that is not used on a highway. Free state tax filling Exclusive use by a nonprofit educational organization. Free state tax filling Exclusive use by a state, political subdivision of a state, or the District of Columbia. Free state tax filling In an aircraft or vehicle owned by an aircraft museum. Free state tax filling Blender claims. Free state tax filling   The claim rate for undyed diesel fuel taxed at $. Free state tax filling 244 and used to produce a diesel-water fuel emulsion is $. Free state tax filling 046 per gallon of diesel fuel so used. Free state tax filling The blender must be registered by the IRS in order to make the claim. Free state tax filling The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. Free state tax filling 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. Free state tax filling Kerosene for Use in Aviation Ultimate purchasers. Free state tax filling   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. Free state tax filling   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. Free state tax filling Generally, the ultimate purchaser is the aircraft operator. Free state tax filling   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. Free state tax filling On a farm for farming purposes. Free state tax filling Certain helicopter and fixed-wing aircraft uses. Free state tax filling Exclusive use by a qualified blood collector organization. Free state tax filling Exclusive use by a nonprofit educational organization. Free state tax filling In an aircraft owned by an aircraft museum. Free state tax filling In military aircraft. Free state tax filling Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. Free state tax filling   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. Free state tax filling At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. Free state tax filling   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. Free state tax filling For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. Free state tax filling 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. Free state tax filling 025 per gallon part of the tax. Free state tax filling The ultimate vendor may make this claim. Free state tax filling The operator may make a claim for the $. Free state tax filling 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. Free state tax filling 175 tax per gallon. Free state tax filling Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. Free state tax filling   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. Free state tax filling A sample waiver is included as Model Waiver L in the Appendix. Free state tax filling The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Free state tax filling   Noncommercial aviation means any use of an aircraft not described as commercial aviation. Free state tax filling For the definition of commercial aviation, see Commercial aviation on page 11. Free state tax filling Kerosene for use in nonexempt, noncommercial aviation. Free state tax filling   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. Free state tax filling The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. Free state tax filling A sample certificate is included as Model Certificate Q in the Appendix. Free state tax filling The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Free state tax filling Kerosene for use in aviation by a state or local government. Free state tax filling   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Free state tax filling The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. Free state tax filling The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. Free state tax filling A sample certificate is included as Model Certificate P in the Appendix. Free state tax filling The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Free state tax filling Credit card purchases. Free state tax filling   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Free state tax filling   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Free state tax filling Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. Free state tax filling While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. Free state tax filling The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. Free state tax filling On a farm for farming purposes. Free state tax filling Off-highway business use. Free state tax filling In a boat engaged in commercial fishing. Free state tax filling In certain intercity and local buses. Free state tax filling In a school bus. Free state tax filling In a qualified local bus. Free state tax filling Exclusive use by a qualified blood collector organization. Free state tax filling Exclusive use by a nonprofit educational organization. Free state tax filling Exclusive use by a state, political subdivision of a state, or the District of Columbia. Free state tax filling In an aircraft or vehicle owned by an aircraft museum. Free state tax filling Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. Free state tax filling See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. Free state tax filling Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. Free state tax filling This is in addition to all other taxes imposed on the sale or use of the fuel. Free state tax filling The section 4081(e) refund (discussed below) cannot be claimed. Free state tax filling If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. Free state tax filling No credit against any tax is allowed for this tax. Free state tax filling For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. Free state tax filling Conditions to allowance of refund. Free state tax filling   A claim for refund of the tax is allowed only if all the following conditions are met. Free state tax filling A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). Free state tax filling After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). Free state tax filling The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). Free state tax filling The person that paid the first tax has met the reporting requirements, discussed next. Free state tax filling Reporting requirements. Free state tax filling   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. Free state tax filling A model first taxpayer's report is shown in the Appendix as Model Certificate B. Free state tax filling The report must contain all information needed to complete the model. Free state tax filling   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. Free state tax filling Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. Free state tax filling Optional reporting. Free state tax filling   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. Free state tax filling However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. Free state tax filling Providing information. Free state tax filling   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. Free state tax filling If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. Free state tax filling   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. Free state tax filling If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. Free state tax filling A model statement of subsequent seller is shown in the Appendix as Model Certificate A. Free state tax filling The statement must contain all information necessary to complete the model. Free state tax filling   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. Free state tax filling Each buyer must be given a copy of the report. Free state tax filling Refund claim. Free state tax filling   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. Free state tax filling You must make your claim for refund on Form 8849. Free state tax filling Complete Schedule 5 (Form 8849) and attach it to your Form 8849. Free state tax filling Do not include this claim with a claim under another tax provision. Free state tax filling You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. Free state tax filling You must submit the following information with your claim. Free state tax filling A copy of the first taxpayer's report (discussed earlier). Free state tax filling A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. Free state tax filling Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. Free state tax filling If applicable, the type of use number from Table 2-1 is indicated in each heading. Free state tax filling Type of use table. Free state tax filling   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. Free state tax filling For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. Free state tax filling Table 2-1. Free state tax filling Type of Use Table No. Free state tax filling Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. Free state tax filling 1). Free state tax filling   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. Free state tax filling Farm. Free state tax filling   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. Free state tax filling It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. Free state tax filling A fish farm is an area where fish are grown or raised — not merely caught or harvested. Free state tax filling Farming purposes. Free state tax filling   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. Free state tax filling To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. Free state tax filling To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. Free state tax filling To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. Free state tax filling To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Free state tax filling For this use to qualify, you must have produced more than half the commodity so treated during the tax year. Free state tax filling Commodity means a single raw product. Free state tax filling For example, apples and peaches are two separate commodities. Free state tax filling To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. Free state tax filling , is incidental to your farming operations. Free state tax filling Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. Free state tax filling   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. Free state tax filling However, see Custom application of fertilizer and pesticide, next. Free state tax filling   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. Free state tax filling For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. Free state tax filling Custom application of fertilizer and pesticide. Free state tax filling   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. Free state tax filling Generally, the applicator is treated as having used the fuel on a farm for farming purposes. Free state tax filling For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. Free state tax filling For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. Free state tax filling Fuel used between airfield and farm. Free state tax filling   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. Free state tax filling Fuel not used for farming. Free state tax filling   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. Free state tax filling Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. Free state tax filling For personal use, such as mowing the lawn. Free state tax filling In processing, packaging, freezing, or canning operations. Free state tax filling In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. Free state tax filling Off-highway business use (No. Free state tax filling 2). Free state tax filling   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. Free state tax filling The terms “highway vehicle,” “public highway,” and “registered” are defined below. Free state tax filling Do not consider any use in a boat as an off-highway business use. Free state tax filling   Off-highway business use includes fuels used in any of the following ways. Free state tax filling In stationary machines such as generators, compressors, power saws, and similar equipment. Free state tax filling For cleaning purposes. Free state tax filling In forklift trucks, bulldozers, and earthmovers. Free state tax filling   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. Free state tax filling Example. Free state tax filling Caroline owns a landscaping business. Free state tax filling She uses power lawn mowers and chain saws in her business. Free state tax filling The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. Free state tax filling The gasoline used in her personal lawn mower at home does not qualify. Free state tax filling Highway vehicle. Free state tax filling   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Free state tax filling Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Free state tax filling A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Free state tax filling A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Free state tax filling A special kind of cargo, goods, supplies, or materials. Free state tax filling Some off-highway task unrelated to highway transportation, except as discussed next. Free state tax filling Vehicles not considered highway vehicles. Free state tax filling   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. Free state tax filling Specially designed mobile machinery for nontransportation functions. Free state tax filling A self-propelled vehicle is not a highway vehicle if all the following apply. Free state tax filling The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Free state tax filling The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Free state tax filling The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Free state tax filling The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. Free state tax filling Vehicles specially designed for off-highway transportation. Free state tax filling A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. Free state tax filling To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Free state tax filling It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Free state tax filling Nontransportation trailers and semitrailers. Free state tax filling A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Free state tax filling For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Free state tax filling Public highway. Free state tax filling   A public highway includes any road in the United States that is not a private roadway. Free state tax filling This includes federal, state, county, and city roads and streets. Free state tax filling Registered. Free state tax filling   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. Free state tax filling Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. Free state tax filling A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. Free state tax filling Dual use of propulsion motor. Free state tax filling   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. Free state tax filling It does not matter if the special equipment is mounted on the vehicle. Free state tax filling Example. Free state tax filling The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. Free state tax filling The fuel used in the motor to run the mixer is not off-highway business use. Free state tax filling Use in separate motor. Free state tax filling   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. Free state tax filling If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. Free state tax filling You may make a reasonable estimate based on your operating experience and supported by your records. Free state tax filling   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. Free state tax filling Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. Free state tax filling The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. Free state tax filling Example. Free state tax filling Hazel owns a refrigerated truck. Free state tax filling It has a separate motor for the refrigeration unit. Free state tax filling The same tank supplies both motors. Free state tax filling Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. Free state tax filling Therefore, 10% of the fuel is used in an off-highway business use. Free state tax filling Fuel lost or destroyed. Free state tax filling   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. Free state tax filling Export (No. Free state tax filling 3). Free state tax filling   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. Free state tax filling Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. Free state tax filling In a boat engaged in commercial fishing (No. Free state tax filling 4). Free state tax filling   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. Free state tax filling They include boats used in both fresh and salt water fishing. Free state tax filling They do not include boats used for both sport fishing and commercial fishing on the same trip. Free state tax filling In certain intercity and local buses (No. Free state tax filling 5). Free state tax filling   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Free state tax filling The bus must be engaged in one of the following activities. Free state tax filling Scheduled transportation along regular routes. Free state tax filling Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. Free state tax filling Vans and similar vehicles used for van-pooling or taxi service do not qualify. Free state tax filling Available to the general public. Free state tax filling   This means you offer service to more than a limited number of persons or organizations. Free state tax filling If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. Free state tax filling A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. Free state tax filling Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. Free state tax filling In a qualified local bus (No. Free state tax filling 6). Free state tax filling   In a qualified local bus means fuel used in a bus meeting all the following requirements. Free state tax filling It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. Free state tax filling It operates along scheduled, regular routes. Free state tax filling It has a seating capacity of at least 20 adults (excluding the driver). Free state tax filling It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. Free state tax filling Intracity passenger land transportation. Free state tax filling   This is the land transportation of passengers between points located within the same metropolitan area. Free state tax filling It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. Free state tax filling Under contract. Free state tax filling   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. Free state tax filling More than a nominal subsidy. Free state tax filling   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. Free state tax filling A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. Free state tax filling In a school bus (No. Free state tax filling 7). Free state tax filling   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. Free state tax filling A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. Free state tax filling For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. Free state tax filling 8). Free state tax filling   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. Free state tax filling In foreign trade (No. Free state tax filling 9). Free state tax filling   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. Free state tax filling The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. Free state tax filling In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. Free state tax filling Certain helicopter and fixed-wing aircraft uses (No. Free state tax filling 10). Free state tax filling   Includes: Certain helicopter uses. Free state tax filling   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. Free state tax filling Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Free state tax filling Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free state tax filling Providing emergency medical transportation. Free state tax filling   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free state tax filling For item (1), treat each flight segment as a separate flight. Free state tax filling Fixed-wing aircraft uses. Free state tax filling   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. Free state tax filling Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free state tax filling Providing emergency medical transportation. Free state tax filling The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free state tax filling During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free state tax filling Exclusive use by a qualified blood collector organization (No. Free state tax filling 11). Free state tax filling   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. Free state tax filling Qualified blood collector organization. Free state tax filling   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. Free state tax filling In a highway vehicle owned by the United States that is not used on a highway (No. Free state tax filling 12). Free state tax filling   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. Free state tax filling This use applies whether or not the vehicle is registered or required to be registered for highway use. Free state tax filling Exclusive use by a nonprofit educational organization (No. Free state tax filling 13). Free state tax filling   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. Free state tax filling It has a regular faculty and curriculum. Free state tax filling It has a regularly enrolled body of students who attend the place where the instruction normally occurs. Free state tax filling   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. Free state tax filling Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. Free state tax filling 14). Free state tax filling   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. Free state tax filling A state or local government is any state, any political subdivision thereof, or the District of Columbia. Free state tax filling An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. Free state tax filling Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. Free state tax filling In an aircraft or vehicle owned by an aircraft museum (No. Free state tax filling 15). Free state tax filling   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. Free state tax filling It is exempt from income tax as an organization described in section 501(c)(3). Free state tax filling It is operated as a museum under a state (or District of Columbia) charter. Free state tax filling It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. Free state tax filling   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). Free state tax filling In military aircraft (No. Free state tax filling 16). Free state tax filling   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. Free state tax filling In commercial aviation (other than foreign trade). Free state tax filling   See Commercial aviation, earlier, for the definition. Free state tax filling Use in a train. Free state tax filling   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. Free state tax filling This includes use in a locomotive, work train, switching engine, and track maintenance machine. Free state tax filling Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. Free state tax filling The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. Free state tax filling Biodiesel or renewable diesel mixture credit claimant. Free state tax filling   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. Free state tax filling Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). Free state tax filling   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. Free state tax filling The credit is based on the gallons of biodiesel or renewable diesel in the mixture. Free state tax filling Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. Free state tax filling Claim requirements. Free state tax filling   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. Free state tax filling Alternative fuel credit claimant. Free state tax filling   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. Free state tax filling Carbon capture requirement. Free state tax filling   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. Free state tax filling Alternative fuel credit. Free state tax filling   The registered alternative fueler is the person eligible to make the claim. Free state tax filling An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. Free state tax filling An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. Free state tax filling Alternative fuel mixture credit claimant. Free state tax filling   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. Free state tax filling The credit is based on the gallons of alternative fuel in the mixture. Free state tax filling An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). Free state tax filling Registration. Free state tax filling   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. Free state tax filling See Registration Requirements in chapter 1. Free state tax filling Credits for fuel provide incentive for United States production. Free state tax filling   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. Free state tax filling The United States includes any possession of the United States. Free state tax filling Credit for fuels derived from paper or pulp production. Free state tax filling   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. Free state tax filling How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. Free state tax filling Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. Free state tax filling See Notice 2005-4 and the Instructions for Form 720 for more information. Free state tax filling Also see Notice 2013-26 on page 984 of I. Free state tax filling R. Free state tax filling B. Free state tax filling 2013-18 at www. Free state tax filling irs. Free state tax filling gov/pub/irs-irbs/irb13-18. Free state tax filling pdf; and see chapter 2, later. Free state tax filling Coordination with income tax credit. Free state tax filling   Only one credit may be taken for any amount of biodiesel or renewable diesel. Free state tax filling If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. Free state tax filling   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. Free state tax filling Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. Free state tax filling   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. Free state tax filling   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. Free state tax filling Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. Free state tax filling This section also covers recordkeeping requirements and when to include the credit or refund in your income. Free state tax filling Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. Free state tax filling In some cases, you will have to attach additional information. Free state tax filling You need to keep records that support your claim for a credit or refund. Free state tax filling Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. Free state tax filling Ultimate purchaser. Free state tax filling   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Free state tax filling If you are an ultimate purchaser, you must keep the following records. Free state tax filling The number of gallons purchased and used during the period covered by your claim. Free state tax filling The dates of the purchases. Free state tax filling The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. Free state tax filling The nontaxable use for which you used the fuel. Free state tax filling The number of gallons used for each nontaxable use. Free state tax filling It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. Free state tax filling If the fuel is exported, you must have proof of exportation. Free state tax filling   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. Free state tax filling Exceptions. Free state tax filling    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. Free state tax filling However, see Claims by credit card issuers, later, for an exception. Free state tax filling The ultimate purchaser may not claim a credit or refund as follows. Free state tax filling The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. Free state tax filling A new certificate is required each year or when any information in the current certificate expires. Free state tax filling The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. Free state tax filling A new waiver is required each year or when any information in the current waiver expires. Free state tax filling The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. Free state tax filling A new waiver is required each year or when any information in the current waiver expires. Free state tax filling The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. Free state tax filling A new certificate is required each year or when any information in the current certificate expires. Free state tax filling Registered ultimate vendor. Free state tax filling   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Free state tax filling If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. Free state tax filling   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. Free state tax filling You are required to have a valid certificate or waiver in your possession in order to make the claim. Free state tax filling   In addition, you must have a registration number that has not been revoked or suspended. Free state tax filling See Form 637. Free state tax filling State use. Free state tax filling   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. Free state tax filling If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. Free state tax filling The name and taxpayer identification number of each person (government unit) that bought the fuel. Free state tax filling The number of gallons sold to each person. Free state tax filling An unexpired certificate from the buyer. Free state tax filling See Model Certificate P in the Appendix. Free state tax filling The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Free state tax filling Nonprofit educational organization and state use. Free state tax filling   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. Free state tax filling If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. Free state tax filling The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. Free state tax filling The number of gallons sold to each person. Free state tax filling An unexpired certificate from the buyer. Free state tax filling See Model Certificate M in the Appendix. Free state tax filling  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Free state tax filling Blocked pump. Free state tax filling   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. Free state tax filling If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. Free state tax filling The date of each sale. Free state tax filling The name and address of the buyer. Free state tax filling The number of gallons sold to that buyer. Free state tax filling Certain intercity and local bus use. Free state tax filling   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. Free state tax filling You must keep the following information. Free state tax filling The date of each sale. Free state tax filling The name and address of the buyer. Free state tax filling The number of gallons sold to the buyer. Free state tax filling A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Free state tax filling See Model Waiver N in the Appendix. Free state tax filling Kerosene for use in commercial aviation or noncommercial aviation. Free state tax filling   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. Free state tax filling See Kerosene for use in aviation, earlier, for a list of nontaxable uses. Free state tax filling You must keep the following information. Free state tax filling The date of each sale. Free state tax filling The name and address of the buyer. Free state tax filling The number of gallons sold to the buyer. Free state tax filling A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Free state tax filling See Model Waiver L in the Appendix. Free state tax filling Kerosene for use in nonexempt, noncommercial aviation. Free state tax filling   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. Free state tax filling You must keep the following information. Free state tax filling The date of each sale. Free state tax filling The name and address of the buyer. Free state tax filling The number of gallons sold to the buyer. Free state tax filling A copy of the certificate signed by the buyer at the time the credit or payment is claimed. Free state tax filling See Model Certificate Q in the Appendix. Free state tax filling Claims by credit card issuers. Free state tax filling   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. Free state tax filling An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). Free state tax filling   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. Free state tax filling However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Free state tax filling   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. Free state tax filling A state is not allowed to make a claim for these fuels. Free state tax filling However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Free state tax filling   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. Free state tax filling The total number of gallons. Free state tax filling Its registration number. Free state tax filling A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. Free state tax filling A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. Free state tax filling Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. Free state tax filling Taxpayer identification number. Free state tax filling   To file a claim, you must have a taxpayer identification number. Free state tax filling Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. Free state tax filling   If you normally file only a U. Free state tax filling S. Free state tax filling individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. Free state tax filling You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. Free state tax filling To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. Free state tax filling   If you operate a business, use your EIN. Free state tax filling If you do not have an EIN, you may apply for one online. Free state tax filling Go to the IRS website at irs. Free state tax filling gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. Free state tax filling You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Free state tax filling Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. Free state tax filling Complete and attach to Form 8849 the appropriate Form 8849 schedules. Free state tax filling The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. Free state tax filling If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. Free state tax filling See the Instructions for Form 720. Free state tax filling Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. Free state tax filling The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. Free state tax filling The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. Free state tax filling To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. Free state tax filling Only one claim may be made for any particular amount of alternative fuel. Free state tax filling Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. Free state tax filling See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. Free state tax filling A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. Free state tax filling If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. Free state tax filling Credit only. Free state tax filling   You can claim the following taxes only as a credit on Form 4136. Free state tax filling Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. Free state tax filling Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. Free state tax filling Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. Free state tax filling Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). Free state tax filling When to file. Free state tax filling   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). Free state tax filling You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. Free state tax filling Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. Free state tax filling How to claim a credit. Free state tax filling   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. Free state tax filling Individuals. Free state tax filling   You claim the credit on the “Credits from” line of Form 1040. Free state tax filling Also check box b on that line. Free state tax filling If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. Free state tax filling Partnerships. Free state tax filling   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free state tax filling , showing each partner's share of the number of gallons of each fuel sold or used for a non
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The Free State Tax Filling

Free state tax filling 1. Free state tax filling   Rental Income and Expenses (If No Personal Use of Dwelling) Table of Contents Rental IncomeWhen To Report Types of Income Rental ExpensesWhen To Deduct Types of Expenses This chapter discusses the various types of rental income and expenses for a residential rental activity with no personal use of the dwelling. Free state tax filling Generally, each year you will report all income and deduct all out-of-pocket expenses in full. Free state tax filling The deduction to recover the cost of your rental property—depreciation—is taken over a prescribed number of years, and is discussed in chapter 2, Depreciation of Rental Property. Free state tax filling If your rental income is from property you also use personally or rent to someone at less than a fair rental price, first read the information in chapter 5 , Personal Use of Dwelling Unit (Including Vacation Home). Free state tax filling Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Free state tax filling Rental income is any payment you receive for the use or occupation of property. Free state tax filling In addition to amounts you receive as normal rental payments, there are other amounts that may be rental income. Free state tax filling When To Report When you report rental income on your tax return generally depends on whether you are a cash basis taxpayer or use an accrual method. Free state tax filling Most individual taxpayers use the cash method. Free state tax filling Cash method. Free state tax filling   You are a cash basis taxpayer if you report income on your return in the year you actually or constructively receive it, regardless of when it was earned. Free state tax filling You constructively receive income when it is made available to you, for example, by being credited to your bank account. Free state tax filling Accrual method. Free state tax filling    If you are an accrual basis taxpayer, you generally report income when you earn it, rather than when you receive it. Free state tax filling You generally deduct your expenses when you incur them, rather than when you pay them. Free state tax filling More information. Free state tax filling   See Publication 538, Accounting Periods and Methods, for more information about when you constructively receive income and accrual methods of accounting. Free state tax filling Types of Income The following are common types of rental income. Free state tax filling Advance rent. Free state tax filling   Advance rent is any amount you receive before the period that it covers. Free state tax filling Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Free state tax filling Example. Free state tax filling On March 18, 2013, you signed a 10-year lease to rent your property. Free state tax filling During 2013, you received $9,600 for the first year's rent and $9,600 as rent for the last year of the lease. Free state tax filling You must include $19,200 in your rental income in the first year. Free state tax filling Canceling a lease. Free state tax filling   If your tenant pays you to cancel a lease, the amount you receive is rent. Free state tax filling Include the payment in your income in the year you receive it regardless of your method of accounting. Free state tax filling Expenses paid by tenant. Free state tax filling   If your tenant pays any of your expenses, those payments are rental income. Free state tax filling Because you must include this amount in income, you can also deduct the expenses if they are deductible rental expenses. Free state tax filling For more information, see Rental Expenses , later. Free state tax filling Example 1. Free state tax filling Your tenant pays the water and sewage bill for your rental property and deducts the amount from the normal rent payment. Free state tax filling Under the terms of the lease, your tenant does not have to pay this bill. Free state tax filling Include the utility bill paid by the tenant and any amount received as a rent payment in your rental income. Free state tax filling You can deduct the utility payment made by your tenant as a rental expense. Free state tax filling Example 2. Free state tax filling While you are out of town, the furnace in your rental property stops working. Free state tax filling Your tenant pays for the necessary repairs and deducts the repair bill from the rent payment. Free state tax filling Include the repair bill paid by the tenant and any amount received as a rent payment in your rental income. Free state tax filling You can deduct the repair payment made by your tenant as a rental expense. Free state tax filling Property or services. Free state tax filling   If you receive property or services as rent, instead of money, include the fair market value of the property or services in your rental income. Free state tax filling   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Free state tax filling Example. Free state tax filling Your tenant is a house painter. Free state tax filling He offers to paint your rental property instead of paying 2 months rent. Free state tax filling You accept his offer. Free state tax filling Include in your rental income the amount the tenant would have paid for 2 months rent. Free state tax filling You can deduct that same amount as a rental expense for painting your property. Free state tax filling Security deposits. Free state tax filling   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Free state tax filling But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Free state tax filling    If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Free state tax filling Include it in your income when you receive it. Free state tax filling Other Sources of Rental Income Lease with option to buy. Free state tax filling   If the rental agreement gives your tenant the right to buy your rental property, the payments you receive under the agreement are generally rental income. Free state tax filling If your tenant exercises the right to buy the property, the payments you receive for the period after the date of sale are considered part of the selling price. Free state tax filling Part interest. Free state tax filling   If you own a part interest in rental property, you must report your part of the rental income from the property. Free state tax filling Rental of property also used as your home. Free state tax filling   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Free state tax filling However, you can deduct on Schedule A (Form 1040), Itemized Deductions, the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Free state tax filling See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Free state tax filling Rental Expenses In most cases, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income. Free state tax filling Personal use of rental property. Free state tax filling   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Free state tax filling Also, your rental expense deductions may be limited. Free state tax filling See chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Free state tax filling Part interest. Free state tax filling   If you own a part interest in rental property, you can deduct expenses you paid according to your percentage of ownership. Free state tax filling Example. Free state tax filling Roger owns a one-half undivided interest in a rental house. Free state tax filling Last year he paid $968 for necessary repairs on the property. Free state tax filling Roger can deduct $484 (50% × $968) as a rental expense. Free state tax filling He is entitled to reimbursement for the remaining half from the co-owner. Free state tax filling When To Deduct You generally deduct your rental expenses in the year you pay them. Free state tax filling If you use the accrual method, see Publication 538 for more information. Free state tax filling Types of Expenses Listed below are the most common rental expenses. Free state tax filling Advertising. Free state tax filling Auto and travel expenses. Free state tax filling Cleaning and maintenance. Free state tax filling Commissions. Free state tax filling Depreciation. Free state tax filling Insurance. Free state tax filling Interest (other). Free state tax filling Legal and other professional fees. Free state tax filling Local transportation expenses. Free state tax filling Management fees. Free state tax filling Mortgage interest paid to banks, etc. Free state tax filling Points. Free state tax filling Rental payments. Free state tax filling Repairs. Free state tax filling Taxes. Free state tax filling Utilities. Free state tax filling Some of these expenses, as well as other less common ones, are discussed below. Free state tax filling Depreciation. Free state tax filling   Depreciation is a capital expense. Free state tax filling It is the mechanism for recovering your cost in an income producing property and must be taken over the expected life of the property. Free state tax filling   You can begin to depreciate rental property when it is ready and available for rent. Free state tax filling See Placed in Service under When Does Depreciation Begin and End in chapter 2. Free state tax filling Insurance premiums paid in advance. Free state tax filling   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Free state tax filling You cannot deduct the total premium in the year you pay it. Free state tax filling See chapter 6 of Publication 535 for information on deductible premiums. Free state tax filling Interest expense. Free state tax filling   You can deduct mortgage interest you pay on your rental property. Free state tax filling When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Free state tax filling Chapter 4 of Publication 535 explains mortgage interest in detail. Free state tax filling Expenses paid to obtain a mortgage. Free state tax filling   Certain expenses you pay to obtain a mortgage on your rental property cannot be deducted as interest. Free state tax filling These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses that are part of your basis in the property. Free state tax filling Form 1098, Mortgage Interest Statement. Free state tax filling   If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098 or similar statement showing the interest you paid for the year. Free state tax filling If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on, the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Free state tax filling Attach a statement to your return showing the name and address of the other person. Free state tax filling On the dotted line next to line 13, enter “See attached. Free state tax filling ” Legal and other professional fees. Free state tax filling   You can deduct, as a rental expense, legal and other professional expenses such as tax return preparation fees you paid to prepare Schedule E, Part I. Free state tax filling For example, on your 2013 Schedule E you can deduct fees paid in 2013 to prepare Part I of your 2012 Schedule E. Free state tax filling You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Free state tax filling Local benefit taxes. Free state tax filling   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Free state tax filling These charges are nondepreciable capital expenditures and must be added to the basis of your property. Free state tax filling However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Free state tax filling Local transportation expenses. Free state tax filling   You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Free state tax filling However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Free state tax filling See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Free state tax filling   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Free state tax filling For 2013, the standard mileage rate for business use is 56. Free state tax filling 5 cents per mile. Free state tax filling For more information, see chapter 4 of Publication 463. Free state tax filling    To deduct car expenses under either method, you must keep records that follow the rules in chapter 5 of Publication 463. Free state tax filling In addition, you must complete Form 4562, Part V, and attach it to your tax return. Free state tax filling Pre-rental expenses. Free state tax filling   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Free state tax filling Rental of equipment. Free state tax filling   You can deduct the rent you pay for equipment that you use for rental purposes. Free state tax filling However, in some cases, lease contracts are actually purchase contracts. Free state tax filling If so, you cannot deduct these payments. Free state tax filling You can recover the cost of purchased equipment through depreciation. Free state tax filling Rental of property. Free state tax filling   You can deduct the rent you pay for property that you use for rental purposes. Free state tax filling If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Free state tax filling Travel expenses. Free state tax filling   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Free state tax filling You must properly allocate your expenses between rental and nonrental activities. Free state tax filling You cannot deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. Free state tax filling The cost of improvements is recovered by taking depreciation. Free state tax filling For information on travel expenses, see chapter 1 of Publication 463. Free state tax filling    To deduct travel expenses, you must keep records that follow the rules in chapter 5 of Publication 463. Free state tax filling Uncollected rent. Free state tax filling   If you are a cash basis taxpayer, do not deduct uncollected rent. Free state tax filling Because you have not included it in your income, it is not deductible. Free state tax filling   If you use an accrual method, report income when you earn it. Free state tax filling If you are unable to collect the rent, you may be able to deduct it as a business bad debt. Free state tax filling See chapter 10 of Publication 535 for more information about business bad debts. Free state tax filling Vacant rental property. Free state tax filling   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Free state tax filling However, you cannot deduct any loss of rental income for the period the property is vacant. Free state tax filling Vacant while listed for sale. Free state tax filling   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Free state tax filling If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Free state tax filling Points The term “points” is often used to describe some of the charges paid, or treated as paid, by a borrower to take out a loan or a mortgage. Free state tax filling These charges are also called loan origination fees, maximum loan charges, or premium charges. Free state tax filling Any of these charges (points) that are solely for the use of money are interest. Free state tax filling Because points are prepaid interest, you generally cannot deduct the full amount in the year paid, but must deduct the interest over the term of the loan. Free state tax filling The method used to figure the amount of points you can deduct each year follows the original issue discount (OID) rules. Free state tax filling In this case, points are equivalent to OID, which is the difference between: The amount borrowed (redemption price at maturity, or principal) and The proceeds (issue price). Free state tax filling The first step is to determine whether your total OID (which you may have on bonds or other investments in addition to the mortgage loan), including the OID resulting from the points, is insignificant or de minimis. Free state tax filling If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct. Free state tax filling De minimis OID. Free state tax filling   The OID is de minimis if it is less than one-fourth of 1% (. Free state tax filling 0025) of the stated redemption price at maturity (principal amount of the loan) multiplied by the number of full years from the date of original issue to maturity (term of the loan). Free state tax filling   If the OID is de minimis, you can choose one of the following ways to figure the amount of points you can deduct each year. Free state tax filling On a constant-yield basis over the term of the loan. Free state tax filling On a straight line basis over the term of the loan. Free state tax filling In proportion to stated interest payments. Free state tax filling In its entirety at maturity of the loan. Free state tax filling You make this choice by deducting the OID (points) in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Free state tax filling Example. Free state tax filling Carol Madison took out a $100,000 mortgage loan on January 1, 2013, to buy a house she will use as a rental during 2013. Free state tax filling The loan is to be repaid over 30 years. Free state tax filling During 2013, Carol paid $10,000 of mortgage interest (stated interest) to the lender. Free state tax filling When the loan was made, she paid $1,500 in points to the lender. Free state tax filling The points reduced the principal amount of the loan from $100,000 to $98,500, resulting in $1,500 of OID. Free state tax filling Carol determines that the points (OID) she paid are de minimis based on the following computation. Free state tax filling Redemption price at maturity (principal amount of the loan) $100,000 Multiplied by: The term of the  loan in complete years ×30 Multiplied by ×. Free state tax filling 0025 De minimis amount $7,500 The points (OID) she paid ($1,500) are less than the de minimis amount ($7,500). Free state tax filling Therefore, Carol has de minimis OID and she can choose one of the four ways discussed earlier to figure the amount she can deduct each year. Free state tax filling Under the straight line method, she can deduct $50 each year for 30 years. Free state tax filling Constant-yield method. Free state tax filling   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Free state tax filling   You figure your deduction for the first year in the following manner. Free state tax filling Determine the issue price of the loan. Free state tax filling If you paid points on the loan, the issue price generally is the difference between the principal and the points. Free state tax filling Multiply the result in (1) by the yield to maturity (defined later). Free state tax filling Subtract any qualified stated interest payments (defined later) from the result in (2). Free state tax filling This is the OID you can deduct in the first year. Free state tax filling Yield to maturity (YTM). Free state tax filling   This rate is generally shown in the literature you receive from your lender. Free state tax filling If you do not have this information, consult your lender or tax advisor. Free state tax filling In general, the YTM is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Free state tax filling Qualified stated interest (QSI). Free state tax filling   In general, this is the stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a fixed rate. Free state tax filling Example—Year 1. Free state tax filling The facts are the same as in the previous example. Free state tax filling The yield to maturity on Carol's loan is 10. Free state tax filling 2467%, compounded annually. Free state tax filling She figured the amount of points (OID) she could deduct in 2013 as follows. Free state tax filling Principal amount of the loan $100,000 Minus: Points (OID) –1,500 Issue price of the loan $98,500 Multiplied by: YTM × . Free state tax filling 102467 Total 10,093 Minus: QSI –10,000 Points (OID) deductible in 2013 $93 To figure your deduction in any subsequent year, you start with the adjusted issue price. Free state tax filling To get the adjusted issue price, add to the issue price figured in Year 1 any OID previously deducted. Free state tax filling Then follow steps (2) and (3), earlier. Free state tax filling Example—Year 2. Free state tax filling Carol figured the deduction for 2014 as follows. Free state tax filling Issue price $98,500 Plus: Points (OID) deducted  in 2013 +93 Adjusted issue price $98,593 Multiplied by: YTM × . Free state tax filling 102467 Total 10,103 Minus: QSI –10,000 Points (OID) deductible in 2014 $103 Loan or mortgage ends. Free state tax filling    If your loan or mortgage ends, you may be able to deduct any remaining points (OID) in the tax year in which the loan or mortgage ends. Free state tax filling A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Free state tax filling However, if the refinancing is with the same lender, the remaining points (OID) generally are not deductible in the year in which the refinancing occurs, but may be deductible over the term of the new mortgage or loan. Free state tax filling Points when loan refinance is more than the previous outstanding balance. Free state tax filling   When you refinance a rental property for more than the previous outstanding balance, the portion of the points allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Free state tax filling For example, if an individual refinanced a loan with a balance of $100,000, the amount of the new loan was $120,000, and the taxpayer used $20,000 to purchase a car, points allocable to the $20,000 would be treated as nondeductible personal interest. Free state tax filling Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Free state tax filling Improvements. Free state tax filling   You must capitalize any expense you pay to improve your rental property. Free state tax filling An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Free state tax filling Betterments. Free state tax filling   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Free state tax filling Restoration. Free state tax filling   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Free state tax filling Adaptation. Free state tax filling   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Free state tax filling Separate the costs of repairs and improvements, and keep accurate records. Free state tax filling You will need to know the cost of improvements when you sell or depreciate your property. Free state tax filling The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Free state tax filling Table 1-1. Free state tax filling Examples of Improvements Additions Bedroom Bathroom Deck Garage Porch Patio  Lawn & Grounds Landscaping Driveway Walkway Fence Retaining wall Sprinkler system Swimming pool Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system   Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances Kitchen modernization Flooring Wall-to-wall carpeting  Insulation Attic Walls, floor Pipes, duct work Prev  Up  Next   Home   More Online Publications