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Free Tax Filing For 2012

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Free Tax Filing For 2012

Free tax filing for 2012 4. Free tax filing for 2012   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. Free tax filing for 2012 However, the information shown on the filled-in forms is not from any actual person or scenario. Free tax filing for 2012 Example 1—Mortgage loan modification. Free tax filing for 2012    In 2007, Nancy Oak bought a main home for $435,000. Free tax filing for 2012 Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. Free tax filing for 2012 The loan was secured by the home. Free tax filing for 2012 The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. Free tax filing for 2012 In 2008, Nancy took out a second mortgage loan (also a recourse debt) in the amount of $30,000 that was used to substantially improve her kitchen. Free tax filing for 2012    In 2011, when the outstanding principal of the first and second mortgage loans was $440,000, Nancy refinanced the two recourse loans into one recourse loan in the amount of $475,000. Free tax filing for 2012 The FMV of Nancy's home at the time of the refinancing was $500,000. Free tax filing for 2012 Nancy used the additional $35,000 debt ($475,000 new mortgage loan minus $440,000 outstanding principal of Nancy's first and second mortgage loans immediately before the refinancing) to pay off personal credit cards and to pay college tuition for her son. Free tax filing for 2012 After the refinancing, Nancy has qualified principal residence indebtedness in the amount of $440,000 because the refinanced debt is qualified principal residence indebtedness only to the extent the amount of debt is not more than the old mortgage principal just before the refinancing. Free tax filing for 2012   In 2013, Nancy was unable to make her mortgage loan payments. Free tax filing for 2012 On August 31, 2013, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy's bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. Free tax filing for 2012 Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. Free tax filing for 2012   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. Free tax filing for 2012 Identifiable event code "F" appears in box 6. Free tax filing for 2012 This box shows the reason the creditor has filed Form 1099-C. Free tax filing for 2012 To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. Free tax filing for 2012 Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. Free tax filing for 2012   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. Free tax filing for 2012 Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was not qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. Free tax filing for 2012 Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. Free tax filing for 2012 Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt). Free tax filing for 2012   Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. Free tax filing for 2012 Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). Free tax filing for 2012 Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. Free tax filing for 2012 You can see Nancy's Form 1099-C and a portion of her Form 1040 below. Free tax filing for 2012 Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 1040, U. Free tax filing for 2012 S. Free tax filing for 2012 Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. Free tax filing for 2012    In 2005, John and Mary Elm bought a main home for $335,000. Free tax filing for 2012 John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. Free tax filing for 2012 The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. Free tax filing for 2012   John and Mary became unable to make their mortgage loan payments and on March 1, 2013, when the outstanding balance of the mortgage loan was $315,000 and the FMV of the property was $290,000, the bank foreclosed on the property and simultaneously canceled the remaining mortgage debt. Free tax filing for 2012 Immediately before the foreclosure, John and Mary's only other assets and liabilities were a checking account with a balance of $6,000, retirement savings of $13,000, and credit card debt of $5,500. Free tax filing for 2012   John and Mary received a 2013 Form 1099-C showing canceled debt of $25,000 in box 2 ($315,000 outstanding balance minus $290,000 FMV) and an FMV of $290,000 in box 7. Free tax filing for 2012 Identifiable event code "D" appears in box 6. Free tax filing for 2012 This box shows the reason the creditor has filed Form 1099-C. Free tax filing for 2012 In order to determine if John and Mary must include the canceled debt in income, they must first determine whether they meet any of the exceptions or exclusions that apply to canceled debts. Free tax filing for 2012 In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. Free tax filing for 2012 Their sample Form 1099-C is shown on this page. Free tax filing for 2012   John and Mary complete the insolvency worksheet and determine that they were insolvent immediately before the cancellation because at that time their liabilities exceeded the FMV of their assets by $11,500 ($320,500 total liabilities minus $309,000 FMV of total assets). Free tax filing for 2012 However, because the entire debt canceled is qualified principal residence indebtedness, the insolvency exclusion only applies if John and Mary elect to apply the insolvency exclusion instead of the qualified principal residence exclusion. Free tax filing for 2012   John and Mary do not elect to apply the insolvency exclusion instead of the qualified principal residence exclusion because under the insolvency exclusion their exclusion would be limited to the amount by which they were insolvent ($11,500). Free tax filing for 2012 Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. Free tax filing for 2012 Under the qualified principal residence exclusion, the amount that John and Mary can exclude is not limited because their qualified principal residence indebtedness is not more than $2 million and no portion of the loan was nonqualified debt. Free tax filing for 2012 As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. Free tax filing for 2012 Because John and Mary no longer own the home due to the foreclosure, John and Mary have no remaining basis in the home at the time of the debt cancellation. Free tax filing for 2012 Thus, John and Mary leave line 10b of Form 982 blank. Free tax filing for 2012   John and Mary must also determine whether they have a gain or loss from the foreclosure. Free tax filing for 2012 John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. Free tax filing for 2012 Because this loss relates to their home, it is a nondeductible loss. Free tax filing for 2012   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. Free tax filing for 2012 John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 1099-C, Cancellation of Debt Table 1-1. Free tax filing for 2012 Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. Free tax filing for 2012 Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free tax filing for 2012 Otherwise, go to Part 2. Free tax filing for 2012 1. Free tax filing for 2012 Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $315,000. Free tax filing for 2012 00 2. Free tax filing for 2012 Enter the fair market value of the transferred property $290,000. Free tax filing for 2012 00 3. Free tax filing for 2012 Ordinary income from the cancellation of debt upon foreclosure or repossession. Free tax filing for 2012 * Subtract line 2 from line 1. Free tax filing for 2012 If less than zero, enter zero. Free tax filing for 2012 Next, go to Part 2 $ 25,000. Free tax filing for 2012 00 Part 2. Free tax filing for 2012 Gain or loss from foreclosure or repossession. Free tax filing for 2012   4. Free tax filing for 2012 Enter the smaller of line 1 or line 2. Free tax filing for 2012 If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property $290,000. Free tax filing for 2012 00 5. Free tax filing for 2012 Enter any proceeds you received from the foreclosure sale   6. Free tax filing for 2012 Add line 4 and line 5 $290,000. Free tax filing for 2012 00 7. Free tax filing for 2012 Enter the adjusted basis of the transferred property $335,000. Free tax filing for 2012 00 8. Free tax filing for 2012 Gain or loss from foreclosure or repossession. Free tax filing for 2012 Subtract line 7 from line 6 ($ 45,000. Free tax filing for 2012 00) * The income may not be taxable. Free tax filing for 2012 See chapter 1 for more details. Free tax filing for 2012 Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. Free tax filing for 2012 Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. Free tax filing for 2012 Credit card debt $ 5,500 2. Free tax filing for 2012 Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 315,000 3. Free tax filing for 2012 Car and other vehicle loans $ 4. Free tax filing for 2012 Medical bills owed $ 5. Free tax filing for 2012 Student loans $ 6. Free tax filing for 2012 Accrued or past-due mortgage interest $ 7. Free tax filing for 2012 Accrued or past-due real estate taxes $ 8. Free tax filing for 2012 Accrued or past-due utilities (water, gas, electric) $ 9. Free tax filing for 2012 Accrued or past-due child care costs $ 10. Free tax filing for 2012 Federal or state income taxes remaining due (for prior tax years) $ 11. Free tax filing for 2012 Judgments $ 12. Free tax filing for 2012 Business debts (including those owed as a sole proprietor or partner) $ 13. Free tax filing for 2012 Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. Free tax filing for 2012 Other liabilities (debts) not included above $ 15. Free tax filing for 2012 Total liabilities immediately before the cancellation. Free tax filing for 2012 Add lines 1 through 14. Free tax filing for 2012 $ 320,500 Part II. Free tax filing for 2012 Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. Free tax filing for 2012 Cash and bank account balances $ 6,000 17. Free tax filing for 2012 Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 290,000 18. Free tax filing for 2012 Cars and other vehicles $ 19. Free tax filing for 2012 Computers $ 20. Free tax filing for 2012 Household goods and furnishings (for example, appliances, electronics, furniture, etc. Free tax filing for 2012 ) $ 21. Free tax filing for 2012 Tools $ 22. Free tax filing for 2012 Jewelry $ 23. Free tax filing for 2012 Clothing $ 24. Free tax filing for 2012 Books $ 25. Free tax filing for 2012 Stocks and bonds $ 26. Free tax filing for 2012 Investments in coins, stamps, paintings, or other collectibles $ 27. Free tax filing for 2012 Firearms, sports, photographic, and other hobby equipment $ 28. Free tax filing for 2012 Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. Free tax filing for 2012 Interest in a pension plan $ 30. Free tax filing for 2012 Interest in education accounts $ 31. Free tax filing for 2012 Cash value of life insurance $ 32. Free tax filing for 2012 Security deposits with landlords, utilities, and others $ 33. Free tax filing for 2012 Interests in partnerships $ 34. Free tax filing for 2012 Value of investment in a business $ 35. Free tax filing for 2012 Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. Free tax filing for 2012 Other assets not included above $ 37. Free tax filing for 2012 FMV of total assets immediately before the cancellation. Free tax filing for 2012 Add lines 16 through 36. Free tax filing for 2012 $ 309,000 Part III. Free tax filing for 2012 Insolvency 38. Free tax filing for 2012 Amount of Insolvency. Free tax filing for 2012 Subtract line 37 from line 15. Free tax filing for 2012 If zero or less, you are not insolvent. Free tax filing for 2012 $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)          Example 3—Mortgage loan foreclosure with debt exceeding $2 million limit. Free tax filing for 2012    In 2011, Kathy and Frank Willow got married and entered into a contract with Hive Construction Corporation to build a house for $3,000,000 to be used as their main home. Free tax filing for 2012 Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house. Free tax filing for 2012 Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. Free tax filing for 2012   In November 2013, when the outstanding principal balance on the mortgage loan was $2,500,000, the FMV of the property fell to $1,750,000 and Kathy and Frank abandoned the property by permanently moving out. Free tax filing for 2012 The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. Free tax filing for 2012 On December 26, 2013, the lender canceled the remaining debt. Free tax filing for 2012 Kathy and Frank have no tax attributes other than basis of personal-use property. Free tax filing for 2012   The lender issued a 2013 Form 1099-C to Kathy and Frank showing canceled debt of $750,000 in box 2 (the remaining balance on the $2,500,000 mortgage debt after application of the foreclosure sale proceeds) and $1,750,000 in box 7 (FMV of the property). Free tax filing for 2012 Identifiable event code "D" appears in box 6. Free tax filing for 2012 This box shows the reason the creditor has filed Form 1099-C. Free tax filing for 2012 Although Kathy and Frank abandoned the property, the lender did not need to also file a Form 1099-A because the lender canceled the debt in connection with the foreclosure in the same calendar year. Free tax filing for 2012 Kathy and Frank are filing a joint return for 2013. Free tax filing for 2012   Because the foreclosure occurred prior to the debt cancellation, Kathy and Frank first calculate their gain or loss from the foreclosure using Table 1-1. Free tax filing for 2012 Because Kathy and Frank remained personally liable for the $750,000 debt remaining after the foreclosure ($2,500,000 outstanding debt immediately before the foreclosure minus $1,750,000 satisfied through the sale of the home), Kathy and Frank enter $1,750,000 on line 1 of Table 1-1 ($2,500,000 outstanding debt immediately before the foreclosure minus the $750,000 for which they remained liable). Free tax filing for 2012 Completing Table 1-1, Kathy and Frank find that they have no ordinary income from the cancellation of debt upon foreclosure and that they have a $1,250,000 loss. Free tax filing for 2012 Because this loss relates to their home, it is a nondeductible loss. Free tax filing for 2012   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. Free tax filing for 2012 Immediately before the cancellation, Kathy and Frank had $15,000 in a savings account, household furnishings with an FMV of $17,000, a car with an FMV of $10,000, and $18,000 in credit card debt. Free tax filing for 2012 Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. Free tax filing for 2012 The household furnishings originally cost $30,000. Free tax filing for 2012 The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. Free tax filing for 2012 Kathy and Frank had no adjustments to the cost basis of the car. Free tax filing for 2012 Kathy and Frank had no other assets or liabilities at the time of the cancellation. Free tax filing for 2012 Kathy and Frank complete the insolvency worksheet to calculate that they were insolvent to the extent of $726,000 immediately before the cancellation ($768,000 of total liabilities minus $42,000 FMV of total assets). Free tax filing for 2012   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. Free tax filing for 2012 Kathy and Frank also owned the same car at that time (still with an FMV of $10,000 and basis of $16,000) and the same household furnishings (still with an FMV of $17,000 and a basis of $30,000). Free tax filing for 2012 Kathy and Frank had no other assets or liabilities at that time. Free tax filing for 2012 Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. Free tax filing for 2012   Because the canceled debt is qualified principal residence indebtedness, the insolvency exclusion does not apply unless Kathy and Frank elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion. Free tax filing for 2012 The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. Free tax filing for 2012 The remaining $500,000 ($2,500,000 outstanding mortgage loan minus $2,000,000 limit on qualified principal residence indebtedness) is not qualified principal residence indebtedness. Free tax filing for 2012 Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. Free tax filing for 2012 Under the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent that the amount canceled ($750,000) exceeds the amount of the loan (immediately before the cancellation) that is not qualified principal residence indebtedness ($500,000). Free tax filing for 2012 This means that Kathy and Frank can only exclude $250,000 ($750,000 amount canceled minus $500,000 nonqualified debt) under the qualified principal residence indebtedness exclusion. Free tax filing for 2012   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. Free tax filing for 2012 Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. Free tax filing for 2012 Kathy and Frank can exclude the remaining $500,000 canceled debt under the insolvency exclusion because they were insolvent immediately before the cancellation to the extent of $726,000. Free tax filing for 2012 Thus, Kathy and Frank check the boxes on lines 1b and 1e of Form 982 and enter $750,000 on line 2 ($250,000 excluded under the qualified principal residence indebtedness exclusion plus $500,000 excluded under the insolvency exclusion). Free tax filing for 2012   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. Free tax filing for 2012 Because Kathy and Frank no longer own the home due to the foreclosure, Kathy and Frank have no remaining basis in the home at the time of the debt cancellation. Free tax filing for 2012 Thus, Kathy and Frank leave line 10b of Form 982 blank. Free tax filing for 2012 However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. Free tax filing for 2012 As a result, Kathy and Frank must reduce the basis of property they own based on the amount of canceled debt they are excluding from income under the insolvency rules. Free tax filing for 2012 Because Kathy and Frank have no tax attributes other than basis of personal-use property to reduce, Kathy and Frank figure the amount they must include on line 10a of Form 982 by taking the smallest of: The $46,000 bases of their personal-use property held at the beginning of 2014 ($16,000 basis in the car plus $30,000 basis in household furnishings), The $500,000 of the nonbusiness debt (other than qualified principal residence indebtedness) that they are excluding from income on line 2 of Form 982, or The $43,000 excess of the total bases of the property and the amount of money they held immediately after the cancellation over their total liabilities immediately after the cancellation ($15,000 in savings account plus $30,000 basis in household furnishings plus $16,000 adjusted basis in car minus $18,000 credit card debt). Free tax filing for 2012 Kathy and Frank enter $43,000 on Form 982, line 10a and reduce their bases in the car and the household furnishings in proportion to the total adjusted bases in all their property. Free tax filing for 2012 Kathy and Frank reduce the basis in the car by $14,956. Free tax filing for 2012 52 ($43,000 x $16,000/$46,000). Free tax filing for 2012 And they reduce the basis in the household furnishings by $28,043. Free tax filing for 2012 48 ($43,000 x $30,000/$46,000). Free tax filing for 2012   Following are Kathy and Frank's sample forms and worksheets. Free tax filing for 2012 Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 1099-C, Cancellation of Debt Table 1-1. Free tax filing for 2012 Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. Free tax filing for 2012 Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free tax filing for 2012 Otherwise, go to Part 2. Free tax filing for 2012 1. Free tax filing for 2012 Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $1,750,000. Free tax filing for 2012 00 2. Free tax filing for 2012 Enter the fair market value of the transferred property $1,750,000. Free tax filing for 2012 00 3. Free tax filing for 2012 Ordinary income from the cancellation of debt upon foreclosure or repossession. Free tax filing for 2012 * Subtract line 2 from line 1. Free tax filing for 2012 If less than zero, enter zero. Free tax filing for 2012 Next, go to Part 2 $0. Free tax filing for 2012 00 Part 2. Free tax filing for 2012 Gain or loss from foreclosure or repossession. Free tax filing for 2012   4. Free tax filing for 2012 Enter the smaller of line 1 or line 2. Free tax filing for 2012 If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property. Free tax filing for 2012 $1,750,000. Free tax filing for 2012 00 5. Free tax filing for 2012 Enter any proceeds you received from the foreclosure sale   6. Free tax filing for 2012 Add line 4 and line 5 $1,750,000. Free tax filing for 2012 00 7. Free tax filing for 2012 Enter the adjusted basis of the transferred property $3,000,000. Free tax filing for 2012 00 8. Free tax filing for 2012 Gain or loss from foreclosure or repossession. Free tax filing for 2012 Subtract line 7 from line 6 ($1,250,000. Free tax filing for 2012 00) * The income may not be taxable. Free tax filing for 2012 See chapter 1 for more details. Free tax filing for 2012    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. Free tax filing for 2012 Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. Free tax filing for 2012 Credit card debt $ 18,000 2. Free tax filing for 2012 Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 750,000 3. Free tax filing for 2012 Car and other vehicle loans $ 4. Free tax filing for 2012 Medical bills owed $ 5. Free tax filing for 2012 Student loans $ 6. Free tax filing for 2012 Accrued or past-due mortgage interest $ 7. Free tax filing for 2012 Accrued or past-due real estate taxes $ 8. Free tax filing for 2012 Accrued or past-due utilities (water, gas, electric) $ 9. Free tax filing for 2012 Accrued or past-due child care costs $ 10. Free tax filing for 2012 Federal or state income taxes remaining due (for prior tax years) $ 11. Free tax filing for 2012 Judgments $ 12. Free tax filing for 2012 Business debts (including those owed as a sole proprietor or partner) $ 13. Free tax filing for 2012 Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. Free tax filing for 2012 Other liabilities (debts) not included above $ 15. Free tax filing for 2012 Total liabilities immediately before the cancellation. Free tax filing for 2012 Add lines 1 through 14. Free tax filing for 2012 $ 768,000 Part II. Free tax filing for 2012 Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. Free tax filing for 2012 Cash and bank account balances $ 15,000 17. Free tax filing for 2012 Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 18. Free tax filing for 2012 Cars and other vehicles $ 10,000 19. Free tax filing for 2012 Computers $ 20. Free tax filing for 2012 Household goods and furnishings (for example, appliances, electronics, furniture, etc. Free tax filing for 2012 ) $ 17,000 21. Free tax filing for 2012 Tools $ 22. Free tax filing for 2012 Jewelry $ 23. Free tax filing for 2012 Clothing $ 24. Free tax filing for 2012 Books $ 25. Free tax filing for 2012 Stocks and bonds $ 26. Free tax filing for 2012 Investments in coins, stamps, paintings, or other collectibles $ 27. Free tax filing for 2012 Firearms, sports, photographic, and other hobby equipment $ 28. Free tax filing for 2012 Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. Free tax filing for 2012 Interest in a pension plan $ 30. Free tax filing for 2012 Interest in education accounts $ 31. Free tax filing for 2012 Cash value of life insurance $ 32. Free tax filing for 2012 Security deposits with landlords, utilities, and others $ 33. Free tax filing for 2012 Interests in partnerships $ 34. Free tax filing for 2012 Value of investment in a business $ 35. Free tax filing for 2012 Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. Free tax filing for 2012 Other assets not included above $ 37. Free tax filing for 2012 FMV of total assets immediately before the cancellation. Free tax filing for 2012 Add lines 16 through 36. Free tax filing for 2012 $ 42,000 Part III. Free tax filing for 2012 Insolvency 38. Free tax filing for 2012 Amount of Insolvency. Free tax filing for 2012 Subtract line 37 from line 15. Free tax filing for 2012 If zero or less, you are not insolvent. Free tax filing for 2012 $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. Free tax filing for 2012 Please click the link to view the image. Free tax filing for 2012 Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications
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The Free Tax Filing For 2012

Free tax filing for 2012 Publication 560 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionSEP plans. Free tax filing for 2012 SIMPLE plans. Free tax filing for 2012 Qualified plans. Free tax filing for 2012 Ordering forms and publications. Free tax filing for 2012 Tax questions. Free tax filing for 2012 Future Developments For the latest information about developments related to Publication 560, such as legislation enacted after we release it, go to www. Free tax filing for 2012 irs. Free tax filing for 2012 gov/pub560. Free tax filing for 2012 What's New Compensation limit increased for 2013 and 2014. Free tax filing for 2012  For 2013 the maximum compensation used for figuring contributions and benefits increases to $255,000. Free tax filing for 2012 This limit increases to $260,000 for 2014. Free tax filing for 2012 Elective deferral limit for 2013 and 2014. Free tax filing for 2012  The limit on elective deferrals, other than catch-up contributions, increases to $17,500 for 2013 and remains at $17,500 for 2014. Free tax filing for 2012 These limits apply for participants in SARSEPs, 401(k) plans (excluding SIMPLE plans), section 403(b) plans and section 457(b) plans. Free tax filing for 2012 Defined contribution limit increased for 2013 and 2014. Free tax filing for 2012  The limit on contributions, other than catch-up contributions, for a participant in a defined contribution plan increases to $51,000 for 2013. Free tax filing for 2012 This limit increases to $52,000 for 2014. Free tax filing for 2012 SIMPLE plan salary reduction contribution limit for 2013 and 2014. Free tax filing for 2012  The limit on salary reduction contributions, other than catch-up contributions, increases to $12,000 for 2013 and remains at $12,000 for 2014. Free tax filing for 2012 Catch-up contribution limit remains unchanged for 2013 and 2014. Free tax filing for 2012  A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. Free tax filing for 2012 The catch-up contribution limitation for defined contribution plans other than SIMPLE plans remains unchanged at $5,500 for 2013 and 2014. Free tax filing for 2012 The catch-up contribution limitation for SIMPLE plans remains unchanged at $2,500 for 2013 and 2014. Free tax filing for 2012 The catch-up contributions a participant can make for a year cannot exceed the lesser of the following amounts. Free tax filing for 2012 The catch-up contribution limit. Free tax filing for 2012 The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Free tax filing for 2012 See “Catch-up contributions” under Contribution Limits and Limit on Elective Deferrals in chapters 3 and 4, respectively, for more information. Free tax filing for 2012 All section references are to the Internal Revenue Code, unless otherwise stated. Free tax filing for 2012 Reminders In-plan Roth rollovers. Free tax filing for 2012  Section 402A(c)(4) provides for a distribution from an individual's account in a 401(k) plan, other than from a designated Roth account, that is rolled over to the individual's designated Roth account in the same plan. Free tax filing for 2012 An in-plan Roth rollover is not treated as a distribution for most purposes. Free tax filing for 2012 Section 402A(c)(4) was added by the Small Business Jobs Act of 2010 and applies to distributions made after September 27, 2010. Free tax filing for 2012 For additional guidance on in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. Free tax filing for 2012 R. Free tax filing for 2012 B. Free tax filing for 2012 872, available at  www. Free tax filing for 2012 irs. Free tax filing for 2012 gov/irb/2010-51_IRB/ar11. Free tax filing for 2012 html. Free tax filing for 2012 In-plan Roth rollovers expanded. Free tax filing for 2012  Beginning in 2013, a plan with designated Roth accounts can permit a participant to roll over amounts into a designated Roth account from his or her other accounts in the same plan, regardless of whether the participant is eligible for a distribution from the other accounts. Free tax filing for 2012 Section 402A(c)(4) was amended by the American Taxpayer Relief Act of 2012. Free tax filing for 2012 For more information, see Notice 2013-74, 2013-52 I. Free tax filing for 2012 R. Free tax filing for 2012 B. Free tax filing for 2012 819, available at www. Free tax filing for 2012 irs. Free tax filing for 2012 gov/irb/2013-52_IRB/ar11. Free tax filing for 2012 html. Free tax filing for 2012 Credit for startup costs. Free tax filing for 2012  You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP, SIMPLE, or qualified plan. Free tax filing for 2012 The credit equals 50% of the cost to set up and administer the plan and educate employees about the plan, up to a maximum of $500 per year for each of the first 3 years of the plan. Free tax filing for 2012 You can choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective. Free tax filing for 2012 You must have had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year. Free tax filing for 2012 At least one participant must be a non-highly compensated employee. Free tax filing for 2012 The employees generally cannot be substantially the same employees for whom contributions were made or benefits accrued under a plan of any of the following employers in the 3-tax-year period immediately before the first year to which the credit applies. Free tax filing for 2012 You. Free tax filing for 2012 A member of a controlled group that includes you. Free tax filing for 2012 A predecessor of (1) or (2). Free tax filing for 2012 The credit is part of the general business credit, which can be carried back or forward to other tax years if it cannot be used in the current year. Free tax filing for 2012 However, the part of the general business credit attributable to the small employer pension plan startup cost credit cannot be carried back to a tax year beginning before January 1, 2002. Free tax filing for 2012 You cannot deduct the part of the startup costs equal to the credit claimed for a tax year, but you can choose not to claim the allowable credit for a tax year. Free tax filing for 2012 To take the credit, use Form 8881, Credit for Small Employer Pension Plan Startup Costs. Free tax filing for 2012 Retirement savings contributions credit. Free tax filing for 2012  Retirement plan participants (including self-employed individuals) who make contributions to their plan may qualify for the retirement savings contribution credit. Free tax filing for 2012 The maximum contribution eligible for the credit is $2,000. Free tax filing for 2012 To take the credit, use Form 8880, Credit for Qualified Retirement Savings Contributions. Free tax filing for 2012 For more information on who is eligible for the credit, retirement plan contributions eligible for the credit and how to figure the credit, see Form 8880 and its instructions or go to the IRS website and search Retirement Topics-Retirement Savings Contributions Credit (Saver's Credit). Free tax filing for 2012 Photographs of missing children. Free tax filing for 2012  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free tax filing for 2012 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free tax filing for 2012 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free tax filing for 2012 Introduction This publication discusses retirement plans you can set up and maintain for yourself and your employees. Free tax filing for 2012 In this publication, “you” refers to the employer. Free tax filing for 2012 See chapter 1 for the definition of the term employer and the definitions of other terms used in this publication. Free tax filing for 2012 This publication covers the following types of retirement plans. Free tax filing for 2012 SEP (simplified employee pension) plans. Free tax filing for 2012 SIMPLE (savings incentive match plan for employees) plans. Free tax filing for 2012 Qualified plans (also called H. Free tax filing for 2012 R. Free tax filing for 2012 10 plans or Keogh plans when covering self-employed individuals), including 401(k) plans. Free tax filing for 2012 SEP, SIMPLE, and qualified plans offer you and your employees a tax-favored way to save for retirement. Free tax filing for 2012 You can deduct contributions you make to the plan for your employees. Free tax filing for 2012 If you are a sole proprietor, you can deduct contributions you make to the plan for yourself. Free tax filing for 2012 You can also deduct trustees' fees if contributions to the plan do not cover them. Free tax filing for 2012 Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. Free tax filing for 2012 Under a 401(k) plan, employees can have you contribute limited amounts of their before-tax (after-tax, in the case of a qualified Roth contribution program) pay to the plan. Free tax filing for 2012 These amounts (and the earnings on them) are generally tax free until your employees receive distributions from the plan or, in the case of a qualified distribution from a designated Roth account, completely tax free. Free tax filing for 2012 What this publication covers. Free tax filing for 2012   This publication contains the information you need to understand the following topics. Free tax filing for 2012 What type of plan to set up. Free tax filing for 2012 How to set up a plan. Free tax filing for 2012 How much you can contribute to a plan. Free tax filing for 2012 How much of your contribution is deductible. Free tax filing for 2012 How to treat certain distributions. Free tax filing for 2012 How to report information about the plan to the IRS and your employees. Free tax filing for 2012 Basic features of SEP, SIMPLE, and qualified plans. Free tax filing for 2012 The key rules for SEP, SIMPLE, and qualified plans are outlined in Table 1. Free tax filing for 2012 SEP plans. Free tax filing for 2012   SEPs provide a simplified method for you to make contributions to a retirement plan for yourself and your employees. Free tax filing for 2012 Instead of setting up a profit-sharing or money purchase plan with a trust, you can adopt a SEP agreement and make contributions directly to a traditional individual retirement account or a traditional individual retirement annuity (SEP-IRA) set up for yourself and each eligible employee. Free tax filing for 2012 SIMPLE plans. Free tax filing for 2012   Generally, if you had 100 or fewer employees who received at least $5,000 in compensation last year, you can set up a SIMPLE plan. Free tax filing for 2012 Under a SIMPLE plan, employees can choose to make salary reduction contributions rather than receiving these amounts as part of their regular pay. Free tax filing for 2012 In addition, you will contribute matching or nonelective contributions. Free tax filing for 2012 The two types of SIMPLE plans are the SIMPLE IRA plan and the SIMPLE 401(k) plan. Free tax filing for 2012 Qualified plans. Free tax filing for 2012   The qualified plan rules are more complex than the SEP plan and SIMPLE plan rules. Free tax filing for 2012 However, there are advantages to qualified plans, such as increased flexibility in designing plans and increased contribution and deduction limits in some cases. Free tax filing for 2012 Table 1. Free tax filing for 2012 Key Retirement Plan Rules for 2013 Type  of  Plan Last Date for Contribution Maximum Contribution Maximum Deduction When To Set Up Plan SEP Due date of employer's return (including extensions). Free tax filing for 2012 Smaller of $51,000 or 25%1 of participant's compensation. Free tax filing for 2012 2 25%1 of all participants' compensation. Free tax filing for 2012 2 Any time up to the due date of employer's return (including extensions). Free tax filing for 2012 SIMPLE IRA and SIMPLE 401(k) Salary reduction contributions: 30 days after the end of the month for which the contributions are to be made. Free tax filing for 2012 4  Matching or nonelective contributions: Due date of employer's return (including extensions). Free tax filing for 2012 Employee contribution: Salary reduction contribution up to $12,000, $14,500 if age 50 or over. Free tax filing for 2012   Employer contribution:  Either dollar-for-dollar matching contributions, up to 3% of employee's compensation,3 or fixed nonelective contributions of 2% of compensation. Free tax filing for 2012 2 Same as maximum contribution. Free tax filing for 2012 Any time between 1/1 and 10/1 of the calendar year. Free tax filing for 2012   For a new employer coming into existence after 10/1, as soon as administratively feasible. Free tax filing for 2012 Qualified Plan: Defined Contribution Plan  Elective deferral: Due date of employer's return (including extensions). Free tax filing for 2012 4   Employer contribution: Money Purchase or Profit-Sharing: Due date of employer's return (including extensions). Free tax filing for 2012  Employee contribution: Elective deferral up to $17,500, $23,000 if age 50 or over. Free tax filing for 2012   Employer contribution: Money Purchase: Smaller of $51,000 or 100%1 of participant's compensation. Free tax filing for 2012 2  Profit-Sharing: Smaller of $51,000 or 100%1 of participant's compensation. Free tax filing for 2012 2  25%1 of all participants' compensation2, plus amount of elective deferrals made. Free tax filing for 2012   By the end of the tax year. Free tax filing for 2012 Qualified Plan: Defined Benefit Plan Contributions generally must be paid in quarterly installments, due 15 days after the end of each quarter. Free tax filing for 2012 See Minimum Funding Requirement in chapter 4. Free tax filing for 2012 Amount needed to provide an annual benefit no larger than the smaller of $205,000 or 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. Free tax filing for 2012 Based on actuarial assumptions and computations. Free tax filing for 2012 By the end of the tax year. Free tax filing for 2012 1Net earnings from self-employment must take the contribution into account. Free tax filing for 2012 See Deduction Limit for Self-Employed Individuals in chapters 2 and 4 . Free tax filing for 2012  2Compensation is generally limited to $255,000 in 2013. Free tax filing for 2012  3Under a SIMPLE 401(k) plan, compensation is generally limited to $255,000 in 2013. Free tax filing for 2012  4Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions and elective deferrals. Free tax filing for 2012 What this publication does not cover. Free tax filing for 2012   Although the purpose of this publication is to provide general information about retirement plans you can set up for your employees, it does not contain all the rules and exceptions that apply to these plans. Free tax filing for 2012 You may also need professional help and guidance. Free tax filing for 2012   Also, this publication does not cover all the rules that may be of interest to employees. Free tax filing for 2012 For example, it does not cover the following topics. Free tax filing for 2012 The comprehensive IRA rules an employee needs to know. Free tax filing for 2012 These rules are covered in Publication 590, Individual Retirement Arrangements (IRAs). Free tax filing for 2012 The comprehensive rules that apply to distributions from retirement plans. Free tax filing for 2012 These rules are covered in Publication 575, Pension and Annuity Income. Free tax filing for 2012 The comprehensive rules that apply to section 403(b) plans. Free tax filing for 2012 These rules are covered in Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). Free tax filing for 2012 Comments and suggestions. Free tax filing for 2012   We welcome your comments about this publication and your suggestions for future editions. Free tax filing for 2012   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free tax filing for 2012 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free tax filing for 2012 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free tax filing for 2012   You can send your comments from www. Free tax filing for 2012 irs. Free tax filing for 2012 gov/formspubs. Free tax filing for 2012 Click on “More Information” and then on “Give us feedback. Free tax filing for 2012 ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free tax filing for 2012 Ordering forms and publications. Free tax filing for 2012   Visit www. Free tax filing for 2012 irs. Free tax filing for 2012 gov/formspubs to download forms  and publications, call 1-800-TAX-FORM  (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free tax filing for 2012 Internal Revenue Service 1201 N. Free tax filing for 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free tax filing for 2012   If you have a tax question, check the information available on IRS. Free tax filing for 2012 gov or call 1-800-829-1040. Free tax filing for 2012 We cannot answer tax questions sent to either of the above addresses. Free tax filing for 2012 Note. Free tax filing for 2012 Forms filed electronically with the Department of Labor are not available on the IRS website. Free tax filing for 2012 Instead, see www. Free tax filing for 2012 efast. Free tax filing for 2012 dol. Free tax filing for 2012 gov. Free tax filing for 2012 Prev  Up  Next   Home   More Online Publications