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

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Free tax preparation locations 4. Free tax preparation locations   Deductions Table of Contents Standard DeductionStandard Deduction for Dependents Itemized DeductionsMedical and Dental Expenses Most taxpayers have a choice of taking a standard deduction or itemizing their deductions. Free tax preparation locations You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. Free tax preparation locations If you have a choice, you should use the method that gives you the lower tax. Free tax preparation locations Standard Deduction The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. Free tax preparation locations Generally, the standard deduction amounts are adjusted each year for inflation. Free tax preparation locations In most cases, you can use Worksheet 4-1 to figure your standard deduction amount. Free tax preparation locations Persons not eligible for the standard deduction. Free tax preparation locations   Your standard deduction is zero and you should itemize any deductions you have if: You are married and filing a separate return, and your spouse itemizes deductions, You are filing a tax return for a short tax year because of a change in your annual accounting period, or You are a nonresident or dual-status alien during the year. Free tax preparation locations You are considered a dual-status alien if you were both a nonresident alien and a resident alien during the year. Free tax preparation locations   If you are a nonresident alien who is married to a U. Free tax preparation locations S. Free tax preparation locations citizen or resident alien at the end of the year, you can choose to be treated as a U. Free tax preparation locations S. Free tax preparation locations resident. Free tax preparation locations See Publication 519, U. Free tax preparation locations S. Free tax preparation locations Tax Guide for Aliens. Free tax preparation locations If you make this choice, you can take the standard deduction. Free tax preparation locations Decedent's final return. Free tax preparation locations   The amount of the standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. Free tax preparation locations However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed. Free tax preparation locations Higher standard deduction for age (65 or older). Free tax preparation locations   If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. Free tax preparation locations You are considered age 65 on the day before your 65th birthday. Free tax preparation locations Therefore, you can take a higher standard deduction for 2013 if you were born before January 2, 1949. Free tax preparation locations Higher standard deduction for blindness. Free tax preparation locations   If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. Free tax preparation locations You qualify for this benefit if you are totally or partly blind. Free tax preparation locations Not totally blind. Free tax preparation locations   If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that: You cannot see better than 20/200 in the better eye with glasses or contact lenses, or Your field of vision is not more than 20 degrees. Free tax preparation locations   If your eye condition will never improve beyond these limits, the statement should include this fact. Free tax preparation locations You must keep the statement in your records. Free tax preparation locations   If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify. Free tax preparation locations Spouse 65 or older or blind. Free tax preparation locations   You can take the higher standard deduction if your spouse is age 65 or older or blind and: You file a joint return, or You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and an exemption for your spouse could not be claimed by another taxpayer. Free tax preparation locations    You cannot claim the higher standard deduction for an individual other than yourself and your spouse. Free tax preparation locations Example. Free tax preparation locations This example illustrates how to determine your standard deduction using Worksheet 4-1. Free tax preparation locations Bill and Lisa are filing a joint return for 2013. Free tax preparation locations Both are over age 65. Free tax preparation locations Neither is blind, and neither can be claimed as a dependent. Free tax preparation locations They do not itemize deductions, so they use Worksheet 4-1. Free tax preparation locations Because they are married filing jointly, they enter $12,200 on line 1. Free tax preparation locations They check the “No” box on line 2, so they also enter $12,200 on line 4. Free tax preparation locations Because they are both over age 65, they enter $2,400 ($1,200 × 2) on line 5. Free tax preparation locations They enter $14,600 ($12,200 + $2,400) on line 6, so their standard deduction is $14,600. Free tax preparation locations Standard Deduction for Dependents The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of: $1,000, or The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $6,100). Free tax preparation locations However, the standard deduction may be higher if the individual is 65 or older or blind. Free tax preparation locations If an exemption for you (or your spouse if you are filing jointly) can be claimed on someone else's return, use Worksheet 4-1, if applicable, to determine your standard deduction. Free tax preparation locations Worksheet 4-1. Free tax preparation locations 2013 Standard Deduction Worksheet Caution. Free tax preparation locations If you are married filing separately and your spouse itemizes deductions, or if you are a dual-status alien, do not complete this worksheet. Free tax preparation locations If you were born before January 2, 1949, and/or blind, check the correct number of boxes below. Free tax preparation locations Put the total number of boxes checked in box c and go to line 1. Free tax preparation locations a. Free tax preparation locations You   Born before  January 2, 1949     Blind b. Free tax preparation locations Your spouse, if claiming  spouse's exemption   Born before January 2, 1949     Blind c. Free tax preparation locations Total boxes checked             1. Free tax preparation locations Enter the amount shown below for your filing status. Free tax preparation locations               Single or married filing separately — $6,100 Married filing jointly or Qualifying widow(er) — $12,200 Head of household — $8,950   1. Free tax preparation locations           2. Free tax preparation locations Can you (or your spouse if filing jointly) be claimed as a dependent on someone else's return?  No. Free tax preparation locations Skip line 3; enter the amount from line 1 on line 4. Free tax preparation locations   Yes. Free tax preparation locations Go to line 3. Free tax preparation locations         3. Free tax preparation locations Is your earned income* more than $650?               Yes. Free tax preparation locations Add $350 to your earned income. Free tax preparation locations Enter the total   3. Free tax preparation locations         No. Free tax preparation locations Enter $1,000 4. Free tax preparation locations Enter the smaller of line 1 or line 3 4. Free tax preparation locations   5. Free tax preparation locations If born before January 2, 1949, or blind, multiply the number in box c by $1,200 ($1,500 if single or head of household). Free tax preparation locations Enter the result here. Free tax preparation locations Otherwise, enter -0- 5. Free tax preparation locations   6. Free tax preparation locations Add lines 4 and 5. Free tax preparation locations This is your standard deduction for 2013. Free tax preparation locations 6. Free tax preparation locations   * Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Free tax preparation locations It also includes any amount received as a scholarship that you must include in your income. Free tax preparation locations Generally, your earned income is the total of the amount(s) you reported on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27 (or the amount you reported on Form 1040A, line 7). Free tax preparation locations Itemized Deductions Some individuals should itemize their deductions because it will save them money. Free tax preparation locations Others should itemize because they do not qualify for the standard deduction. Free tax preparation locations See the discussion under Standard Deduction , earlier, to decide if it would be to your advantage to itemize deductions. Free tax preparation locations You may be subject to a limit on some of your itemized deductions if your adjusted gross income is more than $150,000. Free tax preparation locations For more information, see Overall limitation, later. Free tax preparation locations Medical and dental expenses, some taxes, certain interest expenses, charitable contributions, casualty and theft losses, and certain other miscellaneous expenses may be itemized as deductions on Schedule A (Form 1040). Free tax preparation locations You may benefit from itemizing your deductions on Schedule A (Form 1040) if you: Cannot take the standard deduction, Had uninsured medical or dental expenses that are more than 10% of your adjusted gross income (or more than 7. Free tax preparation locations 5% of your adjusted gross income if either you or your spouse is age 65 or older), Paid interest on your home, Paid real estate or personal property taxes, Paid mortgage insurance premiums, Paid state and local income or general sales taxes, Had large unreimbursed employee business expenses or other miscellaneous deductions, Had large uninsured casualty or theft losses, Made large contributions to qualified charities (see Publication 526, Charitable Contributions), or Have total itemized deductions that are more than the standard deduction that applies to you. Free tax preparation locations See the Schedule A (Form 1040) instructions for more information. Free tax preparation locations Overall limitation. Free tax preparation locations   You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000, if married filing separately, $250,000, if single, $275,000, if head of household, or $300,000, if married filing jointly or qualifying widow(er). Free tax preparation locations  If your adjusted gross income exceeds the applicable amount, you will use the Itemized Deductions Worksheet in the Instructions for Schedule A (Form 1040) to figure your total itemized deductions. Free tax preparation locations Medical and Dental Expenses You can deduct certain medical and dental expenses you paid for yourself, your spouse, and your dependent(s) if you itemize your deductions on Schedule A (Form 1040). Free tax preparation locations Table 4-1 shows some common items that you can or cannot include in figuring your medical expense deduction. Free tax preparation locations For more information, see the following discussions of selected items, which are presented in alphabetical order. Free tax preparation locations A more extensive list of items and further details can be found in Publication 502, Medical and Dental Expenses. Free tax preparation locations Table 4-1. Free tax preparation locations Medical and Dental Expenses Checklist You can include: You cannot include: Bandages Capital expenses for equipment or improvements to your home needed for medical care (see Publication 502) Certain weight-loss expenses for obesity Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. Free tax preparation locations ) Lead-based paint removal (see Publication 502) Long-term care contracts, qualified (see Publication 502) Meals and lodging provided by a hospital during medical treatment Medical and hospital insurance premiums Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Publication 502) Special items (artificial limbs, false teeth, eyeglasses, contact lenses, hearing aids, crutches, wheelchair, etc. Free tax preparation locations ) Special education for mentally or physically disabled persons (see Publication 502) Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services (see Publication 502) Contributions to Archer MSAs (see Publication 969) Bottled water Diaper service Expenses for your general health (even if following your doctor's advice) such as: —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pretax basis) (see Publication 502) Funeral, burial, or cremation expenses Health savings account payments for medical expenses (see Publication 502) Illegal operation or treatment Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. Free tax preparation locations Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases (see Publication 502) Surgery for purely cosmetic reasons (see Publication 502) Toothpaste, toiletries, cosmetics, etc. Free tax preparation locations Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease You can deduct only the amount of your medical and dental expenses that is more than 10% of your adjusted gross income (or that is more than 7. Free tax preparation locations 5% of your adjusted gross income if you or your spouse is age 65 or older). Free tax preparation locations What to include. Free tax preparation locations   Generally, you can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Free tax preparation locations If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Free tax preparation locations If you use a pay-by-phone or online account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Free tax preparation locations You can include medical expenses you charge to your credit card in the year the charge is made. Free tax preparation locations It does not matter when you actually pay the amount charged. Free tax preparation locations Home Improvements You can include in medical expenses amounts you pay for home improvements if their main purpose is medical care for you, your spouse, or your dependent. Free tax preparation locations Only reasonable costs to accommodate a home to your disabled condition (or that of your spouse or your dependent(s) who live with you) are considered medical care. Free tax preparation locations Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Free tax preparation locations Publication 502 contains additional information and examples, including a capital expense worksheet, to assist you in figuring the amount of the capital expense that you can include in your medical expenses. Free tax preparation locations Also, see Publication 502 for information about deductible operating and upkeep expenses related to such capital expense items, and for information about improvements, for medical reasons, to property rented by a person with disabilities. Free tax preparation locations Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. Free tax preparation locations This is a personal expense that is not deductible. Free tax preparation locations However, you may be able to include certain expenses paid to a person providing nursing-type services. Free tax preparation locations For more information, see Nursing Services , later. Free tax preparation locations Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Free tax preparation locations For more information, see Qualified long-term care services under Long-Term Care, later. Free tax preparation locations Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. Free tax preparation locations This includes amounts paid for meals and lodging. Free tax preparation locations Also, see Meals and Lodging , later. Free tax preparation locations Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. Free tax preparation locations Qualified long-term care services. Free tax preparation locations   Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided under a plan of care prescribed by a licensed health care practitioner. Free tax preparation locations Chronically ill individual. Free tax preparation locations    An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. Free tax preparation locations He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Free tax preparation locations Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Free tax preparation locations He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Free tax preparation locations Maintenance and personal care services. Free tax preparation locations    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). Free tax preparation locations Qualified long-term care insurance contracts. Free tax preparation locations   A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. Free tax preparation locations The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. Free tax preparation locations   The amount of qualified long-term care premiums you can include is limited. Free tax preparation locations You can include the following as medical expenses on Schedule A (Form 1040). Free tax preparation locations Qualified long-term care premiums up to the following amounts. Free tax preparation locations Age 40 or under – $360. Free tax preparation locations Age 41 to 50 – $680. Free tax preparation locations Age 51 to 60 – $1,360. Free tax preparation locations Age 61 to 70 – $3,640. Free tax preparation locations Age 71 or over – $4,550. Free tax preparation locations Unreimbursed expenses for qualified long-term care services. Free tax preparation locations Note. Free tax preparation locations The limit on premiums is for each person. Free tax preparation locations Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if your main reason for being there is to receive medical care. Free tax preparation locations You may be able to include in medical expenses the cost of lodging (but not meals) not provided in a hospital or similar institution. Free tax preparation locations You can include the cost of such lodging while away from home if all of the following requirements are met. Free tax preparation locations The lodging is primarily for, and essential to, medical care. Free tax preparation locations The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Free tax preparation locations The lodging is not lavish or extravagant under the circumstances. Free tax preparation locations There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Free tax preparation locations The amount you include in medical expenses for lodging cannot be more than $50 per night for each person. Free tax preparation locations You can include lodging for a person traveling with the person receiving the medical care. Free tax preparation locations For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Free tax preparation locations (Meals are not included. Free tax preparation locations ) Nursing home. Free tax preparation locations   You can include in medical expenses the cost of medical care in a nursing home or a home for the aged for yourself, your spouse, or your dependent(s). Free tax preparation locations This includes the cost of meals and lodging in the home if a main reason for being there is to get medical care. Free tax preparation locations   Do not include the cost of meals and lodging if the reason for being in the home is personal. Free tax preparation locations However, you can include in medical expenses the part of the cost that is for medical or nursing care. Free tax preparation locations Medical Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Free tax preparation locations Policies can provide payment for: Hospitalization, surgical fees, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Qualified long-term care insurance contracts (subject to the additional limits included in the discussion on qualified long-term care insurance contracts under Long-Term Care , earlier). Free tax preparation locations If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Free tax preparation locations The cost of the medical portion must be separately stated in the insurance contract or given to you in a separate statement. Free tax preparation locations Medicare Part A. Free tax preparation locations   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare Part A. Free tax preparation locations The payroll tax paid for Medicare Part A is not a medical expense. Free tax preparation locations If you are not covered under social security (or were not a government employee who paid Medicare tax), you can enroll voluntarily in Medicare Part A. Free tax preparation locations In this situation you can include the premiums you paid for Medicare Part A as a medical expense. Free tax preparation locations Medicare Part B. Free tax preparation locations   Medicare Part B is a supplemental medical insurance. Free tax preparation locations Premiums you pay for Medicare Part B are a medical expense. Free tax preparation locations If you applied for it at age 65 or after you became disabled, you can include in medical expenses the monthly premiums you paid. Free tax preparation locations If you were over age 65 or disabled when you first enrolled, check with your local Social Security Administration office, or go to their website at www. Free tax preparation locations SSA. Free tax preparation locations gov, to find out your premium. Free tax preparation locations Medicare Part D. Free tax preparation locations   Medicare Part D is a voluntary prescription drug insurance program for persons with Medicare Part A or Part B. Free tax preparation locations You can include as a medical expense premiums you pay for Medicare Part D. Free tax preparation locations Prepaid insurance premiums. Free tax preparation locations   Insurance premiums you pay before you are age 65 for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Free tax preparation locations Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. Free tax preparation locations A prescribed drug is one that requires a prescription by a doctor for its use by an individual. Free tax preparation locations You can also include amounts you pay for insulin. Free tax preparation locations Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Free tax preparation locations Imported medicines and drugs. Free tax preparation locations   If you import medicines or drugs from other countries, see Medicines and Drugs From Other Countries, under What Expenses Are Not Includible, in Publication 502. Free tax preparation locations Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. Free tax preparation locations The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. Free tax preparation locations This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Free tax preparation locations These services can be provided in your home or another care facility. Free tax preparation locations Generally, only the amount spent for nursing services is a medical expense. Free tax preparation locations If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. Free tax preparation locations However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Free tax preparation locations See Maintenance and personal care services under Qualified long-term care services, earlier. Free tax preparation locations Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. Free tax preparation locations See Child and Dependent Care Credit , later, and Publication 503, Child and Dependent Care Expenses. Free tax preparation locations You can also include in medical expenses part of the amount you pay for that attendant's meals. Free tax preparation locations Divide the food expense among the household members to find the cost of the attendant's food. Free tax preparation locations Then divide that cost in the same manner as in the preceding paragraph. Free tax preparation locations If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. Free tax preparation locations This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. Free tax preparation locations Employment taxes. Free tax preparation locations   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for a nurse, attendant, or other person who provides medical care. Free tax preparation locations If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier under Nursing Services. Free tax preparation locations For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. Free tax preparation locations Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Free tax preparation locations Car expenses. Free tax preparation locations    You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. Free tax preparation locations You cannot include depreciation, insurance, general repair, or maintenance expenses. Free tax preparation locations   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. Free tax preparation locations   You can also include parking fees and tolls. Free tax preparation locations You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. Free tax preparation locations You can also include:    Bus, taxi, train, or plane fares or ambulance service, and Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone. Free tax preparation locations Do not include transportation expenses if, for purely personal reasons, you choose to travel to another city for an operation or other medical care prescribed by your doctor. Free tax preparation locations Prev  Up  Next   Home   More Online Publications