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Free Taxes For 2012

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Free Taxes For 2012

Free taxes for 2012 7. Free taxes for 2012   Filing Information Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: What, When, and Where To FileResident Aliens Nonresident Aliens Amended Returns and Claims for Refund Other Forms You May Have To File PenaltiesCivil Penalties Criminal Penalties Introduction This chapter provides the basic filing information that you may need. Free taxes for 2012 Topics - This chapter discusses: Forms aliens must file, When and where to file, Penalties, and Amended returns and claims for refund. Free taxes for 2012 Useful Items - You may want to see: Forms (and Instructions) 1040 U. Free taxes for 2012 S. Free taxes for 2012 Individual Income Tax Return 1040A U. Free taxes for 2012 S. Free taxes for 2012 Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. Free taxes for 2012 S. Free taxes for 2012 Nonresident Alien Income Tax Return 1040NR-EZ U. Free taxes for 2012 S. Free taxes for 2012 Income Tax Return for Certain Nonresident Aliens With No Dependents See chapter 12 for information about getting these forms. Free taxes for 2012 What, When, and Where To File What return you must file as well as when and where you file that return, depends on your status at the end of the tax year as a resident or a nonresident alien. Free taxes for 2012 Resident Aliens Resident aliens should file Form 1040EZ, 1040A, or 1040 at the address shown in the instructions for that form. Free taxes for 2012 The due date for filing the return and paying any tax due is April 15 of the year following the year for which you are filing a return (but see the Tip, later). Free taxes for 2012 Under U. Free taxes for 2012 S. Free taxes for 2012 immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. Free taxes for 2012 Extensions of time to file. Free taxes for 2012   You are allowed an automatic extension to June 15 to file if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. Free taxes for 2012 You can get an extension of time to October 15 to file your return if you get an extension by April 15 (June 15 if you qualify for the June 15 extension). Free taxes for 2012 Use Form 4868 to get the extension to October 15. Free taxes for 2012 In addition to this 6-month extension, taxpayers who are out of the country (as defined in the Form 4868 instructions) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Free taxes for 2012 To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Free taxes for 2012 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. Free taxes for 2012   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U. Free taxes for 2012 S. Free taxes for 2012 citizens and resident aliens abroad who expect to qualify for special tax treatment). Free taxes for 2012    If the due date for filing falls on a Saturday, Sunday, or legal holiday, the due date is the next day which is not a Saturday, Sunday, or legal holiday. Free taxes for 2012 You may be able to file your return electronically. Free taxes for 2012 See IRS e-file in your form instructions. Free taxes for 2012 Nonresident Aliens Nonresident aliens who are required to file an income tax return should use Form 1040NR or, if qualified, Form 1040NR-EZ. Free taxes for 2012 If you are any of the following, you must file a return. Free taxes for 2012 A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during 2013. Free taxes for 2012 (But see Exceptions , later. Free taxes for 2012 ) You must file even if: Your income did not come from a trade or business conducted in the United States, You have no income from U. Free taxes for 2012 S. Free taxes for 2012 sources, or Your income is exempt from income tax. Free taxes for 2012 A nonresident alien individual not engaged in a trade or business in the United States with U. Free taxes for 2012 S. Free taxes for 2012 income on which the tax liability was not satisfied by the withholding of tax at the source. Free taxes for 2012 A representative or agent responsible for filing the return of an individual described in (1) or (2). Free taxes for 2012 A fiduciary for a nonresident alien estate or trust. Free taxes for 2012 You must also file if you want to: Claim a refund of overwithheld or overpaid tax, or Claim the benefit of any deductions or credits. Free taxes for 2012 For example, if you have no U. Free taxes for 2012 S. Free taxes for 2012 business activities but have income from real property that you choose to treat as effectively connected income (discussed in chapter 4), you must timely file a true and accurate return to take any allowable deductions against that income. Free taxes for 2012 For information on what is timely, see When to file for deductions and credits under When To File, later. Free taxes for 2012 Exceptions. Free taxes for 2012   You do not need to file Form 1040NR or Form 1040NR-EZ if you meet either of the following conditions. Free taxes for 2012 Your only U. Free taxes for 2012 S. Free taxes for 2012 trade or business was the performance of personal services, and Your wages were less than $3,900, and You have no other need to file a return to claim a refund of overwithheld taxes, to satisfy additional withholding at source, or to claim income exempt or partly exempt by treaty. Free taxes for 2012 You were a nonresident alien student, teacher, or trainee who was temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa and you have no income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. Free taxes for 2012 Even if you have left the United States and filed a Form 1040-C, U. Free taxes for 2012 S. Free taxes for 2012 Departing Alien Income Tax Return, on departure, you still must file an annual U. Free taxes for 2012 S. Free taxes for 2012 income tax return. Free taxes for 2012 If you are married and both you and your spouse are required to file, you must each file a separate return. Free taxes for 2012 Form 1040NR-EZ You can use Form 1040NR-EZ if all of the following conditions are met. Free taxes for 2012 You do not claim any dependents. Free taxes for 2012 You cannot be claimed as a dependent on someone else's U. Free taxes for 2012 S. Free taxes for 2012 tax return. Free taxes for 2012 If you were married, you do not claim an exemption for your spouse. Free taxes for 2012 Your taxable income is less than $100,000. Free taxes for 2012 The only itemized deduction you can claim is for state and local income taxes. Free taxes for 2012 Note. Free taxes for 2012 Residents of India who were students or business apprentices may be able to take the standard deduction instead of the itemized deduction for state and local income taxes. Free taxes for 2012 See chapter 5. Free taxes for 2012 Your only U. Free taxes for 2012 S. Free taxes for 2012 source income is from wages, salaries, tips, taxable refunds of state and local income taxes, scholarship or fellowship grants, and nontaxable interest or dividends. Free taxes for 2012 (If you had taxable interest or dividend income, you cannot use this form. Free taxes for 2012 ) You are not claiming any adjustments to income other than the student loan interest deduction or scholarship and fellowship grants excluded. Free taxes for 2012 You are not claiming any tax credits. Free taxes for 2012 This is not an “expatriation return. Free taxes for 2012 ” See Expatriation Tax in chapter 4. Free taxes for 2012 The only taxes you owe are: The income tax from the Tax Table. Free taxes for 2012 The social security and Medicare tax from Form 4137 or Form 8919. Free taxes for 2012 You are not claiming a credit for excess social security and tier 1 RRTA tax withheld. Free taxes for 2012 You are not filing Form 8959, to figure the amount of Additional Medicare Tax you owe and/or the amount of Additional Medicare Tax withheld by your employer, if any. Free taxes for 2012 If you do not meet all of the above conditions, you must file Form 1040NR. Free taxes for 2012 When To File If you are an employee and you receive wages subject to U. Free taxes for 2012 S. Free taxes for 2012 income tax withholding, you will generally file by the 15th day of the 4th month after your tax year ends. Free taxes for 2012 For the 2013 calendar year, file your return by April 15, 2014. Free taxes for 2012 If you are not an employee who receives wages subject to U. Free taxes for 2012 S. Free taxes for 2012 income tax withholding, you must file by the 15th day of the 6th month after your tax year ends. Free taxes for 2012 For the 2013 calendar year, file your return by June 16, 2014 (because June 15 is a Sunday. Free taxes for 2012 ) Extensions of time to file. Free taxes for 2012   If you cannot file your return by the due date, file Form 4868 or use one of the electronic filing options explained in the Form 4868 instructions. Free taxes for 2012 For the 2013 calendar year, this will extend the due date to October 15, 2014 (December 15, 2014, if the regular due date of your return is June 16, 2014). Free taxes for 2012 You must file the extension by the regular due date of your return. Free taxes for 2012   In addition to the 6-month extension to October 15, taxpayers whose main place of business is outside the United States and Puerto Rico and who live outside those jurisdictions can request a discretionary 2-month extension of time to file their returns (to December 15 for calendar year taxpayers). Free taxes for 2012 To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Free taxes for 2012 Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215   You will not receive any notification from the IRS unless your request is denied for being untimely. Free taxes for 2012 When to file for deductions and credits. Free taxes for 2012   To get the benefit of any allowable deductions or credits, you must timely file a true and accurate return. Free taxes for 2012 For this purpose, a return is timely if it is filed within 16 months of the due date just discussed. Free taxes for 2012 However, if you did not file a 2012 tax return and 2013 is not the first year for which you are required to file one, your 2013 return is timely for this purpose if it is filed by the earlier of: The date that is 16 months after the due date for filing your 2013 return, or The date the IRS notifies you that your 2013 return has not been filed and that you cannot claim certain deductions and credits. Free taxes for 2012 The allowance of the following credits is not affected by this time requirement. Free taxes for 2012 Credit for withheld taxes. Free taxes for 2012 Credit for excise tax on certain uses of gasoline and special fuels. Free taxes for 2012 Credit for tax paid by a mutual fund (or other regulated investment company) or a real estate investment trust on undistributed long-term capital gains. Free taxes for 2012 Protective return. Free taxes for 2012   If your activities in the United States were limited and you do not believe that you had any gross income effectively connected with a U. Free taxes for 2012 S. Free taxes for 2012 trade or business during the year, you can file a protective return (Form 1040NR) by the deadline explained above. Free taxes for 2012 By filing a protective return, you protect your right to receive the benefit of deductions and credits in the event it is later determined that some or all of your income is effectively connected. Free taxes for 2012 You are not required to report any effectively connected income or any deductions on the protective return, but you must give the reason the return is being filed. Free taxes for 2012   If you believe some of your activities resulted in effectively connected income, file your return reporting that income and related deductions by the regular due date. Free taxes for 2012 To protect your right to claim deductions or credits resulting from other activities, attach a statement to that return explaining that you wish to protect your right to claim deductions and credits if it is later determined that the other activities produced effectively connected income. Free taxes for 2012   You can follow the same procedure if you believe you have no U. Free taxes for 2012 S. Free taxes for 2012 tax liability because of a U. Free taxes for 2012 S. Free taxes for 2012 tax treaty. Free taxes for 2012 Be sure to also complete item L on page 5 of Form 1040NR. Free taxes for 2012 Waiver of filing deadline. Free taxes for 2012   The IRS may waive the filing deadline if you establish that, based on the facts and circumstances, you acted reasonably and in good faith in failing to file a U. Free taxes for 2012 S. Free taxes for 2012 income tax return (including a protective return) and you cooperate with the IRS in determining your U. Free taxes for 2012 S. Free taxes for 2012 income tax liability for the tax year for which you did not file a return. Free taxes for 2012 Where To File If you are not enclosing a payment, file Form 1040NR-EZ and Form 1040NR at the following address. Free taxes for 2012  Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If enclosing a payment, mail your return to:  Internal Revenue Service  P. Free taxes for 2012 O. Free taxes for 2012 Box 1303 Charlotte, NC 28201-1303 Aliens from the U. Free taxes for 2012 S. Free taxes for 2012 Virgin Islands. Free taxes for 2012    If you are a bona fide resident of the U. Free taxes for 2012 S. Free taxes for 2012 Virgin Islands during your entire tax year and work temporarily in the United States, you must pay your income taxes to the U. Free taxes for 2012 S. Free taxes for 2012 Virgin Islands and file your income tax returns at the following address. Free taxes for 2012 Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Free taxes for 2012 Thomas, VI 00802   Report all income from U. Free taxes for 2012 S. Free taxes for 2012 sources, as well as income from other sources, on your return. Free taxes for 2012 For information on filing U. Free taxes for 2012 S. Free taxes for 2012 Virgin Islands returns, contact the U. Free taxes for 2012 S. Free taxes for 2012 Virgin Islands Bureau of Internal Revenue. Free taxes for 2012   Chapter 8 discusses withholding from U. Free taxes for 2012 S. Free taxes for 2012 wages of U. Free taxes for 2012 S. Free taxes for 2012 Virgin Islanders. Free taxes for 2012 Aliens from Guam or the Commonwealth of the Northern Mariana Islands. Free taxes for 2012   If you are a bona fide resident of Guam or the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you must file your return with, and pay any tax due to, Guam or the CNMI. Free taxes for 2012 Report all income, including income from U. Free taxes for 2012 S. Free taxes for 2012 sources, on your return. Free taxes for 2012 It is not necessary to file a separate U. Free taxes for 2012 S. Free taxes for 2012 income tax return. Free taxes for 2012    Bona fide residents of Guam should file their Guam returns at the following address. Free taxes for 2012   Department of Revenue and Taxation Government of Guam P. Free taxes for 2012 O. Free taxes for 2012 Box 23607 GMF, GU 96921    Bona fide residents of the CNMI should file their CNMI income tax returns at the following address. Free taxes for 2012   Department of Finance Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Free taxes for 2012 O. Free taxes for 2012 Box 5234 CHRB Saipan, MP 96950   If you are not a bona fide resident of Guam or the CNMI, see Pub. Free taxes for 2012 570, Tax Guide for Individuals With Income From U. Free taxes for 2012 S. Free taxes for 2012 Possessions, for information on where to file your return. Free taxes for 2012 Amended Returns and Claims for Refund If you find changes in your income, deductions, or credits after you mail your return, file Form 1040X, Amended U. Free taxes for 2012 S. Free taxes for 2012 Individual Income Tax Return. Free taxes for 2012 Also use Form 1040X if you should have filed Form 1040, 1040A, or 1040EZ instead of Form 1040NR or 1040NR-EZ, or vice versa. Free taxes for 2012 If you amend Form 1040NR or Form 1040NR-EZ or file the correct return, attach the corrected return (Form 1040, Form 1040NR, etc. Free taxes for 2012 ) to Form 1040X. Free taxes for 2012 Print “Amended” across the top. Free taxes for 2012 Ordinarily, an amended return claiming a refund must be filed within 3 years from the date your return was filed or within 2 years from the time the tax was paid, whichever is later. Free taxes for 2012 A return filed before the final due date is considered to have been filed on the due date. Free taxes for 2012 Other Forms You May Have To File You may be required to file information returns to report certain foreign income or assets, or monetary transactions. Free taxes for 2012 FinCen Form 105 FinCEN Form 105 (formerly Customs Form 4790), Report of International Transportation of Currency or Monetary Instruments, must be filed by each person who physically transports, mails, or ships, or causes to be physically transported, mailed, or shipped, currency or other monetary instruments in a total amount of more than $10,000 at one time from the United States to any place outside the United States, or into the United States from any place outside the United States. Free taxes for 2012 The filing requirement also applies to each person who receives in the United States currency or monetary instruments totaling more than $10,000 at one time from any place outside of the United States. Free taxes for 2012 The term “monetary instruments” means the following: Coin and currency of the United States or of any other country, Travelers' checks in any form, Investment securities or stock in bearer form or otherwise in such form that title to them passes upon delivery, Negotiable instruments (including checks, promissory notes, and money orders) in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title to them passes upon delivery, and Checks, promissory notes, and money orders which are signed but on which the name of the payee has been omitted. Free taxes for 2012 However, the term does not include: Checks or money orders made payable to the order of a named person which have not been endorsed or which contain restrictive endorsements, Warehouse receipts, or Bills of lading. Free taxes for 2012 A transfer of funds through normal banking procedures (wire transfer) that does not involve the physical transportation of currency or monetary instruments is not required to be reported on FinCEN Form 105. Free taxes for 2012 Filing requirements. Free taxes for 2012   FinCEN Form 105 filing requirements follow. Free taxes for 2012 Recipients. Free taxes for 2012   Each person who receives currency or other monetary instruments in the United States must file FinCEN Form 105 within 15 days after receipt, with the Customs officer in charge at any port of entry or departure, or by mail at the following address. Free taxes for 2012 Commissioner of Customs  Attention: Currency Transportation Reports Washington, DC 20229 Shippers or mailers. Free taxes for 2012   If the currency or other monetary instrument does not accompany the person entering or departing the United States, FinCEN Form 105 can be filed by mail at the above address on or before the date of entry, departure, mailing, or shipping. Free taxes for 2012 Travelers. Free taxes for 2012   Travelers must file FinCEN Form 105 with the Customs officer in charge at any Customs port of entry or departure, when entering or departing the United States. Free taxes for 2012 Penalties. Free taxes for 2012   Civil and criminal penalties are provided for failing to file a report, filing a report containing material omissions or misstatements, or filing a false or fraudulent report. Free taxes for 2012 Also, the entire amount of the currency or monetary instrument may be subject to seizure and forfeiture. Free taxes for 2012 More information. Free taxes for 2012   More information regarding the filing of FinCEN Form 105 can be found in the instructions on the back of the form. Free taxes for 2012 Form 8938 You may have to file Form 8938, Statement of Specified Foreign Financial Assets, to report the ownership of specified foreign financial asset(s) if you are one of the following individuals. Free taxes for 2012 A resident alien of the United States for any part of the tax year. Free taxes for 2012 A resident alien of the United States who elects to be treated as a resident of a foreign country under the provisions of a U. Free taxes for 2012 S. Free taxes for 2012 income tax treaty. Free taxes for 2012 See Effect of Tax Treaties in chapter 1. Free taxes for 2012 A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. Free taxes for 2012 See chapter 1 for information about this election. Free taxes for 2012 A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. Free taxes for 2012 See Publication 570, Tax Guide for Individuals With Income From U. Free taxes for 2012 S. Free taxes for 2012 Possessions, for a definition of bona fide resident. Free taxes for 2012 You must file Form 8938 if the total value of those assets exceeds an applicable threshold (the “reporting threshold”). Free taxes for 2012 The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Free taxes for 2012 Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Free taxes for 2012 S. Free taxes for 2012 person. Free taxes for 2012 You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Free taxes for 2012 More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Free taxes for 2012 Penalties The law provides penalties for failure to file returns or pay taxes as required. Free taxes for 2012 Civil Penalties If you do not file your return and pay your tax by the due date, you may have to pay a penalty. Free taxes for 2012 You may also have to pay a penalty if you substantially understate your tax, file a frivolous tax submission, or fail to supply your taxpayer identification number. Free taxes for 2012 If you provide fraudulent information on your return, you may have to pay a civil fraud penalty. Free taxes for 2012 Filing late. Free taxes for 2012   If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. Free taxes for 2012 The penalty is based on the tax not paid by the due date (without regard to extensions). Free taxes for 2012 The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. Free taxes for 2012 Fraud. Free taxes for 2012   If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%. Free taxes for 2012 Return over 60 days late. Free taxes for 2012   If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. Free taxes for 2012 Exception. Free taxes for 2012   You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not because of willful neglect. Free taxes for 2012 Paying tax late. Free taxes for 2012   You will have to pay a failure-to-pay penalty of ½ of 1% (. Free taxes for 2012 50%) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. Free taxes for 2012 This penalty does not apply during the automatic 6-month extension of time to file period, if you paid at least 90% of your actual tax liability on or before the due date of your return and pay the balance when you file the return. Free taxes for 2012   The monthly rate of the failure-to-pay penalty is half the usual rate (. Free taxes for 2012 25% instead of . Free taxes for 2012 50%) if an installment agreement is in effect for that month. Free taxes for 2012 You must have filed your return by the due date (including extensions) to qualify for this reduced penalty. Free taxes for 2012   If a notice of intent to levy is issued, the rate will increase to 1% at the start of the first month beginning at least 10 days after the day that the notice is issued. Free taxes for 2012 If a notice and demand for immediate payment is issued, the rate will increase to 1% at the start of the first month beginning after the day that the notice and demand is issued. Free taxes for 2012   This penalty cannot be more than 25% of your unpaid tax. Free taxes for 2012 You will not have to pay the penalty if you can show that you had a good reason for not paying your tax on time. Free taxes for 2012 Combined penalties. Free taxes for 2012   If both the failure-to-file penalty and the failure-to-pay penalty (discussed earlier) apply in any month, the 5% (or 15%) failure-to-file penalty is reduced by the failure-to-pay penalty. Free taxes for 2012 However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax. Free taxes for 2012 Accuracy-related penalty. Free taxes for 2012   You may have to pay an accuracy-related penalty if you underpay your tax because: You show negligence or disregard of rules or regulations, You substantially understate your income tax, You claim tax benefits for a transaction that lacks economic substance, or You fail to disclose a foreign financial asset. Free taxes for 2012 The penalty is equal to 20% of the underpayment. Free taxes for 2012 The penalty is 40% of any portion of the underpayment that is attributable to an undisclosed noneconomic substance transaction or an undisclosed foreign financial asset transaction. Free taxes for 2012 The penalty will not be figured on any part of an underpayment on which the fraud penalty (discussed later) is charged. Free taxes for 2012 Negligence or disregard. Free taxes for 2012   The term “negligence” includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return. Free taxes for 2012 Negligence also includes failure to keep adequate books and records. Free taxes for 2012 You will not have to pay a negligence penalty if you have a reasonable basis for a position you took. Free taxes for 2012   The term “disregard” includes any careless, reckless, or intentional disregard. Free taxes for 2012 Adequate disclosure. Free taxes for 2012   You can avoid the penalty for disregard of rules or regulations if you adequately disclose on your return a position that has at least a reasonable basis. Free taxes for 2012 See Disclosure statement , later. Free taxes for 2012   This exception will not apply to an item that is attributable to a tax shelter. Free taxes for 2012 In addition, it will not apply if you fail to keep adequate books and records, or substantiate items properly. Free taxes for 2012 Substantial understatement of income tax. Free taxes for 2012   You understate your tax if the tax shown on your return is less than the correct tax. Free taxes for 2012 The understatement is substantial if it is more than the larger of 10% of the correct tax or $5,000. Free taxes for 2012 However, the amount of the understatement is reduced to the extent the understatement is due to: Substantial authority, or Adequate disclosure and a reasonable basis. Free taxes for 2012   If an item on your return is attributable to a tax shelter, there is no reduction for an adequate disclosure. Free taxes for 2012 However, there is a reduction for a position with substantial authority, but only if you reasonably believed that your tax treatment was more likely than not the proper treatment. Free taxes for 2012 Substantial authority. Free taxes for 2012   Whether there is or was substantial authority for the tax treatment of an item depends on the facts and circumstances. Free taxes for 2012 Consideration will be given to court opinions, Treasury regulations, revenue rulings, revenue procedures, and notices and announcements issued by the IRS and published in the Internal Revenue Bulletin that involve the same or similar circumstances as yours. Free taxes for 2012 Disclosure statement. Free taxes for 2012   To adequately disclose the relevant facts about your tax treatment of an item, use Form 8275, Disclosure Statement. Free taxes for 2012 You must also have a reasonable basis for treating the item the way you did. Free taxes for 2012   In cases of substantial understatement only, items that meet the requirements of Revenue Procedure 2012-51, 2012-51 IRB 719 (or later update) are considered adequately disclosed on your return without filing Form 8275. Free taxes for 2012   Use Form 8275-R, Regulation Disclosure Statement, to disclose items or positions contrary to regulations. Free taxes for 2012 Transaction lacking economic substance. Free taxes for 2012   For more information on economic substance, see section 7701(o). Free taxes for 2012 Foreign financial asset. Free taxes for 2012   For more information on undisclosed foreign financial assets, see section 6662(j) or the Instructions for Form 8938. Free taxes for 2012 Reasonable cause. Free taxes for 2012   You will not have to pay a penalty if you show a good reason (reasonable cause) for the way you treated an item. Free taxes for 2012 You must also show that you acted in good faith. Free taxes for 2012 This does not apply to a transaction that lacks economic substance. Free taxes for 2012 Filing erroneous claim for refund or credit. Free taxes for 2012   You may have to pay a penalty if you file an erroneous claim for refund or credit. Free taxes for 2012 The penalty is equal to 20% of the disallowed amount of the claim, unless you can show a reasonable basis for the way you treated an item. Free taxes for 2012 However, any disallowed amount due to a transaction that lacks economic substance will not be treated as having a reasonable basis. Free taxes for 2012 The penalty will not be figured on any part of the disallowed amount of the claim that relates to the earned income credit or on which the accuracy-related or fraud penalties are charged. Free taxes for 2012 Frivolous tax submission. Free taxes for 2012   You may have to pay a penalty of $5,000 if you file a frivolous tax return or other frivolous submissions. Free taxes for 2012 A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect. Free taxes for 2012 For more information on frivolous returns, frivolous submissions, and a list of positions that are identified as frivolous, see Notice 2010-33, 2010-17 IRB 609 available at www. Free taxes for 2012 irs. Free taxes for 2012 gov/irb/2010-17_irb/ar13. Free taxes for 2012 html. Free taxes for 2012   You will have to pay the penalty if you filed this kind of return or submission based on a frivolous position or a desire to delay or interfere with the administration of federal tax laws. Free taxes for 2012 This includes altering or striking out the preprinted language above the space provided for your signature. Free taxes for 2012   This penalty is added to any other penalty provided by law. Free taxes for 2012 Fraud. Free taxes for 2012   If there is any underpayment of tax on your return due to fraud, a penalty of 75% of the underpayment due to fraud will be added to your tax. Free taxes for 2012 Failure to supply taxpayer identification number. Free taxes for 2012   If you do not include your social security number (SSN) or individual taxpayer identification number (ITIN) or the SSN or ITIN of another person where required on a return, statement, or other document, you will be subject to a penalty of $50 for each failure. Free taxes for 2012 You will also be subject to a penalty of $50 if you do not give your SSN or ITIN to another person when it is required on a return, statement, or other document. Free taxes for 2012   For example, if you have a bank account that earns interest, you must give your SSN or ITIN to the bank. Free taxes for 2012 The number must be shown on the Form 1099-INT or other statement the bank sends you. Free taxes for 2012 If you do not give the bank your SSN or ITIN, you will be subject to the $50 penalty. Free taxes for 2012 (You also may be subject to “backup” withholding of income tax. Free taxes for 2012 )   You will not have to pay the penalty if you are able to show that the failure was due to reasonable cause and not willful neglect. Free taxes for 2012 Criminal Penalties You may be subject to criminal prosecution (brought to trial) for actions such as: Tax evasion, Willful failure to file a return, supply information, or pay any tax due, Fraud and false statements, or Preparing and filing a fraudulent return. Free taxes for 2012 Prev  Up  Next   Home   More Online Publications
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The Free Taxes For 2012

Free taxes for 2012 Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). Free taxes for 2012 Low Income Taxpayer Clinics (LITCs). Free taxes for 2012 Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. Free taxes for 2012 All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. Free taxes for 2012 The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). Free taxes for 2012 After notice and hearing, the bankruptcy court may extend the period for another 30 days. Free taxes for 2012 Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. Free taxes for 2012 Note. Free taxes for 2012 Individual debtors should use their home address when filing Form 1040 with the IRS. Free taxes for 2012 Returns should not be filed “in care of” the trustee's address. Free taxes for 2012 Ordering tax transcripts and copies of returns. Free taxes for 2012   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. Free taxes for 2012 The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. Free taxes for 2012 If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. Free taxes for 2012 Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. Free taxes for 2012 Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. Free taxes for 2012 A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. Free taxes for 2012 To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. Free taxes for 2012 It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. Free taxes for 2012 00 per tax return for copies of the returns. Free taxes for 2012 Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. Free taxes for 2012 If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. Free taxes for 2012 Tax returns and payment of taxes in chapter 11 cases. Free taxes for 2012   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. Free taxes for 2012 Disclosure of debtor's return information to trustee. Free taxes for 2012   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. Free taxes for 2012 If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. Free taxes for 2012    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. Free taxes for 2012 Material interest is generally defined as a financial or monetary interest. Free taxes for 2012 Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Free taxes for 2012   However, the U. Free taxes for 2012 S. Free taxes for 2012 Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. Free taxes for 2012 Disclosure of bankruptcy estate's return information to debtor. Free taxes for 2012    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. Free taxes for 2012 Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. Free taxes for 2012 Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Free taxes for 2012 Chapter 13 relief is not available to corporations or partnerships. Free taxes for 2012 The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. Free taxes for 2012 In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. Free taxes for 2012 S. Free taxes for 2012 Individual Income Tax Return. Free taxes for 2012 On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. Free taxes for 2012 Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. Free taxes for 2012 To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. Free taxes for 2012 See Debt Cancellation, later. Free taxes for 2012 Interest on trust accounts in chapter 13 cases. Free taxes for 2012   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. Free taxes for 2012 This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. Free taxes for 2012 S. Free taxes for 2012 Trustee system. Free taxes for 2012 The interest is also not taxable to the trustee as income. Free taxes for 2012 Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. Free taxes for 2012 The bankruptcy estate in a chapter 7 case is represented by a trustee. Free taxes for 2012 The trustee is appointed to administer the estate and liquidate any nonexempt assets. Free taxes for 2012 In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. Free taxes for 2012 However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. Free taxes for 2012 During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. Free taxes for 2012 The bankruptcy trustee files a Form 1041 for the bankruptcy estate. Free taxes for 2012 However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). Free taxes for 2012 Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. Free taxes for 2012 Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). Free taxes for 2012 For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Free taxes for 2012 Debtor's Election To End Tax Year – Form 1040 Short tax years. Free taxes for 2012   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. Free taxes for 2012 If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. Free taxes for 2012 The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. Free taxes for 2012   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Free taxes for 2012 Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. Free taxes for 2012    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. Free taxes for 2012 Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. Free taxes for 2012 Note. Free taxes for 2012 The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. Free taxes for 2012 Making the Election - Filing Requirements First short tax year. Free taxes for 2012   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. Free taxes for 2012 The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. Free taxes for 2012 Second short tax year. Free taxes for 2012   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. Free taxes for 2012   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. Free taxes for 2012 To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. Free taxes for 2012 Example. Free taxes for 2012 Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. Free taxes for 2012 If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. Free taxes for 2012 Jane's second short year runs from May 8, 2012, through December 31, 2012. Free taxes for 2012 To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. Free taxes for 2012 To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. Free taxes for 2012 The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. Free taxes for 2012 S. Free taxes for 2012 Individual Tax Return. Free taxes for 2012 The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. Free taxes for 2012 The debtor must file Form 4868 by the due date of the return for the first short tax year. Free taxes for 2012 The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. Free taxes for 2012 Election by debtor's spouse. Free taxes for 2012   If the debtor is married, the debtor's spouse may join in the election to end the tax year. Free taxes for 2012 If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. Free taxes for 2012 The debtor must elect by the due date for filing the return for the first short tax year. Free taxes for 2012 Once the election is made, it cannot be revoked for the first short tax year. Free taxes for 2012 However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. Free taxes for 2012 Later bankruptcy of spouse. Free taxes for 2012    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. Free taxes for 2012   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. Free taxes for 2012 If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. Free taxes for 2012 However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. Free taxes for 2012 The debtor and the spouse are precluded from this election because they have different tax years. Free taxes for 2012 This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. Free taxes for 2012 Example 1. Free taxes for 2012 Paul and Mary Harris are calendar-year taxpayers. Free taxes for 2012 Paul's voluntary chapter 7 bankruptcy case begins on March 4. Free taxes for 2012 If Paul does not make an election, his tax year does not end on March 3. Free taxes for 2012 If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. Free taxes for 2012 Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. Free taxes for 2012 They must make the election by July 15, the due date for filing the joint return. Free taxes for 2012 Example 2. Free taxes for 2012 Fred and Ethel Barnes are calendar-year taxpayers. Free taxes for 2012 Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. Free taxes for 2012 Ethel could elect to end her tax year on October 31. Free taxes for 2012 If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. Free taxes for 2012 Her first tax year is January 1–October 31, and her second year is November 1–December 31. Free taxes for 2012 If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. Free taxes for 2012 If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. Free taxes for 2012 Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. Free taxes for 2012 Example 3. Free taxes for 2012 Jack and Karen Thomas are calendar-year taxpayers. Free taxes for 2012 Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. Free taxes for 2012 Karen elected to close her tax year on April 9 and Jack joins in Karen's election. Free taxes for 2012 Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. Free taxes for 2012 The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. Free taxes for 2012 Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). Free taxes for 2012 If Karen does join in, she would have the same 3 short tax years as Jack. Free taxes for 2012 Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. Free taxes for 2012 Annualizing taxable income. Free taxes for 2012   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. Free taxes for 2012 See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. Free taxes for 2012 Dismissal of bankruptcy case. Free taxes for 2012   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. Free taxes for 2012 It is as if no bankruptcy estate was created for tax purposes. Free taxes for 2012 In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. Free taxes for 2012 Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. Free taxes for 2012 Attach a statement to the amended returns explaining why the debtor is filing an amended return. Free taxes for 2012 Taxes and the Bankruptcy Estate Property of the bankruptcy estate. Free taxes for 2012   At the commencement of a bankruptcy case a bankruptcy estate is created. Free taxes for 2012 Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. Free taxes for 2012 This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. Free taxes for 2012 However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. Free taxes for 2012 Note. Free taxes for 2012 Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. Free taxes for 2012 Excluded property is never included in the estate. Free taxes for 2012 Transfer of assets between debtor and bankruptcy estate. Free taxes for 2012   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. Free taxes for 2012 The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. Free taxes for 2012 For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. Free taxes for 2012 The estate assumes the same basis, holding period, and character of the transferred assets. Free taxes for 2012 Also, the estate generally accounts for the transferred assets in the same manner as debtor. Free taxes for 2012   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. Free taxes for 2012 The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. Free taxes for 2012 Abandoned property. Free taxes for 2012    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. Free taxes for 2012 If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. Free taxes for 2012 Separate taxable entity. Free taxes for 2012   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. Free taxes for 2012 The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. Free taxes for 2012 S. Free taxes for 2012 Income Tax Return for Estates and Trusts, and paying its taxes. Free taxes for 2012 The debtor remains responsible for filing his or her own returns on Form 1040, U. Free taxes for 2012 S. Free taxes for 2012 Individual Income Tax Return, and paying taxes on income that does not belong to the estate. Free taxes for 2012 Employer identification number. Free taxes for 2012   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Free taxes for 2012 The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Free taxes for 2012 See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Free taxes for 2012    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Free taxes for 2012 Income, deductions, and credits – Form 1040. Free taxes for 2012   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). Free taxes for 2012 Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. Free taxes for 2012 The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. Free taxes for 2012 See Debt Cancellation, below. Free taxes for 2012 Note. Free taxes for 2012 The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. Free taxes for 2012 Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. Free taxes for 2012 However, other exclusions, such as the insolvency exclusion, may apply. Free taxes for 2012 Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. Free taxes for 2012    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. Free taxes for 2012 Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. Free taxes for 2012   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. Free taxes for 2012 Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. Free taxes for 2012 Income of the estate in individual chapter 11 cases. Free taxes for 2012    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. Free taxes for 2012 Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. Free taxes for 2012 S. Free taxes for 2012 C. Free taxes for 2012 section 1115). Free taxes for 2012 Note. Free taxes for 2012 A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. Free taxes for 2012 Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). Free taxes for 2012 Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. Free taxes for 2012 See Administrative expenses, below. Free taxes for 2012 Conversion or dismissal of chapter 11 cases. Free taxes for 2012   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. Free taxes for 2012 If the chapter 11 case is converted to a chapter 7 case, 11 U. Free taxes for 2012 S. Free taxes for 2012 C. Free taxes for 2012 section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. Free taxes for 2012 Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. Free taxes for 2012 If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. Free taxes for 2012 Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. Free taxes for 2012 Note. Free taxes for 2012 Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). Free taxes for 2012 Administrative expenses. Free taxes for 2012   Allowable expenses include administrative expenses. Free taxes for 2012    Administrative expenses can only be deducted by the estate, never by the debtor. Free taxes for 2012   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. Free taxes for 2012 These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. Free taxes for 2012 See IRC section 67(e). Free taxes for 2012 Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. Free taxes for 2012 Note. Free taxes for 2012 The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. Free taxes for 2012 See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. Free taxes for 2012 Administrative expense loss. Free taxes for 2012   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. Free taxes for 2012 The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. Free taxes for 2012 The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. Free taxes for 2012 For a discussion of NOLs, see Publication 536. Free taxes for 2012 Attribute carryovers. Free taxes for 2012   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. Free taxes for 2012 These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. Free taxes for 2012 The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. Free taxes for 2012   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. Free taxes for 2012 See Debt Cancellation, later. Free taxes for 2012   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. Free taxes for 2012 The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. Free taxes for 2012 Note. Free taxes for 2012 The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. Free taxes for 2012 See Administrative expense loss, above. Free taxes for 2012 Passive and at-risk activities. Free taxes for 2012   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. Free taxes for 2012 Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. Free taxes for 2012 These transfers include the return of exempt property and abandonment of estate property to the debtor. Free taxes for 2012 Carrybacks from the debtor's activities. Free taxes for 2012   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. Free taxes for 2012 Carrybacks from the bankruptcy estate. Free taxes for 2012   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. Free taxes for 2012 The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. Free taxes for 2012 Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. Free taxes for 2012    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. Free taxes for 2012 The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. Free taxes for 2012 These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. Free taxes for 2012 The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. Free taxes for 2012 The same method must be used to allocate the income and the withheld tax. Free taxes for 2012 Example. Free taxes for 2012 If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. Free taxes for 2012 Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. Free taxes for 2012 See IRC section 31(a). Free taxes for 2012   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. Free taxes for 2012 In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. Free taxes for 2012    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. Free taxes for 2012 The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. Free taxes for 2012 Note. Free taxes for 2012 The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). Free taxes for 2012   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. Free taxes for 2012 Self-employment taxes in individual chapter 11 cases. Free taxes for 2012   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. Free taxes for 2012 Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. Free taxes for 2012   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. Free taxes for 2012 Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. Free taxes for 2012 This schedule includes self-employment income earned post-petition and the attributable deductions. Free taxes for 2012 The debtor must pay any self-employment tax imposed by IRC section 1401. Free taxes for 2012 Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Free taxes for 2012   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. Free taxes for 2012 However, section 1115 of the Bankruptcy Code (11 U. Free taxes for 2012 S. Free taxes for 2012 C. Free taxes for 2012 section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. Free taxes for 2012 See Notice 2006-83. Free taxes for 2012   The reporting and withholding obligations of a debtor's employer also do not change. Free taxes for 2012 An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. Free taxes for 2012 Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. Free taxes for 2012   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. Free taxes for 2012 See IRC section 6109(a)(2). Free taxes for 2012 As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). Free taxes for 2012   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. Free taxes for 2012 See Notice 2006-83. Free taxes for 2012 An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. Free taxes for 2012   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. Free taxes for 2012 However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. Free taxes for 2012 See Employment Tax Regulations section 31. Free taxes for 2012 3402(f)(2)-1. Free taxes for 2012 Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. Free taxes for 2012 See IRC section 6654(a). Free taxes for 2012 Notice required in converted and dismissed cases. Free taxes for 2012   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. Free taxes for 2012 The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. Free taxes for 2012 This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. Free taxes for 2012   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. Free taxes for 2012 Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. Free taxes for 2012 However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. Free taxes for 2012 After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. Free taxes for 2012 Employment taxes. Free taxes for 2012   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Free taxes for 2012 See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. Free taxes for 2012   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Free taxes for 2012 For a further discussion of employment taxes, see Employment Taxes, later. Free taxes for 2012 Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . Free taxes for 2012 The bankruptcy court case number is . Free taxes for 2012 Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. Free taxes for 2012   Year Taxpayer   Estate 1. Free taxes for 2012 Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. Free taxes for 2012 Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. Free taxes for 2012 Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. Free taxes for 2012 Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. Free taxes for 2012   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. Free taxes for 2012 This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. Free taxes for 2012   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). Free taxes for 2012   These amounts are generally adjusted annually. Free taxes for 2012 See the present year Form 1041 Instructions at www. Free taxes for 2012 irs. Free taxes for 2012 gov/form1041 for the current dollar amounts. Free taxes for 2012 Accounting period. Free taxes for 2012   A bankruptcy estate may have a fiscal year. Free taxes for 2012 However, this period cannot be longer than 12 months. Free taxes for 2012 Change of accounting period. Free taxes for 2012   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. Free taxes for 2012 This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. Free taxes for 2012 The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. Free taxes for 2012 Employer identification number. Free taxes for 2012   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Free taxes for 2012 The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Free taxes for 2012    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Free taxes for 2012   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. Free taxes for 2012 irs. Free taxes for 2012 gov/businesses/small. Free taxes for 2012 The EIN is issued immediately once the application information is validated. Free taxes for 2012 By telephone at 1-800-829-4933 from 7:00 a. Free taxes for 2012 m. Free taxes for 2012 to 7:00 p. Free taxes for 2012 m. Free taxes for 2012 in the trustee's or debtor-in-possession's local time zone. Free taxes for 2012 Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. Free taxes for 2012   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. Free taxes for 2012 For more details, see Pub. Free taxes for 2012 583, Starting a Business and Keeping Records. Free taxes for 2012   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. Free taxes for 2012 Figuring tax due. Free taxes for 2012   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. Free taxes for 2012 However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. Free taxes for 2012 The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. Free taxes for 2012 The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. Free taxes for 2012 Tax rate schedule. Free taxes for 2012 The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. Free taxes for 2012 When to file. Free taxes for 2012   Calendar year bankruptcy estates must file Form 1041 by April 15th. Free taxes for 2012 Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. Free taxes for 2012 For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. Free taxes for 2012 If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Free taxes for 2012 Note. Free taxes for 2012 The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Free taxes for 2012 Transmittal for Form 1040. Free taxes for 2012   Form 1041 is used as a transmittal for Form 1040. Free taxes for 2012 If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. Free taxes for 2012   Prepare the bankruptcy estate's return by completing Form 1040. Free taxes for 2012 In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. Free taxes for 2012 ” Then, attach Form 1040 to the Form 1041 transmittal. Free taxes for 2012 Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. Free taxes for 2012 An example of a bankruptcy estate's tax return is prepared below. Free taxes for 2012 Note. Free taxes for 2012 The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. Free taxes for 2012 Payment of Tax Due Payment methods. Free taxes for 2012   Payment of tax due may be made by check or money order or by credit or debit card. Free taxes for 2012 For information on how to make payments electronically by credit or debit card, go to irs. Free taxes for 2012 gov/e-pay. Free taxes for 2012      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. Free taxes for 2012 To enroll in EFTPS, go to eftps. Free taxes for 2012 gov or call 1-800-555-4477. Free taxes for 2012 For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Free taxes for 2012 Payment voucher – Form 1041-V. Free taxes for 2012   Form 1041-V accompanies payments made by check or money order for Form 1041. Free taxes for 2012 The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. Free taxes for 2012 Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. Free taxes for 2012 We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. Free taxes for 2012 Estimated tax – Form 1041-ES. Free taxes for 2012   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. Free taxes for 2012 See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. Free taxes for 2012 Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Free taxes for 2012 Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. Free taxes for 2012 If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. Free taxes for 2012   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. Free taxes for 2012 Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. Free taxes for 2012 The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Free taxes for 2012 If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free taxes for 2012 , with their individual income tax returns. Free taxes for 2012 Tax Return Example – Form 1041 This publication is not revised annually. Free taxes for 2012 Future changes to the forms and their instructions may not be reflected in this example. Free taxes for 2012 Note. Free taxes for 2012 The following return was prepared for tax year 2011. Free taxes for 2012 In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). Free taxes for 2012 Facts and circumstances. Free taxes for 2012   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. Free taxes for 2012 Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. Free taxes for 2012   The estate received the following assets from Mr. Free taxes for 2012 Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. Free taxes for 2012   Also, the estate received a $251,500 capital loss carryover. Free taxes for 2012   Mr. Free taxes for 2012 Smith's bankruptcy case was closed on December 31, 2011. Free taxes for 2012 During 2011, Mr. Free taxes for 2012 Smith was relieved of $70,000 of debt by the bankruptcy court. Free taxes for 2012 The estate chose a calendar year as its tax year. Free taxes for 2012 Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. Free taxes for 2012 Schedule B (Form 1040). Free taxes for 2012    The certificate of deposit earned $5,500 of interest during 2011. Free taxes for 2012 Joan reports this interest on Schedule B. Free taxes for 2012 She completes this schedule and enters the result on Form 1040. Free taxes for 2012 Form 4562. Free taxes for 2012   Joan enters the depreciation allowed on Form 4562. Free taxes for 2012 She completes the form and enters the result on Schedule E. Free taxes for 2012 Schedule E (Form 1040). Free taxes for 2012   The commercial real estate was rented through the date of sale. Free taxes for 2012 Joan reports the income and expenses on Schedule E. Free taxes for 2012 She enters the net income on Form 1040. Free taxes for 2012 Form 4797. Free taxes for 2012   The commercial real estate was sold on July 1, 2011, for $280,000. Free taxes for 2012 The property was purchased in 2001 at a cost of $250,000. Free taxes for 2012 The total depreciation allowable as of the date of sale was $120,000. Free taxes for 2012 Additionally, $25,000 of selling expenses were incurred. Free taxes for 2012 Joan reports the gain or loss from the sale on Form 4797. Free taxes for 2012 She completes the form and enters the gain on Schedule D (Form 1040). Free taxes for 2012   Mr. Free taxes for 2012 Smith's former residence was sold on September 30, 2011. Free taxes for 2012 The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. Free taxes for 2012 This sale is excluded from gross income under IRC section 121. Free taxes for 2012 Note. Free taxes for 2012 Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). Free taxes for 2012 Bankruptcy estates succeed to this exclusion at the commencement of the case. Free taxes for 2012 See Regulation section 1. Free taxes for 2012 1398-3. Free taxes for 2012 Schedule D (Form 1040). Free taxes for 2012   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). Free taxes for 2012 She enters the results on Form 1040. Free taxes for 2012 Form 1040, page 1. Free taxes for 2012   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. Free taxes for 2012 Schedule A (Form 1040). Free taxes for 2012   During 2011, the estate paid mortgage interest and real property tax on Mr. Free taxes for 2012 Smith's former residence. Free taxes for 2012 It also paid income tax to the state. Free taxes for 2012 Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. Free taxes for 2012 Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. Free taxes for 2012 She completes the Schedule A and enters the result on page 2 of Form 1040. Free taxes for 2012 Form 1040, page 2. Free taxes for 2012   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. Free taxes for 2012 She then enters the estate's estimated tax payments and figures the amount the estate still owes. Free taxes for 2012 Form 982. Free taxes for 2012   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. Free taxes for 2012 Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. Free taxes for 2012 See Debt Cancellation, later. Free taxes for 2012 After the bankruptcy case ends, Mr. Free taxes for 2012 Smith will assume the estate's tax attributes. Free taxes for 2012 Mr. Free taxes for 2012 Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). Free taxes for 2012 Note. Free taxes for 2012 If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. Free taxes for 2012 Form 1041. Free taxes for 2012   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. Free taxes for 2012 She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. Free taxes for 2012 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Schedule A This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Schedule B This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Schedule D This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Schedule E This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 2119 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 4562 This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. Free taxes for 2012 Please click the link to view the image. Free taxes for 2012 Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. Free taxes for 2012 Otherwise, you do not have any carryovers. Free taxes for 2012 1. Free taxes for 2012 Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. Free taxes for 2012 If a loss, enclose the amount in parentheses 1. Free taxes for 2012 19,880   2. Free taxes for 2012 Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. Free taxes for 2012 1,500   3. Free taxes for 2012 Combine lines 1 and 2. Free taxes for 2012 If zero or less, enter -0- 3. Free taxes for 2012 21,380   4. Free taxes for 2012 Enter the smaller of line 2 or line 3 4. Free taxes for 2012 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. Free taxes for 2012       5. Free taxes for 2012 Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. Free taxes for 2012 0   6. Free taxes for 2012 Enter any gain from your 2010 Schedule D, line 15. Free taxes for 2012 If a loss, enter -0- 6. Free taxes for 2012         7. Free taxes for 2012 Add lines 4 and 6 7. Free taxes for 2012 1,500   8. Free taxes for 2012 Short-term capital loss carryover for 2011. Free taxes for 2012 Subtract line 7 from line 5. Free taxes for 2012 If zero or less, enter -0-. Free taxes for 2012 If more than zero, also enter this amount on Schedule D, line 6 8. Free taxes for 2012 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. Free taxes for 2012       9. Free taxes for 2012 Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. Free taxes for 2012 251,500   10. Free taxes for 2012 Enter any gain from your 2010 Schedule D, line 7. Free taxes for 2012 If a loss, enter -0- 10. Free taxes for 2012 0       11. Free taxes for 2012 Subtract line 5 from line 4. Free taxes for 2012 If zero or less, enter -0- 11. Free taxes for 2012 1,500       12. Free taxes for 2012 Add lines 10 and 11 12. Free taxes for 2012 1,500   13. Free taxes for 2012 Long-term capital loss carryover for 2011. Free taxes for 2012 Subtract line 12 from line 9. Free taxes for 2012 If zero or less, enter -0-. Free taxes for 2012 If more than zero, also enter this amount on Schedule D, line 14 13. Free taxes for 2012 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. Free taxes for 2012 The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. Free taxes for 2012 In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. Free taxes for 2012 The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. Free taxes for 2012 Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. Free taxes for 2012 However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. Free taxes for 2012 A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. Free taxes for 2012 However, It may or may not be included in the individual partners' income. Free taxes for 2012 See Partnerships, below under Debt Cancellation. Free taxes for 2012 Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. Free taxes for 2012 A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. Free taxes for 2012 The following discussion only highlights bankruptcy tax rules applying to corporations. Free taxes for 2012 The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. Free taxes for 2012 Therefore, you may wish to seek the help of a professional tax advisor. Free taxes for 2012 See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. Free taxes for 2012 Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. Free taxes for 2012 However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. Free taxes for 2012 A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. Free taxes for 2012 In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. Free taxes for 2012 In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. Free taxes for 2012 Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. Free taxes for 2012 In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. Free taxes for 2012 IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. Free taxes for 2012 IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. Free taxes for 2012 In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. Free taxes for 2012 No loss is recognized in this situation. Free taxes for 2012 Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. Free taxes for 2012 To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. Free taxes for 2012 The exemption request must be submitted to the local IRS Insolvency Office handling the case. Free taxes for 2012 The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. Free taxes for 2012 The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. Free taxes for 2012 ” The statement must be signed by the trustee, receiver or assignee. Free taxes for 2012 The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). Free taxes for 2012 The IRS will act on your request within 90 days. Free taxes for 2012 Disclosure of return information to trustee. Free taxes for 2012   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. Free taxes for 2012 However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. Free taxes for 2012 Material interest is generally defined as a financial or monetary interest. Free taxes for 2012 Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Free taxes for 2012 Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. Free taxes for 2012 Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. Free taxes for 2012 QSFs are required to file an annual income tax return, Form 1120-SF, U. Free taxes for 2012 S. Free taxes for 2012 Income Tax Return for Settlement Funds. Free taxes for 2012 More information about QSFs may be found in Treasury Regulation sections 1. Free taxes for 2012 468B-1 through -5. Free taxes for 2012 Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. Free taxes for 2012 After a return is filed, the IRS will either accept the return as filed or select the return for examination. Free taxes for 2012 Under examination the IRS may redetermine the tax liability shown on the return. Free taxes for 2012 If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. Free taxes for 2012 See Court Jurisdiction over Tax Matters, later. Free taxes for 2012 Prompt Determination Requests Pursuant to Rev. Free taxes for 2012 Proc. Free taxes for 2012 2006-24, 2006-22 I. Free taxes for 2012 R. Free taxes for 2012 B. Free taxes for 2012 943, www. Free taxes for 2012 irs. Free taxes for 2012 gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. Free taxes for 2012 irs. Free taxes for 2012 gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. Free taxes for 2012 Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). Free taxes for 2012 Making the request for determination. Free taxes for 2012   As detailed in Rev. Free taxes for 2012 Proc. Free taxes for 2012 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. Free taxes for 2012 O. Free taxes for 2012 Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). Free taxes for 2012   The request must be submitted in duplicate and must be executed under penalties of perjury. Free taxes for 2012 In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. Free taxes for 2012 The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. Free taxes for 2012 The name and location of the office where the return was filed. Free taxes for 2012 The name of the debtor. Free taxes for 2012 Debtor's social security number, TIN, or EIN. Free taxes for 2012 Type of bankruptcy estate. Free taxes for 2012 Bankruptcy case number. Free taxes for 2012 Court where the bankruptcy case is pending. Free taxes for 2012   The copy of the return(s) submitted with the request must be an exact copy of a valid return. Free taxes for 2012 A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. Free taxes for 2012    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. Free taxes for 2012 A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. Free taxes for 2012 Examination of return. Free taxes for 2012   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. Free taxes for 2012 If the return is selected for examination, it will be examined as soon as possible. Free taxes for 2012 The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. Free taxes for 2012   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. Free taxes for 2012   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. Free taxes for 2012   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. Free taxes for 2012 Note. Free taxes for 2012 An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. Free taxes for 2012   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei