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H&r Block 2010 Tax Software

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H&r Block 2010 Tax Software

H&r block 2010 tax software 1. H&r block 2010 tax software   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). H&r block 2010 tax software  You can set up and make contributions to an IRA if you receive taxable compensation. H&r block 2010 tax software Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. H&r block 2010 tax software For more information about IRAs, see Publication 590. H&r block 2010 tax software Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. H&r block 2010 tax software The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. H&r block 2010 tax software Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. H&r block 2010 tax software Many types of educational assistance are tax free if they meet the requirements discussed here. H&r block 2010 tax software Special rules apply to U. H&r block 2010 tax software S. H&r block 2010 tax software citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. H&r block 2010 tax software For information about these rules, see Publication 54, Tax Guide for U. H&r block 2010 tax software S. H&r block 2010 tax software Citizens and Resident Aliens Abroad. H&r block 2010 tax software Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. H&r block 2010 tax software A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. H&r block 2010 tax software Amount of scholarship or fellowship. H&r block 2010 tax software   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. H&r block 2010 tax software This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. H&r block 2010 tax software The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. H&r block 2010 tax software Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. H&r block 2010 tax software Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. H&r block 2010 tax software A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. H&r block 2010 tax software (But for exceptions, see Payment for services,later. H&r block 2010 tax software Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. H&r block 2010 tax software Candidate for a degree. H&r block 2010 tax software   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. H&r block 2010 tax software Eligible educational institution. H&r block 2010 tax software   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. H&r block 2010 tax software Qualified education expenses. H&r block 2010 tax software   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. H&r block 2010 tax software These items must be required of all students in your course of instruction. H&r block 2010 tax software Expenses that do not qualify. H&r block 2010 tax software   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. H&r block 2010 tax software Payment for services. H&r block 2010 tax software   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. H&r block 2010 tax software This applies even if all candidates for a degree must perform the services to receive the degree. H&r block 2010 tax software (See exceptions next. H&r block 2010 tax software ) Exceptions. H&r block 2010 tax software   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. H&r block 2010 tax software Example 1. H&r block 2010 tax software You received a scholarship of $2,500. H&r block 2010 tax software The scholarship was not received under either of the exceptions mentioned above. H&r block 2010 tax software As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. H&r block 2010 tax software Of the $2,500 scholarship, $1,000 represents payment for teaching. H&r block 2010 tax software The provider of your scholarship gives you a Form W-2 showing $1,000 as income. H&r block 2010 tax software Your qualified education expenses were at least $1,500. H&r block 2010 tax software Assuming that all other conditions are met, $1,500 of your scholarship is tax free. H&r block 2010 tax software The $1,000 you received for teaching is taxable. H&r block 2010 tax software Example 2. H&r block 2010 tax software You are a candidate for a degree at a medical school. H&r block 2010 tax software You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. H&r block 2010 tax software The terms of your scholarship require you to perform future services. H&r block 2010 tax software A substantial penalty applies if you do not comply. H&r block 2010 tax software The entire amount of your grant is taxable as payment for services in the year it is received. H&r block 2010 tax software Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. H&r block 2010 tax software Worksheet 1-1. H&r block 2010 tax software    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. H&r block 2010 tax software    Worksheet 1-1. H&r block 2010 tax software Taxable Scholarship and Fellowship Income 1. H&r block 2010 tax software Enter the total amount of any scholarship or fellowship for 2013. H&r block 2010 tax software See Amount of scholarship or fellowship, earlier. H&r block 2010 tax software 1. H&r block 2010 tax software       If you are a degree candidate at an eligible educational institution, go to line 2. H&r block 2010 tax software If you are not a degree candidate at an eligible educational institution, stop here. H&r block 2010 tax software The entire amount is taxable. H&r block 2010 tax software For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. H&r block 2010 tax software       2. H&r block 2010 tax software Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. H&r block 2010 tax software (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. H&r block 2010 tax software ) 2. H&r block 2010 tax software     3. H&r block 2010 tax software Subtract line 2 from line 1 3. H&r block 2010 tax software     4. H&r block 2010 tax software Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. H&r block 2010 tax software     5. H&r block 2010 tax software Subtract line 4 from line 3 5. H&r block 2010 tax software     6. H&r block 2010 tax software Enter the amount of your qualified education expenses 6. H&r block 2010 tax software     7. H&r block 2010 tax software Enter the smaller of line 5 or line 6. H&r block 2010 tax software This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. H&r block 2010 tax software     8. H&r block 2010 tax software Subtract line 7 from line 5 8. H&r block 2010 tax software     9. H&r block 2010 tax software Taxable part. H&r block 2010 tax software Add lines 2, 4, and 8. H&r block 2010 tax software See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. H&r block 2010 tax software     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. H&r block 2010 tax software You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. H&r block 2010 tax software Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. H&r block 2010 tax software If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. H&r block 2010 tax software If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. H&r block 2010 tax software You must report the taxable amount whether or not you received a Form W-2. H&r block 2010 tax software If you receive an incorrect Form W-2, ask the payer for a corrected one. H&r block 2010 tax software For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. H&r block 2010 tax software How To Report How you report any taxable scholarship or fellowship income depends on which return you file. H&r block 2010 tax software Form 1040EZ. H&r block 2010 tax software   If you file Form 1040EZ, include the taxable amount in the total on line 1. H&r block 2010 tax software If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. H&r block 2010 tax software Form 1040A. H&r block 2010 tax software   If you file Form 1040A, include the taxable amount in the total on line 7. H&r block 2010 tax software If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. H&r block 2010 tax software Form 1040. H&r block 2010 tax software   If you file Form 1040, include the taxable amount in the total on line 7. H&r block 2010 tax software If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. H&r block 2010 tax software Schedule SE (Form 1040). H&r block 2010 tax software   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. H&r block 2010 tax software If your net earnings are $400 or more, you must pay self-employment tax. H&r block 2010 tax software Use Schedule SE, Self-Employment Tax, to figure this tax. H&r block 2010 tax software Form 1040NR. H&r block 2010 tax software   If you file Form 1040NR, report the taxable amount on line 12. H&r block 2010 tax software Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. H&r block 2010 tax software S. H&r block 2010 tax software Source Income Subject to Withholding. H&r block 2010 tax software See the Instructions for Form 1040NR for more information. H&r block 2010 tax software Form 1040NR-EZ. H&r block 2010 tax software   If you file Form 1040NR-EZ, report the taxable amount on line 5. H&r block 2010 tax software Generally, you must report the amount shown in box 2 of Form(s) 1042-S. H&r block 2010 tax software See the Instructions for Form 1040NR-EZ for more information. H&r block 2010 tax software Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. H&r block 2010 tax software Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. H&r block 2010 tax software Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. H&r block 2010 tax software They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. H&r block 2010 tax software Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. H&r block 2010 tax software Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. H&r block 2010 tax software Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. H&r block 2010 tax software Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. H&r block 2010 tax software Do not include these payments as income on your federal tax return. H&r block 2010 tax software If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. H&r block 2010 tax software This applies only to the part of your VA payments that is required to be used for education expenses. H&r block 2010 tax software You may want to visit the Veteran's Administration website at www. H&r block 2010 tax software gibill. H&r block 2010 tax software va. H&r block 2010 tax software gov for specific information about the various VA benefits for education. H&r block 2010 tax software Example. H&r block 2010 tax software You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. H&r block 2010 tax software Neither of these benefits is taxable and you do not report them on your tax return. H&r block 2010 tax software You also want to claim an American opportunity credit on your return. H&r block 2010 tax software You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). H&r block 2010 tax software To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. H&r block 2010 tax software You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. H&r block 2010 tax software Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. H&r block 2010 tax software This is called a “tuition reduction. H&r block 2010 tax software ” You do not have to include a qualified tuition reduction in your income. H&r block 2010 tax software A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. H&r block 2010 tax software You do not have to use the tuition reduction at the eligible educational institution from which you received it. H&r block 2010 tax software In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. H&r block 2010 tax software The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. H&r block 2010 tax software You must include in your income any tuition reduction you receive that is payment for your services. H&r block 2010 tax software Eligible educational institution. H&r block 2010 tax software   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. H&r block 2010 tax software Officers, owners, and highly compensated employees. H&r block 2010 tax software   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. H&r block 2010 tax software This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. H&r block 2010 tax software The group must be defined under a reasonable classification set up by the employer. H&r block 2010 tax software The classification must not discriminate in favor of owners, officers, or highly compensated employees. H&r block 2010 tax software Payment for services. H&r block 2010 tax software   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. H&r block 2010 tax software This applies even if all candidates for a degree must perform the services to receive the degree. H&r block 2010 tax software (See below for exceptions. H&r block 2010 tax software ) Exceptions. H&r block 2010 tax software   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. H&r block 2010 tax software Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. H&r block 2010 tax software You are an employee of the eligible educational institution. H&r block 2010 tax software You were an employee of the eligible educational institution, but you retired or left on disability. H&r block 2010 tax software You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. H&r block 2010 tax software You are the dependent child or spouse of an individual described in (1) through (3), above. H&r block 2010 tax software Child of deceased parents. H&r block 2010 tax software   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. H&r block 2010 tax software Child of divorced parents. H&r block 2010 tax software   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. H&r block 2010 tax software Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. H&r block 2010 tax software It is provided by an eligible educational institution. H&r block 2010 tax software You are a graduate student who performs teaching or research activities for the educational institution. H&r block 2010 tax software You must include in income any other tuition reductions for graduate education that you receive. H&r block 2010 tax software How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. H&r block 2010 tax software Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). H&r block 2010 tax software Prev  Up  Next   Home   More Online Publications
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The H&r Block 2010 Tax Software

H&r block 2010 tax software 14. H&r block 2010 tax software   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Fuels Used in FarmingBuyer of fuel, including undyed diesel fuel or undyed kerosene. H&r block 2010 tax software Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). H&r block 2010 tax software Custom application of fertilizer and pesticide. H&r block 2010 tax software Fuel not used for farming. H&r block 2010 tax software Dyed Diesel Fuel and Dyed Kerosene Fuels Used in Off-Highway Business Use Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines How To Claim a Credit or RefundCredit only. H&r block 2010 tax software Claiming a Credit Claiming a Refund Including the Credit or Refund in Income Introduction You may be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. H&r block 2010 tax software You may also be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on your income tax return. H&r block 2010 tax software Whether you can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which you used the fuel. H&r block 2010 tax software The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following. H&r block 2010 tax software Use on a farm for farming purposes. H&r block 2010 tax software Off-highway business use. H&r block 2010 tax software Uses other than as a fuel in a propulsion engine, such as home use. H&r block 2010 tax software Table 14-1 presents an overview of credits and refunds that may be claimed for fuels used for the nontaxable uses listed above. H&r block 2010 tax software See Publication 510, Excise Taxes, for more information. H&r block 2010 tax software Topics - This chapter discusses: Fuels used in farming Dyed diesel fuel and dyed kerosene Fuels used in off-highway business use Fuels used for household purposes How to claim a credit or refund Including the credit or refund in income Useful Items - You may want to see: Publication 510 Excise Taxes Form (and Instructions) 720 Quarterly Federal Excise Tax Return 4136 Credit for Federal Tax Paid on Fuels 8849 Claim for Refund of Excise Taxes See chapter 16 for information about getting publications and forms. H&r block 2010 tax software Fuels Used in Farming Owners, operators, and tenants of farms and certain other persons may be eligible to claim a credit or refund of excise taxes on fuel used in the trade or business of farming, when used on a farm in the United States for farming purposes. H&r block 2010 tax software See Table 14-1 for a list of available fuel tax credits and refunds. H&r block 2010 tax software Fuel is used on a farm for farming purposes only if used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. H&r block 2010 tax software Farm. H&r block 2010 tax software   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms, orchards, plantations, ranches, nurseries, ranges, and feed yards for finishing cattle. H&r block 2010 tax software It also includes structures such as greenhouses used primarily for raising agricultural or horticultural commodities. H&r block 2010 tax software A fish farm is an area where fish are grown or raised and not merely caught or harvested. H&r block 2010 tax software Table 14-1. H&r block 2010 tax software Fuel Tax Credits and Refunds at a Glance Use this table to see if you can take a credit or refund for a nontaxable use of the fuel listed. H&r block 2010 tax software Fuel Used On a Farm for Farming Purposes Off-Highway Business Use Household Use or Use Other Than as a Fuel1 Gasoline Credit only Credit or refund None Aviation gasoline Credit only None None Undyed diesel fuel and undyed kerosene Credit or refund Credit or refund2 Credit or refund2 Kerosene for use in aviation Credit or refund None None Dyed diesel fuel and dyed kerosene None None None Other Fuels (including alternative fuels)3 Credit or refund Credit or refund None 1For a use other than as fuel in a propulsion engine. H&r block 2010 tax software 2Applies to undyed kerosene not sold from a blocked pump or, under certain circumstances, for blending with undyed diesel fuel to be used for heating purposes. H&r block 2010 tax software See Reg. H&r block 2010 tax software 48. H&r block 2010 tax software 6427-10 (b)(1) for the definition of a blocked pump. H&r block 2010 tax software 3Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. H&r block 2010 tax software It includes the alternative fuels: liquefied petroleum gas (LPG),“P” Series fuels, compressed natural gas (CNG), liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid fuel derived from biomass, liquid natural gas (LNG), liquefied gas derived from biomass, and compressed gas derived from biomass. H&r block 2010 tax software Farming purposes. H&r block 2010 tax software   As the owner, tenant, or operator and the ultimate purchaser of fuel that you purchased, you use the fuel on a farm for farming purposes if you use it in any of the following ways. H&r block 2010 tax software To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. H&r block 2010 tax software To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. H&r block 2010 tax software To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. H&r block 2010 tax software To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. H&r block 2010 tax software For this use to qualify, you must have produced more than half the commodity so treated during the tax year. H&r block 2010 tax software The more-than-one-half test applies separately to each commodity. H&r block 2010 tax software Commodity means a single raw product. H&r block 2010 tax software For example, apples and peaches are two separate commodities. H&r block 2010 tax software To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if these activities are incidental to your farming operations. H&r block 2010 tax software Your tree operations are incidental only if they are minor in nature when compared to the total farming operations. H&r block 2010 tax software   If any other person, such as a neighbor or custom operator (independent contractor), performs a service for you on your farm for any of the purposes included in list items (1) or (2), above, you are considered to be the ultimate purchaser who used the fuel on a farm for farming purposes. H&r block 2010 tax software Therefore, you can still claim the credit or refund for the fuel so used. H&r block 2010 tax software However, see Custom application of fertilizer and pesticide, later. H&r block 2010 tax software If the other person performs any other services for you on your farm for purposes not included in list items (1) or (2) above, no one can claim the credit or refund for fuel used on your farm for those other services. H&r block 2010 tax software Buyer of fuel, including undyed diesel fuel or undyed kerosene. H&r block 2010 tax software   If doubt exists whether the owner, tenant, or operator of the farm bought the fuel, determine who actually bore the cost of the fuel. H&r block 2010 tax software For example, if the owner of a farm and his or her tenant equally share the cost of gasoline used on the farm, each can claim a credit for the tax on half the fuel used. H&r block 2010 tax software Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). H&r block 2010 tax software   Usually, the farmer is the only person who can make a claim for credit or refund for the tax on undyed diesel fuel, undyed kerosene, or other fuels (including alternative fuel) used for farming purposes. H&r block 2010 tax software However, see Custom application of fertilizer and pesticide, next. H&r block 2010 tax software Also see Dyed Diesel Fuel and Dyed Kerosene, later. H&r block 2010 tax software Example. H&r block 2010 tax software Farm owner Haleigh Blue hired custom operator Tyler Steele to cultivate the soil on her farm. H&r block 2010 tax software Tyler used 200 gallons of undyed diesel fuel that he purchased to perform the work on Haleigh's farm. H&r block 2010 tax software In addition, Haleigh hired contractor Lee Brown to pack and store her apple crop. H&r block 2010 tax software Lee bought 25 gallons of undyed diesel fuel to use in packing the apples. H&r block 2010 tax software Haleigh can claim the credit for the 200 gallons of undyed diesel fuel used by Tyler on her farm because it qualifies as fuel used on the farm for farming purposes. H&r block 2010 tax software No one can claim a credit for the 25 gallons used by Lee because that fuel was not used for a farming purpose included in list items (1) or (2), above. H&r block 2010 tax software In the above example, both Tyler Steele and Lee Brown could have purchased dyed (untaxed) diesel fuel for their tasks. H&r block 2010 tax software Custom application of fertilizer and pesticide. H&r block 2010 tax software   Fuel used on a farm for farming purposes includes fuel used in the application (including aerial application) of fertilizer, pesticides, or other substances. H&r block 2010 tax software Generally, the applicator is treated as having used the fuel on a farm for farming purposes. H&r block 2010 tax software For applicators using highway vehicles, only the fuel used on the farm is exempt. H&r block 2010 tax software Fuel used traveling on the highway to and from the farm is taxable. H&r block 2010 tax software Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as used for a farming purpose. H&r block 2010 tax software For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. H&r block 2010 tax software For kerosene used in aviation, the ultimate purchaser may make the claim or waive the right to make the claim to the registered ultimate vendor. H&r block 2010 tax software A sample waiver is included as Model Waiver L in the appendix of Publication 510. H&r block 2010 tax software A registered ultimate vendor is the person who sells undyed diesel fuel, undyed kerosene, or kerosene for use in aviation to the user (ultimate purchaser) of the fuel for use on a farm for farming purposes. H&r block 2010 tax software To claim a credit or refund of tax, the ultimate vendor must be registered with the Internal Revenue Service at the time the claim is made. H&r block 2010 tax software However, registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene sold for use on a farm for farming purposes. H&r block 2010 tax software Fuel not used for farming. H&r block 2010 tax software   You do not use fuel on a farm for farming purposes when you use it in any of the following ways. H&r block 2010 tax software Off the farm, such as on the highway or in noncommercial aviation, even if the fuel is used in transporting livestock, feed, crops, or equipment. H&r block 2010 tax software For personal use, such as lawn mowing. H&r block 2010 tax software In processing, packaging, freezing, or canning operations. H&r block 2010 tax software In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. H&r block 2010 tax software All-terrain vehicles (ATVs). H&r block 2010 tax software   Fuel used in ATVs on a farm for farming purposes, discussed earlier, is eligible for a credit or refund of excise taxes on the fuel. H&r block 2010 tax software Fuel used in ATVs for nonfarming purposes is not eligible for a credit or refund of the taxes. H&r block 2010 tax software If ATVs are used both for farming and nonfarming purposes, only that portion of the fuel used for farming purposes is eligible for the credit or refund. H&r block 2010 tax software Dyed Diesel Fuel and Dyed Kerosene If you purchase dyed diesel fuel or dyed kerosene for a nontaxable use, you must use it only on a farm for farming purposes or for other nontaxable purposes. H&r block 2010 tax software For example, you should not use dyed diesel fuel in a truck that is used both on the farm for farming purposes and on the highway, even though the highway use is in connection with farm business. H&r block 2010 tax software Excise tax applies to the fuel used by the truck on the highways. H&r block 2010 tax software In this situation, undyed (taxed) fuel should be purchased for the truck. H&r block 2010 tax software You should keep fuel records of the use of the truck on the farm for farming purposes, and for other uses. H&r block 2010 tax software You may be eligible for a credit or refund for the excise tax on fuel used on the farm for farming purposes. H&r block 2010 tax software Penalty. H&r block 2010 tax software   A penalty is imposed on any person who knowingly uses, sells, or alters dyed diesel fuel or dyed kerosene for any purpose other than a nontaxable use. H&r block 2010 tax software The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. H&r block 2010 tax software After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. H&r block 2010 tax software For more information on this penalty, see Publication 510. H&r block 2010 tax software Fuels Used in Off-Highway Business Use You may be eligible to claim a credit or refund for the excise tax on fuel used in an off-highway business use. H&r block 2010 tax software Off-highway business use. H&r block 2010 tax software   This is any use of fuel in a trade or business or in an income-producing activity. H&r block 2010 tax software The use must not be in a highway vehicle registered or required to be registered for use on public highways. H&r block 2010 tax software Off-highway business use generally does not include any use in a recreational motorboat. H&r block 2010 tax software Examples. H&r block 2010 tax software   Off-highway business use includes the use of fuels in a trade or business in any of the following ways. H&r block 2010 tax software In stationary machines such as generators, compressors, power saws, and similar equipment; For cleaning ; and In forklift trucks, bulldozers, and earthmovers. H&r block 2010 tax software   Off-highway nonbusiness (taxable) use of fuel includes: use in minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. H&r block 2010 tax software For more information, see Publication 510. H&r block 2010 tax software Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines You may be eligible to claim a credit or refund for the excise tax on undyed diesel fuel or kerosene used for home heating, lighting, and cooking. H&r block 2010 tax software This also applies to diesel fuel and kerosene used in a home generator to produce electricity for home use. H&r block 2010 tax software Home use of a fuel does not include use in a propulsion engine and it is not considered an off-highway business use. H&r block 2010 tax software How To Claim a Credit or Refund You may be able to claim a credit or refund of the excise tax on fuels you use for nontaxable uses. H&r block 2010 tax software The basic rules for claiming credits and refunds are listed in Table 14-2 . H&r block 2010 tax software Table 14-2. H&r block 2010 tax software Claiming a Credit or Refund of Excise Taxes This table gives the basic rules for claiming a credit or refund of excise taxes on fuels used for a nontaxable use. H&r block 2010 tax software   Credit Refund Which form to use Form 4136, Credit for Federal Tax Paid on Fuels Form 8849, Claim for Refund of Excise Taxes, and Schedule 1 (Form 8849), Nontaxable Use of Fuels Type of form Annual Quarterly When to file With your income tax return By the last day of the quarter following the last quarter included in the claim Amount of tax Any amount $750 or more1 1You may carry over an amount less than $750 to the next quarter. H&r block 2010 tax software Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. H&r block 2010 tax software You do not have to use any special form, but the records should establish the following information. H&r block 2010 tax software The total number of gallons bought and used during the period covered by your claim. H&r block 2010 tax software The dates of the purchases. H&r block 2010 tax software The names and addresses of suppliers and amounts bought from each during the period covered by your claim. H&r block 2010 tax software The nontaxable use for which you used the fuel. H&r block 2010 tax software The number of gallons used for each nontaxable use. H&r block 2010 tax software It is important that your records separately show the number of gallons used for each nontaxable use that qualifies as a claim. H&r block 2010 tax software For more information about recordkeeping, see Publication 583, Starting a Business and Keeping Records. H&r block 2010 tax software Credit or refund. H&r block 2010 tax software   A credit is an amount that reduces the tax on your income tax return when you file it at the end of the year. H&r block 2010 tax software If you meet certain requirements, you may claim a refund during the year instead of waiting until you file your income tax return. H&r block 2010 tax software Credit only. H&r block 2010 tax software   You can claim the following taxes only as a credit on your income tax return. H&r block 2010 tax software Tax on gasoline and aviation gasoline you used on a farm for farming purposes. H&r block 2010 tax software Tax on fuels (including undyed diesel fuel or undyed kerosene) you used for nontaxable uses if the total for the tax year is less than $750. H&r block 2010 tax software Tax on fuel you did not include in any claim for refund previously filed for any quarter of the tax year. H&r block 2010 tax software Claiming a Credit You make a claim for a fuel tax credit on Form 4136 and attach it to your income tax return. H&r block 2010 tax software Do not claim a credit for any excise tax for which you have filed a refund claim. H&r block 2010 tax software How to claim a credit. H&r block 2010 tax software   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, trust, or farmers' cooperative association. H&r block 2010 tax software Individuals. H&r block 2010 tax software   You claim the credit on the “Credit for federal tax on fuels” line of your Form 1040. H&r block 2010 tax software If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. H&r block 2010 tax software Partnership. H&r block 2010 tax software   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. H&r block 2010 tax software , showing each partner's share of the number of gallons of each fuel sold or used for a nontaxable use, the type of use, and the applicable credit per gallon. H&r block 2010 tax software Each partner claims the credit on his or her income tax return for the partner's share of the fuel used by the partnership. H&r block 2010 tax software An electing large partnership can claim the credit on the “Other payments” line of Form 1065-B, U. H&r block 2010 tax software S. H&r block 2010 tax software Return of Income for Electing Large Partnerships. H&r block 2010 tax software Other entities. H&r block 2010 tax software   Corporations, S corporations, farmers' cooperative associations, and trusts make the claim on the appropriate line of their income tax return. H&r block 2010 tax software When to claim a credit. H&r block 2010 tax software   You can claim a fuel tax credit on your income tax return for the year you used the fuel. H&r block 2010 tax software You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. H&r block 2010 tax software A claim for credit or refund of an overpayment must generally be filed within the later of: Three years from the date the original return was filed, or Two years from the date the tax was paid. H&r block 2010 tax software Claiming a Refund Generally, you may claim a refund of excise taxes on Form 8849. H&r block 2010 tax software Complete and attach to Form 8849 the appropriate Form 8849 schedule(s). H&r block 2010 tax software The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. H&r block 2010 tax software If you file Form 720, you can use its Schedule C for your refund claims for the quarter. H&r block 2010 tax software See the Instructions for Form 720. H&r block 2010 tax software Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Form 720 or Form 4136. H&r block 2010 tax software You may file a claim for refund for any quarter of your tax year for which you can claim $750 or more. H&r block 2010 tax software This amount is the excise tax on all fuels used for a nontaxable use during that quarter or any prior quarter (for which no other claim has been filed) during the tax year. H&r block 2010 tax software If you cannot claim at least $750 at the end of a quarter, you carry the amount over to the next quarter of your tax year to determine if you can claim at least $750 for that quarter. H&r block 2010 tax software If you cannot claim at least $750 at the end of the fourth quarter of your tax year, you must claim a credit on your income tax return using Form 4136. H&r block 2010 tax software Only one claim can be filed for a quarter. H&r block 2010 tax software You cannot claim a refund for excise tax on gasoline and aviation gasoline used on a farm for farming purposes. H&r block 2010 tax software You must claim a credit on your income tax return for the tax. H&r block 2010 tax software How to file a quarterly claim. H&r block 2010 tax software   File the claim for refund by filling out Schedule 1 (Form 8849) and attaching it to Form 8849. H&r block 2010 tax software Send it to the address shown in the instructions. H&r block 2010 tax software If you file Form 720, you can use its Schedule C for your refund claims. H&r block 2010 tax software See the Instructions for Form 720. H&r block 2010 tax software When to file a quarterly claim. H&r block 2010 tax software   You must file a quarterly claim by the last day of the first quarter following the last quarter included in the claim. H&r block 2010 tax software If you do not file a timely refund claim for the fourth quarter of your tax year, you will have to claim a credit for that amount on your income tax return, as discussed earlier. H&r block 2010 tax software    In most situations, the amount claimed as a credit or refund will be less than the amount deducted as fuel tax expense because the Leaking Underground Storage Tank (LUST) tax of $0. H&r block 2010 tax software 001 per gallon is generally not subject to credit or refund. H&r block 2010 tax software Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your gross income if you claimed the total cost of the fuel (including the excise taxes) as an expense deduction that reduced your income tax liability. H&r block 2010 tax software Which year you include a credit or refund in gross income depends on whether you use the cash or an accrual method of accounting. H&r block 2010 tax software Cash method. H&r block 2010 tax software   If you use the cash method and file a claim for refund, include the refund amount in gross income for the tax year in which you receive the refund. H&r block 2010 tax software If you claim a credit on your income tax return, include the credit amount in gross income for the tax year in which you file Form 4136. H&r block 2010 tax software If you file an amended return and claim a credit, include the credit amount in gross income for the tax year in which you receive the credit. H&r block 2010 tax software Example. H&r block 2010 tax software Sharon Brown, a farmer who uses the cash method, filed her 2012 Form 1040 on March 3, 2013. H&r block 2010 tax software On her Schedule F, she deducted the total cost of gasoline (including $110 of excise taxes) used on the farm for farming purposes. H&r block 2010 tax software Then, on Form 4136, she claimed the $110 as a credit. H&r block 2010 tax software Sharon reports the $110 as other income on line 8b of her 2013 Schedule F. H&r block 2010 tax software Accrual method. H&r block 2010 tax software   If you use an accrual method, include the amount of credit or refund in gross income for the tax year in which you used the fuels. H&r block 2010 tax software It does not matter whether you filed for a quarterly refund or claimed the entire amount as a credit. H&r block 2010 tax software Example. H&r block 2010 tax software Patty Green, a farmer who uses the accrual method, files her 2012 Form 1040 on April 15, 2013. H&r block 2010 tax software On Schedule F, she deducts the total cost of gasoline (including $155 of excise taxes) she used on the farm for farming purposes during 2012. H&r block 2010 tax software On Form 4136, Patty claims the $155 as a credit. H&r block 2010 tax software She reports the $155 as other income on line 8b of her 2012 Schedule F. H&r block 2010 tax software Prev  Up  Next   Home   More Online Publications