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H&r Block Free Tax File 2012

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H&r Block Free Tax File 2012

H&r block free tax file 2012 5. H&r block free tax file 2012   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. H&r block free tax file 2012 Free help with your tax return. H&r block free tax file 2012   You can get free help preparing your return nationwide from IRS-certified volunteers. H&r block free tax file 2012 The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. H&r block free tax file 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. H&r block free tax file 2012 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. H&r block free tax file 2012 In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. H&r block free tax file 2012 To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. H&r block free tax file 2012 gov, download the IRS2Go app, or call 1-800-906-9887. H&r block free tax file 2012   As part of the TCE program, AARP offers the Tax-Aide counseling program. H&r block free tax file 2012 To find the nearest AARP Tax-Aide site, visit AARP's website at www. H&r block free tax file 2012 aarp. H&r block free tax file 2012 org/money/taxaide or call 1-888-227-7669. H&r block free tax file 2012 For more information on these programs, go to IRS. H&r block free tax file 2012 gov and enter “VITA” in the search box. H&r block free tax file 2012 Internet. H&r block free tax file 2012    IRS. H&r block free tax file 2012 gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. H&r block free tax file 2012 Download the free IRS2Go app from the iTunes app store or from Google Play. H&r block free tax file 2012 Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. H&r block free tax file 2012 Check the status of your 2013 refund with the Where's My Refund? application on IRS. H&r block free tax file 2012 gov or download the IRS2Go app and select the Refund Status option. H&r block free tax file 2012 The IRS issues more than 9 out of 10 refunds in less than 21 days. H&r block free tax file 2012 Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. H&r block free tax file 2012 You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block free tax file 2012 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. H&r block free tax file 2012 Use the Interactive Tax Assistant (ITA) to research your tax questions. H&r block free tax file 2012 No need to wait on the phone or stand in line. H&r block free tax file 2012 The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. H&r block free tax file 2012 When you reach the response screen, you can print the entire interview and the final response for your records. H&r block free tax file 2012 New subject areas are added on a regular basis. H&r block free tax file 2012  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. H&r block free tax file 2012 gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. H&r block free tax file 2012 You can use the IRS Tax Map, to search publications and instructions by topic or keyword. H&r block free tax file 2012 The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. H&r block free tax file 2012 When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. H&r block free tax file 2012 Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. H&r block free tax file 2012 You can also ask the IRS to mail a return or an account transcript to you. H&r block free tax file 2012 Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. H&r block free tax file 2012 gov or by calling 1-800-908-9946. H&r block free tax file 2012 Tax return and tax account transcripts are generally available for the current year and the past three years. H&r block free tax file 2012 Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. H&r block free tax file 2012 Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. H&r block free tax file 2012 If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. H&r block free tax file 2012 Check the status of your amended return using Where's My Amended Return? Go to IRS. H&r block free tax file 2012 gov and enter Where's My Amended Return? in the search box. H&r block free tax file 2012 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. H&r block free tax file 2012 It can take up to 3 weeks from the date you mailed it to show up in our system. H&r block free tax file 2012 Make a payment using one of several safe and convenient electronic payment options available on IRS. H&r block free tax file 2012 gov. H&r block free tax file 2012 Select the Payment tab on the front page of IRS. H&r block free tax file 2012 gov for more information. H&r block free tax file 2012 Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. H&r block free tax file 2012 Figure your income tax withholding with the IRS Withholding Calculator on IRS. H&r block free tax file 2012 gov. H&r block free tax file 2012 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. H&r block free tax file 2012 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. H&r block free tax file 2012 gov. H&r block free tax file 2012 Request an Electronic Filing PIN by going to IRS. H&r block free tax file 2012 gov and entering Electronic Filing PIN in the search box. H&r block free tax file 2012 Download forms, instructions and publications, including accessible versions for people with disabilities. H&r block free tax file 2012 Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. H&r block free tax file 2012 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. H&r block free tax file 2012 An employee can answer questions about your tax account or help you set up a payment plan. H&r block free tax file 2012 Before you visit, check the Office Locator on IRS. H&r block free tax file 2012 gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. H&r block free tax file 2012 If you have a special need, such as a disability, you can request an appointment. H&r block free tax file 2012 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. H&r block free tax file 2012 Apply for an Employer Identification Number (EIN). H&r block free tax file 2012 Go to IRS. H&r block free tax file 2012 gov and enter Apply for an EIN in the search box. H&r block free tax file 2012 Read the Internal Revenue Code, regulations, or other official guidance. H&r block free tax file 2012 Read Internal Revenue Bulletins. H&r block free tax file 2012 Sign up to receive local and national tax news and more by email. H&r block free tax file 2012 Just click on “subscriptions” above the search box on IRS. H&r block free tax file 2012 gov and choose from a variety of options. H&r block free tax file 2012 Phone. H&r block free tax file 2012   You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. H&r block free tax file 2012 Download the free IRS2Go app from the iTunes app store or from Google Play. H&r block free tax file 2012 Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. H&r block free tax file 2012 gov, or download the IRS2Go app. H&r block free tax file 2012 Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H&r block free tax file 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. H&r block free tax file 2012 Most VITA and TCE sites offer free electronic filing. H&r block free tax file 2012 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. H&r block free tax file 2012 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. H&r block free tax file 2012 Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. H&r block free tax file 2012 If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H&r block free tax file 2012 The IRS issues more than 9 out of 10 refunds in less than 21 days. H&r block free tax file 2012 Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r block free tax file 2012 Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. H&r block free tax file 2012 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. H&r block free tax file 2012 Note, the above information is for our automated hotline. H&r block free tax file 2012 Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. H&r block free tax file 2012 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. H&r block free tax file 2012 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. H&r block free tax file 2012 It can take up to 3 weeks from the date you mailed it to show up in our system. H&r block free tax file 2012 Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). H&r block free tax file 2012 You should receive your order within 10 business days. H&r block free tax file 2012 Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. H&r block free tax file 2012 If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. H&r block free tax file 2012 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. H&r block free tax file 2012 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. H&r block free tax file 2012 These individuals can also contact the IRS through relay services such as the Federal Relay Service. H&r block free tax file 2012 Walk-in. H&r block free tax file 2012   You can find a selection of forms, publications and services — in-person. H&r block free tax file 2012 Products. H&r block free tax file 2012 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. H&r block free tax file 2012 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. H&r block free tax file 2012 Services. H&r block free tax file 2012 You can walk in to your local TAC for face-to-face tax help. H&r block free tax file 2012 An employee can answer questions about your tax account or help you set up a payment plan. H&r block free tax file 2012 Before visiting, use the Office Locator tool on IRS. H&r block free tax file 2012 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. H&r block free tax file 2012 Mail. H&r block free tax file 2012   You can send your order for forms, instructions, and publications to the address below. H&r block free tax file 2012 You should receive a response within 10 business days after your request is received. H&r block free tax file 2012 Internal Revenue Service 1201 N. H&r block free tax file 2012 Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. H&r block free tax file 2012 The Taxpayer Advocate Service (TAS) is your voice at the IRS. H&r block free tax file 2012 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. H&r block free tax file 2012   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. H&r block free tax file 2012 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. H&r block free tax file 2012 You face (or your business is facing) an immediate threat of adverse action. H&r block free tax file 2012 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. H&r block free tax file 2012   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. H&r block free tax file 2012 Here's why we can help: TAS is an independent organization within the IRS. H&r block free tax file 2012 Our advocates know how to work with the IRS. H&r block free tax file 2012 Our services are free and tailored to meet your needs. H&r block free tax file 2012 We have offices in every state, the District of Columbia, and Puerto Rico. H&r block free tax file 2012   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. H&r block free tax file 2012   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. H&r block free tax file 2012 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. H&r block free tax file 2012 Prev  Up  Next   Home   More Online Publications
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Why is CI Involved in Identity Theft?

IRS Criminal Investigation (CI) detects and investigates tax fraud and other financial fraud, including fraud related to identity theft. Identity theft is most likely to occur in our Questionable Refund Program (QRP) area where individual identities are stolen with the intent to file false returns claiming tax refunds. Additional areas involving identity theft include employment tax cases, abusive return preparer schemes, and narcotics and money laundering investigations.

CI has four Scheme Development Centers (SDCs) across the country whose primary mission is detecting refund fraud. These SDCs have uncovered numerous identity theft related schemes. These schemes are forwarded to one of CI’s 26 field offices for criminal investigation and/or to our civil counterparts to resolve victim accounts. After CI completes the initial evidence gathering of our investigations, we recommend prosecution of refund fraud, to include identity theft, when appropriate, to United States Attorney’s Offices nationwide.  Specifically, we recommend Title 18 U.S.C. §1028, which is commonly referred to as the Identity Fraud Statute, when the evidence supports it.  Per IRS policy (Internal Revenue Manual section 9.5.3.3.11.1), the identity fraud statute is not intended to be a stand-alone violation, but rather used as a companion charge when it enhances the overall substantive tax, money laundering, and/or conspiracy charges.  As a result, CI generally pairs Title 18 U.S.C. §1028 with other substantive tax or tax-related charges.

In addition to detecting and investigating identity theft-related refund fraud, Criminal Investigation participates in the Department of Justice’s Identity Theft Interagency Working Group. Our field offices also participate with other federal, state and local law enforcement agencies on joint investigative efforts involving identity theft.

Statistical Data - Identity Theft Schemes
Enforcement statistics on investigations initiated, prosecutions recommended, indictments, sentenced investigations, and months to serve in prison.

Examples of Identity Theft Schemes
Examples have been written from public record documents filed in the district courts where the case was prosecuted.

Enforcement Actions Taken on Identity Theft Investigations - During the month of January 2013, Criminal Investigation took a number of enforcement actions against individuals involved in Identity Theft crimes

Identity Theft - Be alert to possible identity theft issues.

 


Criminal Enforcement Home Page

 

Page Last Reviewed or Updated: 30-Oct-2013

The H&r Block Free Tax File 2012

H&r block free tax file 2012 2. H&r block free tax file 2012   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. H&r block free tax file 2012 Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. H&r block free tax file 2012 Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. H&r block free tax file 2012 Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. H&r block free tax file 2012 The annual accounting period for your income tax return is called a tax year. H&r block free tax file 2012 You can use one of the following tax years. H&r block free tax file 2012 A calendar tax year. H&r block free tax file 2012 A fiscal tax year. H&r block free tax file 2012 Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. H&r block free tax file 2012 A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. H&r block free tax file 2012 Calendar tax year. H&r block free tax file 2012   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. H&r block free tax file 2012   You must adopt the calendar tax year if any of the following apply. H&r block free tax file 2012 You do not keep books. H&r block free tax file 2012 You have no annual accounting period. H&r block free tax file 2012 Your present tax year does not qualify as a fiscal year. H&r block free tax file 2012 Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. H&r block free tax file 2012   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. H&r block free tax file 2012 For more information, see Change in tax year, later. H&r block free tax file 2012   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. H&r block free tax file 2012 Fiscal tax year. H&r block free tax file 2012   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. H&r block free tax file 2012 A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. H&r block free tax file 2012   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. H&r block free tax file 2012   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. H&r block free tax file 2012 Change in tax year. H&r block free tax file 2012   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. H&r block free tax file 2012 See the Instructions for Form 1128 for exceptions. H&r block free tax file 2012 If you qualify for an automatic approval request, a user fee is not required. H&r block free tax file 2012 If you do not qualify for automatic approval, a ruling must be requested. H&r block free tax file 2012 See the instructions for Form 1128 for information about user fees if you are requesting a ruling. H&r block free tax file 2012 Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. H&r block free tax file 2012 Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. H&r block free tax file 2012 You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. H&r block free tax file 2012 After that, if you want to change your accounting method, you must generally get IRS approval. H&r block free tax file 2012 See Change in Accounting Method, later. H&r block free tax file 2012 Kinds of methods. H&r block free tax file 2012   Generally, you can use any of the following accounting methods. H&r block free tax file 2012 Cash method. H&r block free tax file 2012 An accrual method. H&r block free tax file 2012 Special methods of accounting for certain items of income and expenses. H&r block free tax file 2012 Combination method using elements of two or more of the above. H&r block free tax file 2012 You must use the same accounting method to figure your taxable income and to keep your books. H&r block free tax file 2012 Also, you must use an accounting method that clearly shows your income. H&r block free tax file 2012 Business and personal items. H&r block free tax file 2012   You can account for business and personal items under different accounting methods. H&r block free tax file 2012 For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. H&r block free tax file 2012 Two or more businesses. H&r block free tax file 2012   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. H&r block free tax file 2012 They are separate and distinct only if you maintain complete and separate books and records for each business. H&r block free tax file 2012 Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. H&r block free tax file 2012 However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. H&r block free tax file 2012 For more information, see Inventories, later. H&r block free tax file 2012 Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. H&r block free tax file 2012 If you receive property or services, you must include their fair market value in income. H&r block free tax file 2012 Example. H&r block free tax file 2012 On December 30, 2012, Mrs. H&r block free tax file 2012 Sycamore sent you a check for interior decorating services you provided to her. H&r block free tax file 2012 You received the check on January 2, 2013. H&r block free tax file 2012 You must include the amount of the check in income for 2013. H&r block free tax file 2012 Constructive receipt. H&r block free tax file 2012   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. H&r block free tax file 2012 You do not need to have possession of it. H&r block free tax file 2012 If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. H&r block free tax file 2012 Example. H&r block free tax file 2012 Interest is credited to your bank account in December 2013. H&r block free tax file 2012 You do not withdraw it or enter it into your passbook until 2014. H&r block free tax file 2012 You must include it in your gross income for 2013. H&r block free tax file 2012 Delaying receipt of income. H&r block free tax file 2012   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. H&r block free tax file 2012 You must report the income in the year the property is received or made available to you without restriction. H&r block free tax file 2012 Example. H&r block free tax file 2012 Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. H&r block free tax file 2012 She was told in December that her payment was available. H&r block free tax file 2012 At her request, she was not paid until January 2014. H&r block free tax file 2012 She must include this payment in her 2013 income because it was constructively received in 2013. H&r block free tax file 2012 Checks. H&r block free tax file 2012   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. H&r block free tax file 2012 Example. H&r block free tax file 2012 Dr. H&r block free tax file 2012 Redd received a check for $500 on December 31, 2013, from a patient. H&r block free tax file 2012 She could not deposit the check in her business account until January 2, 2014. H&r block free tax file 2012 She must include this fee in her income for 2013. H&r block free tax file 2012 Debts paid by another person or canceled. H&r block free tax file 2012   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. H&r block free tax file 2012 If you receive income in this way, you constructively receive the income when the debt is canceled or paid. H&r block free tax file 2012 For more information, see Canceled Debt under Kinds of Income in chapter 5. H&r block free tax file 2012 Repayment of income. H&r block free tax file 2012   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. H&r block free tax file 2012 If the amount you repay is over $3,000, a special rule applies. H&r block free tax file 2012 For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. H&r block free tax file 2012 Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. H&r block free tax file 2012 This includes business expenses for which you contest liability. H&r block free tax file 2012 However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. H&r block free tax file 2012 Expenses paid in advance. H&r block free tax file 2012   You can deduct an expense you pay in advance only in the year to which it applies. H&r block free tax file 2012 Example. H&r block free tax file 2012 You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. H&r block free tax file 2012 You can deduct $500 in 2013 and $500 in 2014. H&r block free tax file 2012 Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. H&r block free tax file 2012 The purpose of an accrual method of accounting is to match income and expenses in the correct year. H&r block free tax file 2012 Income—General Rule Under an accrual method, you generally include an amount in your gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. H&r block free tax file 2012 Example. H&r block free tax file 2012 You are a calendar year accrual method taxpayer. H&r block free tax file 2012 You sold a computer on December 28, 2013. H&r block free tax file 2012 You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. H&r block free tax file 2012 You must include the amount received for the computer in your 2013 income. H&r block free tax file 2012 Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. H&r block free tax file 2012 Estimated income. H&r block free tax file 2012   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. H&r block free tax file 2012 Change in payment schedule for services. H&r block free tax file 2012   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. H&r block free tax file 2012 Advance payments for services. H&r block free tax file 2012   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. H&r block free tax file 2012 However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. H&r block free tax file 2012 However, you cannot postpone including any payment beyond that tax year. H&r block free tax file 2012   For more information, see Advance Payment for Services under Accrual Method in Publication 538. H&r block free tax file 2012 That publication also explains special rules for reporting the following types of income. H&r block free tax file 2012 Advance payments for service agreements. H&r block free tax file 2012 Prepaid rent. H&r block free tax file 2012 Advance payments for sales. H&r block free tax file 2012   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. H&r block free tax file 2012 If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. H&r block free tax file 2012 An agreement includes a gift certificate that can be redeemed for goods. H&r block free tax file 2012 Treat amounts that are due and payable as amounts you received. H&r block free tax file 2012   You generally include an advance payment in income for the tax year in which you receive it. H&r block free tax file 2012 However, you can use an alternative method. H&r block free tax file 2012 For information about the alternative method, see Publication 538. H&r block free tax file 2012 Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. H&r block free tax file 2012 The all-events test has been met. H&r block free tax file 2012 The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. H&r block free tax file 2012 Economic performance has occurred. H&r block free tax file 2012 Economic performance. H&r block free tax file 2012   You generally cannot deduct or capitalize a business expense until economic performance occurs. H&r block free tax file 2012 If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. H&r block free tax file 2012 If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. H&r block free tax file 2012 An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. H&r block free tax file 2012 For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. H&r block free tax file 2012 Example. H&r block free tax file 2012 You are a calendar year taxpayer and use an accrual method of accounting. H&r block free tax file 2012 You buy office supplies in December 2013. H&r block free tax file 2012 You receive the supplies and the bill in December, but you pay the bill in January 2014. H&r block free tax file 2012 You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. H&r block free tax file 2012 Your office supplies may qualify as a recurring expense. H&r block free tax file 2012 In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). H&r block free tax file 2012 Keeping inventories. H&r block free tax file 2012   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. H&r block free tax file 2012 If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. H&r block free tax file 2012 For more information, see Inventories , later. H&r block free tax file 2012 Special rule for related persons. H&r block free tax file 2012   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. H&r block free tax file 2012 Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. H&r block free tax file 2012 If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. H&r block free tax file 2012   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. H&r block free tax file 2012 For a list of other related persons, see section 267 of the Internal Revenue Code. H&r block free tax file 2012 Combination Method You can generally use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. H&r block free tax file 2012 However, the following restrictions apply. H&r block free tax file 2012 If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. H&r block free tax file 2012 (See, however, Inventories, later. H&r block free tax file 2012 ) You can use the cash method for all other items of income and expenses. H&r block free tax file 2012 If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. H&r block free tax file 2012 If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. H&r block free tax file 2012 If you use a combination method that includes the cash method, treat that combination method as the cash method. H&r block free tax file 2012 Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. H&r block free tax file 2012 However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. H&r block free tax file 2012 These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). H&r block free tax file 2012 A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. H&r block free tax file 2012 A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. H&r block free tax file 2012 Qualifying taxpayer. H&r block free tax file 2012   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. H&r block free tax file 2012 (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. H&r block free tax file 2012 ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. H&r block free tax file 2012 Qualifying small business taxpayer. H&r block free tax file 2012   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. H&r block free tax file 2012 (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. H&r block free tax file 2012 ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. H&r block free tax file 2012 Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). H&r block free tax file 2012 Business not owned or not in existence for 3 years. H&r block free tax file 2012   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. H&r block free tax file 2012 If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. H&r block free tax file 2012 Materials and supplies that are not incidental. H&r block free tax file 2012   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. H&r block free tax file 2012 If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. H&r block free tax file 2012 Changing accounting method. H&r block free tax file 2012   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. H&r block free tax file 2012 See Change in Accounting Method, later. H&r block free tax file 2012 More information. H&r block free tax file 2012    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. H&r block free tax file 2012 For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. H&r block free tax file 2012 Items included in inventory. H&r block free tax file 2012   If you are required to account for inventories, include the following items when accounting for your inventory. H&r block free tax file 2012 Merchandise or stock in trade. H&r block free tax file 2012 Raw materials. H&r block free tax file 2012 Work in process. H&r block free tax file 2012 Finished products. H&r block free tax file 2012 Supplies that physically become a part of the item intended for sale. H&r block free tax file 2012 Valuing inventory. H&r block free tax file 2012   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). H&r block free tax file 2012 To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. H&r block free tax file 2012   Inventory valuation rules cannot be the same for all kinds of businesses. H&r block free tax file 2012 The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. H&r block free tax file 2012 Your inventory practices must be consistent from year to year. H&r block free tax file 2012 More information. H&r block free tax file 2012   For more information about inventories, see Publication 538. H&r block free tax file 2012 Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. H&r block free tax file 2012 Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. H&r block free tax file 2012 You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. H&r block free tax file 2012 Activities subject to the uniform capitalization rules. H&r block free tax file 2012   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. H&r block free tax file 2012 Produce real or tangible personal property. H&r block free tax file 2012 For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. H&r block free tax file 2012 Acquire property for resale. H&r block free tax file 2012 Exceptions. H&r block free tax file 2012   These rules do not apply to the following property. H&r block free tax file 2012 Personal property you acquire for resale if your average annual gross receipts are $10 million or less. H&r block free tax file 2012 Property you produce if you meet either of the following conditions. H&r block free tax file 2012 Your indirect costs of producing the property are $200,000 or less. H&r block free tax file 2012 You use the cash method of accounting and do not account for inventories. H&r block free tax file 2012 For more information, see Inventories, earlier. H&r block free tax file 2012 Special Methods There are special methods of accounting for certain items of income or expense. H&r block free tax file 2012 These include the following. H&r block free tax file 2012 Amortization, discussed in chapter 8 of Publication 535, Business Expenses. H&r block free tax file 2012 Bad debts, discussed in chapter 10 of Publication 535. H&r block free tax file 2012 Depletion, discussed in chapter 9 of Publication 535. H&r block free tax file 2012 Depreciation, discussed in Publication 946, How To Depreciate Property. H&r block free tax file 2012 Installment sales, discussed in Publication 537, Installment Sales. H&r block free tax file 2012 Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. H&r block free tax file 2012 A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. H&r block free tax file 2012 To get approval, you must file Form 3115, Application for Change in Accounting Method. H&r block free tax file 2012 You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. H&r block free tax file 2012 You may have to pay a user fee. H&r block free tax file 2012 For more information, see the form instructions. H&r block free tax file 2012 Automatic change procedures. H&r block free tax file 2012   Certain taxpayers can presume to have IRS approval to change their method of accounting. H&r block free tax file 2012 The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. H&r block free tax file 2012 No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. H&r block free tax file 2012   Generally, you must use Form 3115 to request an automatic change. H&r block free tax file 2012 For more information, see the Instructions for Form 3115. H&r block free tax file 2012 Prev  Up  Next   Home   More Online Publications