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Taxact2011online

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Taxact2011online

Taxact2011online Publication 509 - Main Content Table of Contents General Tax CalendarFirst Quarter Second Quarter Third Quarter Fourth Quarter Fiscal-Year Taxpayers Employer's Tax CalendarFirst Quarter Second Quarter Third Quarter Fourth Quarter Excise Tax CalendarFirst Quarter Second Quarter Third Quarter Fourth Quarter How To Get Tax Help General Tax Calendar This tax calendar has the due dates for 2014 that most taxpayers will need. Taxact2011online Employers and persons who pay excise taxes also should use the Employer's Tax Calendar and the Excise Tax Calendar . Taxact2011online Fiscal-year taxpayers. Taxact2011online   If you file your income tax return for a fiscal year rather than the calendar year, you must change some of the dates in this calendar. Taxact2011online These changes are described under Fiscal-Year Taxpayers at the end of this calendar. Taxact2011online First Quarter The first quarter of a calendar year is made up of January, February, and March. Taxact2011online Second Quarter The second quarter of a calendar year is made up of April, May, and June. Taxact2011online Third Quarter The third quarter of a calendar year is made up of July, August, and September. Taxact2011online Fourth Quarter The fourth quarter of a calendar year is made up of October, November, and December. Taxact2011online Fiscal-Year Taxpayers If you use a fiscal year (rather than the calendar year) as your tax year, you should change some of the dates in this calendar. Taxact2011online Use the following general guidelines to make these changes. Taxact2011online The 3 months that make up each quarter of a fiscal year may be different from those of each calendar quarter, depending on when the fiscal year begins. Taxact2011online Also see Saturday, Sunday, or legal holiday, earlier. Taxact2011online Individuals Form 1040. Taxact2011online    This form is due on the 15th day of the 4th month after the end of your tax year. Taxact2011online Form 4868 is used to request an extension of time to file Form 1040. Taxact2011online Estimated tax payments (Form 1040-ES). Taxact2011online   Payments are due on the 15th day of the 4th, 6th, and 9th months of your tax year and on the 15th day of the 1st month after your tax year ends. Taxact2011online Partnerships Form 1065. Taxact2011online   This form is due on the 15th day of the 4th month after the end of the partnership's tax year. Taxact2011online Provide each partner with a copy of Schedule K-1 (Form 1065) or a substitute Schedule K-1. Taxact2011online Form 1065-B (electing large partnerships). Taxact2011online   This form is due on the 15th day of the 4th month after the end of the partnership's tax year. Taxact2011online Provide each partner with a copy of Schedule K-1 (Form 1065-B) or a substitute Schedule K-1 by the first March 15 following the close of the partnership's tax year. Taxact2011online Corporations and S Corporations Form 1120 and Form 1120S (or Form 7004). Taxact2011online   These forms are due on the 15th day of the 3rd month after the end of the corporation's tax year. Taxact2011online S corporations must provide each shareholder with a copy of Schedule K-1 (Form 1120S) or a substitute Schedule K-1. Taxact2011online Form 7004 is used to request an extension of time to file Form 1120 or Form 1120S. Taxact2011online Estimated tax payments. Taxact2011online   Payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year. Taxact2011online Form 2553. Taxact2011online   This form is used to choose S corporation treatment. Taxact2011online It is due no more than two months and 15 days after the beginning of the tax year the election is to take effect or at any time during the preceding tax year. Taxact2011online Employer's Tax Calendar This tax calendar covers various due dates of interest to employers. Taxact2011online Principally, it covers the following federal taxes. Taxact2011online Income tax you withhold from your employees' wages or from nonpayroll amounts you pay out. Taxact2011online Social security and Medicare taxes (FICA taxes) you withhold from your employees' wages and the social security and Medicare taxes you must pay as an employer. Taxact2011online Federal unemployment (FUTA) tax you must pay as an employer. Taxact2011online The calendar lists due dates for filing returns and for making deposits of these three taxes throughout the year. Taxact2011online Use this calendar with Publication 15 (Circular E), which gives the deposit rules. Taxact2011online Forms you may need. Taxact2011online   The following is a list and description of the primary employment tax forms you may need. Taxact2011online Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Taxact2011online This form is due the last day of the first calendar month after the calendar year ends. Taxact2011online Use it to report the FUTA tax on wages you paid. Taxact2011online Form 941, Employer's QUARTERLY Federal Tax Return. Taxact2011online This form is due the last day of the first calendar month after the calendar quarter ends. Taxact2011online Use it to report social security and Medicare taxes and withheld income taxes on wages if your employees are not farm workers or household employees. Taxact2011online Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Taxact2011online This form is due the last day of the first calendar month after the calendar year ends. Taxact2011online Use it to report social security and Medicare taxes and withheld income taxes on wages if your employees are farm workers. Taxact2011online Form 944, Employer's ANNUAL Federal Tax Return. Taxact2011online This form is due the last day of the first calendar month after the calendar year ends. Taxact2011online Certain small employers use it instead of Form 941 to report social security and Medicare taxes and withheld income tax. Taxact2011online Form 945, Annual Return of Withheld Federal Income Tax. Taxact2011online This form is due the last day of the first calendar month after the calendar year ends. Taxact2011online Use it to report income tax withheld on all nonpayroll items. Taxact2011online Nonpayroll items include the following. Taxact2011online Backup withholding. Taxact2011online Withholding on pensions, annuities, IRAs, and gambling winnings. Taxact2011online Payments of Indian gaming profits to tribal members. Taxact2011online Fiscal-year taxpayers. Taxact2011online   The dates in this calendar apply whether you use a fiscal year or the calendar year as your tax year. Taxact2011online The only exception is the date for filing Forms 5500, Annual Return/Report of Employee Benefit Plan, and 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan. Taxact2011online These employee benefit plan forms are due by the last day of the seventh month after the plan year ends. Taxact2011online See July 31 , later. Taxact2011online Extended due dates. Taxact2011online   If you timely deposit in full the tax you are required to report on Form 940, 941, 943, 944, or 945, you have an additional 10 calendar days to file that form. Taxact2011online If you are subject to the semiweekly deposit rule, use Table 2 near the end of this publication for your deposit due dates. Taxact2011online However, if you accumulate $100,000 or more of taxes on any day during a deposit period, you must deposit the tax by the next business day instead of the date shown in Table 2. Taxact2011online First Quarter The first quarter of a calendar year is made up of January, February, and March. Taxact2011online Second Quarter The second quarter of a calendar year is made up of April, May, and June. Taxact2011online Third Quarter The third quarter of a calendar year is made up of July, August, and September. Taxact2011online Fourth Quarter The fourth quarter of a calendar year is made up of October, November, and December. Taxact2011online Excise Tax Calendar This tax calendar gives the due dates for filing returns and making deposits of excise taxes. Taxact2011online Use this calendar with Publication 510. Taxact2011online Also see the instructions for Forms 11-C, 720, 730, and 2290 for more information. Taxact2011online References to Form 2290 also apply to Form 2290(SP). Taxact2011online Forms you may need. Taxact2011online   The following is a list and description of the excise tax forms you may need. Taxact2011online Form 11-C, Occupational Tax and Registration Return for Wagering. Taxact2011online Use this form to register any wagering activity and to pay an occupational tax on wagering. Taxact2011online File Form 11-C if you are in the business of accepting wagers, including conducting a wagering pool or lottery, or are an agent of someone who accepts wagers. Taxact2011online You must file the form before you begin accepting wagers. Taxact2011online After that, file the form by July 1 of each year. Taxact2011online Also, see Form 730, later. Taxact2011online Form 720, Quarterly Federal Excise Tax Return. Taxact2011online File this form by the last day of the month following the calendar quarter. Taxact2011online Use this form to report a wide variety of excise taxes, including: Communications and air transportation taxes, Fuel taxes, Retail tax, Ship passenger tax, and Manufacturers taxes. Taxact2011online Form 730, Monthly Tax Return for Wagers. Taxact2011online Use this form to pay an excise tax on wagers you accept. Taxact2011online File this form for each month by the last day of the following month. Taxact2011online Also, see Form 11-C, earlier. Taxact2011online Form 2290, Heavy Highway Vehicle Use Tax Return. Taxact2011online Use this form to pay the federal use tax on heavy highway vehicles registered in your name. Taxact2011online File this form by the last day of the month following the month of the vehicle's first taxable use in the tax period. Taxact2011online The tax period begins on July 1 and ends the following June 30. Taxact2011online You must pay the full year's tax on all vehicles you have in use during the month of July. Taxact2011online You must also pay a partial-year tax on taxable vehicles that you put into use in a month after July. Taxact2011online For more information, see the Instructions for Form 2290. Taxact2011online Fiscal-year taxpayers. Taxact2011online   The dates in this calendar apply whether you use a fiscal year or the calendar year as your tax year. Taxact2011online Adjustments for Saturday, Sunday, or legal holidays. Taxact2011online   Generally, if a due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next day that is not a Saturday, Sunday, or legal holiday. Taxact2011online For excise taxes, there are two exceptions to this rule. Taxact2011online For deposits of regular method taxes, if the due date is a Saturday, Sunday, or legal holiday, the due date is the immediately preceding day that is not a Saturday, Sunday, or legal holiday. Taxact2011online Under the special September deposit rules, if the due date falls on a Saturday, the deposit is due on the preceding Friday. Taxact2011online If the due date falls on a Sunday, the deposit is due on the following Monday. Taxact2011online For more information, see the Instructions for Form 720. Taxact2011online The Excise Tax Calendar has been adjusted for all of these provisions. Taxact2011online Regular method taxes. Taxact2011online   These are taxes, other than alternative method taxes used for communication and air transportation taxes, reported on Form 720 for which deposits are required. Taxact2011online First Quarter The first quarter of a calendar year is made up of January, February, and March. Taxact2011online Second Quarter The second quarter of a calendar year is made up of April, May, and June. Taxact2011online Third Quarter The third quarter of a calendar year is made up of July, August, and September. Taxact2011online Fourth Quarter The fourth quarter of a calendar year is made up of October, November, and December. Taxact2011online How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Taxact2011online Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Taxact2011online Free help with your tax return. Taxact2011online   Free help in preparing your return is available nationwide from IRS-certified volunteers. Taxact2011online The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Taxact2011online The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Taxact2011online 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. Taxact2011online Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Taxact2011online To find the nearest VITA or TCE site, visit IRS. Taxact2011online gov or call 1-800-906-9887. Taxact2011online   As part of the TCE program, AARP offers the Tax-Aide counseling program. Taxact2011online To find the nearest AARP Tax-Aide site, visit AARP's website at www. Taxact2011online aarp. Taxact2011online org/money/taxaide or call 1-888-227-7669. Taxact2011online   For more information on these programs, go to IRS. Taxact2011online gov and enter “VITA” in the search box. Taxact2011online Internet. Taxact2011online IRS. Taxact2011online gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Taxact2011online Apply for an Employer Identification Number (EIN). Taxact2011online Go to IRS. Taxact2011online gov and enter Apply for an EIN in the search box. Taxact2011online Request an Electronic Filing PIN by going to IRS. Taxact2011online gov and entering Electronic Filing PIN in the search box. Taxact2011online Check the status of your 2013 refund with Where's My Refund? Go to IRS. Taxact2011online gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Taxact2011online If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Taxact2011online Checking the status of your amended return. Taxact2011online Go to IRS. Taxact2011online gov and enter Where's My Amended Return in the search box. Taxact2011online Download forms, instructions, and publications, including some accessible versions. Taxact2011online Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Taxact2011online gov or IRS2Go. Taxact2011online Tax return and tax account transcripts are generally available for the current year and past three years. Taxact2011online Figure your income tax withholding with the IRS Withholding Calculator on IRS. Taxact2011online gov. Taxact2011online 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. Taxact2011online Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Taxact2011online gov. Taxact2011online Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Taxact2011online gov or IRS2Go. Taxact2011online Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Taxact2011online An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Taxact2011online Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Taxact2011online If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Taxact2011online Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Taxact2011online Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Taxact2011online gov. Taxact2011online Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Taxact2011online The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Taxact2011online Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Taxact2011online AARP offers the Tax-Aide counseling program as part of the TCE program. Taxact2011online Visit AARP's website to find the nearest Tax-Aide location. Taxact2011online Research your tax questions. Taxact2011online Search publications and instructions by topic or keyword. Taxact2011online Read the Internal Revenue Code, regulations, or other official guidance. Taxact2011online Read Internal Revenue Bulletins. Taxact2011online Sign up to receive local and national tax news by email. Taxact2011online Phone. Taxact2011online You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Taxact2011online Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Taxact2011online Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, 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. Taxact2011online Call to locate the nearest volunteer help site, 1-800-906-9887. Taxact2011online Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Taxact2011online The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Taxact2011online Most VITA and TCE sites offer free electronic filing. Taxact2011online Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Taxact2011online Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Taxact2011online Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Taxact2011online The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Taxact2011online If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Taxact2011online Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Taxact2011online Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Taxact2011online Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Taxact2011online Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Taxact2011online Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Taxact2011online You should receive your order within 10 business days. Taxact2011online Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Taxact2011online Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Taxact2011online Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Taxact2011online Call to ask tax questions, 1-800-829-1040. Taxact2011online Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Taxact2011online The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Taxact2011online These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Taxact2011online gsa. Taxact2011online gov/fedrelay. Taxact2011online Walk-in. Taxact2011online You can find a selection of forms, publications and services — in-person, face-to-face. Taxact2011online Products. Taxact2011online You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Taxact2011online Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Taxact2011online Services. Taxact2011online You can walk in to your local TAC most business days for personal, face-to-face tax help. Taxact2011online An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Taxact2011online If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Taxact2011online No appointment is necessary—just walk in. Taxact2011online Before visiting, check www. Taxact2011online irs. Taxact2011online gov/localcontacts for hours of operation and services provided. Taxact2011online Mail. Taxact2011online You can send your order for forms, instructions, and publications to the address below. Taxact2011online You should receive a response within 10 business days after your request is received. Taxact2011online  Internal Revenue Service 1201 N. Taxact2011online Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Taxact2011online   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Taxact2011online Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Taxact2011online What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Taxact2011online 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. Taxact2011online You face (or your business is facing) an immediate threat of adverse action. Taxact2011online You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Taxact2011online   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. Taxact2011online Here's why we can help: TAS is an independent organization within the IRS. Taxact2011online Our advocates know how to work with the IRS. Taxact2011online Our services are free and tailored to meet your needs. Taxact2011online We have offices in every state, the District of Columbia, and Puerto Rico. Taxact2011online 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 www. Taxact2011online irs. Taxact2011online gov/advocate, or call us toll-free at 1-877-777-4778. Taxact2011online How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Taxact2011online If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Taxact2011online irs. Taxact2011online gov/sams. Taxact2011online Low Income Taxpayer Clinics. Taxact2011online   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Taxact2011online Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Taxact2011online Visit www. Taxact2011online TaxpayerAdvocate. Taxact2011online irs. Taxact2011online gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Taxact2011online gnewbus01 Prev  Up  Next   Home   More Online Publications
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Taxact2011online 2. Taxact2011online   Tax Shelters and Other Reportable Transactions Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Abusive Tax SheltersRules To Curb Abusive Tax Shelters Investor Reporting Penalties Whether To Invest Introduction Investments that yield tax benefits are sometimes called “tax shelters. Taxact2011online ” In some cases, Congress has concluded that the loss of revenue is an acceptable side effect of special tax provisions designed to encourage taxpayers to make certain types of investments. Taxact2011online In many cases, however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. Taxact2011online Those cases are called “abusive tax shelters. Taxact2011online ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. Taxact2011online Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . Taxact2011online Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 556 Examination of Returns, Appeal Rights, and Claims for Refund 561 Determining the Value of Donated Property 925 Passive Activity and At-Risk Rules Form (and Instructions) 8275 Disclosure Statement 8275-R Regulation Disclosure Statement 8283 Noncash Charitable Contributions 8886 Reportable Transaction Disclosure Statement See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Taxact2011online Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. Taxact2011online They often make use of unrealistic allocations, inflated appraisals, losses in connection with nonrecourse loans, mismatching of income and deductions, financing techniques that do not conform to standard commercial business practices, or mischaracterization of the substance of the transaction. Taxact2011online Despite appearances to the contrary, the taxpayer generally risks little. Taxact2011online Abusive tax shelters commonly involve package deals designed from the start to generate losses, deductions, or credits that will be far more than present or future investment. Taxact2011online Or, they may promise investors from the start that future inflated appraisals will enable them, for example, to reap charitable contribution deductions based on those appraisals. Taxact2011online (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. Taxact2011online ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. Taxact2011online This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. Taxact2011online Because there are many abusive tax shelters, it is not possible to list all the factors you should consider in determining whether an offering is an abusive tax shelter. Taxact2011online However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. Taxact2011online Do the tax benefits far outweigh the economic benefits? Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit? Do shelter assets really exist and, if so, are they insured for less than their purchase price? Is there a nontax justification for the way profits and losses are allocated to partners? Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices? Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction? Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment? Is your debt a real debt or are you assured by the promoter that you will never have to pay it? Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders? Rules To Curb Abusive Tax Shelters Congress has enacted a series of income tax laws designed to halt the growth of abusive tax shelters. Taxact2011online These provisions include the following. Taxact2011online Disclosure of reportable transactions. Taxact2011online   You must disclose information for each reportable transaction in which you participate. Taxact2011online See Reportable Transaction Disclosure Statement , later. Taxact2011online   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. Taxact2011online To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. Taxact2011online   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. Taxact2011online They must provide this number to all persons to whom they acted as a material advisor. Taxact2011online They must provide the number at the time the transaction is entered into. Taxact2011online If they do not have the number at that time, they must provide it within 60 days from the date the number is mailed to them. Taxact2011online For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. Taxact2011online Requirement to maintain list. Taxact2011online   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. Taxact2011online The list must be available for inspection by the IRS, and the information required to be included on the list generally must be kept for 7 years. Taxact2011online See Regulations section 301. Taxact2011online 6112-1 for more information (including what information is required to be included on the list). Taxact2011online Confidentiality privilege. Taxact2011online   The confidentiality privilege between you and a federally authorized tax practitioner does not apply to written communications made after October 21, 2004, regarding the promotion of your direct or indirect participation in any tax shelter. Taxact2011online Appraisal requirement for donated property. Taxact2011online   If you claim a deduction of more than $5,000 for an item or group of similar items of donated property, you generally must get a qualified appraisal from a qualified appraiser and complete and attach section B of Form 8283 to your return. Taxact2011online If you claim a deduction of more than $500,000 for the donated property, you generally must attach the qualified appraisal to your return. Taxact2011online If you file electronically, see Form 8453, U. Taxact2011online S. Taxact2011online Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. Taxact2011online For more information about appraisals, including exceptions, see Publication 561. Taxact2011online Passive activity loss and credit limits. Taxact2011online   The passive activity loss and credit rules limit the amount of losses and credits that can be claimed from passive activities and limit the amount that can offset nonpassive income, such as certain portfolio income from investments. Taxact2011online For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. Taxact2011online Interest on penalties. Taxact2011online   If you are assessed an accuracy-related or civil fraud penalty (as discussed under Penalties , later), interest will be imposed on the amount of the penalty from the due date of the return (including any extensions) to the date you pay the penalty. Taxact2011online Accounting method restriction. Taxact2011online   Tax shelters generally cannot use the cash method of accounting. Taxact2011online Uniform capitalization rules. Taxact2011online   The uniform capitalization rules generally apply to producing property or acquiring it for resale. Taxact2011online Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. Taxact2011online For more information, see Publication 538. Taxact2011online Denial of deduction for interest on an underpayment due to a reportable transaction. Taxact2011online   You cannot deduct any interest you paid or accrued on any part of an underpayment of tax due to an understatement arising from a reportable transaction (discussed later) if the relevant facts affecting the tax treatment of the item are not adequately disclosed. Taxact2011online This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. Taxact2011online Authority for Disallowance of Tax Benefits The IRS has published guidance concluding that the claimed tax benefits of various abusive tax shelters should be disallowed. Taxact2011online The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. Taxact2011online Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. Taxact2011online So, if your return is examined and an abusive tax shelter is identified and challenged, published guidance dealing with that type of shelter, which disallows certain claimed tax shelter benefits, could serve as the basis for the examining official's challenge of the tax benefits you claimed. Taxact2011online In such a case, the examiner will not compromise even if you or your representative believes you have authority for the positions taken on your tax return. Taxact2011online The courts have generally been unsympathetic to taxpayers involved in abusive tax shelter schemes and have ruled in favor of the IRS in the majority of the cases in which these shelters have been challenged. Taxact2011online Investor Reporting You may be required to file a reportable transaction disclosure statement. Taxact2011online Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. Taxact2011online Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. Taxact2011online Under certain circumstances, a transaction must be disclosed within 90 days of the transaction being identified as a listed transaction or a transaction of interest (discussed later). Taxact2011online In addition, for the first year Form 8886 is attached to your return, you must send a copy of the form to: Internal Revenue Service OTSA Mail Stop 4915 1973 North Rulon White Blvd. Taxact2011online  Ogden, UT 84404 If you file your return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. Taxact2011online If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. Taxact2011online If you fail to file Form 8886 as required or fail to include any required information on the form, you may have to pay a penalty. Taxact2011online See Penalty for failure to disclose a reportable transaction , later under Penalties. Taxact2011online The following discussion briefly describes reportable transactions. Taxact2011online For more details, see the Instructions for Form 8886. Taxact2011online Reportable transaction. Taxact2011online   A reportable transaction is any of the following. Taxact2011online A listed transaction. Taxact2011online A confidential transaction. Taxact2011online A transaction with contractual protection. Taxact2011online A loss transaction. Taxact2011online A transaction of interest entered into after November 1, 2006. Taxact2011online Note. Taxact2011online Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. Taxact2011online Listed transaction. Taxact2011online   A listed transaction is the same as, or substantially similar to, one of the types of transactions the IRS has determined to be a tax-avoidance transaction. Taxact2011online These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. Taxact2011online For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. Taxact2011online irs. Taxact2011online gov/irb/2009-31_IRB/ar07. Taxact2011online html. Taxact2011online Confidential transaction. Taxact2011online   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. Taxact2011online A transaction is offered under conditions of confidentiality if the advisor who is paid the fee places a limit on your disclosure of the tax treatment or tax structure of the transaction and the limit protects the confidentiality of the advisor's tax strategies. Taxact2011online The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. Taxact2011online Transaction with contractual protection. Taxact2011online   Generally, a transaction with contractual protection is one in which you or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences of the transaction are not sustained, or a transaction for which the fees are contingent on your realizing the tax benefits from the transaction. Taxact2011online For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. Taxact2011online irs. Taxact2011online gov/irb/2007-07_IRB/ar15. Taxact2011online html. Taxact2011online Loss transaction. Taxact2011online   For individuals, a loss transaction is one that results in a deductible loss if the gross amount of the loss is at least $2 million in a single tax year or $4 million in any combination of tax years. Taxact2011online A loss from a foreign currency transaction under Internal Revenue Code section 988 is a loss transaction if the gross amount of the loss is at least $50,000 in a single tax year, whether or not the loss flows through from an S corporation or partnership. Taxact2011online   Certain losses (such as losses from casualties, thefts, and condemnations) are excepted from this category and do not have to be reported on Form 8886. Taxact2011online For information on other exceptions, see Revenue Procedure 2004-66 in Internal Revenue Bulletin 2004-50, as modified and superseded by Revenue Procedure 2013-11, (or future published guidance) available at www. Taxact2011online irs. Taxact2011online gov/irb/2004-50_IRB/ar11. Taxact2011online html. Taxact2011online Transaction of interest. Taxact2011online   A transaction of interest is a transaction entered into after November 1, 2006, that is the same as, or substantially similar to, one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest. Taxact2011online The IRS has identified the following transactions of interest. Taxact2011online “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. Taxact2011online R. Taxact2011online B. Taxact2011online 545, available at www. Taxact2011online irs. Taxact2011online gov/irb/2007-36_IRB/ar20. Taxact2011online html. Taxact2011online Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. Taxact2011online R. Taxact2011online B. Taxact2011online 544, available at www. Taxact2011online irs. Taxact2011online gov/irb/2007-36_IRB/ar19. Taxact2011online html. Taxact2011online Certain transactions involving the sale or other disposition of all interests in a charitable remainder trust and claiming little or no taxable gain as described in Notice 2008-99, 2008-47 I. Taxact2011online R. Taxact2011online B. Taxact2011online 1194, available at www. Taxact2011online irs. Taxact2011online gov/irb/2008-47_IRB/ar11. Taxact2011online html. Taxact2011online Certain transactions involving a U. Taxact2011online S. Taxact2011online taxpayer owning controlled foreign corporations (CFCs) that hold stock of a lower-tier CFC through a domestic partnership to avoid reporting income as described in Notice 2009-7, 2009-3 I. Taxact2011online R. Taxact2011online B. Taxact2011online 312, available at www. Taxact2011online irs. Taxact2011online gov/irb/2009-03_IRB/ar10. Taxact2011online html. Taxact2011online   For updates to this list, go to www. Taxact2011online irs. Taxact2011online gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. Taxact2011online Penalties Investing in an abusive tax shelter may lead to substantial expenses. Taxact2011online First, the promoter generally charges a substantial fee. Taxact2011online If your return is examined by the IRS and a tax deficiency is determined, you will be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. Taxact2011online You may also be subject to the penalty for failure to pay tax. Taxact2011online These penalties are explained in the following paragraphs. Taxact2011online Accuracy-related penalties. Taxact2011online   An accuracy-related penalty of 20% can be imposed for underpayments of tax due to: Negligence or disregard of rules or regulations, Substantial understatement of tax, Substantial valuation misstatement (increased to 40% for gross valuation misstatement), Transaction lacking economic substance (increased to 40% for undisclosed transaction lacking economic substance), or Undisclosed foreign financial asset understatement (40% in all cases). Taxact2011online Except for a transaction lacking economic substance, this penalty will not be imposed if you can show you had reasonable cause for any understatement of tax and that you acted in good faith. Taxact2011online Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. Taxact2011online   If you are charged an accuracy-related penalty, interest will be imposed on the amount of the penalty from the due date of the return (including extensions) to the date you pay the penalty. Taxact2011online   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). Taxact2011online Negligence or disregard of rules or regulations. Taxact2011online   The penalty for negligence or disregard of rules or regulations is imposed only on the part of the underpayment due to negligence or disregard of rules or regulations. Taxact2011online The penalty will not be charged if you can show you had reasonable cause for understating your tax and that you acted in good faith. Taxact2011online    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. Taxact2011online It also includes any failure to keep adequate books and records. Taxact2011online A return position that has a reasonable basis is not negligence. Taxact2011online   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. Taxact2011online   The penalty for disregard of rules and regulations can be avoided if all the following are true. Taxact2011online You keep adequate books and records. Taxact2011online You have a reasonable basis for your position on the tax issue. Taxact2011online You make an adequate disclosure of your position. Taxact2011online Use Form 8275 to make your disclosure and attach it to your return. Taxact2011online To disclose a position contrary to a regulation, use Form 8275-R. Taxact2011online Use Form 8886 to disclose a reportable transaction (discussed earlier). Taxact2011online Substantial understatement of tax. Taxact2011online   An understatement is considered to be substantial if it is more than the greater of: 10% of the tax required to be shown on the return, or $5,000. Taxact2011online An “understatement” is the amount of tax required to be shown on your return for a tax year minus the amount of tax shown on the return, reduced by any rebates. Taxact2011online The term “rebate” generally means a decrease in the tax shown on your original return as the result of your filing an amended return or claim for refund. Taxact2011online   For items other than tax shelters, you can file Form 8275 or Form 8275-R to disclose items that could cause a substantial understatement of income tax. Taxact2011online In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. Taxact2011online Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. Taxact2011online   Also, the understatement penalty will not be imposed if you can show there was reasonable cause for the underpayment caused by the understatement and that you acted in good faith. Taxact2011online An important factor in establishing reasonable cause and good faith will be the extent of your effort to determine your proper tax liability under the law. Taxact2011online Substantial valuation misstatement. Taxact2011online   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. Taxact2011online The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. Taxact2011online You underpaid your tax by more than $5,000 because of the misstatement. Taxact2011online You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. Taxact2011online   You may be assessed a penalty of 40% for a gross valuation misstatement. Taxact2011online If you misstate the value or the adjusted basis of property by 200% or more of the amount determined to be correct, you will be assessed a penalty of 40%, instead of 20%, of the amount you underpaid because of the gross valuation misstatement. Taxact2011online The penalty rate is also 40% if the property's correct value or adjusted basis is zero. Taxact2011online Transaction lacking economic substance. Taxact2011online   The economic substance doctrine only applies to an individual that entered into a transaction in connection with a trade or business or an activity engaged in for the production of income. Taxact2011online For transactions entered into after March 30, 2010, a transaction has economic substance for you as an individual taxpayer only if: The transaction changes your economic position in a meaningful way (apart from federal income tax effects), or You have a substantial purpose (apart from federal income tax effects) for entering into the transaction. Taxact2011online   For purposes of determining whether economic substance exists, a transaction's profit potential will only be taken into account if the present value of the reasonably expected pre-tax profit from the transaction is substantial compared to the present value of the expected net tax benefits that would be allowed if the transaction were respected. Taxact2011online   If any part of your underpayment is due to any disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, that part of your underpayment will be subject to the 20% accuracy-related penalty even if you had a reasonable cause and acted in good faith concerning that part. Taxact2011online   Additionally, the penalty increases to 40% if you do not adequately disclose on your return or in a statement attached to your return the relevant facts affecting the tax treatment of a transaction that lacks economic substance. Taxact2011online Relevant facts include any facts affecting the tax treatment of the transaction. Taxact2011online    Any excessive amount of an erroneous claim for an income tax refund or credit (other than a refund or credit related to the earned income credit) that results from a transaction found to be lacking economic substance will not be treated as having a reasonable basis and could be subject to a 20% penalty. Taxact2011online Undisclosed foreign financial asset understatement. Taxact2011online   For tax years beginning after March 18, 2010, you may be liable for a 40% penalty for an understatement of your tax liability due to an undisclosed foreign financial asset. Taxact2011online An undisclosed foreign financial asset is any asset for which an information return, required to be provided under Internal Revenue Code section 6038, 6038B, 6038D, 6046A, or 6048 for any taxable year, is not provided. Taxact2011online The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. Taxact2011online Any foreign business you control, reportable on Form 5471, Information Return of U. Taxact2011online S. Taxact2011online Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. Taxact2011online S. Taxact2011online Persons With Respect to Certain Foreign Partnerships. Taxact2011online Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. Taxact2011online S. Taxact2011online Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. Taxact2011online Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. Taxact2011online    Instead of, or in addition to, Form 8275 or 8275-R, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. Taxact2011online See the Instructions for Form 8938 for details. Taxact2011online    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. Taxact2011online Creation or transfer of money or property to certain foreign trusts, reportable on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Taxact2011online Penalty for incorrect appraisals. Taxact2011online   The person who prepares an appraisal of the value of property may have to pay a penalty if: He or she knows, or reasonably should have known, that the appraisal would be used in connection with a return or claim for refund; and The claimed value of the property on a return or claim for refund based on that appraisal results in a substantial valuation misstatement or a gross valuation misstatement as discussed earlier. Taxact2011online For details on the penalty amount and exceptions, see Publication 561. Taxact2011online Penalty for failure to disclose a reportable transaction. Taxact2011online   If you fail to include any required information regarding a reportable transaction (discussed earlier) on a return or statement, you may have to pay a penalty of 75% of the decrease in tax shown on your return as a result of such transaction (or that would have resulted if the transaction were respected for federal tax purposes). Taxact2011online For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). Taxact2011online This penalty is in addition to any other penalty that may be imposed. Taxact2011online   The IRS may rescind or abate the penalty for failing to disclose a reportable transaction under certain limited circumstances but cannot rescind the penalty for failing to disclose a listed transaction. Taxact2011online For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. Taxact2011online irs. Taxact2011online gov/irb/2007-09_IRB/ar12. Taxact2011online html. Taxact2011online Accuracy-related penalty for a reportable transaction understatement. Taxact2011online   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. Taxact2011online This applies to any item due to a listed transaction or other reportable transaction with a significant purpose of avoiding or evading federal income tax. Taxact2011online The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. Taxact2011online You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. Taxact2011online The reasonable cause and good faith exception does not apply to any part of a reportable transaction understatement attributable to one or more transactions that lack economic substance. Taxact2011online   This penalty does not apply to the part of an understatement on which the fraud penalty, gross valuation misstatement penalty, or penalty for nondisclosure of noneconomic substance transactions is imposed. Taxact2011online Civil fraud penalty. Taxact2011online   If any underpayment of tax on your return is due to fraud, a penalty of 75% of the underpayment will be added to your tax. Taxact2011online Joint return. Taxact2011online   The fraud penalty on a joint return applies to a spouse only if some part of the underpayment is due to the fraud of that spouse. Taxact2011online Failure to pay tax. Taxact2011online   If a deficiency is assessed and is not paid within 10 days of the demand for payment, an investor can be penalized with up to a 25% addition to tax if the failure to pay continues. Taxact2011online Whether To Invest In light of the adverse tax consequences and the substantial amount of penalties and interest that will result if the claimed tax benefits are disallowed, you should consider tax shelter investments carefully and seek competent legal and financial advice. Taxact2011online Prev  Up  Next   Home   More Online Publications