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Turbo Tax Free Military

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Turbo Tax Free Military

Turbo tax free military Index A Abroad, citizens living, filing requirements, U. Turbo tax free military S. Turbo tax free military Citizens or Resident Aliens Living Abroad Absence, temporary, Temporary absences. Turbo tax free military , Temporary absences. Turbo tax free military , Temporary absences. Turbo tax free military Accounting periods, joint returns, Accounting period. Turbo tax free military Adopted child, Exception for adopted child. Turbo tax free military , Adopted child. Turbo tax free military , Adopted child. Turbo tax free military Taxpayer identification number, Taxpayer identification numbers for adoptees. Turbo tax free military Age Filing status determination, Age. Turbo tax free military Gross income and filing requirements (Table 1), Table 1. Turbo tax free military 2013 Filing Requirements Chart for Most Taxpayers Standard deduction for age 65 or older, Higher Standard Deduction for Age (65 or Older) Test, Age Test Aliens Dual-status (see Dual-status taxpayers) Nonresident (see Nonresident aliens) Alimony, Alimony. Turbo tax free military Alternative minimum tax (AMT), effect on filing requirements (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Amended returns, Joint Return After Separate Returns, Changing your mind. Turbo tax free military (see also Form 1040X) Change from itemized to standard deduction (or vice versa), Electing to itemize for state tax or other purposes. Turbo tax free military American citizens abroad, U. Turbo tax free military S. Turbo tax free military Citizens or Resident Aliens Living Abroad Annulled marriages, filing status, Annulled marriages. Turbo tax free military Armed forces Combat zone, signing return for spouse, Spouse in combat zone. Turbo tax free military Dependency allotments, Armed Forces dependency allotments. Turbo tax free military GI Bill benefits, Tuition payments and allowances under the GI Bill. Turbo tax free military Military quarters allotments, Tax-exempt military quarters allowances. Turbo tax free military Assistance (see Tax help) ATINs (Adoption taxpayer identification numbers), Taxpayer identification numbers for adoptees. Turbo tax free military B Birth of child, Death or birth. Turbo tax free military Blind persons, standard deduction, Higher Standard Deduction for Blindness C Canada, resident of, U. Turbo tax free military S. Turbo tax free military citizen or resident alien. Turbo tax free military , Citizen or Resident Test, Child in Canada or Mexico. Turbo tax free military Capital expenses, Capital expenses. Turbo tax free military Child born alive, Child born alive. Turbo tax free military Child care expenses, Child care expenses. Turbo tax free military Child custody, Custodial parent and noncustodial parent. Turbo tax free military Child support under pre-1985 agreement, Child support under pre-1985 agreement. Turbo tax free military Child tax credit, Child tax credit. Turbo tax free military Child, qualifying, Qualifying Child Children Adopted child (see Adoption) Adoption (see Adopted child) Birth of child, Death or birth. Turbo tax free military , Death or birth. Turbo tax free military Claiming parent, when child is head of household, Special rule for parent. Turbo tax free military Custody of, Custodial parent and noncustodial parent. Turbo tax free military Death of child, Death or birth. Turbo tax free military , Death or birth. Turbo tax free military Dividends of, Unearned income. Turbo tax free military Filing requirements as dependents (Table 2), Table 2. Turbo tax free military 2013 Filing Requirements for Dependents Investment income of child under age 18, Table 2. Turbo tax free military 2013 Filing Requirements for Dependents , Unearned income. Turbo tax free military Kidnapped, Kidnapped child. Turbo tax free military , Kidnapped child. Turbo tax free military Social security number, Social Security Numbers for Dependents Stillborn, Stillborn child. Turbo tax free military Church employees, filing requirements (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Citizen or resident test, Citizen or Resident Test Citizens outside U. Turbo tax free military S. Turbo tax free military , filing requirements, U. Turbo tax free military S. Turbo tax free military Citizens or Resident Aliens Living Abroad Common law marriage, Considered married. Turbo tax free military Community property states, Community property states. Turbo tax free military Cousin, Cousin. Turbo tax free military Custody of child, Custodial parent and noncustodial parent. Turbo tax free military D Death Of child, Death or birth of child. Turbo tax free military Of dependent, Death or birth. Turbo tax free military , Death or birth. Turbo tax free military Of spouse, Spouse died during the year. Turbo tax free military , Spouse died. Turbo tax free military , Spouse died before signing. Turbo tax free military , Death of spouse. Turbo tax free military Decedents, Spouse died during the year. Turbo tax free military , Decedent's final return. Turbo tax free military (see also Death of spouse) Filing requirements, Deceased Persons Deductions Personal exemption, Personal Exemptions Standard deduction, Standard Deduction Dependent taxpayer test, Dependent Taxpayer Test Dependents Birth of, Death or birth. Turbo tax free military Born and died within year, Born and died in 2013. Turbo tax free military Child's earnings, Child's earnings. Turbo tax free military Death of, Death or birth. Turbo tax free military Earned income, Earned income. Turbo tax free military Exemption for, Exemptions for Dependents Filing requirements, Table 2. Turbo tax free military 2013 Filing Requirements for Dependents , Dependents Married, filing joint return, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Not allowed to claim dependents, Dependent Taxpayer Test Qualifying child, Qualifying Child Qualifying relative, Qualifying Relative Social security number, Social Security Numbers for Dependents, Taxpayer identification numbers for adoptees. Turbo tax free military Standard deduction for, Standard Deduction for Dependents Unearned income, Unearned income. Turbo tax free military Disabled Child, Permanently and totally disabled. Turbo tax free military Dependent, Disabled dependent working at sheltered workshop. Turbo tax free military Divorced parents, Children of divorced or separated parents (or parents who live apart). Turbo tax free military Divorced taxpayers Child custody, Custodial parent and noncustodial parent. Turbo tax free military Filing status, Divorced persons. Turbo tax free military , Divorce and remarriage. Turbo tax free military , Divorced persons. Turbo tax free military Joint returns, responsibility for, Divorced taxpayer. Turbo tax free military Personal exemption, Divorced or separated spouse. Turbo tax free military Domestic help, no exemption for, Housekeepers, maids, or servants. Turbo tax free military Dual-status taxpayers Exemptions, Dual-status taxpayers. Turbo tax free military Joint returns not available, Nonresident alien or dual-status alien. Turbo tax free military E Earned income Defined for purposes of standard deduction, Earned income defined. Turbo tax free military Dependent filing requirements (Table 2), Table 2. Turbo tax free military 2013 Filing Requirements for Dependents Earned income credit Two persons with same qualifying child, Special Rule for Qualifying Child of More Than One Person Elderly persons Home for the aged, Home for the aged. Turbo tax free military Standard deduction for age 65 or older, Higher Standard Deduction for Age (65 or Older) Equitable relief, Innocent spouse, Relief from joint responsibility. Turbo tax free military Exemptions, Exemptions, Taxpayer identification numbers for adoptees. Turbo tax free military Dependents, Exemptions for Dependents Personal (see Personal exemption) F Fair rental value, Fair rental value defined. Turbo tax free military Figures (see Tables and figures) Filing requirements, Who Must File, Filing Status Filing status, Filing Status, Qualifying Widow(er) With Dependent Child Annulled marriages, Annulled marriages. Turbo tax free military Change to Joint return after separate returns, Joint Return After Separate Returns Separate returns after joint return, Separate Returns After Joint Return, Kidnapped child. Turbo tax free military Determination of, Filing status. Turbo tax free military , Filing Status Head of household, Head of household or qualifying widow(er) with dependent child. Turbo tax free military , Head of Household Marital status, determination of, Marital Status Married filing jointly (see Joint returns) Married filing separately (see Married filing separately) Unmarried persons (see Single taxpayers) Food benefits, Support provided by the state (welfare, food benefits, housing, etc. Turbo tax free military ). Turbo tax free military Foreign employment, filing requirements, U. Turbo tax free military S. Turbo tax free military Citizens or Resident Aliens Living Abroad Foreign students, Foreign students' place of residence. Turbo tax free military Form 1040 Personal exemption, Form 1040 filers. Turbo tax free military Social security numbers, Social Security Numbers for Dependents Use of, How to file. Turbo tax free military , How to file. Turbo tax free military , How to file. Turbo tax free military Form 1040A Personal exemption, Form 1040A filers. Turbo tax free military Social security numbers, Social Security Numbers for Dependents Use of, How to file. Turbo tax free military , How to file. Turbo tax free military , How to file. Turbo tax free military Form 1040EZ Personal exemption, Form 1040EZ filers. Turbo tax free military Use of, How to file. Turbo tax free military , How to file. Turbo tax free military Form 1040X Change of filing status, Joint Return After Separate Returns Itemized deductions, change to standard deduction, Changing your mind. Turbo tax free military Standard deduction, change to itemized deductions, Changing your mind. Turbo tax free military Form 1099-B, Form 1099-B received. Turbo tax free military Form 8814, parents' election to report child's interest and dividends, Election to report child's unearned income on parent's return. Turbo tax free military Form 8857, innocent spouse relief, Relief from joint responsibility. Turbo tax free military Form SS-5, social security number request, No SSN. Turbo tax free military Form W-7, individual taxpayer identification number request, Taxpayer identification numbers for aliens. Turbo tax free military Form W-7A, adoption taxpayer identification number request, Taxpayer identification numbers for adoptees. Turbo tax free military Foster care payments and expenses, Foster care payments and expenses. Turbo tax free military , Foster care. Turbo tax free military Foster child, Foster child. Turbo tax free military , Foster care payments and expenses. Turbo tax free military , Foster child. Turbo tax free military , Foster care. Turbo tax free military Free tax services, Free help with your tax return. Turbo tax free military Funeral expenses, Do Not Include in Total Support G GI Bill benefits, Tuition payments and allowances under the GI Bill. Turbo tax free military Gross income Defined, Gross income. Turbo tax free military Filing requirements (Table 1), Table 1. Turbo tax free military 2013 Filing Requirements Chart for Most Taxpayers Dependent filing requirements (Table 2), Table 2. Turbo tax free military 2013 Filing Requirements for Dependents Test, Gross Income Test Group-term life insurance, Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return H Head of household, Head of Household, Kidnapped child. Turbo tax free military Exemption for spouse, Head of household. Turbo tax free military Filing requirements (Table 1), Table 1. Turbo tax free military 2013 Filing Requirements Chart for Most Taxpayers Health insurance premiums, Medical insurance premiums. Turbo tax free military Help (see Tax help) Home Aged, home for, Home for the aged. Turbo tax free military Cost of keeping up, Keeping Up a Home Household workers, no exemption for, Housekeepers, maids, or servants. Turbo tax free military I Income Gross, Gross Income Test Tax exempt, Tax-exempt income. Turbo tax free military Individual retirement arrangements (IRAs) Filing requirements (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Married filing separately, Individual retirement arrangements (IRAs). Turbo tax free military Individual taxpayer identification numbers (ITINs), Reminders, Taxpayer identification numbers for aliens. Turbo tax free military Innocent spouse relief, Relief from joint responsibility. Turbo tax free military Insurance premiums Life, Do Not Include in Total Support Medical, Medical insurance premiums. Turbo tax free military IRAs (see Individual retirement arrangements (IRAs)) Itemized deductions Changing from standard to itemized deduction (or vice versa), Changing your mind. Turbo tax free military Choosing to itemize, Who Should Itemize Married filing separately, Married persons who filed separate returns. Turbo tax free military When to itemize, When to itemize. Turbo tax free military ITINs (Individual taxpayer identification numbers), Taxpayer identification numbers for aliens. Turbo tax free military J Joint return test, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Joint returns, Married Filing Jointly, Nonresident alien or dual-status alien. Turbo tax free military Dependents on, Joint return. Turbo tax free military Personal exemption, Joint return. Turbo tax free military K Kidnapped children Qualifying child, Kidnapped child. Turbo tax free military Qualifying relative, Kidnapped child. Turbo tax free military Widow(er) with dependent child, Death or birth. Turbo tax free military L Life insurance premiums, Do Not Include in Total Support Local income taxes, itemized deductions, Electing to itemize for state tax or other purposes. Turbo tax free military Local law violated, Local law violated. Turbo tax free military Lodging, Lodging. Turbo tax free military Losses, rental real estate, Rental activity losses. Turbo tax free military M Marital status, determination of, Marital Status Married dependents, filing joint return, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Married filing jointly (see Joint returns) Married filing separately, Married Filing Separately Changing method from or to itemized deductions, Changing your mind. Turbo tax free military Exemption for spouse, Separate return. Turbo tax free military Itemized deductions, Married persons who filed separate returns. Turbo tax free military Married taxpayers, Married Filing Jointly (see also Joint returns) Age 65 or older spouse, standard deduction, Higher Standard Deduction for Age (65 or Older), Spouse 65 or Older or Blind Blind spouse, standard deduction, Higher Standard Deduction for Blindness, Spouse 65 or Older or Blind Dual-status alien spouse, Nonresident alien or dual-status alien. Turbo tax free military Filing status, Married persons. Turbo tax free military Medical insurance premiums, Medical insurance premiums. Turbo tax free military Medical savings accounts (MSAs, effect on filing requirements (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Medicare taxes, not support, Do Not Include in Total Support Member of household or relationship test, Member of Household or Relationship Test Mexico, resident of, U. Turbo tax free military S. Turbo tax free military citizen or resident alien. Turbo tax free military , Citizen or Resident Test, Child in Canada or Mexico. Turbo tax free military Military (see Armed forces) Missing children, photographs of in IRS publications, Reminders Multiple support agreement, Multiple Support Agreement N National of the United States, U. Turbo tax free military S. Turbo tax free military national. Turbo tax free military Nonresident aliens, Nonresident aliens. Turbo tax free military Dependents, Taxpayer identification numbers for aliens. Turbo tax free military Exemptions, Nonresident aliens. Turbo tax free military Joint return, Nonresident alien or dual-status alien. Turbo tax free military Spouse, Nonresident alien spouse. Turbo tax free military Taxpayer identification number, Taxpayer identification numbers for aliens. Turbo tax free military O Overseas taxpayers, U. Turbo tax free military S. Turbo tax free military Citizens or Resident Aliens Living Abroad P Parent, claiming head of household for, Special rule for parent. Turbo tax free military Parents who never married, Parents who never married. Turbo tax free military Parents, divorced or separated, Children of divorced or separated parents (or parents who live apart). Turbo tax free military Penalty, failure to file, Who Must File Personal exemption, Personal Exemptions Photographs of missing children in IRS publications, Reminders Publications (see Tax help) Puerto Rico, residents of, Residents of Puerto Rico Q Qualifying Child, Qualifying Child Relative, Qualifying Relative Surviving spouse, Qualifying Widow(er) With Dependent Child Widow/widower, Qualifying Widow(er) With Dependent Child R Recapture taxes, Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Relationship test, Relationship Test, Member of Household or Relationship Test Relative, qualifying, Qualifying Relative Remarriage after divorce, Divorce and remarriage. Turbo tax free military Rental losses, Rental activity losses. Turbo tax free military Residency test, Residency Test S Same-sex marriage Filing status, Same-sex marriage. Turbo tax free military Scholarships, Earned income. Turbo tax free military , Scholarships. Turbo tax free military , Gross income defined. Turbo tax free military , Do Not Include in Total Support , Earned income defined. Turbo tax free military Self-employed persons Filing requirements (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Gross income, Self-employed persons. Turbo tax free military Separate returns (see Married filing separately) Separated parents, Children of divorced or separated parents (or parents who live apart). Turbo tax free military Separated taxpayers Filing status, Considered married. Turbo tax free military , Married persons living apart. Turbo tax free military Living apart but not legally separated, Considered married. Turbo tax free military Personal exemption, Divorced or separated spouse. Turbo tax free military Signatures, joint returns, Signing a joint return. Turbo tax free military Single taxpayers Filing status, Unmarried persons. Turbo tax free military , Single Gross income filing requirements (Table 1), Table 1. Turbo tax free military 2013 Filing Requirements Chart for Most Taxpayers How to file and forms, How to file. Turbo tax free military Personal exemption, Your Own Exemption Social security and Medicare taxes Reporting of (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Support, not included in, Do Not Include in Total Support Social security benefits, Social security benefits. Turbo tax free military Social security numbers (SSNs) for dependents, Social Security Numbers for Dependents Spouse Deceased, Spouse died. Turbo tax free military , Spouse died before signing. Turbo tax free military , Death of spouse. Turbo tax free military Dual-status alien spouse, Nonresident alien or dual-status alien. Turbo tax free military Exemption for, Your Spouse's Exemption Innocent spouse relief, Relief from joint responsibility. Turbo tax free military Nonresident alien, Nonresident alien spouse. Turbo tax free military Signing joint returns, Signing a joint return. Turbo tax free military Surviving (see Surviving spouse) SSNs (see Social security numbers (SSNs) for dependents) Standard deduction, What's New, Standard Deduction, Married persons who filed separate returns. Turbo tax free military Married filing jointly, Married Filing Jointly State or local income taxes, Electing to itemize for state tax or other purposes. Turbo tax free military Stillborn child, Stillborn child. Turbo tax free military Students Defined, Student defined. Turbo tax free military Foreign, Foreign students' place of residence. Turbo tax free military Support test Qualifying child, Support Test (To Be a Qualifying Child) Qualifying relative, Support Test (To Be a Qualifying Relative) Surviving spouse Death of spouse (see Death of spouse) Gross income filing requirements (Table 1), Table 1. Turbo tax free military 2013 Filing Requirements Chart for Most Taxpayers Single filing status, Widow(er). Turbo tax free military Widow(er) with dependent child, Qualifying Widow(er) With Dependent Child, How to file. Turbo tax free military , Death or birth. Turbo tax free military T Tables and figures, Keeping Up a Home, Worksheet 2. Turbo tax free military Worksheet for Determining Support (see also Worksheets) Filing requirements Dependents (Table 2), Table 2. Turbo tax free military 2013 Filing Requirements for Dependents Gross income levels (Table 1), Table 1. Turbo tax free military 2013 Filing Requirements Chart for Most Taxpayers Other situations requiring filing (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Tax help, How To Get Tax Help Tax returns Amended (see Form 1040X) Filing of (see Filing requirements) Joint returns (see Joint returns) Who must file, What's New, Who Must File, Filing Requirements for Most Taxpayers, Who Should File Tax-exempt income, Tax-exempt income. Turbo tax free military Taxes, not support, Do Not Include in Total Support Temporary absences, Temporary absences. Turbo tax free military , Temporary absences. Turbo tax free military Tiebreaker rules, Tiebreaker rules. Turbo tax free military Tips, reporting of (Table 3), Table 3. Turbo tax free military Other Situations When You Must File a 2013 Return Total support, Total Support Tuition, benefits under GI Bill, Tuition payments and allowances under the GI Bill. Turbo tax free military U U. Turbo tax free military S. Turbo tax free military citizen or resident, Citizen or Resident Test U. Turbo tax free military S. Turbo tax free military citizens filing abroad, filing requirements Filing requirements, U. Turbo tax free military S. Turbo tax free military Citizens or Resident Aliens Living Abroad U. Turbo tax free military S. Turbo tax free military national, U. Turbo tax free military S. Turbo tax free military national. Turbo tax free military U. Turbo tax free military S. Turbo tax free military possessions, income from, Individuals With Income From U. Turbo tax free military S. Turbo tax free military Possessions Unmarried persons (see Single taxpayers) W Welfare benefits, Support provided by the state (welfare, food benefits, housing, etc. Turbo tax free military ). Turbo tax free military What's New, What's New Widow/widower (see Surviving spouse) Worksheets Exemption Phaseout, Worksheet 3. Turbo tax free military Worksheet for Determining the Deduction for Exemptions Head of household status and cost of keeping up home, Keeping Up a Home Support test, Worksheet 2. 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The Turbo Tax Free Military

Turbo tax free military 10. Turbo tax free military   Business Bad Debts Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Definition of Business Bad DebtAccrual method. Turbo tax free military Cash method. Turbo tax free military Debt acquired from a decedent. Turbo tax free military Liquidation. Turbo tax free military Types of Business Bad Debts When a Debt Becomes Worthless How To Claim a Business Bad DebtSpecific Charge-Off Method Nonaccrual-Experience Method Recovery of a Bad DebtNet operating loss (NOL) carryover. Turbo tax free military Introduction You have a bad debt if you cannot collect money owed to you. Turbo tax free military A bad debt is either a business bad debt or a nonbusiness bad debt. Turbo tax free military This chapter discusses only business bad debts. Turbo tax free military Generally, a business bad debt is one that comes from operating your trade or business. Turbo tax free military You can deduct business bad debts on Schedule C (Form 1040) or your applicable business income tax return. Turbo tax free military All other bad debts are nonbusiness bad debts and are deductible only as short-term capital losses. Turbo tax free military For more information on nonbusiness bad debts, see Publication 550. Turbo tax free military Topics - This chapter discusses: Definition of business bad debt When a debt becomes worthless How to claim a business bad debt Recovery of a bad debt Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 556 Examination of Returns, Appeal Rights, and Claims for Refund Form (and Instructions) Schedule C (Form 1040) Profit or Loss From Business 1040X Amended U. Turbo tax free military S. Turbo tax free military Individual Income Tax Return 1045 Application for Tentative Refund 1139 Corporation Application for Tentative Refund 3115 Application for Change in Accounting Method See chapter 12 for information about getting publications and forms. Turbo tax free military Definition of Business Bad Debt A business bad debt is a loss from the worthlessness of a debt that was either: Created or acquired in your trade or business, or Closely related to your trade or business when it became partly or totally worthless. Turbo tax free military A debt is closely related to your trade or business if your primary motive for incurring the debt is business related. Turbo tax free military Bad debts of a corporation (other than an S corporation) are always business bad debts. Turbo tax free military Credit sales. Turbo tax free military   Business bad debts are mainly the result of credit sales to customers. Turbo tax free military Goods that have been sold, but not yet paid for, and services that have been performed, but not yet paid for, are recorded in your books as either accounts receivable or notes receivable. Turbo tax free military After a reasonable period of time, if you have tried to collect the amount due, but are unable to do so, the uncollectible part becomes a business bad debt. Turbo tax free military   Accounts or notes receivable valued at fair market value (FMV) when received are deductible only at that value, even though the FMV may be less than the face value. Turbo tax free military If you purchased an account receivable for less than its face value, and the receivable subsequently becomes worthless, the most you are allowed to deduct is the amount you paid to acquire it. Turbo tax free military    You can claim a business bad debt deduction only if the amount owed to you was previously included in gross income. Turbo tax free military This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest. Turbo tax free military Accrual method. Turbo tax free military   If you use the accrual method of accounting, you generally report income as you earn it. Turbo tax free military You can only claim a bad debt deduction for an uncollectible receivable if you have previously included the uncollectible amount in income. Turbo tax free military   If you qualify, you can use the nonaccrual-experience method of accounting discussed later. Turbo tax free military Under this method, you do not have to accrue income that, based on your experience, you do not expect to collect. Turbo tax free military Cash method. Turbo tax free military   If you use the cash method of accounting, you generally report income when you receive payment. Turbo tax free military You cannot claim a bad debt deduction for amounts owed to you because you never included those amounts in income. Turbo tax free military For example, a cash basis architect cannot claim a bad debt deduction if a client fails to pay the bill because the architect's fee was never included in income. Turbo tax free military Debts from a former business. Turbo tax free military   If you sell your business but retain its receivables, these debts are business debts because they arose out of your trade or business. Turbo tax free military If any of these receivables subsequently become worthless, the loss is still a business bad debt. Turbo tax free military Debt acquired from a decedent. Turbo tax free military   The character of a loss from debts of a business acquired from a decedent is determined in the same way as debts acquired on the purchase of a business. Turbo tax free military The executor of the decedent's estate treats any loss from the debts as a business bad debt if the debts were closely related to the decedent's trade or business when they became worthless. Turbo tax free military Otherwise, a loss from these debts becomes a nonbusiness bad debt for the decedent's estate. Turbo tax free military Liquidation. Turbo tax free military   If you liquidate your business and some of the accounts receivable that you retain become worthless, they become business bad debts. Turbo tax free military Types of Business Bad Debts Business bad debts may result from the following. Turbo tax free military Loans to clients and suppliers. Turbo tax free military   If you loan money to a client, supplier, employee, or distributor for a business reason and you are unable to collect the loan after attempting to do so, you have a business bad debt. Turbo tax free military Debts owed by political parties. Turbo tax free military   If a political party (or other organization that accepts contributions or spends money to influence elections) owes you money and the debt becomes worthless, you can claim a bad debt deduction only if all of the following requirements are met. Turbo tax free military You use the accrual method of accounting. Turbo tax free military The debt arose from the sale of goods or services in the ordinary course of your trade or business. Turbo tax free military More than 30% of your receivables accrued in the year of the sale were from sales to political parties. Turbo tax free military You made substantial and continuing efforts to collect on the debt. Turbo tax free military Loan or capital contribution. Turbo tax free military   You cannot claim a bad debt deduction for a loan you made to a corporation if, based on the facts and circumstances, the loan is actually a contribution to capital. Turbo tax free military Debts of an insolvent partner. Turbo tax free military   If your business partnership breaks up and one of your former partners becomes insolvent, you may have to pay more than your pro rata share of the partnership's debts. Turbo tax free military If you pay any part of the insolvent partner's share of the debts, you can claim a bad debt deduction for the amount you paid that is attributable to the insolvent partner's share. Turbo tax free military Business loan guarantee. Turbo tax free military   If you guarantee a debt that subsequently becomes worthless, the debt can qualify as a business bad debt if all the following requirements are met. Turbo tax free military You made the guarantee in the course of your trade or business. Turbo tax free military You have a legal duty to pay the debt. Turbo tax free military You made the guarantee before the debt became worthless. Turbo tax free military You meet this requirement if you reasonably expected you would not have to pay the debt without full reimbursement from the borrower. Turbo tax free military You received reasonable consideration for making the guarantee. Turbo tax free military You meet this requirement if you made the guarantee in accord with normal business practice or for a good faith business purpose. Turbo tax free military Example. Turbo tax free military Jane Zayne owns the Zayne Dress Company. Turbo tax free military She guaranteed payment of a $20,000 note for Elegant Fashions, a dress outlet. Turbo tax free military Elegant Fashions is one of Zayne's largest clients. Turbo tax free military Elegant Fashions later defaulted on the loan. Turbo tax free military As a result, Ms. Turbo tax free military Zayne paid the remaining balance of the loan in full to the bank. Turbo tax free military She can claim a business bad debt deduction only for the amount she paid, since her guarantee was made in the course of her trade or business for a good faith business purpose. Turbo tax free military She was motivated by the desire to retain one of her better clients and keep a sales outlet. Turbo tax free military Deductible in the year paid. Turbo tax free military   If you make a payment on a loan you guaranteed, you can deduct it in the year paid, unless you have rights against the borrower. Turbo tax free military Rights against a borrower. Turbo tax free military   When you make payment on a loan you guaranteed, you may have the right to take the place of the lender. Turbo tax free military The debt is then owed to you. Turbo tax free military If you have this right, or some other right to demand payment from the borrower, you cannot claim a bad debt deduction until these rights become partly or totally worthless. Turbo tax free military Joint debtor. Turbo tax free military   If two or more debtors jointly owe you money, your inability to collect from one does not enable you to deduct a proportionate amount as a bad debt. Turbo tax free military Sale of mortgaged property. Turbo tax free military   If mortgaged or pledged property is sold for less than the debt, the unpaid, uncollectible balance of the debt is a bad debt. Turbo tax free military When a Debt Becomes Worthless A debt becomes worthless when there is no longer any chance the amount owed will be paid. Turbo tax free military This may occur when the debt is due or prior to that date. Turbo tax free military To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. Turbo tax free military It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. Turbo tax free military Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. Turbo tax free military Property received for debt. Turbo tax free military   If you receive property in partial settlement of a debt, reduce the debt by the property's FMV, which becomes the property's basis. Turbo tax free military You can deduct the remaining debt as a bad debt if and when it becomes worthless. Turbo tax free military   If you later sell the property for more than its basis, any gain on the sale is due to the appreciation of the property. Turbo tax free military It is not a recovery of a bad debt. Turbo tax free military For information on the sale of an asset, see Publication 544. Turbo tax free military How To Claim a Business Bad Debt There are two methods to claim a business bad debt. Turbo tax free military The specific charge-off method. Turbo tax free military The nonaccrual-experience method. Turbo tax free military Generally, you must use the specific charge-off method. Turbo tax free military However, you may use the nonaccrual-experience method if you meet the requirements discussed later under Nonaccrual-Experience Method . Turbo tax free military Specific Charge-Off Method If you use the specific charge-off method, you can deduct specific business bad debts that become either partly or totally worthless during the tax year. Turbo tax free military However, with respect to partly worthless bad debts, your deduction is limited to the amount you charged off on your books during the year. Turbo tax free military Partly worthless debts. Turbo tax free military   You can deduct specific bad debts that become partly uncollectible during the tax year. Turbo tax free military Your tax deduction is limited to the amount you charge off on your books during the year. Turbo tax free military You do not have to charge off and deduct your partly worthless debts annually. Turbo tax free military You can delay the charge off until a later year. Turbo tax free military However, you cannot deduct any part of a debt after the year it becomes totally worthless. Turbo tax free military Significantly modified debt. Turbo tax free military   An exception to the charge-off rule exists for debt which has been significantly modified and on which the holder recognized gain. Turbo tax free military For more information, see Regulations section 1. Turbo tax free military 166-3(a)(3). Turbo tax free military Deduction disallowed. Turbo tax free military   Generally, you can claim a partial bad debt deduction only in the year you make the charge-off on your books. Turbo tax free military If, under audit, the IRS does not allow your deduction and the debt becomes partly worthless in a later tax year, you can deduct the amount you charged off in that year plus the disallowed amount charged off in the earlier year. Turbo tax free military The charge-off in the earlier year, unless reversed on your books, fulfills the charge-off requirement for the later year. Turbo tax free military Totally worthless debts. Turbo tax free military   If a debt becomes totally worthless in the current tax year, you can deduct the entire amount, less any amount deducted in an earlier tax year when the debt was only partly worthless. Turbo tax free military   You do not have to make an actual charge-off on your books to claim a bad debt deduction for a totally worthless debt. Turbo tax free military However, you may want to do so. Turbo tax free military If you do not and the IRS later rules the debt is only partly worthless, you will not be allowed a deduction for the debt in that tax year because a deduction of a partly worthless bad debt is limited to the amount actually charged off. Turbo tax free military See Partly worthless debts, earlier. Turbo tax free military Filing a claim for refund. Turbo tax free military   If you did not deduct a bad debt on your original return for the year it became worthless, you can file a claim for a credit or refund. Turbo tax free military If the bad debt was totally worthless, you must file the claim by the later of the following dates. Turbo tax free military 7 years from the date your original return was due (not including extensions). Turbo tax free military 2 years from the date you paid the tax. Turbo tax free military   If the claim is for a partly worthless bad debt, you must file the claim by the later of the following dates. Turbo tax free military 3 years from the date you filed your original return. Turbo tax free military 2 years from the date you paid the tax. Turbo tax free military You may have longer to file the claim if you were unable to manage your financial affairs due to a physical or mental impairment. Turbo tax free military Such an impairment requires proof of existence. Turbo tax free military   For details and more information about filing a claim, see Publication 556. Turbo tax free military Use one of the following forms to file a claim. Turbo tax free military For more information, see the instructions for the applicable form. Turbo tax free military Table 10-1. Turbo tax free military Forms Used To File a Claim IF you filed as a. Turbo tax free military . Turbo tax free military . Turbo tax free military THEN file. Turbo tax free military . Turbo tax free military . Turbo tax free military Sole proprietor or farmer Form 1040X Corporation Form 1120X S corporation Form 1120S and check box H(4) Partnership Form 1065X if filing on paper or  Form 1065 and check box G(5) if filing electronically Nonaccrual-Experience Method If you use an accrual method of accounting and qualify under the rules explained in this section, you can use the nonaccrual-experience method for bad debts. Turbo tax free military Under this method, you do not accrue service related income you expect to be uncollectible. Turbo tax free military Because the expected uncollectible amounts are not included in income, these amounts are not later deducted from income. Turbo tax free military Generally, you can use the nonaccrual-experience method for accounts receivable for services you performed only if: The services are provided in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, or the performing arts, or You meet the $5 million gross receipts test for all prior years. Turbo tax free military Service related income. Turbo tax free military   You can use the nonaccrual-experience method only for amounts earned by performing services. Turbo tax free military You cannot use this method for amounts owed to you from activities such as lending money, selling goods, or acquiring receivables or other rights to receive payment. Turbo tax free military Gross receipts test. Turbo tax free military   To find out if you meet the $5 million gross receipts test for all prior years, you must figure the average annual gross receipts for each prior year. Turbo tax free military If your average annual gross receipts for any year exceeds $5 million, you cannot use the non-accural experience method. Turbo tax free military   The average annual gross receipts for any year is the average of gross receipts from the year in question and the 2 previous years. Turbo tax free military For example, if you were figuring the average annual gross receipts for 2013, you would average your gross receipts for 2011, 2012, and 2013. Turbo tax free military Interest or penalty charged. Turbo tax free military   Generally, you cannot use the nonaccrual-experience method for amounts due on which you charge interest or a late payment penalty. Turbo tax free military However, do not treat a discount offered for early payment as the charging of interest or a penalty if both the following apply. Turbo tax free military You otherwise accrue the full amount due as gross income at the time you provide the services. Turbo tax free military You treat the discount allowed for early payment as an adjustment to gross income in the year of payment. Turbo tax free military Change in accounting method. Turbo tax free military   Generally, you must obtain consent to change to a nonaccrual-experience method (other than one of the safe harbor methods) or to change from one method to another. Turbo tax free military See Form 3115 and the Instructions for Form 3115 for more information. Turbo tax free military Recovery of a Bad Debt If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. Turbo tax free military The amount you include is limited to the amount you actually deducted. Turbo tax free military However, you can exclude the amount deducted that did not reduce your tax. Turbo tax free military Report the recovery as “Other income” on the appropriate business form or schedule. Turbo tax free military See Recoveries in Publication 525 for more information. Turbo tax free military Net operating loss (NOL) carryover. Turbo tax free military   If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. Turbo tax free military A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. Turbo tax free military For more information about NOLs, see Publication 536. Turbo tax free military Also, see the Instructions for Form 1045, and the Instructions for Form 1139. 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