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2012 free taxes online 3. 2012 free taxes online   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. 2012 free taxes online Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. 2012 free taxes online Certain contracts held by a charitable remainder trust. 2012 free taxes online Excise Taxes. 2012 free taxes online Indoor tanning services. 2012 free taxes online Application for Recognition of ExemptionPolitical activity. 2012 free taxes online Private delivery service. 2012 free taxes online Amendments to organizing documents required. 2012 free taxes online How to show reasonable action and good faith. 2012 free taxes online Not acting reasonably and in good faith. 2012 free taxes online Prejudicing the interest of the Government. 2012 free taxes online Procedure for requesting extension. 2012 free taxes online More information. 2012 free taxes online Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. 2012 free taxes online Grass roots expenditures. 2012 free taxes online Lobbying nontaxable amount. 2012 free taxes online Grass roots nontaxable amount. 2012 free taxes online Organization that no longer qualifies. 2012 free taxes online Tax on organization. 2012 free taxes online Tax on managers. 2012 free taxes online Taxes on organizations. 2012 free taxes online Taxes on managers. 2012 free taxes online Political expenditures. 2012 free taxes online Correction of expenditure. 2012 free taxes online Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. 2012 free taxes online Religious. 2012 free taxes online Charitable. 2012 free taxes online Scientific. 2012 free taxes online Testing for public safety. 2012 free taxes online Literary. 2012 free taxes online Educational. 2012 free taxes online Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). 2012 free taxes online The prevention of cruelty to children or animals. 2012 free taxes online To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. 2012 free taxes online A trust is a fund or foundation and will qualify. 2012 free taxes online However, an individual or a partnership will not qualify. 2012 free taxes online Examples. 2012 free taxes online   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. 2012 free taxes online Child care organizations. 2012 free taxes online   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. 2012 free taxes online Instrumentalities. 2012 free taxes online   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). 2012 free taxes online Examples of a qualifying instrumentality might include state schools, universities, or hospitals. 2012 free taxes online However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. 2012 free taxes online A state or municipality itself does not qualify for exemption. 2012 free taxes online Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. 2012 free taxes online Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. 2012 free taxes online Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. 2012 free taxes online Fundraising events. 2012 free taxes online   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. 2012 free taxes online This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. 2012 free taxes online   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. 2012 free taxes online If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. 2012 free taxes online You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. 2012 free taxes online See Disclosure of Quid Pro Quo Contributions in chapter 2. 2012 free taxes online Exemption application not filed. 2012 free taxes online   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. 2012 free taxes online Separate fund—contributions that are deductible. 2012 free taxes online   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. 2012 free taxes online   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. 2012 free taxes online A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. 2012 free taxes online Personal benefit contracts. 2012 free taxes online   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. 2012 free taxes online   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. 2012 free taxes online Certain annuity contracts. 2012 free taxes online   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). 2012 free taxes online Certain contracts held by a charitable remainder trust. 2012 free taxes online   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. 2012 free taxes online Excise tax. 2012 free taxes online   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. 2012 free taxes online The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. 2012 free taxes online Excise Taxes. 2012 free taxes online   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. 2012 free taxes online Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. 2012 free taxes online Indoor tanning services. 2012 free taxes online   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. 2012 free taxes online For more information, go to IRS. 2012 free taxes online gov and select Affordable Care Act Tax Provisions. 2012 free taxes online Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. 2012 free taxes online For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. 2012 free taxes online See the organization headings that follow for specific information your organization may need to provide. 2012 free taxes online Form 1023. 2012 free taxes online   Your organization must file its application for recognition of exemption on Form 1023. 2012 free taxes online See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. 2012 free taxes online Some organizations are not required to file Form 1023. 2012 free taxes online See Organizations Not Required To File Form 1023, later. 2012 free taxes online    Additional information to help you complete your application can be found online. 2012 free taxes online Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. 2012 free taxes online See Exemption Requirements - Section 501(c)(3) Organizations. 2012 free taxes online   Form 1023 and accompanying statements must show that all of the following are true. 2012 free taxes online The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. 2012 free taxes online ) specified in the introduction to this chapter. 2012 free taxes online No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. 2012 free taxes online You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. 2012 free taxes online The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. 2012 free taxes online See Political activity, next, and Lobbying Expenditures , near the end of this chapter. 2012 free taxes online Political activity. 2012 free taxes online   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). 2012 free taxes online Such participation or intervention includes the publishing or distributing of statements. 2012 free taxes online   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. 2012 free taxes online Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. 2012 free taxes online Effective date of exemption. 2012 free taxes online   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. 2012 free taxes online These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. 2012 free taxes online If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. 2012 free taxes online Otherwise, exemption will be recognized only from the date of receipt. 2012 free taxes online The date of receipt is the date of the U. 2012 free taxes online S. 2012 free taxes online postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. 2012 free taxes online Private delivery service. 2012 free taxes online   If a private delivery service designated by the IRS, rather than the U. 2012 free taxes online S. 2012 free taxes online Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. 2012 free taxes online The following private delivery services have been designated by the IRS. 2012 free taxes online DHL Express (DHL): DHL “Same Day” Service. 2012 free taxes online Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. 2012 free taxes online United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 2012 free taxes online M. 2012 free taxes online , UPS Worldwide Express Plus, and UPS Worldwide Express. 2012 free taxes online Amendments to organizing documents required. 2012 free taxes online   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. 2012 free taxes online If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. 2012 free taxes online Extensions of time for filing. 2012 free taxes online   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. 2012 free taxes online Automatic 12-month extension. 2012 free taxes online Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. 2012 free taxes online To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. 2012 free taxes online 9100-2. 2012 free taxes online ” Discretionary extensions. 2012 free taxes online An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. 2012 free taxes online How to show reasonable action and good faith. 2012 free taxes online   An organization acted reasonably and showed good faith if at least one of the following is true. 2012 free taxes online The organization requests relief before its failure to file is discovered by the IRS. 2012 free taxes online The organization failed to file because of intervening events beyond its control. 2012 free taxes online The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. 2012 free taxes online The organization reasonably relied upon the written advice of the IRS. 2012 free taxes online The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. 2012 free taxes online An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. 2012 free taxes online Not acting reasonably and in good faith. 2012 free taxes online   An organization has not acted reasonably and in good faith under the following circumstances. 2012 free taxes online It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. 2012 free taxes online It was informed of the requirement to file and related tax consequences, but chose not to file. 2012 free taxes online It uses hindsight in requesting relief. 2012 free taxes online The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. 2012 free taxes online Prejudicing the interest of the Government. 2012 free taxes online   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. 2012 free taxes online Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. 2012 free taxes online The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. 2012 free taxes online The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. 2012 free taxes online Procedure for requesting extension. 2012 free taxes online   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. 2012 free taxes online A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. 2012 free taxes online Any documents relevant to the application. 2012 free taxes online An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. 2012 free taxes online If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. 2012 free taxes online This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. 2012 free taxes online ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. 2012 free taxes online This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. 2012 free taxes online The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. 2012 free taxes online These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. 2012 free taxes online ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. 2012 free taxes online The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. 2012 free taxes online The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. 2012 free taxes online   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. 2012 free taxes online Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. 2012 free taxes online More information. 2012 free taxes online   For more information about these procedures, see Regulations sections 301. 2012 free taxes online 9100-1, 301. 2012 free taxes online 9100-2, 301. 2012 free taxes online 9100-3, Revenue Procedure 2013-4, section 6. 2012 free taxes online 04, 2013-1 I. 2012 free taxes online R. 2012 free taxes online B. 2012 free taxes online 126, and Revenue Procedure 2013-8, 2013-1 I. 2012 free taxes online R. 2012 free taxes online B. 2012 free taxes online 237. 2012 free taxes online See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. 2012 free taxes online Notification from the IRS. 2012 free taxes online   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. 2012 free taxes online Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. 2012 free taxes online These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. 2012 free taxes online Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). 2012 free taxes online These organizations are exempt automatically if they meet the requirements of section 501(c)(3). 2012 free taxes online Filing Form 1023 to establish exemption. 2012 free taxes online   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. 2012 free taxes online By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. 2012 free taxes online A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. 2012 free taxes online Private foundations. 2012 free taxes online   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. 2012 free taxes online Gross receipts test. 2012 free taxes online   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. 2012 free taxes online   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. 2012 free taxes online For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. 2012 free taxes online The organization must file Form 1023 within 90 days after the end of its second tax year. 2012 free taxes online   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. 2012 free taxes online However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. 2012 free taxes online Example. 2012 free taxes online   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. 2012 free taxes online It was incorporated on January 1, 2009, and files returns on a calendar-year basis. 2012 free taxes online It did not file a Form 1023. 2012 free taxes online The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. 2012 free taxes online Therefore, it did not have to file Form 1023 and is exempt for those years. 2012 free taxes online However, for 2010, 2011, and 2012 the total gross receipts were $15,900. 2012 free taxes online Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. 2012 free taxes online If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. 2012 free taxes online The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. 2012 free taxes online   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. 2012 free taxes online See the procedures for this extension discussed earlier. 2012 free taxes online Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. 2012 free taxes online This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. 2012 free taxes online Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. 2012 free taxes online These conditions for exemption are referred to as the organizational test. 2012 free taxes online Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. 2012 free taxes online Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). 2012 free taxes online The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. 2012 free taxes online Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. 2012 free taxes online Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. 2012 free taxes online In interpreting an organization's articles, the law of the state where the organization was created is controlling. 2012 free taxes online If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. 2012 free taxes online The following are examples illustrating the organizational test. 2012 free taxes online Example 1. 2012 free taxes online Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). 2012 free taxes online These articles appropriately limit the organization's purposes. 2012 free taxes online The organization meets the organizational test. 2012 free taxes online Example 2. 2012 free taxes online An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. 2012 free taxes online The organization will not be properly limited as to its purposes since all research is not scientific. 2012 free taxes online The organization does not meet the organizational test. 2012 free taxes online Example 3. 2012 free taxes online An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). 2012 free taxes online The organization meets the organizational test. 2012 free taxes online Example 4. 2012 free taxes online If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. 2012 free taxes online Example 5. 2012 free taxes online If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. 2012 free taxes online On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. 2012 free taxes online Example 6. 2012 free taxes online If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. 2012 free taxes online Such purposes are vague and may be accomplished other than in an exempt manner. 2012 free taxes online Example 7. 2012 free taxes online A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. 2012 free taxes online A hospital may or may not be exempt depending on the manner in which it is operated. 2012 free taxes online Example 8. 2012 free taxes online An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. 2012 free taxes online Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. 2012 free taxes online This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. 2012 free taxes online If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. 2012 free taxes online Dedication. 2012 free taxes online   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. 2012 free taxes online Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. 2012 free taxes online Distribution. 2012 free taxes online   Revenue Procedure 82-2, 1982-1 C. 2012 free taxes online B. 2012 free taxes online 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. 2012 free taxes online The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. 2012 free taxes online   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. 2012 free taxes online Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. 2012 free taxes online Sample articles of organization. 2012 free taxes online   See sample articles of organization in the Appendix in the back of this publication. 2012 free taxes online Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. 2012 free taxes online In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. 2012 free taxes online You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. 2012 free taxes online If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. 2012 free taxes online See also Private Schools , discussed later. 2012 free taxes online Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. 2012 free taxes online Advocacy of a position. 2012 free taxes online   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. 2012 free taxes online The mere presentation of unsupported opinion is not educational. 2012 free taxes online Method not educational. 2012 free taxes online   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). 2012 free taxes online The following factors may indicate that the method is not educational. 2012 free taxes online The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. 2012 free taxes online The facts that purport to support the viewpoint are distorted. 2012 free taxes online The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. 2012 free taxes online The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. 2012 free taxes online   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. 2012 free taxes online Qualifying organizations. 2012 free taxes online   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. 2012 free taxes online College book stores, cafeterias, restaurants, etc. 2012 free taxes online   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. 2012 free taxes online Alumni association. 2012 free taxes online   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. 2012 free taxes online If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . 2012 free taxes online Athletic organization. 2012 free taxes online   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. 2012 free taxes online If it is not so engaged, your organization may be exempt as a social club described in chapter 4. 2012 free taxes online Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. 2012 free taxes online If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. 2012 free taxes online Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. 2012 free taxes online The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. 2012 free taxes online (This information also must be projected, so far as may be feasible, for the next academic year. 2012 free taxes online ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. 2012 free taxes online A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. 2012 free taxes online A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. 2012 free taxes online The public school district and county in which the school is located. 2012 free taxes online How to determine racial composition. 2012 free taxes online   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. 2012 free taxes online Nevertheless, a statement of the method by which the racial composition was determined must be supplied. 2012 free taxes online The identity of individual students or members of the faculty and administrative staff should not be included with this information. 2012 free taxes online   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. 2012 free taxes online Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. 2012 free taxes online Also, the school must circulate information that clearly states the school's admission policies. 2012 free taxes online A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. 2012 free taxes online The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. 2012 free taxes online The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. 2012 free taxes online Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. 2012 free taxes online A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. 2012 free taxes online A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. 2012 free taxes online Policy statement. 2012 free taxes online   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. 2012 free taxes online Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. 2012 free taxes online Publicity requirement. 2012 free taxes online   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. 2012 free taxes online Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. 2012 free taxes online To satisfy this requirement, the school must use one of the following two methods. 2012 free taxes online Method one. 2012 free taxes online   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. 2012 free taxes online Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. 2012 free taxes online When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. 2012 free taxes online If this method is used, the notice must meet the following printing requirements. 2012 free taxes online It must appear in a section of the newspaper likely to be read by prospective students and their families. 2012 free taxes online It must occupy at least 3 column inches. 2012 free taxes online It must have its title printed in at least 12 point bold face type. 2012 free taxes online It must have the remaining text printed in at least 8 point type. 2012 free taxes online The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. 2012 free taxes online It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. 2012 free taxes online   Method two. 2012 free taxes online   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. 2012 free taxes online If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. 2012 free taxes online In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. 2012 free taxes online The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. 2012 free taxes online Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. 2012 free taxes online Exceptions. 2012 free taxes online   The publicity requirements will not apply in the following situations. 2012 free taxes online First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. 2012 free taxes online These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. 2012 free taxes online If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. 2012 free taxes online Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . 2012 free taxes online   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. 2012 free taxes online The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. 2012 free taxes online   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. 2012 free taxes online Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. 2012 free taxes online   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. 2012 free taxes online The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. 2012 free taxes online In this regard, it is each school's responsibility to determine whether either of the exceptions applies. 2012 free taxes online Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. 2012 free taxes online Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. 2012 free taxes online Facilities and programs. 2012 free taxes online   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. 2012 free taxes online Scholarship and loan programs. 2012 free taxes online   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. 2012 free taxes online This must be known throughout the general community being served by the school and should be referred to in its publicity. 2012 free taxes online Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. 2012 free taxes online Certification. 2012 free taxes online   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. 2012 free taxes online   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. 2012 free taxes online Recordkeeping requirements. 2012 free taxes online With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. 2012 free taxes online Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. 2012 free taxes online Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. 2012 free taxes online Copies of all materials used by or on behalf of the school to solicit contributions. 2012 free taxes online Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. 2012 free taxes online (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. 2012 free taxes online ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. 2012 free taxes online However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. 2012 free taxes online The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. 2012 free taxes online Similarly, the IRS does not require a school to keep records prohibited under state or federal law. 2012 free taxes online Exceptions. 2012 free taxes online   The school does not have to independently maintain these records for IRS use if both of the following are true. 2012 free taxes online Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. 2012 free taxes online The school maintains copies of these reports from which this information is readily obtainable. 2012 free taxes online If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. 2012 free taxes online Failure to maintain records. 2012 free taxes online   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. 2012 free taxes online Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. 2012 free taxes online However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. 2012 free taxes online Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). 2012 free taxes online Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. 2012 free taxes online Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. 2012 free taxes online Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. 2012 free taxes online The rest of this section contains a description of the information to be provided by certain specific organizations. 2012 free taxes online This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. 2012 free taxes online Each of the following organizations must submit the information described. 2012 free taxes online Charitable organization supporting education. 2012 free taxes online   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. 2012 free taxes online Scholarships. 2012 free taxes online   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. 2012 free taxes online Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. 2012 free taxes online How and by whom the recipients are or will be selected. 2012 free taxes online If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. 2012 free taxes online If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. 2012 free taxes online A copy of the scholarship application form and any brochures or literature describing the scholarship program. 2012 free taxes online Hospital. 2012 free taxes online   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. 2012 free taxes online   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. 2012 free taxes online You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. 2012 free taxes online Submit also an appraisal showing the fair rental value of the rented space. 2012 free taxes online Clinic. 2012 free taxes online   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. 2012 free taxes online Home for the aged. 2012 free taxes online   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. 2012 free taxes online Community nursing bureau. 2012 free taxes online   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. 2012 free taxes online Organization providing loans. 2012 free taxes online   If you make, or will make, loans for charitable and educational purposes, submit the following information. 2012 free taxes online An explanation of the circumstances under which such loans are, or will be, made. 2012 free taxes online Criteria for selection, including the rules of eligibility. 2012 free taxes online How and by whom the recipients are or will be selected. 2012 free taxes online Manner of repayment of the loan. 2012 free taxes online Security required, if any. 2012 free taxes online Interest charged, if any, and when payable. 2012 free taxes online Copies in duplicate of the loan application and any brochures or literature describing the loan program. 2012 free taxes online Public-interest law firms. 2012 free taxes online   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. 2012 free taxes online How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. 2012 free taxes online Whether the organization will accept fees for its services. 2012 free taxes online A description of the cases litigated or to be litigated and how they benefit the public generally. 2012 free taxes online Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. 2012 free taxes online Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. 2012 free taxes online Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. 2012 free taxes online Acceptance of attorneys' fees. 2012 free taxes online   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. 2012 free taxes online Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. 2012 free taxes online   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. 2012 free taxes online All fee awards must be paid to the organization and not to its individual staff attorneys. 2012 free taxes online Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. 2012 free taxes online Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. 2012 free taxes online   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. 2012 free taxes online   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. 2012 free taxes online Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. 2012 free taxes online That the particular religious beliefs of the organization are truly and sincerely held. 2012 free taxes online That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. 2012 free taxes online Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. 2012 free taxes online If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. 2012 free taxes online Churches. 2012 free taxes online   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. 2012 free taxes online In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. 2012 free taxes online   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. 2012 free taxes online Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. 2012 free taxes online The IRS considers the facts and circumstances of each organization applying for church status. 2012 free taxes online Convention or association of churches. 2012 free taxes online   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. 2012 free taxes online Integrated auxiliaries. 2012 free taxes online   An organization is an integrated auxiliary of a church if all the following are true. 2012 free taxes online The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). 2012 free taxes online It is affiliated with a church or a convention or association of churches. 2012 free taxes online It is internally supported. 2012 free taxes online An organization is internally supported unless both of the following are true. 2012 free taxes online It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). 2012 free taxes online It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. 2012 free taxes online Special rule. 2012 free taxes online   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. 2012 free taxes online   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. 2012 free taxes online   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. 2012 free taxes online Scientific Organizations You must show that your organization's research will be carried on in the public interest. 2012 free taxes online Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. 2012 free taxes online Aiding in the scientific education of college or university students. 2012 free taxes online Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
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  • Automotive Manufacturers and Dispute Resolution Programs
    If you have a problem with your car and your dealer can't help you, contact the manufacturer or a national dispute program. (PDF)
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    Read this section of the Consumer Action Handbook for advice before you make a purchase. (PDF)
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    Use the federal directory to find agencies that enforce, regulate, or provide information on products and services that affect consumers. (PDF)
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    Get suggestions on resolving consumer problems and a sample complaint letter to use as a guide. (PDF)
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    Get a list of public resources and contact information, such as libraries, consumer organizations, and resources for military personnel. (PDF)
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    Contact your local consumer protection offices to get help with consumer complaints, get information about consumer laws, and educational materials. (PDF)
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    Find the agency that oversees state-chartered banks and other financial institutions in your state. (PDF)
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    Find the insurance regulator in your state to help you with general insurance questions and to report problems with your insurance company. (PDF)
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    Download the directory of securities administrator if you have a problem with an investment firm or broker. (PDF)
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The 2012 Free Taxes Online

2012 free taxes online 1. 2012 free taxes online   Filing Information Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Filing RequirementsWhen To File and Pay Foreign Currency Does My Return Have To Be On Paper? Where To File Nonresident Alien Spouse Treated as a ResidentSocial Security Number (SSN) How To Make the Choice Suspending the Choice Ending the Choice Estimated Tax Other Forms You May Have To File Topics - This chapter discusses: Whether you have to file a return, When to file your return and pay any tax due, How to treat foreign currency, How to file electronically, Where to file your return, When you can treat your nonresident alien spouse as a resident, and When you may have to make estimated tax payments. 2012 free taxes online Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide 501 Exemptions, Standard Deduction, and Filing Information 505 Tax Withholding and Estimated Tax 519 U. 2012 free taxes online S. 2012 free taxes online Tax Guide for Aliens 970 Tax Benefits for Education Form (and Instructions) 1040-ES Estimated Tax for Individuals 1040X Amended U. 2012 free taxes online S. 2012 free taxes online Individual Income Tax Return 2350 Application for Extension of Time To File U. 2012 free taxes online S. 2012 free taxes online Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 4868 Application for Automatic Extension of Time To File U. 2012 free taxes online S. 2012 free taxes online Individual Income Tax Return 8822 Change of Address See chapter 7 for information about getting these publications and forms. 2012 free taxes online Filing Requirements If you are a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. 2012 free taxes online Your income, filing status, and age generally determine whether you must file an income tax return. 2012 free taxes online Generally, you must file a return for 2013 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table. 2012 free taxes online Filing Status*   Amount Single $10,000 65 or older $11,500 Head of household $12,850 65 or older $14,350 Qualifying widow(er) $16,100 65 or older $17,300 Married filing jointly $20,000 Not living with spouse at end of year $3,900 One spouse 65 or older $21,200 Both spouses 65 or older $22,400 Married filing separately $3,900 *If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return. 2012 free taxes online Gross income. 2012 free taxes online   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. 2012 free taxes online   For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount. 2012 free taxes online If you are self-employed, your gross income includes the amount on Part I, line 7 of Schedule C (Form 1040), Profit or Loss From Business, or line 1 of Schedule C-EZ (Form 1040), Net Profit From Business. 2012 free taxes online Self-employed individuals. 2012 free taxes online   If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. 2012 free taxes online Net earnings from self-employment are defined in Publication 334, Tax Guide for Small Business. 2012 free taxes online 65 or older. 2012 free taxes online   You are considered to be age 65 on the day before your 65th birthday. 2012 free taxes online For example, if your 65th birthday is on January 1, 2014, you are considered 65 for 2013. 2012 free taxes online Residents of U. 2012 free taxes online S. 2012 free taxes online possessions. 2012 free taxes online   If you are (or were) a bona fide resident of a U. 2012 free taxes online S. 2012 free taxes online possession, you may be required to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U. 2012 free taxes online S. 2012 free taxes online Possession. 2012 free taxes online See the instructions for the form for more information. 2012 free taxes online When To File and Pay If you file on a calendar year basis, the due date for filing your return is April 15 of the following year. 2012 free taxes online If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. 2012 free taxes online In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return. 2012 free taxes online When the due date for doing any act for tax purposes—filing a return, paying taxes, etc. 2012 free taxes online — falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. 2012 free taxes online A tax return delivered by the U. 2012 free taxes online S. 2012 free taxes online mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. 2012 free taxes online See your Form 1040 or Form 1040A instructions for a list of designated delivery services. 2012 free taxes online Foreign wire transfers. 2012 free taxes online   If you have a U. 2012 free taxes online S. 2012 free taxes online bank account, you can use: EFTPS (Electronic Federal Tax Payment System), or Federal Tax Application (same-day wire transfer). 2012 free taxes online If you do not have a U. 2012 free taxes online S. 2012 free taxes online bank account, ask if your financial institution has a U. 2012 free taxes online S. 2012 free taxes online affiliate that can help you make same-day wire transfers. 2012 free taxes online   For more information, visit www. 2012 free taxes online eftps. 2012 free taxes online gov. 2012 free taxes online Extensions You can get an extension of time to file your return. 2012 free taxes online In some circumstances, you also can get an extension of time to file and pay any tax due. 2012 free taxes online However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. 2012 free taxes online This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet tests. 2012 free taxes online If you served in a combat zone or qualified hazardous duty area, see Publication 3 for a discussion of extensions of deadlines. 2012 free taxes online Automatic 2-month extension. 2012 free taxes online   You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien, and on the regular due date of your return: You are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. 2012 free taxes online   If you use a calendar year, the regular due date of your return is April 15. 2012 free taxes online Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. 2012 free taxes online Married taxpayers. 2012 free taxes online   If you file a joint return, either you or your spouse can qualify for the automatic extension. 2012 free taxes online If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it. 2012 free taxes online How to get the extension. 2012 free taxes online   To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension. 2012 free taxes online Automatic 6-month extension. 2012 free taxes online   If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). 2012 free taxes online To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). 2012 free taxes online For more information about filing electronically, see E-file options , later. 2012 free taxes online   The form must show your properly estimated tax liability based on the information available to you. 2012 free taxes online    You may not be eligible. 2012 free taxes online You cannot use the automatic 6-month extension of time to file if: You want the IRS to figure your tax, or You are under a court order to file by the regular due date. 2012 free taxes online E-file options. 2012 free taxes online    You can use e-file to get an extension of time to file. 2012 free taxes online You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card. 2012 free taxes online   First, complete Form 4868 to use as a worksheet. 2012 free taxes online If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. 2012 free taxes online    Then, do one of the following. 2012 free taxes online E-file Form 4868. 2012 free taxes online You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. 2012 free taxes online You will need to provide certain information from your tax return for 2012. 2012 free taxes online If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. 2012 free taxes online If you e-file Form 4868, do not also send a paper Form 4868. 2012 free taxes online E-file and pay by credit or debit card. 2012 free taxes online You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. 2012 free taxes online You can do this by phone or over the Internet. 2012 free taxes online If you do this, you do not file Form 4868. 2012 free taxes online For more information, see the instructions for your tax return. 2012 free taxes online When to file. 2012 free taxes online   Generally, you must request the 6-month extension by the regular due date of your return. 2012 free taxes online Previous 2-month extension. 2012 free taxes online   If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 4 months to file your return, for a total of 6 months. 2012 free taxes online The 2-month period and the 6-month period start at the same time. 2012 free taxes online You have to request the additional 4 months by the new due date allowed by the 2-month extension. 2012 free taxes online   The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. 2012 free taxes online You must make an accurate estimate of your tax based on the information available to you. 2012 free taxes online If you find you cannot pay the full amount due with Form 4868, you can still get the extension. 2012 free taxes online You will owe interest on the unpaid amount from the original due date of the return. 2012 free taxes online   You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. 2012 free taxes online Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. 2012 free taxes online In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar year taxpayers). 2012 free taxes online Additional extension of time for taxpayers out of the country. 2012 free taxes online   In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). 2012 free taxes online   To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. 2012 free taxes online Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You will not receive any notification from the Internal Revenue Service unless your request is denied. 2012 free taxes online   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350, discussed next. 2012 free taxes online Extension of time to meet tests. 2012 free taxes online   You generally cannot get an extension of more than 6 months. 2012 free taxes online However, if you are outside the United States and meet certain requirements, you may be able to get a longer extension. 2012 free taxes online   You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. 2012 free taxes online The tests, the exclusions, and the deduction are explained in chapter 4. 2012 free taxes online   You should request an extension if all three of the following apply. 2012 free taxes online You are a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien. 2012 free taxes online You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due. 2012 free taxes online Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies. 2012 free taxes online   If you are granted an extension, it generally will be to 30 days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either the bona fide residence test or the physical presence test. 2012 free taxes online However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension until after the end of the second year. 2012 free taxes online How to get an extension. 2012 free taxes online   To obtain an extension, file Form 2350 either by giving it to a local IRS representative or other IRS employee or by mailing it to the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You must file Form 2350 by the due date for filing your return. 2012 free taxes online Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15. 2012 free taxes online What if tests are not met. 2012 free taxes online   If you obtain an extension and unforeseen events make it impossible for you to meet either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted). 2012 free taxes online    You should make any request for an extension early, so that if it is denied you still can file your return on time. 2012 free taxes online Otherwise, if you file late and additional tax is due, you may be subject to a penalty. 2012 free taxes online Return filed before test is met. 2012 free taxes online   If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U. 2012 free taxes online S. 2012 free taxes online and foreign sources and pay the tax on that income. 2012 free taxes online If you later meet either of the tests, you can claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on Form 1040X. 2012 free taxes online Foreign Currency You must express the amounts you report on your U. 2012 free taxes online S. 2012 free taxes online tax return in U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online How you do this depends on your functional currency. 2012 free taxes online Your functional currency generally is the U. 2012 free taxes online S. 2012 free taxes online dollar unless you are required to use the currency of a foreign country. 2012 free taxes online You must make all federal income tax determinations in your functional currency. 2012 free taxes online The U. 2012 free taxes online S. 2012 free taxes online dollar is the functional currency for all taxpayers except some qualified business units (QBUs). 2012 free taxes online A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. 2012 free taxes online Even if you have a QBU, your functional currency is the dollar if any of the following apply. 2012 free taxes online You conduct the business in U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online The principal place of business is located in the United States. 2012 free taxes online You choose to or are required to use the U. 2012 free taxes online S. 2012 free taxes online dollar as your functional currency. 2012 free taxes online The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted. 2012 free taxes online Make all income tax determinations in your functional currency. 2012 free taxes online If your functional currency is the U. 2012 free taxes online S. 2012 free taxes online dollar, you must immediately translate into U. 2012 free taxes online S. 2012 free taxes online dollars all items of income, expense, etc. 2012 free taxes online (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. 2012 free taxes online Use the exchange rate prevailing when you receive, pay, or accrue the item. 2012 free taxes online If there is more than one exchange rate, use the one that most properly reflects your income. 2012 free taxes online You can generally get exchange rates from banks and U. 2012 free taxes online S. 2012 free taxes online Embassies. 2012 free taxes online If your functional currency is not the U. 2012 free taxes online S. 2012 free taxes online dollar, make all income tax determinations in your functional currency. 2012 free taxes online At the end of the year, translate the results, such as income or loss, into U. 2012 free taxes online S. 2012 free taxes online dollars to report on your income tax return. 2012 free taxes online Blocked Income You generally must report your foreign income in terms of U. 2012 free taxes online S. 2012 free taxes online dollars and, with one exception (see Fulbright Grant, later), you must pay taxes due on it in U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online If, because of restrictions in a foreign country, your income is not readily convertible into U. 2012 free taxes online S. 2012 free taxes online dollars or into other money or property that is readily convertible into U. 2012 free taxes online S. 2012 free taxes online dollars, your income is “blocked” or “deferrable” income. 2012 free taxes online You can report this income in one of two ways: Report the income and pay your federal income tax with U. 2012 free taxes online S. 2012 free taxes online dollars that you have in the United States or in some other country, or Postpone the reporting of the income until it becomes unblocked. 2012 free taxes online If you choose to postpone the reporting of the income, you must file an information return with your tax return. 2012 free taxes online For this information return, you should use another Form 1040 labeled “Report of Deferrable Foreign Income, pursuant to Rev. 2012 free taxes online Rul. 2012 free taxes online 74-351. 2012 free taxes online ” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. 2012 free taxes online You also must state that you waive any right to claim that the deferrable income was includible in your income for any earlier year. 2012 free taxes online You must report your income on your information return using the foreign currency in which you received that income. 2012 free taxes online If you have blocked income from more than one foreign country, include a separate information return for each country. 2012 free taxes online Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U. 2012 free taxes online S. 2012 free taxes online dollars or into other money or property that is convertible into U. 2012 free taxes online S. 2012 free taxes online currency. 2012 free taxes online Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable. 2012 free taxes online If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. 2012 free taxes online If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked. 2012 free taxes online If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. 2012 free taxes online To apply for permission, file Form 3115, Application for Change in Accounting Method. 2012 free taxes online You also must request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. 2012 free taxes online See the instructions for Form 3115 for information on changing your accounting method. 2012 free taxes online Fulbright Grant All income must be reported in U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online In most cases, the tax also must be paid in U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U. 2012 free taxes online S. 2012 free taxes online tax that is based on the blocked income. 2012 free taxes online Paying U. 2012 free taxes online S. 2012 free taxes online tax in foreign currency. 2012 free taxes online   To qualify for this method of payment, you must prepare a statement that shows the following information. 2012 free taxes online You were a Fulbright grantee and were paid in nonconvertible foreign currency. 2012 free taxes online The total grant you received during the year and the amount you received in nonconvertible foreign currency. 2012 free taxes online At least 70% of the grant was paid in nonconvertible foreign currency. 2012 free taxes online The statement must be certified by the U. 2012 free taxes online S. 2012 free taxes online educational foundation or commission paying the grant or other person having control of grant payments to you. 2012 free taxes online   You should prepare at least two copies of this statement. 2012 free taxes online Attach one copy to your Form 1040 and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency. 2012 free taxes online Figuring actual tax. 2012 free taxes online   When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. 2012 free taxes online If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula. 2012 free taxes online   Adjusted gross income that is blocked income × Total U. 2012 free taxes online S. 2012 free taxes online tax = Tax on blocked income     Total adjusted  gross income     You must attach all of the following to the return. 2012 free taxes online A copy of the certified statement discussed earlier. 2012 free taxes online A detailed statement showing the allocation of tax attributable to amounts received in foreign currency and the rates of exchange used in determining your tax liability in U. 2012 free taxes online S. 2012 free taxes online dollars. 2012 free taxes online The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency. 2012 free taxes online Figuring estimated tax on nonconvertible foreign currency. 2012 free taxes online   If you are liable for estimated tax (discussed later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula. 2012 free taxes online   Adjusted gross income that is blocked income × Total estimated U. 2012 free taxes online S. 2012 free taxes online tax = Estimated tax on blocked income     Total adjusted  gross income     If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income. 2012 free taxes online Deposit of foreign currency with disbursing officer. 2012 free taxes online   Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located. 2012 free taxes online Estimated tax installments. 2012 free taxes online   You can either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. 2012 free taxes online See Estimated Tax , later. 2012 free taxes online Deposit receipt. 2012 free taxes online   Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. 2012 free taxes online The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U. 2012 free taxes online S. 2012 free taxes online dollars) should be attached to your Form 1040 or payment voucher from Form 1040-ES. 2012 free taxes online Keep the copy for your records. 2012 free taxes online Does My Return Have To Be On Paper? IRS e-file (electronic filing) is the fastest, easiest, and most convenient way to file your income tax return electronically. 2012 free taxes online IRS e-file offers accurate, safe, and fast alternatives to filing on paper. 2012 free taxes online IRS computers quickly and automatically check for errors or other missing information. 2012 free taxes online Even returns with a foreign address can be e-filed! How to e-file. 2012 free taxes online   There are three ways you can e-file. 2012 free taxes online Use your personal computer. 2012 free taxes online Use a volunteer. 2012 free taxes online Many programs offering free tax help can e-file your return. 2012 free taxes online Use a tax professional. 2012 free taxes online Most tax professionals can e-file your return. 2012 free taxes online These methods are explained in detail in the instructions for your tax return. 2012 free taxes online Where To File If any of the following situations apply to you, do not file your return with the service center listed for your home state. 2012 free taxes online You claim the foreign earned income exclusion. 2012 free taxes online You claim the foreign housing exclusion or deduction. 2012 free taxes online You live in a foreign country. 2012 free taxes online Instead, use one of the following special addresses. 2012 free taxes online If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 USA If you are enclosing a check or money order, file your return with: Internal Revenue Service Center P. 2012 free taxes online O. 2012 free taxes online Box 1303 Charlotte, NC 28201-1303 USA If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the appropriate address listed above. 2012 free taxes online However, you should not file with the addresses listed above if you are a bona fide resident of the U. 2012 free taxes online S. 2012 free taxes online Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year. 2012 free taxes online Resident of U. 2012 free taxes online S. 2012 free taxes online Virgin Islands (USVI). 2012 free taxes online   If you are a bona fide resident of the USVI during your entire tax year, you generally are not required to file a U. 2012 free taxes online S. 2012 free taxes online return. 2012 free taxes online However, you must file a return with the USVI. 2012 free taxes online    Send your return to the:     Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. 2012 free taxes online Thomas, Virgin Islands 00802 Non-USVI resident with USVI income. 2012 free taxes online   If you are a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. 2012 free taxes online File the original return with the United States and file a signed copy of the U. 2012 free taxes online S. 2012 free taxes online return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue. 2012 free taxes online   You must complete Form 8689, Allocation of Individual Income Tax to the U. 2012 free taxes online S. 2012 free taxes online Virgin Islands, and attach a copy to both your U. 2012 free taxes online S. 2012 free taxes online return and your USVI return. 2012 free taxes online You should file your U. 2012 free taxes online S. 2012 free taxes online return with the address listed under Where To File. 2012 free taxes online   See Publication 570, Tax Guide for Individuals With Income From U. 2012 free taxes online S. 2012 free taxes online Possessions, for information about filing Virgin Islands returns. 2012 free taxes online Resident of Guam. 2012 free taxes online   If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam. 2012 free taxes online    Send your return to the:     Department of Revenue and Taxation Government of Guam P. 2012 free taxes online O. 2012 free taxes online Box 23607 GMF, GU 96921   However, if you have income from sources within Guam and you are a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien, but not a bona fide resident of Guam during the entire tax year, you should file a return with the United States. 2012 free taxes online Send your return to the address listed under Where To File. 2012 free taxes online   See Publication 570 for information about filing Guam returns. 2012 free taxes online Resident of the Commonwealth of the Northern Mariana Islands. 2012 free taxes online   If you are a bona fide resident of the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you should file a return with the Northern Mariana Islands. 2012 free taxes online    Send your return to the:      Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. 2012 free taxes online O. 2012 free taxes online Box 5234, CHRB Saipan, MP 96950   However, if you have income from sources within the CNMI and you are a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien, but not a bona fide resident of the CNMI during the entire tax year, you should file a return with the United States. 2012 free taxes online Send your return to the address listed under Where To File. 2012 free taxes online   See Publication 570 for information about filing Northern Mariana Islands returns. 2012 free taxes online Nonresident Alien Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. 2012 free taxes online S. 2012 free taxes online citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U. 2012 free taxes online S. 2012 free taxes online resident. 2012 free taxes online This includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year. 2012 free taxes online If you make this choice, the following two rules apply. 2012 free taxes online You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect. 2012 free taxes online You must file a joint income tax return for the year you make the choice. 2012 free taxes online This means that neither of you can claim under any tax treaty not to be a U. 2012 free taxes online S. 2012 free taxes online resident for a tax year for which the choice is in effect. 2012 free taxes online You can file joint or separate returns in years after the year in which you make the choice. 2012 free taxes online Example 1. 2012 free taxes online Pat Smith, a U. 2012 free taxes online S. 2012 free taxes online citizen, is married to Norman, a nonresident alien. 2012 free taxes online Pat and Norman make the choice to treat Norman as a resident alien by attaching a statement to their joint return. 2012 free taxes online Pat and Norman must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. 2012 free taxes online Although Pat and Norman must file a joint return for the year they make the choice, they can file either joint or separate returns for later years. 2012 free taxes online Example 2. 2012 free taxes online When Bob and Sharon Williams got married, both were nonresident aliens. 2012 free taxes online In June of last year, Bob became a resident alien and remained a resident for the rest of the year. 2012 free taxes online Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return for last year. 2012 free taxes online Bob and Sharon must report their worldwide income for last year and all later years unless the choice is ended or suspended. 2012 free taxes online Bob and Sharon must file a joint return for last year, but they can file either joint or separate returns for later years. 2012 free taxes online If you do not choose to treat your nonresident alien spouse as a U. 2012 free taxes online S. 2012 free taxes online resident, you may be able to use head of household filing status. 2012 free taxes online To use this status, you must pay more than half the cost of maintaining a household for certain dependents or relatives other than your nonresident alien spouse. 2012 free taxes online For more information, see Publication 501. 2012 free taxes online Social Security Number (SSN) If you choose to treat your nonresident alien spouse as a U. 2012 free taxes online S. 2012 free taxes online resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN). 2012 free taxes online To get an SSN for a nonresident alien spouse, apply at an office of the U. 2012 free taxes online S. 2012 free taxes online Social Security Administration (SSA) or U. 2012 free taxes online S. 2012 free taxes online consulate. 2012 free taxes online You must complete Form SS-5, Application for a Social Security Card, available at www. 2012 free taxes online socialsecurity. 2012 free taxes online gov or by calling 1-800-772-1213. 2012 free taxes online You must also provide original or certified copies of documents to verify that spouse's age, identity, and citizenship. 2012 free taxes online If the nonresident alien spouse is not eligible to get an SSN, he or she can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN. 2012 free taxes online How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. 2012 free taxes online It should contain the following: A declaration that one spouse was a nonresident alien and the other spouse a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien on the last day of your tax year and that you choose to be treated as U. 2012 free taxes online S. 2012 free taxes online residents for the entire tax year, and The name, address, and social security number (or individual taxpayer identification number) of each spouse. 2012 free taxes online (If one spouse died, include the name and address of the person making the choice for the deceased spouse. 2012 free taxes online ) You generally make this choice when you file your joint return. 2012 free taxes online However, you also can make the choice by filing a joint amended return on Form 1040X. 2012 free taxes online Attach Form 1040, 1040A, or 1040EZ and print “Amended” across the top of the amended return. 2012 free taxes online If you make the choice with an amended return, you and your spouse also must amend any returns that you may have filed after the year for which you made the choice. 2012 free taxes online You generally must file the amended joint return within 3 years from the date you filed your original U. 2012 free taxes online S. 2012 free taxes online income tax return or 2 years from the date you paid your income tax for that year, whichever is later. 2012 free taxes online Table 1–1. 2012 free taxes online Ending the Choice To Treat Nonresident Alien Spouse as a Resident Revocation   Either spouse can revoke the choice for any tax year. 2012 free taxes online   • The revocation must be made by the due date for filing the tax return for that tax year. 2012 free taxes online   • The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. 2012 free taxes online The statement revoking the choice must include the following:     • The name, address, and social security number (or taxpayer identification number) of each spouse. 2012 free taxes online     • The name and address of any person who is revoking the choice for a deceased spouse. 2012 free taxes online     • A list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. 2012 free taxes online   • If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where the last joint return was filed. 2012 free taxes online Death   The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died. 2012 free taxes online   • If the surviving spouse is a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. 2012 free taxes online   • If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. 2012 free taxes online Divorce or  Legal separation   A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs. 2012 free taxes online Inadequate records   The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. 2012 free taxes online Suspending the Choice The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U. 2012 free taxes online S. 2012 free taxes online citizen or resident alien at any time during the later tax year. 2012 free taxes online Example. 2012 free taxes online Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. 2012 free taxes online They chose to treat Judy as a resident alien and filed a joint 2010 income tax return. 2012 free taxes online On January 10, 2012, Dick became a nonresident alien. 2012 free taxes online Judy had remained a nonresident alien. 2012 free taxes online Because Dick was a resident alien during part of 2012, Dick and Judy can file joint or separate returns for that year. 2012 free taxes online Neither Dick nor Judy was a resident alien at any time during 2013 and their choice is suspended for that year. 2012 free taxes online For 2013, both are treated as nonresident aliens. 2012 free taxes online If Dick becomes a resident alien again in 2014, their choice is no longer suspended and both are treated as resident aliens. 2012 free taxes online Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier) or ended in one of the ways shown in Table 1-1. 2012 free taxes online If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax year. 2012 free taxes online Estimated Tax The requirements for determining who must pay estimated tax are the same for a U. 2012 free taxes online S. 2012 free taxes online citizen or resident abroad as for a taxpayer in the United States. 2012 free taxes online For current instructions on making estimated tax payments, see Form 1040-ES. 2012 free taxes online If you had a tax liability for 2013, you may have to pay estimated tax for 2014. 2012 free taxes online Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 after subtracting your withholding and credits and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. 2012 free taxes online (The return must cover all 12 months. 2012 free taxes online ) If less than two-thirds of your gross income for 2013 and 2014 is from farming or fishing and your adjusted gross income for 2013 is more than $150,000 ($75,000 if you are married and file separately), substitute 110% for 100% in (2). 2012 free taxes online See Publication 505 for more information. 2012 free taxes online The first installment of estimated tax is due on April 15, 2014. 2012 free taxes online Foreign earned income exclusion. 2012 free taxes online   When figuring your estimated gross income, subtract amounts you expect to exclude under the foreign earned income exclusion and the foreign housing exclusion. 2012 free taxes online In addition, you can reduce your income by your estimated foreign housing deduction. 2012 free taxes online However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. 2012 free taxes online If the actual amount of the exclusion or deduction is less than you estimate, you may have to pay a penalty for underpayment of estimated tax. 2012 free taxes online   For more information about figuring your estimated tax, see Publication 505. 2012 free taxes online Other Forms You May Have To File FinCEN Form 114 (replaces Form TD F 90-22. 2012 free taxes online 1). 2012 free taxes online   Beginning October 1, 2013, Form 114, Report of Foreign Bank and Financial Accounts (FBAR), must be filed instead of Form TD F 90-22. 2012 free taxes online 1. 2012 free taxes online Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). 2012 free taxes online See the filing instructions at www. 2012 free taxes online bsaefiling. 2012 free taxes online fincen. 2012 free taxes online treas. 2012 free taxes online gov/main. 2012 free taxes online html. 2012 free taxes online   You must file Form 114 if you had any financial interest in, or signature or other authority over a bank, securities, or other financial account in a foreign country. 2012 free taxes online You do not need to file the report if the assets are with a U. 2012 free taxes online S. 2012 free taxes online military banking facility operated by a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year. 2012 free taxes online   More information about the filing of Form 114 can be found in the instructions for the form. 2012 free taxes online FinCEN Form 105. 2012 free taxes online   You must file Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or cause to be physically transported, mailed, or shipped into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. 2012 free taxes online Certain recipients of currency or monetary instruments also must file Form 105. 2012 free taxes online   More information about the filing of Form 105 can be found in the instructions on the back of the form. 2012 free taxes online Form 8938. 2012 free taxes online   You must file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold ”). 2012 free taxes online The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. 2012 free taxes online Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. 2012 free taxes online S. 2012 free taxes online person. 2012 free taxes online   You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. 2012 free taxes online   More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. 2012 free taxes online Prev  Up  Next   Home   More Online 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