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Free 1040ez Publication 970 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionComparison table. Free 1040ez Ordering forms and publications. Free 1040ez Tax questions. Free 1040ez Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 970, such as legislation enacted after it was published, go to www. Free 1040ez irs. Free 1040ez gov/pub970. Free 1040ez What's New Lifetime learning credit. Free 1040ez  For 2013, the amount of your lifetime learning credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $53,000 and $63,000 ($107,000 and $127,000 if you file a joint return). Free 1040ez You cannot claim a credit if your MAGI is $63,000 or more ($127,000 or more if you file a joint return). Free 1040ez This is an increase from the 2012 limits of $52,000 and $62,000 ($104,000 and $124,000 if filing a joint return). Free 1040ez For more information, see chapter 3, Lifetime Learning Credit . Free 1040ez Business deduction for work-related education. Free 1040ez  For 2013, if you drive your car to and from school and qualify to deduct transportation expenses, the amount you can deduct for miles driven from January 1, 2013 through December 31, 2013 is 56. Free 1040ez 5 cents per mile. Free 1040ez See chapter 12, Business Deduction for Work-Related Education , for more information. Free 1040ez Reminders Form 1098-T, Tuition Statement. Free 1040ez  When figuring an education credit or the tuition and fees deduction, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. Free 1040ez In most cases, the student should receive Form 1098-T from the eligible educational institution by January 31, 2014. Free 1040ez An institution my choose to report either payments received during calendar year 2013 (box 1), or amounts billed during the calendar year 2013 (box 2), for qualified education expenses. Free 1040ez However, the amounts in boxes 1 and 2 of Form 1098-T might be different than the amount you actually paid and are deemed to have paid. Free 1040ez In addition, the Form 1098-T should give you other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements, or refunds, and whether the student was enrolled at least half-time or was a graduate student. Free 1040ez The eligible educational institution may ask for a completed Form W-9S, Request for Student's or Borrower's Taxpayer Identification Number and Certification, or similar statement to obtain the student's name, address, and taxpayer identification number. Free 1040ez Hope Scholarship Credit. Free 1040ez  For 2013, the Hope Scholarship Credit is not available. Free 1040ez However, you may be able to claim an American opportunity or lifetime learning credit. Free 1040ez See chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit , for more information. Free 1040ez Estimated tax payments. Free 1040ez  If you have taxable income from any of your education benefits and the payer does not withhold enough income tax, you may need to make estimated tax payments. Free 1040ez For more information, see Publication 505, Tax Withholding and Estimated Tax. Free 1040ez Photographs of missing children. Free 1040ez  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free 1040ez Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free 1040ez You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free 1040ez Introduction This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Free 1040ez Most benefits apply only to higher education. Free 1040ez What is in this publication. Free 1040ez    Chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions , explains the tax treatment of various types of educational assistance, including scholarships, fellowships, and tuition reductions. Free 1040ez   Two tax credits for which you may be eligible are explained in chapter 2, American Opportunity Credit , and chapter 3, Lifetime Learning Credit . Free 1040ez These benefits, which reduce the amount of income tax you may have to pay, are: The American opportunity credit, and The lifetime learning credit. Free 1040ez    Ten other types of benefits are explained in chapters 4 through 12. Free 1040ez These benefits, which reduce the amount of income tax you may have to pay, are: Deduct student loan interest; Receive tax-free treatment of a canceled student loan; Receive tax-free student loan repayment assistance; Deduct tuition and fees for education; Establish and contribute to a Coverdell education savings account (ESA), which features tax-free earnings; Participate in a qualified tuition program (QTP), which features tax-free earnings; Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions; Cash in savings bonds for education costs without having to pay tax on the interest; Receive tax-free educational benefits from your employer; and Take a business deduction for work-related education. Free 1040ez Note. Free 1040ez You generally cannot claim more than one of the benefits described in the list above for the same qualifying education expense. Free 1040ez Comparison table. Free 1040ez   Some of the features of these benefits are highlighted in Appendix B, Highlights of Education Tax Benefits for Tax Year 2013 , later, in this publication. Free 1040ez This general comparison table may guide you in determining which benefits you may be eligible for and which chapters you may want to read. Free 1040ez When you figure your taxes, you may want to compare these tax benefits so you can choose the method(s) that gives you the lowest tax liability. Free 1040ez If you qualify, you may find that a combination of credit(s) and deduction(s) gives you the lowest tax. Free 1040ez Analyzing your tax withholding. Free 1040ez   After you estimate your education tax benefits for the year, you may be able to reduce the amount of your federal income tax withholding. Free 1040ez Also, you may want to recheck your withholding during the year if your personal or financial situation changes. Free 1040ez See Publication 919, How Do I Adjust My Tax Withholding, for more information. Free 1040ez Glossary. Free 1040ez   In this publication, wherever appropriate, we have tried to use the same or similar terminology when referring to the basic components of each education benefit. Free 1040ez Some of the terms used are: Qualified education expenses, Eligible educational institution, and Modified adjusted gross income. Free 1040ez   Even though the same term, such as qualified education expenses, is used to label a basic component of many of the education benefits, the same expenses are not necessarily allowed for each benefit. Free 1040ez For example, the cost of room and board is a qualified education expense for the qualified tuition program, but not for the education savings bond program. Free 1040ez   Many of the terms used in the publication are defined in the glossary near the end of the publication. Free 1040ez The glossary is not intended to be a substitute for reading the chapter on a particular education benefit, but it will give you an overview of how certain terms are used in discussing the different benefits. Free 1040ez Comments and suggestions. Free 1040ez   We welcome your comments about this publication and your suggestions for future editions. Free 1040ez   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free 1040ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free 1040ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free 1040ez   You can send your comments from www. Free 1040ez irs. Free 1040ez gov/formspubs/. Free 1040ez Click on “More Information” and then on “Comment on Tax Forms and Publications”. Free 1040ez   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free 1040ez Ordering forms and publications. Free 1040ez   Visit www. Free 1040ez irs. Free 1040ez gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free 1040ez Internal Revenue Service 1201 N. Free 1040ez Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free 1040ez   If you have a tax question, check the information available on IRS. Free 1040ez gov or call 1-800-829-1040. Free 1040ez We cannot answer tax questions sent to either of the above addresses. Free 1040ez Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1040 U. Free 1040ez S. Free 1040ez Individual Income Tax Return 1040A U. Free 1040ez S. Free 1040ez Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040NR U. Free 1040ez S. Free 1040ez Nonresident Alien Income Tax Return 1040NR-EZ U. Free 1040ez S. Free 1040ez Income Tax Return for Certain Nonresident Aliens With No Dependents 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 5329 Additional Taxes on Qualified Plans and Other Tax-Favored Accounts 8815 Exclusion of Interest From Series EE and I U. Free 1040ez S. Free 1040ez Savings Bonds Issued After 1989 8863 Education Credits 8917 Tuition and Fees Deduction Schedule A (Form 1040) Itemized Deductions  See chapter 13, How To Get Tax Help , for information about getting these publications and forms. Free 1040ez Prev  Up  Next   Home   More Online Publications
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Free 1040ez 4. Free 1040ez   Communications and Air Transportation Taxes Table of Contents Uncollected Tax Report Communications TaxLocal-only service. Free 1040ez Private communication service. Free 1040ez Exemptions Credits or Refunds Air Transportation TaxesTransportation of Persons by Air International Air Travel Facilities Transportation of Property by Air Special Rules on Transportation Taxes Excise taxes are imposed on amounts paid for certain facilities and services. Free 1040ez If you receive any payment on which tax is imposed, you are required to collect the tax, file returns, and pay the tax over to the government. Free 1040ez If you fail to collect and pay over the taxes, you may be liable for the trust fund recovery penalty. Free 1040ez See chapter 14, later. Free 1040ez Uncollected Tax Report A separate report is required to be filed by collecting agents of communications services and air transportation taxes if the person from whom the facilities or services tax (the tax) is required to be collected (the taxpayer) refuses to pay the tax, or it is impossible for the collecting agent to collect the tax. Free 1040ez The report must contain the name and address of the taxpayer, the type of facility provided or service rendered, the amount paid for the facility or service (the amount on which the tax is based), and the date paid. Free 1040ez Regular method taxpayers. Free 1040ez   For regular method taxpayers, the report must be filed by the due date of the Form 720 on which the tax would have been reported. Free 1040ez Alternative method taxpayers. Free 1040ez   For alternative method taxpayers, the report must be filed by the due date of the Form 720 that includes an adjustment to the separate account for the uncollected tax. Free 1040ez See Alternative method in  chapter 11. Free 1040ez Where to file. Free 1040ez    Do not file the uncollected tax report with Form 720. Free 1040ez Instead, mail the report to: Internal Revenue Service Excise Tax Program SE:S:SP:EX MS C9-109 5000 Ellin Rd. Free 1040ez  Lanham, MD 20706 Communications Tax A 3% tax is imposed on amounts paid for local telephone service and teletypewriter exchange service. Free 1040ez Local telephone service. Free 1040ez   This includes access to a local telephone system and the privilege of telephonic quality communication with most people who are part of the system. Free 1040ez Local telephone service also includes any facility or services provided in connection with this service. Free 1040ez The tax applies to lease payments for certain customer premises equipment (CPE) even though the lessor does not also provide access to a local telecommunications system. Free 1040ez Local-only service. Free 1040ez   Local-only service is local telephone service as described above, provided under a plan that does not include long distance telephone service or that separately states the charge for local service on the bill to customers. Free 1040ez Local-only service also includes any facility or services provided in connection with this service, even though these services and facilities may also be used with long-distance service. Free 1040ez Private communication service. Free 1040ez   Private communication service is not local telephone service. Free 1040ez Private communication service includes accessory-type services provided in connection with a Centrex, PBX, or other similar system for dual use accessory equipment. Free 1040ez However, the charge for the service must be stated separately from the charge for the basic system, and the accessory must function, in whole or in part, in connection with intercommunication among the subscriber's stations. Free 1040ez Teletypewriter exchange service. Free 1040ez   This includes access from a teletypewriter or other data station to a teletypewriter exchange system and the privilege of intercommunication by that station with most persons having teletypewriter or other data stations in the same exchange system. Free 1040ez Figuring the tax. Free 1040ez   The tax is based on the sum of all charges for local telephone service included in the bill. Free 1040ez However, if the bill groups individual items for billing and tax purposes, the tax is based on the sum of the individual items within that group. Free 1040ez The tax on the remaining items not included in any group is based on the charge for each item separately. Free 1040ez Do not include in the tax base state or local sales or use taxes that are separately stated on the taxpayer's bill. Free 1040ez Exemptions Payments for certain services or payments from certain users are exempt from the communications tax. Free 1040ez Nontaxable service. Free 1040ez   Nontaxable service means bundled service and long distance service. Free 1040ez Nontaxable service also includes pre-paid telephone cards and pre-paid cellular service. Free 1040ez Bundled service. Free 1040ez   Bundled service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. Free 1040ez Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. Free 1040ez Telecommunications companies provide bundled service for both landlines and wireless (cellular) service. Free 1040ez If Voice over Internet Protocol service provides both local and long distance service and the charges are not separately stated, such service is bundled service. Free 1040ez   The method for sending or receiving a call, such as on a landline telephone, wireless (cellular), or some other method, does not affect whether a service is local-only or bundled. Free 1040ez Long distance service. Free 1040ez   Long distance service is telephonic quality communication with persons whose telephones are outside the local telephone system of the caller. Free 1040ez Pre-paid telephone cards (PTC). Free 1040ez   A PTC will be treated as bundled service unless a PTC expressly states it is for local-only service. Free 1040ez Generally, the person responsible for collecting the tax is the carrier who transfers the PTC to the transferee. Free 1040ez The transferee is the first person that is not a carrier to whom a PTC is transferred by the carrier. Free 1040ez The transferee is the person liable for the tax and is eligible to request a credit or refund. Free 1040ez For more information, see Regulations section 49. Free 1040ez 4251-4. Free 1040ez   The holder is the person that purchases a PTC to use and not to resell. Free 1040ez Holders are not liable for the tax and cannot request a credit or refund. Free 1040ez Pre-paid cellular telephones. Free 1040ez   Rules similar to the PTC rules described above apply to pre-paid cellular telephones. Free 1040ez The transferee is the person eligible to request the credit or refund. Free 1040ez Installation charges. Free 1040ez   The tax does not apply to payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment. Free 1040ez However, the tax does apply to payments for the repair or replacement of those items incidental to ordinary maintenance. Free 1040ez Answering services. Free 1040ez   The tax does not apply to amounts paid for a private line, an answering service, and a one-way paging or message service if they do not provide access to a local telephone system and the privilege of telephonic communication as part of the local telephone system. Free 1040ez Mobile radio telephone service. Free 1040ez   The tax does not apply to payments for a two-way radio service that does not provide access to a local telephone system. Free 1040ez Coin-operated telephones. Free 1040ez   The tax for local telephone service does not apply to payments made for services by inserting coins in public coin-operated telephones. Free 1040ez But the tax applies if the coin-operated telephone service is furnished for a guaranteed amount. Free 1040ez Figure the tax on the amount paid under the guarantee plus any fixed monthly or other periodic charge. Free 1040ez Telephone-operated security systems. Free 1040ez   The tax does not apply to amounts paid for telephones used only to originate calls to a limited number of telephone stations for security entry into a building. Free 1040ez In addition, the tax does not apply to any amounts paid for rented communication equipment used in the security system. Free 1040ez News services. Free 1040ez   The tax on teletypewriter exchange service does not apply to charges for the following news services. Free 1040ez Services dealing exclusively with the collection or dissemination of news for or through the public press or radio or television broadcasting. Free 1040ez Services used exclusively in the collection or dissemination of news by a news ticker service furnishing a general news service similar to that of the public press. Free 1040ez This exemption applies to payments received for messages from one member of the news media to another member (or to or from their bona fide correspondents). Free 1040ez For the exemption to apply, the charge for these services must be billed in writing to the person paying for the service and that person must certify in writing that the services are used for an exempt purpose. Free 1040ez Services not exempted. Free 1040ez   The tax applies to amounts paid by members of the news media for local telephone service. Free 1040ez International organizations and the American Red Cross. Free 1040ez   The tax does not apply to communication services furnished to an international organization or to the American National Red Cross. Free 1040ez Nonprofit hospitals. Free 1040ez   The tax does not apply to telephone services furnished to income tax-exempt nonprofit hospitals for their use. Free 1040ez Also, the tax does not apply to amounts paid by these hospitals to provide local telephone service in the homes of their personnel who must be reached during their off-duty hours. Free 1040ez Nonprofit educational organizations. Free 1040ez   The tax does not apply to payments received for services and facilities furnished to a nonprofit educational organization for its use. Free 1040ez A nonprofit educational organization is one that satisfies all the following requirements. Free 1040ez It normally maintains a regular faculty and curriculum. Free 1040ez It normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. Free 1040ez It is exempt from income tax under section 501(a). Free 1040ez This includes a school operated by an organization exempt under section 501(c)(3) if the school meets the above qualifications. Free 1040ez Qualified blood collector organizations. Free 1040ez   The tax does not apply to telephone services furnished to qualified blood collector organizations for their use. Free 1040ez A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered with the IRS, and Registered by the Food and Drug Administration to collect blood. Free 1040ez Federal, state, and local government. Free 1040ez   The tax does not apply to communication services provided to the government of the United States, the government of any state or its political subdivisions, the District of Columbia, or the United Nations. Free 1040ez Treat an Indian tribal government as a state for the exemption from the communications tax only if the services involve the exercise of an essential tribal government function. Free 1040ez Exemption certificate. Free 1040ez   Any form of exemption certificate will be acceptable if it includes all the information required by the Internal Revenue Code and Regulations. Free 1040ez See Regulations section 49. Free 1040ez 4253-11. Free 1040ez File the certificate with the provider of the communication services. Free 1040ez An exemption certificate is not required for nontaxable services. Free 1040ez   The following users that are exempt from the communications tax do not have to file an annual exemption certificate after they have filed the initial certificate to claim an exemption from the communications tax. Free 1040ez The American National Red Cross and other international organizations. Free 1040ez Nonprofit hospitals. Free 1040ez Nonprofit educational organizations. Free 1040ez Qualified blood collector organizations. Free 1040ez State and local governments. Free 1040ez   The federal government does not have to file any exemption certificate. Free 1040ez   All other organizations must furnish exemption certificates when required. Free 1040ez Credits or Refunds If tax is collected and paid over for nontaxable services, or for certain services or users exempt from the communications tax, the collector or taxpayer may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Free 1040ez Alternatively, the person who paid the tax may claim a refund. Free 1040ez For more information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Free 1040ez Collectors. Free 1040ez   The collector may request a credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Free 1040ez These requirements also apply to nontaxable service refunds. Free 1040ez Collectors using the regular method for deposits. Free 1040ez   Collectors using the regular method for deposits must use Form 720X to request a credit or refund if the collector has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Free 1040ez Collectors using the alternative method for deposits. Free 1040ez   Collectors using the alternative method for deposits must adjust their separate accounts for the credit or refund if it has repaid the tax to the person from whom the tax was collected, or obtained the consent of that person to the allowance of the credit or refund. Free 1040ez For more information, see the Instructions for Form 720. Free 1040ez Air Transportation Taxes Taxes are imposed on amounts paid for: Transportation of persons by air, Use of international air travel facilities, and Transportation of property by air. Free 1040ez Transportation of Persons by Air The tax on transportation of persons by air is made up of the: Percentage tax, and Domestic-segment tax. Free 1040ez Percentage tax. Free 1040ez   A tax of 7. Free 1040ez 5% applies to amounts paid for taxable transportation of persons by air. Free 1040ez Amounts paid for transportation include charges for layover or waiting time and movement of aircraft in deadhead service. Free 1040ez Mileage awards. Free 1040ez   The percentage tax may apply to an amount paid (in cash or in kind) to an air carrier (or any related person) for the right to provide mileage awards for, or other reductions in the cost of, any transportation of persons by air. Free 1040ez For example, this applies to mileage awards purchased by credit card companies, telephone companies, restaurants, hotels, and other businesses. Free 1040ez   Generally, the percentage tax does not apply to amounts paid for mileage awards where the mileage awards cannot, under any circumstances, be redeemed for air transportation that is subject to the tax. Free 1040ez Until regulations are issued, the following rules apply to mileage awards. Free 1040ez Amounts paid for mileage awards that cannot be redeemed for taxable transportation beginning and ending in the United States are not subject to the tax. Free 1040ez For this rule, mileage awards issued by a foreign air carrier are considered to be usable only on that foreign air carrier and thus not redeemable for taxable transportation beginning and ending in the United States. Free 1040ez Therefore, amounts paid to a foreign air carrier for mileage awards are not subject to the tax. Free 1040ez Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are not subject to the tax to the extent those miles will be awarded in connection with the purchase of taxable transportation. Free 1040ez Amounts paid by an air carrier to a domestic air carrier for mileage awards that can be redeemed for taxable transportation are subject to the tax to the extent those miles will not be awarded in connection with the purchase of taxable transportation. Free 1040ez Domestic-segment tax. Free 1040ez   The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. Free 1040ez However, see Rural airports, later. Free 1040ez A segment is a single takeoff and a single landing. Free 1040ez The amount of the domestic-segment tax is in the Instructions for Form 720. Free 1040ez Charter flights. Free 1040ez    If an aircraft is chartered, the domestic-segment tax for each segment of taxable transportation is figured by multiplying the tax by the number of passengers transported on the aircraft. Free 1040ez Rural airports. Free 1040ez   The domestic-segment tax does not apply to a segment to or from a rural airport. Free 1040ez An airport is a rural airport for a calendar year if fewer than 100,000 commercial passengers departed from the airport by air during the second preceding calendar year (the 100,000 passenger rule), and one of the following is true: The airport is not located within 75 miles of another airport from which 100,000 or more commercial passengers departed during the second preceding calendar year, The airport was receiving essential air service subsidies as of August 5, 1997, or The airport is not connected by paved roads to another airport. Free 1040ez   To apply the 100,000 passenger rule to any airport described in (3) above, only count commercial passengers departing from the airport by air on flight segments of at least 100 miles. Free 1040ez   An updated list of rural airports can be found on the Department of Transportation website at www. Free 1040ez dot. Free 1040ez gov and enter the phrase “Essential Air Service” in the search box. Free 1040ez Taxable transportation. Free 1040ez   Taxable transportation is transportation by air that meets either of the following tests. Free 1040ez It begins and ends either in the United States or at any place in Canada or Mexico not more than 225 miles from the nearest point on the continental United States boundary (this is the 225-mile zone). Free 1040ez It is directly or indirectly from one port or station in the United States to another port or station in the United States, but only if it is not a part of uninterrupted international air transportation, discussed later. Free 1040ez Round trip. Free 1040ez   A round trip is considered two separate trips. Free 1040ez The first trip is from the point of departure to the destination. Free 1040ez The second trip is the return trip from that destination. Free 1040ez Uninterrupted international air transportation. Free 1040ez   This means transportation entirely by air that does not begin and end in the United States or in the 225-mile zone if there is not more than a 12-hour scheduled interval between arrival and departure at any station in the United States. Free 1040ez For a special rule that applies to military personnel, see Exemptions, later. Free 1040ez Transportation between the continental U. Free 1040ez S. Free 1040ez and Alaska or Hawaii. Free 1040ez   This transportation is partially exempt from the tax on transportation of persons by air. Free 1040ez The tax does not apply to the part of the trip between the point at which the route of transportation leaves or enters the continental United States (or a port or station in the 225-mile zone) and the point at which it enters or leaves Hawaii or Alaska. Free 1040ez Leaving or entering occurs when the route of the transportation passes over either the United States border or a point 3 nautical miles (3. Free 1040ez 45 statute miles) from low tide on the coast line, or when it leaves a port or station in the 225-mile zone. Free 1040ez Therefore, this transportation is subject to the percentage tax on the part of the trip in U. Free 1040ez S. Free 1040ez airspace, the domestic-segment tax for each domestic segment, and the tax on the use of international air travel facilities, discussed later. Free 1040ez Transportation within Alaska or Hawaii. Free 1040ez   The tax on transportation of persons by air applies to the entire fare paid in the case of flights between any of the Hawaiian Islands, and between any ports or stations in the Aleutian Islands or other ports or stations elsewhere in Alaska. Free 1040ez The tax applies even though parts of the flights may be over international waters or over Canada, if no point on the direct line of transportation between the ports or stations is more than 225 miles from the United States (Hawaii or Alaska). Free 1040ez Package tours. Free 1040ez   The air transportation taxes apply to “complimentary” air transportation furnished solely to participants in package holiday tours. Free 1040ez The amount paid for these package tours includes a charge for air transportation even though it may be advertised as “free. Free 1040ez ” This rule also applies to the tax on the use of international air travel facilities, discussed later. Free 1040ez Liability for tax. Free 1040ez   The person paying for taxable transportation is liable for the tax and, ordinarily, the person receiving the payment collects the tax, files the returns, and pays the tax over to the government. Free 1040ez However, if payment is made outside the United States for a prepaid order, exchange order, or similar order, the person furnishing the initial transportation provided for under that order must collect the tax. Free 1040ez    A travel agency that is an independent broker and sells tours on aircraft that it charters must collect the transportation tax, file the returns, and pay the tax over to the government. Free 1040ez However, a travel agency that sells tours as the agent of an airline must collect the tax and remit it to the airline for the filing of returns and for the payment of the tax over to the government. Free 1040ez An independent third party that is not under the airline's supervision or control, but is acting on behalf of, and receiving compensation from, a passenger, is not required to collect the tax and pay it to the government. Free 1040ez For more information on resellers of air transportation, see Revenue Ruling 2006-52. Free 1040ez You can find Revenue Ruling 2006-52 on page 761 of I. Free 1040ez R. Free 1040ez B. Free 1040ez 2006-43 at www. Free 1040ez irs. Free 1040ez gov/pub/irs-irbs/irb06-43. Free 1040ez pdf. Free 1040ez   The fact that the aircraft does not use public or commercial airports in taking off and landing has no effect on the tax. Free 1040ez But see Certain helicopter uses, later. Free 1040ez   For taxable transportation that begins and ends in the United States, the tax applies regardless of whether the payment is made in or outside the United States. Free 1040ez   If the tax is not paid when payment for the transportation is made, the air carrier providing the initial segment of the transportation that begins or ends in the United States becomes liable for the tax. Free 1040ez Exemptions. Free 1040ez   The tax on transportation of persons by air does not apply in the following situations. Free 1040ez See also Special Rules on Transportation Taxes, later. Free 1040ez Military personnel on international trips. Free 1040ez   When traveling in uniform at their own expense, United States military personnel on authorized leave are deemed to be traveling in uninterrupted international air transportation (defined earlier) even if the scheduled interval between arrival and departure at any station in the United States is actually more than 12 hours. Free 1040ez However, such personnel must buy their tickets within 12 hours after landing at the first domestic airport and accept the first available accommodation of the type called for by their tickets. Free 1040ez The trip must begin or end outside the United States and the 225-mile zone. Free 1040ez Certain helicopter uses. Free 1040ez   The tax does not apply to air transportation by helicopter if the helicopter is used for any of the following purposes. Free 1040ez Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Free 1040ez Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free 1040ez Providing emergency medical transportation. Free 1040ez   However, during a use described in items (1) or (2), the tax applies if the helicopter takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free 1040ez For item (1), treat each flight segment as a separate flight. Free 1040ez Fixed-wing aircraft uses. Free 1040ez   The tax does not apply to air transportation by fixed-wing aircraft if the fixed-wing aircraft is used for any of the following purposes. Free 1040ez Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Free 1040ez Providing emergency medical transportation. Free 1040ez The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free 1040ez   However, during a use described in item (1), the tax applies if the fixed-wing aircraft takes off from, or lands at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise uses services provided under section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Free 1040ez Skydiving. Free 1040ez   The tax does not apply to any air transportation exclusively for the purpose of skydiving. Free 1040ez Seaplanes. Free 1040ez   The tax does not apply to any air transportation by seaplane for any segment consisting of a takeoff from, and a landing on, water if the places where the takeoff and landing occur are not receiving financial assistance from the Airport and Airways Trust Fund. Free 1040ez Bonus tickets. Free 1040ez   The tax does not apply to free bonus tickets issued by an airline company to its customers who have satisfied all requirements to qualify for the bonus tickets. Free 1040ez However, the tax applies to amounts paid by customers for advance bonus tickets when customers have traveled insufficient mileage to fully qualify for the free advance bonus tickets. Free 1040ez International Air Travel Facilities A tax per person is imposed (whether in or outside the United States) for international flights that begin or end in the United States. Free 1040ez However, for a domestic segment that begins or ends in Alaska or Hawaii, a reduced tax per person applies only to departures. Free 1040ez This tax does not apply if all the transportation is subject to the percentage tax, discussed earlier. Free 1040ez It also doesn't apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. Free 1040ez See the Instructions for Form 720 for the tax rates. Free 1040ez Transportation of Property by Air A tax of 6. Free 1040ez 25% is imposed on amounts paid (whether in or outside the United States) for transportation of property by air. Free 1040ez The fact that the aircraft may not use public or commercial airports in taking off and landing has no effect on the tax. Free 1040ez The tax applies only to amounts paid to a person engaged in the business of transporting property by air for hire. Free 1040ez The tax applies only to transportation (including layover time and movement of aircraft in deadhead service) that begins and ends in the United States. Free 1040ez Thus, the tax does not apply to transportation of property by air that begins or ends outside the United States. Free 1040ez Exemptions. Free 1040ez   The tax on transportation of property by air does not apply in the following situations. Free 1040ez See also Special Rules on Transportation Taxes, later. Free 1040ez Cropdusting and firefighting service. Free 1040ez   The tax does not apply to amounts paid for cropdusting or aerial firefighting service. Free 1040ez Exportation. Free 1040ez    The tax does not apply to payments for transportation of property by air in the course of exportation (including to United States possessions) by continuous movement, as evidenced by the execution of Form 1363, Export Exemption Certificate. Free 1040ez See Form 1363 for more information. Free 1040ez Certain helicopter and fixed-wing air ambulance uses. Free 1040ez   The tax does not apply to amounts paid for the use of helicopters in construction to set heating and air conditioning units on roofs of buildings, to dismantle tower cranes, and to aid in construction of power lines and ski lifts. Free 1040ez   The tax also does not apply to air transportation by helicopter or fixed-wing aircraft for the purpose of providing emergency medical services. Free 1040ez The fixed-wing aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Free 1040ez Skydiving. Free 1040ez   The tax does not apply to any air transportation exclusively for the purpose of skydiving. Free 1040ez Excess baggage. Free 1040ez    The tax does not apply to excess baggage accompanying a passenger on an aircraft operated on an established line. Free 1040ez Surtax on fuel used in a fractional ownership program aircraft. Free 1040ez   The tax does not apply if the surtax on fuel used in a fractional ownership program aircraft (discussed earlier) is imposed. Free 1040ez Alaska and Hawaii. Free 1040ez   For transportation of property to and from Alaska and Hawaii, the tax in general does not apply to the portion of the transportation that is entirely outside the continental United States (or the 225-mile zone if the aircraft departs from or arrives at an airport in the 225-mile zone). Free 1040ez But the tax applies to flights between ports or stations in Alaska and the Aleutian Islands, as well as between ports or stations in Hawaii. Free 1040ez The tax applies even though parts of the flights may be over international waters or over Canada, if no point on a line drawn from where the route of transportation leaves the United States (Alaska) to where it reenters the United States (Alaska) is more than 225 miles from the United States. Free 1040ez Liability for tax. Free 1040ez   The person paying for taxable transportation is liable for the tax and, ordinarily, the person engaged in the business of transporting property by air for hire receives the payment, collects the tax, files the returns, and pays the tax over to the government. Free 1040ez   If tax is not paid when a payment is made outside the United States, the person furnishing the last segment of taxable transportation collects the tax from the person to whom the property is delivered in the United States. Free 1040ez Special Rules on Transportation Taxes In certain circumstances, special rules apply to the taxes on transportation of persons and property by air. Free 1040ez Aircraft used by affiliated corporations. Free 1040ez   The taxes do not apply to payments received by one member of an affiliated group of corporations from another member for services furnished in connection with the use of an aircraft. Free 1040ez However, the aircraft must be owned or leased by a member of the affiliated group and cannot be available for hire by a nonmember of the affiliated group. Free 1040ez Determine whether an aircraft is available for hire by a nonmember of an affiliated group on a flight-by-flight basis. Free 1040ez   For this rule, an affiliated group of corporations is any group of corporations connected with a common parent corporation through 80% or more of stock ownership. Free 1040ez Small aircraft. Free 1040ez   The taxes do not apply to transportation furnished by an aircraft having a maximum certificated takeoff weight of 6,000 pounds or less. Free 1040ez However, the taxes do apply if the aircraft is operated on an established line. Free 1040ez “Operated on an established line” means the aircraft operates with some degree of regularity between definite points. Free 1040ez However, it does not include any time an aircraft is being operated on a flight that is solely for sightseeing. Free 1040ez   Consider an aircraft to be operated on an established line if it is operated on a charter basis between two cities also served by that carrier on a regularly scheduled basis. Free 1040ez   Also, the taxes apply if the aircraft is jet-powered, regardless of its maximum certificated takeoff weight or whether or not it is operated on an established line. Free 1040ez Mixed load of persons and property. Free 1040ez   If a single amount is paid for air transportation of persons and property, the payment must be allocated between the amount subject to the tax on transportation of persons and the amount subject to the tax on transportation of property. Free 1040ez The allocation must be reasonable and supported by adequate records. Free 1040ez Credits or refunds. Free 1040ez   If tax is collected and paid over for air transportation that is not taxable air transportation, the collector may claim a credit or refund if it has repaid the tax to the person from whom the tax was collected or obtained the consent of that person to the allowance of the credit or refund. Free 1040ez Alternatively, the person who paid the tax may claim a refund. Free 1040ez For information on how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Free 1040ez Prev  Up  Next   Home   More Online Publications