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Free 2007 tax software download 5. Free 2007 tax software download   Exemptions, Deductions, and Credits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Items Related to Excluded Income Exemptions Contributions to Foreign Charitable Organizations Moving ExpensesAllocation of Moving Expenses Forms To File Contributions to Individual Retirement Arrangements Taxes of Foreign Countries and U. Free 2007 tax software download S. Free 2007 tax software download PossessionsCredit for Foreign Income Taxes Deduction for Foreign Income Taxes Deduction for Other Foreign Taxes How To Report Deductions Topics - This chapter discusses: The rules concerning items related to excluded income, Exemptions, Contributions to foreign charitable organizations, Moving expenses, Contributions to individual retirement arrangements (IRAs), Taxes of foreign countries and U. Free 2007 tax software download S. Free 2007 tax software download possessions, and How to report deductions. Free 2007 tax software download Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 514 Foreign Tax Credit for Individuals 521 Moving Expenses 523 Selling Your Home 590 Individual Retirement Arrangements (IRAs) 597 Information on the United States—Canada Income Tax Treaty Form (and Instructions) 1116 Foreign Tax Credit 2106 Employee Business Expenses 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 3903 Moving Expenses Schedule A (Form 1040) Itemized Deductions Schedule C (Form 1040) Profit or Loss From Business SS-5 Application for a Social Security Card W-7 Application for IRS Individual Taxpayer Identification Number See chapter 7 for information about getting these publications and forms. Free 2007 tax software download Items Related to Excluded Income U. Free 2007 tax software download S. Free 2007 tax software download citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States. Free 2007 tax software download If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Free 2007 tax software download This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. Free 2007 tax software download You can deduct only those expenses connected with earning includible income. Free 2007 tax software download These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that are not definitely related to any particular type of gross income. Free 2007 tax software download These rules do not apply to items such as: Personal exemptions, Qualified retirement contributions, Alimony payments, Charitable contributions, Medical expenses, Mortgage interest, or Real estate taxes on your personal residence. Free 2007 tax software download For purposes of these rules, your housing deduction is not treated as allocable to your excluded income, but the deduction for self- employment tax is. Free 2007 tax software download If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions. Free 2007 tax software download Example. Free 2007 tax software download In 2012, you had $90,400 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. Free 2007 tax software download You did not have a housing exclusion. Free 2007 tax software download Because you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2012 return. Free 2007 tax software download In 2013, you received a $12,000 bonus for work you did abroad in 2012. Free 2007 tax software download You can exclude $4,700 of the bonus because the limit on the foreign earned income exclusion for 2012 was $95,100 and you have already excluded $90,400. Free 2007 tax software download Since you must include $7,300 of the bonus ($12,000 − $4,700) for work you did in 2012 in income, you can file an amended return for 2012 to claim $677 of the deductions. Free 2007 tax software download This is the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($7,300) and divided by the total foreign earned income for 2012 ($102,400). Free 2007 tax software download Exemptions You can claim an exemption for your nonresident alien spouse on your separate return, provided your spouse has no gross income for U. Free 2007 tax software download S. Free 2007 tax software download tax purposes and is not the dependent of another U. Free 2007 tax software download S. Free 2007 tax software download taxpayer. Free 2007 tax software download You also can claim exemptions for individuals who qualify as your dependents. Free 2007 tax software download To be your dependent, the individual must be a U. Free 2007 tax software download S. Free 2007 tax software download citizen, U. Free 2007 tax software download S. Free 2007 tax software download national, U. Free 2007 tax software download S. Free 2007 tax software download resident alien, or a resident of Canada or Mexico for some part of the calendar year in which your tax year begins. Free 2007 tax software download Children. Free 2007 tax software download   Children usually are citizens or residents of the same country as their parents. Free 2007 tax software download If you were a U. Free 2007 tax software download S. Free 2007 tax software download citizen when your child was born, your child generally is a U. Free 2007 tax software download S. Free 2007 tax software download citizen. Free 2007 tax software download This is true even if the child's other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent. Free 2007 tax software download   If you have a legally adopted child who is not a U. Free 2007 tax software download S. Free 2007 tax software download citizen, U. Free 2007 tax software download S. Free 2007 tax software download resident, or U. Free 2007 tax software download S. Free 2007 tax software download national, the child meets the citizen requirement if you are a U. Free 2007 tax software download S. Free 2007 tax software download citizen or U. Free 2007 tax software download S. Free 2007 tax software download national and the child lived with you as a member of your household all year. Free 2007 tax software download Social security number. Free 2007 tax software download   You must include on your return the social security number (SSN) of each dependent for whom you claim an exemption. Free 2007 tax software download To get a social security number for a dependent, apply at a Social Security office or U. Free 2007 tax software download S. Free 2007 tax software download consulate. Free 2007 tax software download You must provide original or certified copies of documents to verify the dependent's age, identity, and citizenship, and complete Form SS-5. Free 2007 tax software download   If you do not have an SSN for a child who was born in 2013 and died in 2013, attach a copy of the child's birth certificate to your tax return. Free 2007 tax software download Print “Died” in column (2) of line 6c of your Form 1040 or Form 1040A. Free 2007 tax software download   If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent's individual taxpayer identification number (ITIN) instead of an SSN. Free 2007 tax software download To apply for an ITIN, file Form W-7 with the IRS. Free 2007 tax software download It usually takes 6 to 10 weeks to get an ITIN. Free 2007 tax software download Enter your dependent's ITIN wherever an SSN is requested on your tax return. Free 2007 tax software download More information. Free 2007 tax software download   For more information about exemptions, see Publication 501. Free 2007 tax software download Contributions to Foreign Charitable Organizations If you make contributions directly to a foreign church or other foreign charitable organization, you generally cannot deduct them. Free 2007 tax software download Exceptions are explained under Canadian, Mexican, and Israeli charities, later. Free 2007 tax software download You can deduct contributions to a U. Free 2007 tax software download S. Free 2007 tax software download organization that transfers funds to a charitable foreign organization if the U. Free 2007 tax software download S. Free 2007 tax software download organization controls the use of the funds by the foreign organization or if the foreign organization is just an administrative arm of the U. Free 2007 tax software download S. Free 2007 tax software download organization. Free 2007 tax software download Canadian, Mexican, and Israeli charities. Free 2007 tax software download   Under the income tax treaties with Canada, Mexico and Israel, you may be able to deduct contributions to certain Canadian, Mexican, and Israeli charitable organizations. Free 2007 tax software download Generally, you must have income from sources in Canada, Mexico, or Israel, and the organization must meet certain requirements. Free 2007 tax software download See Publication 597, Information on the United States-Canada Income Tax Treaty, and Publication 526, Charitable Contributions, for more information. Free 2007 tax software download Moving Expenses If you moved to a new home in 2013 because of your job or business, you may be able to deduct the expenses of your move. Free 2007 tax software download Generally, to be deductible, the moving expenses must have been paid or incurred in connection with starting work at a new job location. Free 2007 tax software download See Publication 521 for a complete discussion of the deduction for moving expenses and information about moves within the United States. Free 2007 tax software download Foreign moves. Free 2007 tax software download   A foreign move is a move in connection with the start of work at a new job location outside the United States and its possessions. Free 2007 tax software download A foreign move does not include a move back to the United States or its possessions. Free 2007 tax software download Allocation of Moving Expenses When your new place of work is in a foreign country, your moving expenses are directly connected with the income earned in that foreign country. Free 2007 tax software download If you exclude all or part of the income that you earn at the new location under the foreign earned income exclusion or the foreign housing exclusion, you cannot deduct the part of your moving expense that is allocable to the excluded income. Free 2007 tax software download Also, you cannot deduct the part of the moving expense related to the excluded income for a move from a foreign country to the United States if you receive a reimbursement that you are able to treat as compensation for services performed in the foreign country. Free 2007 tax software download Year to which expense is connected. Free 2007 tax software download   The moving expense is connected with earning the income (including reimbursements, as discussed in chapter 4 under Reimbursement of moving expenses ) either entirely in the year of the move or in 2 years. Free 2007 tax software download It is connected with earning the income entirely in the year of the move if you qualify for the foreign earned income exclusion under the bona fide residence test or physical presence test for at least 120 days during that tax year. Free 2007 tax software download   If you do not qualify under either the bona fide residence test or the physical presence test for at least 120 days during the year of the move, the expense is connected with earning the income in 2 years. Free 2007 tax software download The moving expense is connected with the year of the move and the following year if the move is from the United States to a foreign country. Free 2007 tax software download The moving expense is connected with the year of the move and the preceding year if the move is from a foreign country to the United States. Free 2007 tax software download Amount allocable to excluded income. Free 2007 tax software download   To figure the amount of your moving expense that is allocable to your excluded foreign earned income (and not deductible), you must multiply your total moving expense deduction by a fraction. Free 2007 tax software download The numerator (top number) of the fraction is the total of your excluded foreign earned income and housing amounts for both years and the denominator (bottom number) of the fraction is your total foreign earned income for both years. Free 2007 tax software download Example. Free 2007 tax software download On November 1, 2012, you transfer to Monaco. Free 2007 tax software download Your tax home is in Monaco, and you are a bona fide resident of Monaco for the entire tax year 2013. Free 2007 tax software download In 2012, you paid $6,000 for allowable moving expenses for your move from the United States to Monaco. Free 2007 tax software download You were fully reimbursed (under a nonaccountable plan) for these expenses in the same year. Free 2007 tax software download The reimbursement is included in your income. Free 2007 tax software download Your only other income consists of $16,000 wages earned in 2012 after the date of your move, and $100,100 wages earned in Monaco for 2013. Free 2007 tax software download Because you did not meet the bona fide residence test for at least 120 days during 2012, the year of the move, the moving expenses are for services you performed in both 2012 and the following year, 2013. Free 2007 tax software download Your total foreign earned income for both years is $122,100, consisting of $16,000 wages for 2012, $100,100 wages for 2013, and $6,000 moving expense reimbursement for both years. Free 2007 tax software download You have no housing exclusion. Free 2007 tax software download The total amount you can exclude is $113,190, consisting of the $97,600 full-year exclusion for 2013 and a $15,590 part-year exclusion for 2012 ($95,100 times the fraction of 60 qualifying bona fide residence days over 366 total days in the year). Free 2007 tax software download To find the part of your moving expenses that is not deductible, multiply your $6,000 total expenses by the fraction $113,190 over $122,100. Free 2007 tax software download The result, $5,562, is your nondeductible amount. Free 2007 tax software download    You must report the full amount of the moving expense reimbursement in the year in which you received the reimbursement. Free 2007 tax software download In the preceding example, this year was 2012. Free 2007 tax software download You attribute the reimbursement to both 2012 and 2013 only to figure the amount of foreign earned income eligible for exclusion for each year. Free 2007 tax software download Move between foreign countries. Free 2007 tax software download   If you move between foreign countries, your moving expense is allocable to income earned in the year of the move if you qualified under either the bona fide residence test or the physical presence test for a period that includes at least 120 days in the year of the move. Free 2007 tax software download New place of work in U. Free 2007 tax software download S. Free 2007 tax software download   If your new place of work is in the United States, the deductible moving expenses are directly connected with the income earned in the United States. Free 2007 tax software download If you treat a reimbursement from your employer as foreign earned income (see the discussion in chapter 4), you must allocate deductible moving expenses to foreign earned income. Free 2007 tax software download Storage expenses. Free 2007 tax software download   These expenses are attributable to work you do during the year in which you incur the storage expenses. Free 2007 tax software download You cannot deduct the amount allocable to excluded income. Free 2007 tax software download Moving Expense Attributable to Foreign Earnings in 2 Years If your moving expense deduction is attributable to your foreign earnings in 2 years (the year of the move and the following year), you should request an extension of time to file your return for the year of the move until after the end of the second year. Free 2007 tax software download By then, you should have all the information needed to properly figure the moving expense deduction. Free 2007 tax software download See Extensions under When To File and Pay in chapter 1. Free 2007 tax software download If you do not request an extension, you should figure the part of the moving expense that you cannot deduct because it is allocable to the foreign earned income you are excluding. Free 2007 tax software download You do this by multiplying the moving expense by a fraction, the numerator (top number) of which is your excluded foreign earned income for the year of the move, and the denominator (bottom number) of which is your total foreign earned income for the year of the move. Free 2007 tax software download Once you know your foreign earnings and exclusion for the following year, you must either: Adjust the moving expense deduction by filing an amended return for the year of the move, or Recapture any additional unallowable amount as income on your return for the following year. Free 2007 tax software download If, after you make the final computation, you have an additional amount of allowable moving expense deduction, you can claim this only on an amended return for the year of the move. Free 2007 tax software download You cannot claim it on the return for the second year. Free 2007 tax software download Forms To File Report your moving expenses on Form 3903. Free 2007 tax software download Report your moving expense deduction on line 26 of Form 1040. Free 2007 tax software download If you must reduce your moving expenses by the amount allocable to excluded income (as explained later under How To Report Deductions ), attach a statement to your return showing how you figured this amount. Free 2007 tax software download For more information about figuring moving expenses, see Publication 521. Free 2007 tax software download Contributions to Individual Retirement Arrangements Contributions to your individual retirement arrangements (IRAs) that are traditional IRAs or Roth IRAs are generally limited to the lesser of $5,500 ($6,500 if 50 or older) or your compensation that is includible in your gross income for the tax year. Free 2007 tax software download In determining compensation for this purpose, do not take into account amounts you exclude under either the foreign earned income exclusion or the foreign housing exclusion. Free 2007 tax software download Do not reduce your compensation by the foreign housing deduction. Free 2007 tax software download If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. Free 2007 tax software download This is your adjusted gross income figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Free 2007 tax software download Other modifications are also required. Free 2007 tax software download For more information on IRAs, see Publication 590. Free 2007 tax software download Taxes of Foreign Countries and U. Free 2007 tax software download S. Free 2007 tax software download Possessions You can take either a credit or a deduction for income taxes paid to a foreign country or a U. Free 2007 tax software download S. Free 2007 tax software download possession. Free 2007 tax software download Taken as a deduction, foreign income taxes reduce your taxable income. Free 2007 tax software download Taken as a credit, foreign income taxes reduce your tax liability. Free 2007 tax software download You must treat all foreign income taxes the same way. Free 2007 tax software download If you take a credit for any foreign income taxes, you cannot deduct any foreign income taxes. Free 2007 tax software download However, you may be able to deduct other foreign taxes. Free 2007 tax software download See Deduction for Other Foreign Taxes, later. Free 2007 tax software download There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income taxes. Free 2007 tax software download In most cases, it is to your advantage to take foreign income taxes as a tax credit, which you subtract directly from your U. Free 2007 tax software download S. Free 2007 tax software download tax liability, rather than as a deduction in figuring taxable income. Free 2007 tax software download However, if foreign income taxes were imposed at a high rate and the proportion of foreign income to U. Free 2007 tax software download S. Free 2007 tax software download income is small, a lower final tax may result from deducting the foreign income taxes. Free 2007 tax software download In any event, you should figure your tax liability both ways and then use the one that is better for you. Free 2007 tax software download You can make or change your choice within 10 years from the due date for filing the tax return on which you are entitled to take either the deduction or the credit. Free 2007 tax software download Foreign income taxes. Free 2007 tax software download   These are generally income taxes you pay to any foreign country or possession of the United States. Free 2007 tax software download Foreign income taxes on U. Free 2007 tax software download S. Free 2007 tax software download return. Free 2007 tax software download   Foreign income taxes can only be taken as a credit on Form 1040, line 47, or as an itemized deduction on Schedule A. Free 2007 tax software download These amounts cannot be included as withheld income taxes on Form 1040, line 62. Free 2007 tax software download Foreign taxes paid on excluded income. Free 2007 tax software download   You cannot take a credit or deduction for foreign income taxes paid on earnings you exclude from tax under any of the following. Free 2007 tax software download Foreign earned income exclusion. Free 2007 tax software download Foreign housing exclusion. Free 2007 tax software download Possession exclusion. Free 2007 tax software download If your wages are completely excluded, you cannot deduct or take a credit for any of the foreign taxes paid on your wages. Free 2007 tax software download   If only part of your wages is excluded, you cannot deduct or take a credit for the foreign income taxes allocable to the excluded part. Free 2007 tax software download You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes paid on foreign earned income received during the tax year. Free 2007 tax software download The numerator (top number) of the fraction is your excluded foreign earned income received during the tax year minus deductible expenses allocable to that income (not including the foreign housing deduction). Free 2007 tax software download The denominator (bottom number) of the fraction is your total foreign earned income received during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction). Free 2007 tax software download   If foreign law taxes both earned income and some other type of income and the taxes on the other type cannot be separated, the denominator of the fraction is the total amount of income subject to foreign tax minus deductible expenses allocable to that income. Free 2007 tax software download    If you take a foreign tax credit for tax on income you could have excluded under your choice to exclude foreign earned income or your choice to exclude foreign housing costs, one or both of the choices may be considered revoked. Free 2007 tax software download Credit for Foreign Income Taxes If you take the foreign tax credit, you may have to file Form 1116 with Form 1040. Free 2007 tax software download Form 1116 is used to figure the amount of foreign tax paid or accrued that can be claimed as a foreign tax credit. Free 2007 tax software download Do not include the amount of foreign tax paid or accrued as withheld federal income taxes on Form 1040, line 62. Free 2007 tax software download The foreign income tax for which you can claim a credit is the amount of legal and actual tax liability you pay or accrue during the year. Free 2007 tax software download The amount for which you can claim a credit is not necessarily the amount withheld by the foreign country. Free 2007 tax software download You cannot take a foreign tax credit for income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund. Free 2007 tax software download Subsidies. Free 2007 tax software download   If a foreign country returns your foreign tax payments to you in the form of a subsidy, you cannot claim a foreign tax credit based on these payments. Free 2007 tax software download This rule applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of tax, or to the base used to figure the tax. Free 2007 tax software download   Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. Free 2007 tax software download A credit is also not allowed if the subsidy is given to a person related to you, or persons who participated in a transaction or a related transaction with you. Free 2007 tax software download Limit The foreign tax credit is limited to the part of your total U. Free 2007 tax software download S. Free 2007 tax software download tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. Free 2007 tax software download The allowable foreign tax credit cannot be more than your actual foreign tax liability. Free 2007 tax software download Exemption from limit. Free 2007 tax software download   You will not be subject to this limit and will not have to file Form 1116 if you meet all three of the following requirements. Free 2007 tax software download Your only foreign source income for the year is passive income (dividends, interest, royalties, etc. Free 2007 tax software download ) that is reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT). Free 2007 tax software download Your foreign taxes for the year that qualify for the credit are not more than $300 ($600 if you are filing a joint return) and are reported on a payee statement. Free 2007 tax software download You elect this procedure. Free 2007 tax software download If you make this election, you cannot carry back or carry over any unused foreign tax to or from this year. Free 2007 tax software download Separate limit. Free 2007 tax software download   You must figure the limit on a separate basis with regard to “passive category income” and “general category income” (see the instructions for Form 1116). Free 2007 tax software download Figuring the limit. Free 2007 tax software download   In figuring taxable income in each category, you take into account only the amount that you must include in income on your federal tax return. Free 2007 tax software download Do not take any excluded amount into account. Free 2007 tax software download   To determine your taxable income in each category, deduct expenses and losses that are definitely related to that income. Free 2007 tax software download   Other expenses (such as itemized deductions or the standard deduction) not definitely related to specific items of income must be apportioned to the foreign income in each category by multiplying them by a fraction. Free 2007 tax software download The numerator (top number) of the fraction is your gross foreign income in the separate limit category. Free 2007 tax software download The denominator (bottom number) of the fraction is your gross income from all sources. 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Free 2007 tax software download Add the $450 to the $500 that you have on line 23 and enter the total ($950) on line 24. Free 2007 tax software download On line 26 of Schedule A, enter $696, which is 2% of your adjusted gross income of $34,780 (line 38, Form 1040) and subtract it from the amount on line 24. Free 2007 tax software download Enter $254 on line 27 of Schedule A. Free 2007 tax software download Example 2. Free 2007 tax software download You are a U. Free 2007 tax software download S. Free 2007 tax software download citizen, have a tax home in Spain, and meet the physical presence test. Free 2007 tax software download You are self-employed and personal services produce the business income. Free 2007 tax software download Your gross income was $116,931, business expenses $66,895, and net income (profit) $50,036. Free 2007 tax software download You choose the foreign earned income exclusion and exclude $97,600 of your gross income. Free 2007 tax software download Since your excluded income is 83. Free 2007 tax software download 47% of your total income, 83. Free 2007 tax software download 47% of your business expenses are not deductible. Free 2007 tax software download Report your total income and expenses on Schedule C (Form 1040). Free 2007 tax software download On Form 2555 you will show the following: Line 20a, $116,931, gross income, Lines 42 and 43, $97,600, foreign earned income exclusion, and Line 44, $55,837 (83. Free 2007 tax software download 47% × $66,895) business expenses attributable to the exclusion. Free 2007 tax software download In this situation (Example 2), you cannot use Form 2555-EZ since you had self-employment income and business expenses. Free 2007 tax software download Example 3. Free 2007 tax software download Assume in Example 2 that both capital and personal services combine to produce the business income. Free 2007 tax software download No more than 30% of your net income, or $15,011, assuming that this amount is a reasonable allowance for your services, is considered earned and can be excluded. Free 2007 tax software download Your exclusion of $15,011 is 12. Free 2007 tax software download 84% of your gross income ($15,011 ÷ $116,931). Free 2007 tax software download Because you excluded 12. Free 2007 tax software download 84% of your total income, $8,589 (. Free 2007 tax software download 1284 x $66,895) of your business expenses is attributable to the excluded income and is not deductible. Free 2007 tax software download Example 4. Free 2007 tax software download You are a U. Free 2007 tax software download S. Free 2007 tax software download citizen, have a tax home in Brazil, and meet the physical presence test. Free 2007 tax software download You are self-employed and both capital and personal services combine to produce business income. Free 2007 tax software download Your gross income was $146,000, business expenses were $172,000, and your net loss was $26,000. Free 2007 tax software download A reasonable allowance for the services you performed for the business is $77,000. Free 2007 tax software download Because you incurred a net loss, the earned income limit of 30% of your net profit does not apply. Free 2007 tax software download The $77,000 is foreign earned income. Free 2007 tax software download If you choose to exclude the $77,000, you exclude 52. Free 2007 tax software download 74% of your gross income ($77,000 ÷ $146,000), and 52. Free 2007 tax software download 74% of your business expenses ($90,713) is attributable to that income and is not deductible. Free 2007 tax software download Show your total income and expenses on Schedule C (Form 1040). Free 2007 tax software download On Form 2555, exclude $77,000 and show $90,713 on line 44. Free 2007 tax software download Subtract line 44 from line 43, and enter the difference as a negative (in parentheses) on line 45. Free 2007 tax software download Because this amount is negative, enter it as a positive (no parentheses) on line 21, Form 1040, and combine it with your other income to arrive at total income on line 22 of Form 1040. Free 2007 tax software download In this situation (Example 4), you would probably not want to choose the foreign earned income exclusion if this was the first year you were eligible. Free 2007 tax software download If you had chosen the exclusion in an earlier year, you might want to revoke the choice for this year. Free 2007 tax software download To do so would mean that you could not claim the exclusion again for the next 5 tax years without IRS approval. Free 2007 tax software download See Choosing the Exclusion in chapter 4. Free 2007 tax software download Example 5. Free 2007 tax software download You are a U. Free 2007 tax software download S. Free 2007 tax software download citizen, have a tax home in Panama, and meet the bona fide residence test. Free 2007 tax software download You have been performing services for clients as a partner in a firm that provides services exclusively in Panama. Free 2007 tax software download Capital investment is not material in producing the partnership's income. Free 2007 tax software download Under the terms of the partnership agreement, you are to receive 50% of the net profits. Free 2007 tax software download The partnership received gross income of $244,000 and incurred operating expenses of $98,250. Free 2007 tax software download Of the net profits of $145,750, you received $72,875 as your distributive share. Free 2007 tax software download You choose to exclude $97,600 of your share of the gross income. Free 2007 tax software download Because you exclude 80% ($97,600 ÷ $122,000) of your share of the gross income, you cannot deduct $39,300, 80% of your share of the operating expenses (. Free 2007 tax software download 80 × $49,125). Free 2007 tax software download Report $72,875, your distributive share of the partnership net profit, on Schedule E (Form 1040), Supplemental Income and Loss. Free 2007 tax software download On Form 2555, show $97,600 on line 42 and show $39,300 on line 44. Free 2007 tax software download Your exclusion on Form 2555 is $58,300. Free 2007 tax software download In this situation (Example 5), you cannot use Form 2555-EZ since you had earned income other than salaries and wages and you had business expenses. Free 2007 tax software download Prev  Up  Next   Home   More Online Publications
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The Free 2007 Tax Software Download

Free 2007 tax software download Publication 971 - Additional Material Table of Contents How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Free 2007 tax software download Questions & AnswersThis section answers questions commonly asked by taxpayers about innocent spouse relief. Free 2007 tax software download . Free 2007 tax software download What is joint and several liability? . Free 2007 tax software download How can I get relief from joint and several liability? . Free 2007 tax software download What are the rules for innocent spouse relief? . Free 2007 tax software download What are erroneous items? . Free 2007 tax software download What is an understated tax? . Free 2007 tax software download Will I qualify for innocent spouse relief in any situation where there is an understated tax? . Free 2007 tax software download What are the rules for separation of liability relief? . Free 2007 tax software download Why would a request for separation of liability relief be denied? . Free 2007 tax software download What are the rules for equitable relief? . Free 2007 tax software download How do state community property laws affect my ability to qualify for relief? . Free 2007 tax software download How do I request relief? . Free 2007 tax software download When should I file Form 8857? . Free 2007 tax software download Where should I file Form 8857? . Free 2007 tax software download I am currently undergoing an examination of my return. Free 2007 tax software download How do I request innocent spouse relief? . Free 2007 tax software download What if the IRS has given me notice that it will levy my account for the tax liability and I decide to request relief? . Free 2007 tax software download What is injured spouse relief? . Free 2007 tax software download What is joint and several liability? When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability. Free 2007 tax software download This is called joint and several liability. Free 2007 tax software download Joint and several liability applies not only to the tax liability you show on the return but also to any additional tax liability the IRS determines to be due, even if the additional tax is due to the income, deductions, or credits of your spouse or former spouse. Free 2007 tax software download You remain jointly and severally liable for taxes, and the IRS still can collect from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax. Free 2007 tax software download There are three types of relief for filers of joint returns: “innocent spouse relief,” “separation of liability relief,” and “equitable relief. Free 2007 tax software download ” Each type has different requirements. Free 2007 tax software download They are explained separately below. Free 2007 tax software download To qualify for innocent spouse relief, you must meet all of the following conditions. Free 2007 tax software download You must have filed a joint return which has an understated tax. Free 2007 tax software download The understated tax must be due to erroneous items of your spouse (or former spouse). Free 2007 tax software download You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understated tax. Free 2007 tax software download Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understated tax. Free 2007 tax software download You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. Free 2007 tax software download You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. Free 2007 tax software download For example, you reported total tax on your 2008 return of $2,500. Free 2007 tax software download IRS determined in an audit of your 2008 return that the total tax should be $3,000. Free 2007 tax software download You have a $500 understated tax. Free 2007 tax software download No. Free 2007 tax software download There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. Free 2007 tax software download For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. Free 2007 tax software download You are not eligible for innocent spouse relief because you have knowledge of the understated tax. Free 2007 tax software download Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download How can I get relief from joint and several liability? There are three types of relief for filers of joint returns: “innocent spouse relief,” “separation of liability relief,” and “equitable relief. Free 2007 tax software download ” Each type has different requirements. Free 2007 tax software download They are explained separately below. Free 2007 tax software download To qualify for innocent spouse relief, you must meet all of the following conditions. Free 2007 tax software download You must have filed a joint return which has an understated tax. Free 2007 tax software download The understated tax must be due to erroneous items of your spouse (or former spouse). Free 2007 tax software download You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understated tax. Free 2007 tax software download Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understated tax. Free 2007 tax software download You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. Free 2007 tax software download You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. Free 2007 tax software download For example, you reported total tax on your 2008 return of $2,500. Free 2007 tax software download IRS determined in an audit of your 2008 return that the total tax should be $3,000. Free 2007 tax software download You have a $500 understated tax. Free 2007 tax software download No. Free 2007 tax software download There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. Free 2007 tax software download For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. Free 2007 tax software download You are not eligible for innocent spouse relief because you have knowledge of the understated tax. Free 2007 tax software download Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download What are the rules for innocent spouse relief? To qualify for innocent spouse relief, you must meet all of the following conditions. Free 2007 tax software download You must have filed a joint return which has an understated tax. Free 2007 tax software download The understated tax must be due to erroneous items of your spouse (or former spouse). Free 2007 tax software download You must establish that at the time you signed the joint return, you did not know, and had no reason to know, that there was an understated tax. Free 2007 tax software download Taking into account all of the facts and circumstances, it would be unfair to hold you liable for the understated tax. Free 2007 tax software download You must request relief within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. Free 2007 tax software download You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. Free 2007 tax software download For example, you reported total tax on your 2008 return of $2,500. Free 2007 tax software download IRS determined in an audit of your 2008 return that the total tax should be $3,000. Free 2007 tax software download You have a $500 understated tax. Free 2007 tax software download No. Free 2007 tax software download There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. Free 2007 tax software download For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. Free 2007 tax software download You are not eligible for innocent spouse relief because you have knowledge of the understated tax. Free 2007 tax software download Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download What are “erroneous items”? Erroneous items are any deductions, credits, or bases that are incorrectly stated on the return, and any income that is not properly reported on the return. Free 2007 tax software download You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. Free 2007 tax software download For example, you reported total tax on your 2008 return of $2,500. Free 2007 tax software download IRS determined in an audit of your 2008 return that the total tax should be $3,000. Free 2007 tax software download You have a $500 understated tax. Free 2007 tax software download No. Free 2007 tax software download There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. Free 2007 tax software download For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. Free 2007 tax software download You are not eligible for innocent spouse relief because you have knowledge of the understated tax. Free 2007 tax software download Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download What is an “understated tax”? You have an understated tax if the IRS determined that your total tax should be more than the amount actually shown on your return. Free 2007 tax software download For example, you reported total tax on your 2008 return of $2,500. Free 2007 tax software download IRS determined in an audit of your 2008 return that the total tax should be $3,000. Free 2007 tax software download You have a $500 understated tax. Free 2007 tax software download No. Free 2007 tax software download There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. Free 2007 tax software download For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. Free 2007 tax software download You are not eligible for innocent spouse relief because you have knowledge of the understated tax. Free 2007 tax software download Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download Will I qualify for innocent spouse relief in any situation where there is an understated tax? No. Free 2007 tax software download There are many situations in which you may owe tax that is related to your spouse (or former spouse), but not be eligible for innocent spouse relief. Free 2007 tax software download For example, you and your spouse file a joint return on which you report $10,000 of income and deductions, but you knew that your spouse was not reporting $5,000 of dividends. Free 2007 tax software download You are not eligible for innocent spouse relief because you have knowledge of the understated tax. Free 2007 tax software download Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download What are the rules for separation of liability relief? Under this type of relief, you allocate (separate) the understated tax (plus interest and penalties) on your joint return between you and your spouse (or former spouse). Free 2007 tax software download The understated tax allocated to you is generally the amount you are responsible for. Free 2007 tax software download To qualify for separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. Free 2007 tax software download You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. Free 2007 tax software download (Under this rule, you are no longer married if you are widowed. Free 2007 tax software download ) You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857. Free 2007 tax software download In addition to the above requirements, you must file a Form 8857 within 2 years after the date on which the IRS first began collection activity against you after July 22, 1998. Free 2007 tax software download Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download Why would a request for separation of liability relief be denied? Even if you meet the requirements listed earlier, a request for separation of liability relief will not be granted in the following situations. Free 2007 tax software download The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. Free 2007 tax software download The IRS proves that at the time you signed your joint return, you had actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse (or former spouse). Free 2007 tax software download Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. Free 2007 tax software download Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download What are the rules for equitable relief? Equitable relief is only available if you meet all of the following conditions. Free 2007 tax software download You do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. Free 2007 tax software download You have an understated tax or underpaid tax. Free 2007 tax software download See Note later. Free 2007 tax software download You did not pay the tax. Free 2007 tax software download However, see Refunds , earlier, for exceptions. Free 2007 tax software download The IRS determines that it is unfair to hold you liable for the understated or underpaid tax taking into account all the facts and circumstances. Free 2007 tax software download You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. Free 2007 tax software download Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. Free 2007 tax software download You did not file or fail to file your return with the intent to commit fraud. Free 2007 tax software download The income tax liability for which you seek relief is attributable to your spouse (or former spouse) with whom you filed the joint return. Free 2007 tax software download For exceptions to this condition, see item (8) under Conditions for Getting Equitable Relief , earlier. Free 2007 tax software download You timely file Form 8857 as explained earlier in Exception for equitable relief under How To Request Relief. Free 2007 tax software download Note. Free 2007 tax software download Unlike innocent spouse relief or separation of liability relief, if you qualify for equitable relief, you can also get relief from an underpaid tax. Free 2007 tax software download (An underpaid tax is tax that is properly shown on the return, but has not been paid. Free 2007 tax software download ) Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or resume collecting from you. Free 2007 tax software download The 10-year period will be increased by the amount of time your request for relief was pending plus 60 days. Free 2007 tax software download See Publication 594 for more information. Free 2007 tax software download Injured spouse relief is different from innocent spouse relief. Free 2007 tax software download When a joint return is filed and the refund is used to pay one spouse's past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or federal non-tax debt, such as a student loan, the other spouse may be considered an injured spouse. Free 2007 tax software download The injured spouse can get back his or her share of the joint overpayment using Form 8379, Injured Spouse Allocation. Free 2007 tax software download You are considered an injured spouse if: You are not legally obligated to pay the past-due amount, and You meet any of the following conditions: You made and reported tax payments (such as federal income tax withholding or estimated tax payments). Free 2007 tax software download You had earned income (such as wages, salaries, or self-employment income) and claimed the earned income credit or the additional child tax credit. Free 2007 tax software download You claimed a refundable tax credit, such as the health coverage tax credit or the refundable credit for prior year minimum tax. Free 2007 tax software download Note. Free 2007 tax software download If your residence was in a community property state at any time during the year, you may file Form 8379 even if only item (1) above applies. Free 2007 tax software download . Free 2007 tax software download How do state community property laws affect my ability to qualify for relief? Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Free 2007 tax software download Generally, community property laws require you to allocate community income and expenses equally between both spouses. Free 2007 tax software download However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. Free 2007 tax software download      File Form 8857, Request for Innocent Spouse Relief, to ask the IRS for relief. Free 2007 tax software download You must file an additional Form 8857 if you are requesting relief for more than three years. Free 2007 tax software download If you are requesting innocent spouse relief or separation of liability relief, file Form 8857 no later than two years after the date on which the IRS first began collection activities against you after July 22, 1998. Free 2007 tax software download If you are requesting equitable relief, see Exception for equitable relief. Free 2007 tax software download under How To Request Relief, earlier, for when to file Form 8857. Free 2007 tax software download If you are requesting relief from liability arising from community property law, see How and When To Request Relief under Community Property Laws, earlier, for when to file Form 8857. Free 2007 tax software download Use the address or fax number shown in the Instructions for Form 8857. Free 2007 tax software download File Form 8857 at the address or send it to the fax number shown in the Instructions for Form 8857. Free 2007 tax software download Do not file it with the employee assigned to examine your return. Free 2007 tax software download Generally, the IRS has 10 years to collect an amount you owe. Free 2007 tax software download This is the collection statute of limitations. Free 2007 tax software download By law, the IRS is not allowed to collect from you after the 10-year period ends. Free 2007 tax software download If you request relief for any tax year, the IRS cannot collect from you for that year while your request is pending. Free 2007 tax software download But interest and penalties continue to accrue. Free 2007 tax software download Your request is generally considered pending from the date the IRS receives your Form 8857 until the date your request is resolved. Free 2007 tax software download This includes the time the Tax Court is considering your request. Free 2007 tax software download After your case is resolved, the IRS can begin or