Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free State Tax Return Online

Students Filing Taxes 20132012 Taxes Online FreeAmend 2012 Tax Return OnlineForms For 2012 Income Tax2013 Amended Tax Return FormEz Tax Form 2013E-file Tax Extension FreeHow Do You File An Amended Tax Return2011 Turbo Tax Software2012 Tax Software2011 Federal Tax Form 1040E File 2012Fill 1040x Form Online1040ez 2013 Tax FormIrs Forms Amended Tax ReturnFreetaxes ComFree Federal Tax E FilingFree Turbotax 2012 Download2010 Tax Software Free DownloadFree Tax Filing 2012File 1040x Online Amended ReturnHow Do I File A Amended Tax ReturnTax Forms 1040 EzFile 1040xIrs Forms Amended ReturnTax CutFree Tax Forms 2011Form 1040 EsStudent Taxes 201310w40ezIrs Free File 2011Income Tax Forms For 2012Free E-file 2012 TaxesHow Can I File An Amended Tax Return1040ez Tax Form InstructionsFile 2005 Tax Return FreeIrs 1040nrH & R Block Free TaxesTaxhow 1040xHand R Block Com

Free State Tax Return Online

Free state tax return online Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Free state tax return online Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Free state tax return online The care must be for one or more qualifying persons who are identified on Form 2441. Free state tax return online (See Qualifying Person Test. Free state tax return online ) You (and your spouse if filing jointly) must have earned income during the year. Free state tax return online (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Free state tax return online ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Free state tax return online (See Work-Related Expense Test, later. Free state tax return online ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Free state tax return online If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Free state tax return online You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Free state tax return online See Payments to Relatives or Dependents under Work-Related Expense Test, later. Free state tax return online Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Free state tax return online If you are married, you must file a joint return, unless an exception applies to you. Free state tax return online See Joint Return Test, later. Free state tax return online You must identify the care provider on your tax return. Free state tax return online (See Provider Identification Test, later. Free state tax return online ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Free state tax return online (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Free state tax return online See Reduced Dollar Limit under How To Figure the Credit, later. Free state tax return online ) These tests are presented in Figure A and are also explained in detail in this publication. Free state tax return online Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Free state tax return online A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Free state tax return online Dependent defined. Free state tax return online   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Free state tax return online To be your dependent, a person must be your qualifying child (or your qualifying relative). Free state tax return online Qualifying child. Free state tax return online   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Free state tax return online More information. Free state tax return online   For more information about who is a dependent or a qualifying child, see Publication 501. Free state tax return online Physically or mentally not able to care for oneself. Free state tax return online   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Free state tax return online Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Free state tax return online Person qualifying for part of year. Free state tax return online   You determine a person's qualifying status each day. Free state tax return online For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Free state tax return online Also see Yearly limit under Dollar Limit, later. Free state tax return online Birth or death of otherwise qualifying person. Free state tax return online   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Free state tax return online Taxpayer identification number. Free state tax return online   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Free state tax return online If the correct information is not shown, the credit may be reduced or disallowed. Free state tax return online Individual taxpayer identification number (ITIN) for aliens. Free state tax return online   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Free state tax return online The ITIN is entered wherever an SSN is requested on a tax return. Free state tax return online If the alien does not have an ITIN, he or she must apply for one. Free state tax return online See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Free state tax return online   An ITIN is for tax use only. Free state tax return online It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Free state tax return online S. Free state tax return online law. Free state tax return online Adoption taxpayer identification number (ATIN). Free state tax return online   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Free state tax return online File Form W-7A, Application for Taxpayer Identification Number for Pending U. Free state tax return online S. Free state tax return online Adoptions. Free state tax return online Child of divorced or separated parents or parents living apart. Free state tax return online   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Free state tax return online   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Free state tax return online If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Free state tax return online For details and an exception for a parent who works at night, see Publication 501. Free state tax return online   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Free state tax return online Please click here for the text description of the image. Free state tax return online Figure a. Free state tax return online Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Free state tax return online Earned income. Free state tax return online   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Free state tax return online A net loss from self-employment reduces earned income. Free state tax return online Earned income also includes strike benefits and any disability pay you report as wages. Free state tax return online   Generally, only taxable compensation is included. Free state tax return online However, you can elect to include nontaxable combat pay in earned income. Free state tax return online If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Free state tax return online (In other words, if one of you makes the election, the other one can also make it but does not have to. Free state tax return online ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Free state tax return online You should figure your credit both ways and make the election if it gives you a greater tax benefit. Free state tax return online    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Free state tax return online Members of certain religious faiths opposed to social security. Free state tax return online   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Free state tax return online These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Free state tax return online   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Free state tax return online For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Free state tax return online Form 4361. Free state tax return online   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Free state tax return online This includes wages, salaries, tips, and other taxable employee compensation. Free state tax return online   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Free state tax return online Examples include fees for performing marriages and honoraria for delivering speeches. Free state tax return online   Any amount you received for work that is not related to your ministerial duties is earned income. Free state tax return online Form 4029. Free state tax return online   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Free state tax return online   However, amounts you received as a self-employed individual do not count as earned income. Free state tax return online What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Free state tax return online S. Free state tax return online trade or business, or Any amount received for work while an inmate in a penal institution. Free state tax return online Rule for student-spouse or spouse not able to care for self. Free state tax return online   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Free state tax return online (Your spouse also must live with you for more than half the year. Free state tax return online )   If you are filing a joint return, this rule also applies to you. Free state tax return online You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Free state tax return online   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Free state tax return online   This rule applies to only one spouse for any one month. Free state tax return online If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Free state tax return online Full-time student. Free state tax return online    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Free state tax return online You must have been a full-time student for some part of each of 5 calendar months during the year. Free state tax return online (The months need not be consecutive. Free state tax return online ) School. Free state tax return online   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Free state tax return online A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Free state tax return online Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Free state tax return online Expenses are considered work-related only if both of the following are true. Free state tax return online They allow you (and your spouse if filing jointly) to work or look for work. Free state tax return online They are for a qualifying person's care. Free state tax return online Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Free state tax return online If you are married, generally both you and your spouse must work or look for work. Free state tax return online One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Free state tax return online Your work can be for others or in your own business or partnership. Free state tax return online It can be either full time or part time. Free state tax return online Work also includes actively looking for work. Free state tax return online However, if you do not find a job and have no earned income for the year, you cannot take this credit. Free state tax return online See Earned Income Test, earlier. Free state tax return online An expense is not considered work-related merely because you had it while you were working. Free state tax return online The purpose of the expense must be to allow you to work. Free state tax return online Whether your expenses allow you to work or look for work depends on the facts. Free state tax return online Example 1. Free state tax return online The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Free state tax return online Example 2. Free state tax return online You work during the day. Free state tax return online Your spouse works at night and sleeps during the day. Free state tax return online You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Free state tax return online Your expenses are considered work-related. Free state tax return online Volunteer work. Free state tax return online   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Free state tax return online Work for part of year. Free state tax return online   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Free state tax return online For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. Free state tax return online However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Free state tax return online Temporary absence from work. Free state tax return online   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Free state tax return online Instead, you can figure your credit including the expenses you paid for the period of absence. Free state tax return online   An absence of 2 weeks or less is a short, temporary absence. Free state tax return online An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Free state tax return online Example. Free state tax return online You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Free state tax return online You become ill and miss 4 months of work but receive sick pay. Free state tax return online You continue to pay the nanny to care for the children while you are ill. Free state tax return online Your absence is not a short, temporary absence, and your expenses are not considered work-related. Free state tax return online Part-time work. Free state tax return online   If you work part-time, you generally must figure your expenses for each day. Free state tax return online However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Free state tax return online Any day when you work at least 1 hour is a day of work. Free state tax return online Example 1. Free state tax return online You work 3 days a week. Free state tax return online While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Free state tax return online You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Free state tax return online Your child attends the center 5 days a week. Free state tax return online Your work-related expenses are limited to $150 a week. Free state tax return online Example 2. Free state tax return online The facts are the same as in Example 1 except the center does not offer a 3-day option. Free state tax return online The entire $250 weekly fee may be a work-related expense. Free state tax return online Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Free state tax return online You do not have to choose the least expensive way of providing the care. Free state tax return online The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Free state tax return online Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Free state tax return online Expenses for household services qualify if part of the services is for the care of qualifying persons. Free state tax return online See Household Services, later. Free state tax return online Expenses not for care. Free state tax return online   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Free state tax return online However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Free state tax return online Otherwise, see the discussion of Expenses partly work-related, later. Free state tax return online   Child support payments are not for care and do not qualify for the credit. Free state tax return online Education. Free state tax return online   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Free state tax return online   Expenses to attend kindergarten or a higher grade are not expenses for care. Free state tax return online Do not use these expenses to figure your credit. Free state tax return online   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Free state tax return online   Summer school and tutoring programs are not for care. Free state tax return online Example 1. Free state tax return online You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Free state tax return online The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Free state tax return online You can count the total cost when you figure the credit. Free state tax return online Example 2. Free state tax return online You place your 10-year-old child in a boarding school so you can work full time. Free state tax return online Only the part of the boarding school expense that is for the care of your child is a work-related expense. Free state tax return online You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Free state tax return online You cannot count any part of the amount you pay the school for your child's education. Free state tax return online Care outside your home. Free state tax return online   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Free state tax return online Dependent care center. Free state tax return online   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Free state tax return online   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Free state tax return online Camp. Free state tax return online   The cost of sending your child to an overnight camp is not considered a work-related expense. Free state tax return online    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Free state tax return online Transportation. Free state tax return online   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Free state tax return online This includes transportation by bus, subway, taxi, or private car. Free state tax return online However, transportation not provided by a care provider is not for the care of a qualifying person. Free state tax return online Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Free state tax return online Fees and deposits. Free state tax return online   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Free state tax return online However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Free state tax return online Example 1. Free state tax return online You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Free state tax return online The fee you paid is a work-related expense. Free state tax return online Example 2. Free state tax return online You placed a deposit with a preschool to reserve a place for your 3-year-old child. Free state tax return online You later sent your child to a different preschool and forfeited the deposit. Free state tax return online The forfeited deposit is not for care and so is not a work-related expense. Free state tax return online Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Free state tax return online Definition. Free state tax return online   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Free state tax return online They include the services of a housekeeper, maid, or cook. Free state tax return online However, they do not include the services of a chauffeur, bartender, or gardener. Free state tax return online Housekeeper. Free state tax return online   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Free state tax return online Expenses partly work-related. Free state tax return online   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Free state tax return online To figure your credit, count only the part that is work-related. Free state tax return online However, you do not have to divide the expense if only a small part is for other purposes. Free state tax return online Example. Free state tax return online You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Free state tax return online The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Free state tax return online You do not have to divide the expenses. Free state tax return online You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Free state tax return online Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Free state tax return online However, the dollar limit (discussed later) is based on one qualifying person, not two. Free state tax return online Meals and lodging provided for housekeeper. Free state tax return online   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Free state tax return online If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Free state tax return online Example. Free state tax return online To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Free state tax return online You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Free state tax return online However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Free state tax return online Taxes paid on wages. Free state tax return online   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Free state tax return online For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Free state tax return online Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Free state tax return online However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Free state tax return online Joint Return Test Generally, married couples must file a joint return to take the credit. Free state tax return online However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Free state tax return online Legally separated. Free state tax return online   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Free state tax return online You may be eligible to take the credit on your return using head of household filing status. Free state tax return online Married and living apart. Free state tax return online   You are not considered married and are eligible to take the credit if all the following apply. Free state tax return online You file a return apart from your spouse. Free state tax return online Your home is the home of a qualifying person for more than half the year. Free state tax return online You pay more than half the cost of keeping up your home for the year. Free state tax return online Your spouse does not live in your home for the last 6 months of the year. Free state tax return online Costs of keeping up a home. Free state tax return online   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Free state tax return online   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Free state tax return online   They also do not include the purchase, permanent improvement, or replacement of property. Free state tax return online For example, you cannot include the cost of replacing a water heater. Free state tax return online However, you can include the cost of repairing a water heater. Free state tax return online Death of spouse. Free state tax return online   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Free state tax return online If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Free state tax return online Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Free state tax return online Use Form 2441, Part I, to show the information. Free state tax return online If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Free state tax return online Information needed. Free state tax return online   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Free state tax return online    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Free state tax return online If the care provider is an organization, then it is the employer identification number (EIN). Free state tax return online   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Free state tax return online In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Free state tax return online   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Free state tax return online Getting the information. Free state tax return online    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Free state tax return online If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Free state tax return online    You should keep this information with your tax records. Free state tax return online Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Free state tax return online Due diligence. Free state tax return online   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Free state tax return online However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Free state tax return online   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Free state tax return online Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Free state tax return online Provider refusal. Free state tax return online    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Free state tax return online Enter “See Attached Statement” in the columns calling for the information you do not have. Free state tax return online Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Free state tax return online Be sure to write your name and social security number on this statement. Free state tax return online The statement will show that you used due diligence in trying to furnish the necessary information. Free state tax return online U. Free state tax return online S. Free state tax return online citizens and resident aliens living abroad. Free state tax return online   If you are living abroad, your care provider may not have, and may not be required to get, a U. Free state tax return online S. Free state tax return online taxpayer identification number (for example, an SSN or an EIN). Free state tax return online If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Free state tax return online How To Figure the Credit Your credit is a percentage of your work-related expenses. Free state tax return online Your expenses are subject to the earned income limit and the dollar limit. Free state tax return online The percentage is based on your adjusted gross income. Free state tax return online Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Free state tax return online Expenses prepaid in an earlier year. Free state tax return online   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Free state tax return online Claim the expenses for the later year as if they were actually paid in that later year. Free state tax return online Expenses not paid until the following year. Free state tax return online   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Free state tax return online You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Free state tax return online See Payments for prior year's expenses under Amount of Credit, later. Free state tax return online If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Free state tax return online You may be able to claim a credit for them on your 2014 return. Free state tax return online Expenses reimbursed. Free state tax return online   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Free state tax return online Example. Free state tax return online You paid work-related expenses of $3,000. Free state tax return online You are reimbursed $2,000 by a state social services agency. Free state tax return online You can use only $1,000 to figure your credit. Free state tax return online Medical expenses. Free state tax return online   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Free state tax return online You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Free state tax return online   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Free state tax return online However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Free state tax return online For information on medical expenses, see Publication 502, Medical and Dental Expenses. Free state tax return online    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Free state tax return online Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Free state tax return online See Reduced Dollar Limit, later. Free state tax return online But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Free state tax return online Dependent care benefits. Free state tax return online    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Free state tax return online Your salary may have been reduced to pay for these benefits. Free state tax return online If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Free state tax return online See Statement for employee, later. Free state tax return online Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Free state tax return online   Enter the amount of these benefits on Form 2441, Part III, line 12. Free state tax return online Exclusion or deduction. Free state tax return online   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Free state tax return online Your employer can tell you whether your benefit plan qualifies. Free state tax return online To claim the exclusion, you must complete Part III of Form 2441. Free state tax return online You cannot use Form 1040EZ. Free state tax return online   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Free state tax return online Therefore, you would not get an exclusion from wages. Free state tax return online Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Free state tax return online To claim the deduction, you must use Form 2441. Free state tax return online   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Free state tax return online   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Free state tax return online    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Free state tax return online Statement for employee. Free state tax return online   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Free state tax return online Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Free state tax return online Effect of exclusion on credit. Free state tax return online   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Free state tax return online Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Free state tax return online Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Free state tax return online For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Free state tax return online Example. Free state tax return online You remarried on December 3. Free state tax return online Your earned income for the year was $18,000. Free state tax return online Your new spouse's earned income for the year was $2,000. Free state tax return online You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Free state tax return online The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Free state tax return online Separated spouse. Free state tax return online   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Free state tax return online Use only your income in figuring the earned income limit. Free state tax return online Surviving spouse. Free state tax return online   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Free state tax return online Community property laws. Free state tax return online   Disregard community property laws when you figure earned income for this credit. Free state tax return online Self-employment earnings. Free state tax return online   If you are self-employed, include your net earnings in earned income. Free state tax return online For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Free state tax return online Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Free state tax return online Clergy or church employee. Free state tax return online   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Free state tax return online Statutory employee. Free state tax return online   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Free state tax return online Net loss. Free state tax return online   You must reduce your earned income by any net loss from self-employment. Free state tax return online Optional method if earnings are low or a net loss. Free state tax return online   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Free state tax return online Get Publication 334, Tax Guide for Small Business, for details. Free state tax return online If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Free state tax return online In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Free state tax return online You or your spouse is a student or not able to care for self. Free state tax return online   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Free state tax return online His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Free state tax return online Spouse works. Free state tax return online   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Free state tax return online Spouse qualifies for part of month. Free state tax return online   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Free state tax return online You are a student or not able to care for self. Free state tax return online   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Free state tax return online For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Free state tax return online If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Free state tax return online Both spouses qualify. Free state tax return online   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Free state tax return online Example. Free state tax return online Jim works and keeps up a home for himself and his wife Sharon. Free state tax return online Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Free state tax return online During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Free state tax return online These expenses also qualify as medical expenses. Free state tax return online Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Free state tax return online Jim and Sharon's earned income limit is the smallest of the following amounts. Free state tax return online   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Free state tax return online However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Free state tax return online Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Free state tax return online This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Free state tax return online If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Free state tax return online This limit does not need to be divided equally among them. Free state tax return online For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Free state tax return online Yearly limit. Free state tax return online   The dollar limit is a yearly limit. Free state tax return online The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Free state tax return online Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Free state tax return online Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Free state tax return online Example 1. Free state tax return online You pay $500 a month for after-school care for your son. Free state tax return online He turned 13 on May 1 and is no longer a qualifying person. Free state tax return online You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Free state tax return online Example 2. Free state tax return online In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Free state tax return online You paid $300 per month for the childcare. Free state tax return online You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Free state tax return online Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Free state tax return online Your reduced dollar limit is figured on Form 2441, Part III. Free state tax return online See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Free state tax return online Example 1. Free state tax return online George is a widower with one child and earns $24,000 a year. Free state tax return online He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Free state tax return online His employer pays an additional $1,000 under a qualified dependent care benefit plan. Free state tax return online This $1,000 is excluded from George's income. Free state tax return online Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Free state tax return online This is because his dollar limit is reduced as shown next. Free state tax return online   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Free state tax return online Randall is married and both he and his wife are employed. Free state tax return online Each has earned income in excess of $6,000. Free state tax return online They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Free state tax return online Randall's work-related expenses are $6,000 for the year. Free state tax return online Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Free state tax return online Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Free state tax return online Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Free state tax return online This is because his dollar limit is reduced as shown next. Free state tax return online   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Free state tax return online This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Free state tax return online The following table shows the percentage to use based on adjusted gross income. Free state tax return online   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Free state tax return online You should show the expenses for each person on Form 2441, line 2, column (c). Free state tax return online However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Free state tax return online You should list -0- for the one person and the actual amount for the second person. Free state tax return online The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Free state tax return online Example. Free state tax return online Roger and Megan Paris have two qualifying children. Free state tax return online They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Free state tax return online They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Free state tax return online Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Free state tax return online Line 30 tells them to complete line 2 without including any dependent care benefits. Free state tax return online They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Free state tax return online Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Free state tax return online 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Free state tax return online However, their son James has special needs and they paid $18,500 for his care. Free state tax return online Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Free state tax return online Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Free state tax return online Payments for prior year's expenses. Free state tax return online   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Free state tax return online Attach a statement to your form showing how you figured the additional amount from 2012. Free state tax return online Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Free state tax return online Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Free state tax return online Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Free state tax return online See Worksheet A. Free state tax return online Example. Free state tax return online In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Free state tax return online Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Free state tax return online Their adjusted gross income for 2012 was $30,000. Free state tax return online Sam's earned income of $14,000 was less than Kate's earned income. Free state tax return online A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Free state tax return online It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Free state tax return online The filled-in Worksheet A they used to figure this credit is shown later. Free state tax return online Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Free state tax return online They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Free state tax return online Worksheet A. Free state tax return online Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Free state tax return online 1. Free state tax return online   Enter your 2012 qualified expenses paid in 2012 1. Free state tax return online     2. Free state tax return online   Enter your 2012 qualified expenses paid in 2013 2. Free state tax return online     3. Free state tax return online   Add the amounts on lines 1 and 2 3. Free state tax return online     4. Free state tax return online   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Free state tax return online     5. Free state tax return online   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Free state tax return online     6. Free state tax return online   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Free state tax return online     7. Free state tax return online   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Free state tax return online     8. Free state tax return online   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Free state tax return online     9. Free state tax return online   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Free state tax return online     10. Free state tax return online   Subtract the amount on line 9 from the amount on line 8 and enter the result. Free state tax return online If zero or less, stop here. Free state tax return online You cannot increase your 2013 credit by any previous year's expenses 10. Free state tax return online     11. Free state tax return online   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Free state tax return online     12. Free state tax return online   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Free state tax return online             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Free state tax return online 35                 15,000 — 17,000     . Free state tax return online 34                 17,000 — 19,000     . Free state tax return online 33                 19,000 — 21,000     . Free state tax return online 32                 21,000 — 23,000     . Free state tax return online 31                 23,000 — 25,000     . Free state tax return online 30                 25,000 — 27,000     . Free state tax return online 29                 27,000 — 29,000     . Free state tax return online 28                 29,000 — 31,000     . Free state tax return online 27                 31,000 — 33,000     . Free state tax return online 26                 33,000 — 35,000     . Free state tax return online 25                 35,000 — 37,000     . Free state tax return online 24                 37,000 — 39,000     . Free state tax return online 23                 39,000 — 41,000     . Free state tax return online 22                 41,000 — 43,000     . Free state tax return online 21                 43,000 — No limit     . Free state tax return online 20           13. Free state tax return online   Multiply line 10 by line 12. Free state tax return online Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Free state tax return online Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Free state tax return online       Worksheet A. Free state tax return online Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Free state tax return online 1. Free state tax return online   Enter your 2012 qualified expenses paid in 2012 1. Free state tax return online   $2,000 2. Free state tax return online   Enter your 2012 qualified expenses paid in 2013 2. Free state tax return online   600 3. Free state tax return online   Add the amounts on lines 1 and 2 3. Free state tax return online   2,600 4. Free state tax return online   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Free state tax return online   3,000 5. Free state tax return online   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Free state tax return online   0 6. Free state tax return online   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Free state tax return online   3,000 7. Free state tax return online   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Free state tax return online   14,000 8. Free state tax return online   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Free state tax return online   2,600 9. Free state tax return online   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Free state tax return online   2,000 10. Free state tax return online   Subtract the amount on line 9 from the amount on line 8 and enter the result. Free state tax return online If zero or less, stop here. Free state tax return online You cannot increase your 2013 credit by any previous year's expenses 10. Free state tax return online   600 11. Free state tax return online   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Free state tax return online   30,000 12. Free state tax return online   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Free state tax return online   . Free state tax return online 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Free state tax return online 35                 15,000 — 17,000     . Free state tax return online 34                 17,000 — 19,000     . Free state tax return online 33                 19,000 — 21,000     . Free state tax return online 32                 21,000 — 23,000     . Free state tax return online 31                 23,000 — 25,000     . Free state tax return online 30                 25,000 — 27,000     . Free state tax return online 29                 27,000 — 29,000     . Free state tax return online 28                 29,000 — 31,000     . Free state tax return online 27                 31,000 — 33,000     . Free state tax return online 26                 33,000 — 35,000     . Free state tax return online 25                 35,000 — 37,000     . Free state tax return online 24                 37,000 — 39,000     . Free state tax return online 23                 39,000 — 41,000     . Free state tax return online 22                 41,000 — 43,000     . Free state tax return online 21                 43,000 — No limit     . Free state tax return online 20           13. Free state tax return online   Multiply line 10 by line 12. Free state tax return online Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Free state tax return online Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Free state tax return online   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Free state tax return online You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Free state tax return online Form 1040, Form 1040A, or Form 1040NR. Free state tax return online    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Free state tax return online Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Free state tax return online Limit on credit. Free state tax return online    The amount of credit you can claim is limited to your tax. Free state tax return online For more information, see the Instructions for Form 2441. Free state tax return online Tax credit not refundable. Free state tax return online   You cannot get a refund for any part of the credit that is more than this limit. Free state tax return online Recordkeeping. Free state tax return online You should keep records of your work-related expenses. Free state tax return online Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Free state tax return online Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Free state tax return online Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Free state tax return online If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Free state tax return online If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Free state tax return online Self-employed persons who are in business for themselves are not household employees. Free state tax return online Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Free state tax return online If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Free state tax return online This control could include providing rules of conduct and appearance and requiring regular reports. Free state tax return online In this case, you do not have to pay employment taxes. Free state tax return online But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Free state tax return online If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Free state tax return online Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Free state tax return online Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Free state tax return online Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Free state tax return online For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Free state tax return online State employment tax. Free state tax return online   You may also have to pay state unemployment tax. Free state tax return online Contact your state unemployment tax office for information. Free state tax return online You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Free state tax return online For a list of state unemployment tax agencies, visit the U. Free state tax return online S. Free state tax return online Department of Labor's website. Free state tax return online To find that website, use the link in Publication 926 or search online. Free state tax return online How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free state tax return online Free help with your tax return. Free state tax return online   You can get free help preparing your return nationwide from IRS-certified volunteers. Free state tax return online The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free state tax return online The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free state tax return online Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free state tax return online In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free state tax return online To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free state tax return online gov, download the IRS2Go app, or call 1-800-906-9887. Free state tax return online   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free state tax return online To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free state tax return online aarp. Free state tax return online org/money/taxaide or call 1-888-227-7669. Free state tax return online For more information on these programs, go to IRS. Free state tax return online gov and enter “VITA” in the search box. Free state tax return online Internet. Free state tax return online    IRS. Free state tax return online gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free state tax return online Download the free IRS2Go app from the iTunes app store or from Google Play. Free state tax return online Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free state tax return online Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free state tax return online gov or download the IRS2Go app and select the Refund Status option. Free state tax return online The IRS issues more than 9 out of 10 refunds in less than 21 days. Free state tax return online Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free state tax return online You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free state tax return online The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free state tax return online Use the Interactive Tax Assistant (ITA) to research your tax questions. Free state tax return online No need to wait on the phone or stand in line. Free state tax return online The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free state tax return online When you reach the response screen, you can print the entire interview and the final response for your records. Free state tax return online New subject areas are added on a regular basis. Free state tax return online  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free state tax return online gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free state tax return online You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free state tax return online The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free state tax return online When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free state tax return online Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free state tax return online You can also ask the IRS to mail a return or an account transcript to you. Free state tax return online Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free state tax return online gov or by calling 1-800-908-9946. Free state tax return online Tax return and tax account transcripts are generally available for the current year and the past three years. Free state tax return online Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free state tax return online Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free state tax return online If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free state tax return online Check the status of your amended return using Where's My Amended Return? Go to IRS. Free state tax return online gov and enter Where's My Amended Return? in the search box. Free state tax return online You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free state tax return online It can take up to 3 weeks from the date you mailed it to show up in our system. Free state tax return online Make a payment using one of several safe and convenient electronic payment options available on IRS. Free state tax return online gov. Free state tax return online Select the Payment tab on the front page of IRS. Free state tax return online gov for more information. Free state tax return online Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free state tax return online Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free state tax return online gov. Free state tax return online Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free state tax return online Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free state tax return online gov. Free state tax return online Request an Electronic Filing PIN by going to IRS. Free state tax return online gov and entering Electronic Filing PIN in the search box. Free state tax return online Download forms, instructions and publications, including accessible versions for people with disabilities. Free state tax return online Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free state tax return online gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free state tax return online An employee can answer questions about your tax account or help you set up a payment plan. Free state tax return online Before you visit, check the Office Locator on IRS. Free state tax return online gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free state tax return online If you have a special need, such as a disability, you can request an appointment. Free state tax return online Call the local number listed in the Office Locator, or look in the phone book under Unit
Español

Joint Congressional Committee on Inaugural Ceremonies

Made up of members of the House and Senate, the Joint Congressional Committee on Inaugural Ceremonies is responsible for planning and carrying out the President's swearing-in ceremony at the U.S. Capitol.

The Free State Tax Return Online

Free state tax return online 4. Free state tax return online   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. Free state tax return online However, the information shown on the filled-in forms is not from any actual person or scenario. Free state tax return online Example 1—Mortgage loan modification. Free state tax return online    In 2007, Nancy Oak bought a main home for $435,000. Free state tax return online Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. Free state tax return online The loan was secured by the home. Free state tax return online The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. Free state tax return online In 2008, Nancy took out a second mortgage loan (also a recourse debt) in the amount of $30,000 that was used to substantially improve her kitchen. Free state tax return online    In 2011, when the outstanding principal of the first and second mortgage loans was $440,000, Nancy refinanced the two recourse loans into one recourse loan in the amount of $475,000. Free state tax return online The FMV of Nancy's home at the time of the refinancing was $500,000. Free state tax return online Nancy used the additional $35,000 debt ($475,000 new mortgage loan minus $440,000 outstanding principal of Nancy's first and second mortgage loans immediately before the refinancing) to pay off personal credit cards and to pay college tuition for her son. Free state tax return online After the refinancing, Nancy has qualified principal residence indebtedness in the amount of $440,000 because the refinanced debt is qualified principal residence indebtedness only to the extent the amount of debt is not more than the old mortgage principal just before the refinancing. Free state tax return online   In 2013, Nancy was unable to make her mortgage loan payments. Free state tax return online On August 31, 2013, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy's bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. Free state tax return online Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. Free state tax return online   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. Free state tax return online Identifiable event code "F" appears in box 6. Free state tax return online This box shows the reason the creditor has filed Form 1099-C. Free state tax return online To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. Free state tax return online Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. Free state tax return online   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. Free state tax return online Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was not qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. Free state tax return online Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. Free state tax return online Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt). Free state tax return online   Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. Free state tax return online Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). Free state tax return online Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. Free state tax return online You can see Nancy's Form 1099-C and a portion of her Form 1040 below. Free state tax return online Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 1040, U. Free state tax return online S. Free state tax return online Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. Free state tax return online    In 2005, John and Mary Elm bought a main home for $335,000. Free state tax return online John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. Free state tax return online The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. Free state tax return online   John and Mary became unable to make their mortgage loan payments and on March 1, 2013, when the outstanding balance of the mortgage loan was $315,000 and the FMV of the property was $290,000, the bank foreclosed on the property and simultaneously canceled the remaining mortgage debt. Free state tax return online Immediately before the foreclosure, John and Mary's only other assets and liabilities were a checking account with a balance of $6,000, retirement savings of $13,000, and credit card debt of $5,500. Free state tax return online   John and Mary received a 2013 Form 1099-C showing canceled debt of $25,000 in box 2 ($315,000 outstanding balance minus $290,000 FMV) and an FMV of $290,000 in box 7. Free state tax return online Identifiable event code "D" appears in box 6. Free state tax return online This box shows the reason the creditor has filed Form 1099-C. Free state tax return online In order to determine if John and Mary must include the canceled debt in income, they must first determine whether they meet any of the exceptions or exclusions that apply to canceled debts. Free state tax return online In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. Free state tax return online Their sample Form 1099-C is shown on this page. Free state tax return online   John and Mary complete the insolvency worksheet and determine that they were insolvent immediately before the cancellation because at that time their liabilities exceeded the FMV of their assets by $11,500 ($320,500 total liabilities minus $309,000 FMV of total assets). Free state tax return online However, because the entire debt canceled is qualified principal residence indebtedness, the insolvency exclusion only applies if John and Mary elect to apply the insolvency exclusion instead of the qualified principal residence exclusion. Free state tax return online   John and Mary do not elect to apply the insolvency exclusion instead of the qualified principal residence exclusion because under the insolvency exclusion their exclusion would be limited to the amount by which they were insolvent ($11,500). Free state tax return online Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. Free state tax return online Under the qualified principal residence exclusion, the amount that John and Mary can exclude is not limited because their qualified principal residence indebtedness is not more than $2 million and no portion of the loan was nonqualified debt. Free state tax return online As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. Free state tax return online Because John and Mary no longer own the home due to the foreclosure, John and Mary have no remaining basis in the home at the time of the debt cancellation. Free state tax return online Thus, John and Mary leave line 10b of Form 982 blank. Free state tax return online   John and Mary must also determine whether they have a gain or loss from the foreclosure. Free state tax return online John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. Free state tax return online Because this loss relates to their home, it is a nondeductible loss. Free state tax return online   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. Free state tax return online John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 1099-C, Cancellation of Debt Table 1-1. Free state tax return online Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. Free state tax return online Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free state tax return online Otherwise, go to Part 2. Free state tax return online 1. Free state tax return online Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $315,000. Free state tax return online 00 2. Free state tax return online Enter the fair market value of the transferred property $290,000. Free state tax return online 00 3. Free state tax return online Ordinary income from the cancellation of debt upon foreclosure or repossession. Free state tax return online * Subtract line 2 from line 1. Free state tax return online If less than zero, enter zero. Free state tax return online Next, go to Part 2 $ 25,000. Free state tax return online 00 Part 2. Free state tax return online Gain or loss from foreclosure or repossession. Free state tax return online   4. Free state tax return online Enter the smaller of line 1 or line 2. Free state tax return online If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property $290,000. Free state tax return online 00 5. Free state tax return online Enter any proceeds you received from the foreclosure sale   6. Free state tax return online Add line 4 and line 5 $290,000. Free state tax return online 00 7. Free state tax return online Enter the adjusted basis of the transferred property $335,000. Free state tax return online 00 8. Free state tax return online Gain or loss from foreclosure or repossession. Free state tax return online Subtract line 7 from line 6 ($ 45,000. Free state tax return online 00) * The income may not be taxable. Free state tax return online See chapter 1 for more details. Free state tax return online Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. Free state tax return online Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. Free state tax return online Credit card debt $ 5,500 2. Free state tax return online Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 315,000 3. Free state tax return online Car and other vehicle loans $ 4. Free state tax return online Medical bills owed $ 5. Free state tax return online Student loans $ 6. Free state tax return online Accrued or past-due mortgage interest $ 7. Free state tax return online Accrued or past-due real estate taxes $ 8. Free state tax return online Accrued or past-due utilities (water, gas, electric) $ 9. Free state tax return online Accrued or past-due child care costs $ 10. Free state tax return online Federal or state income taxes remaining due (for prior tax years) $ 11. Free state tax return online Judgments $ 12. Free state tax return online Business debts (including those owed as a sole proprietor or partner) $ 13. Free state tax return online Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. Free state tax return online Other liabilities (debts) not included above $ 15. Free state tax return online Total liabilities immediately before the cancellation. Free state tax return online Add lines 1 through 14. Free state tax return online $ 320,500 Part II. Free state tax return online Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. Free state tax return online Cash and bank account balances $ 6,000 17. Free state tax return online Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 290,000 18. Free state tax return online Cars and other vehicles $ 19. Free state tax return online Computers $ 20. Free state tax return online Household goods and furnishings (for example, appliances, electronics, furniture, etc. Free state tax return online ) $ 21. Free state tax return online Tools $ 22. Free state tax return online Jewelry $ 23. Free state tax return online Clothing $ 24. Free state tax return online Books $ 25. Free state tax return online Stocks and bonds $ 26. Free state tax return online Investments in coins, stamps, paintings, or other collectibles $ 27. Free state tax return online Firearms, sports, photographic, and other hobby equipment $ 28. Free state tax return online Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. Free state tax return online Interest in a pension plan $ 30. Free state tax return online Interest in education accounts $ 31. Free state tax return online Cash value of life insurance $ 32. Free state tax return online Security deposits with landlords, utilities, and others $ 33. Free state tax return online Interests in partnerships $ 34. Free state tax return online Value of investment in a business $ 35. Free state tax return online Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. Free state tax return online Other assets not included above $ 37. Free state tax return online FMV of total assets immediately before the cancellation. Free state tax return online Add lines 16 through 36. Free state tax return online $ 309,000 Part III. Free state tax return online Insolvency 38. Free state tax return online Amount of Insolvency. Free state tax return online Subtract line 37 from line 15. Free state tax return online If zero or less, you are not insolvent. Free state tax return online $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)          Example 3—Mortgage loan foreclosure with debt exceeding $2 million limit. Free state tax return online    In 2011, Kathy and Frank Willow got married and entered into a contract with Hive Construction Corporation to build a house for $3,000,000 to be used as their main home. Free state tax return online Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house. Free state tax return online Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. Free state tax return online   In November 2013, when the outstanding principal balance on the mortgage loan was $2,500,000, the FMV of the property fell to $1,750,000 and Kathy and Frank abandoned the property by permanently moving out. Free state tax return online The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. Free state tax return online On December 26, 2013, the lender canceled the remaining debt. Free state tax return online Kathy and Frank have no tax attributes other than basis of personal-use property. Free state tax return online   The lender issued a 2013 Form 1099-C to Kathy and Frank showing canceled debt of $750,000 in box 2 (the remaining balance on the $2,500,000 mortgage debt after application of the foreclosure sale proceeds) and $1,750,000 in box 7 (FMV of the property). Free state tax return online Identifiable event code "D" appears in box 6. Free state tax return online This box shows the reason the creditor has filed Form 1099-C. Free state tax return online Although Kathy and Frank abandoned the property, the lender did not need to also file a Form 1099-A because the lender canceled the debt in connection with the foreclosure in the same calendar year. Free state tax return online Kathy and Frank are filing a joint return for 2013. Free state tax return online   Because the foreclosure occurred prior to the debt cancellation, Kathy and Frank first calculate their gain or loss from the foreclosure using Table 1-1. Free state tax return online Because Kathy and Frank remained personally liable for the $750,000 debt remaining after the foreclosure ($2,500,000 outstanding debt immediately before the foreclosure minus $1,750,000 satisfied through the sale of the home), Kathy and Frank enter $1,750,000 on line 1 of Table 1-1 ($2,500,000 outstanding debt immediately before the foreclosure minus the $750,000 for which they remained liable). Free state tax return online Completing Table 1-1, Kathy and Frank find that they have no ordinary income from the cancellation of debt upon foreclosure and that they have a $1,250,000 loss. Free state tax return online Because this loss relates to their home, it is a nondeductible loss. Free state tax return online   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. Free state tax return online Immediately before the cancellation, Kathy and Frank had $15,000 in a savings account, household furnishings with an FMV of $17,000, a car with an FMV of $10,000, and $18,000 in credit card debt. Free state tax return online Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. Free state tax return online The household furnishings originally cost $30,000. Free state tax return online The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. Free state tax return online Kathy and Frank had no adjustments to the cost basis of the car. Free state tax return online Kathy and Frank had no other assets or liabilities at the time of the cancellation. Free state tax return online Kathy and Frank complete the insolvency worksheet to calculate that they were insolvent to the extent of $726,000 immediately before the cancellation ($768,000 of total liabilities minus $42,000 FMV of total assets). Free state tax return online   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. Free state tax return online Kathy and Frank also owned the same car at that time (still with an FMV of $10,000 and basis of $16,000) and the same household furnishings (still with an FMV of $17,000 and a basis of $30,000). Free state tax return online Kathy and Frank had no other assets or liabilities at that time. Free state tax return online Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. Free state tax return online   Because the canceled debt is qualified principal residence indebtedness, the insolvency exclusion does not apply unless Kathy and Frank elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion. Free state tax return online The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. Free state tax return online The remaining $500,000 ($2,500,000 outstanding mortgage loan minus $2,000,000 limit on qualified principal residence indebtedness) is not qualified principal residence indebtedness. Free state tax return online Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. Free state tax return online Under the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent that the amount canceled ($750,000) exceeds the amount of the loan (immediately before the cancellation) that is not qualified principal residence indebtedness ($500,000). Free state tax return online This means that Kathy and Frank can only exclude $250,000 ($750,000 amount canceled minus $500,000 nonqualified debt) under the qualified principal residence indebtedness exclusion. Free state tax return online   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. Free state tax return online Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. Free state tax return online Kathy and Frank can exclude the remaining $500,000 canceled debt under the insolvency exclusion because they were insolvent immediately before the cancellation to the extent of $726,000. Free state tax return online Thus, Kathy and Frank check the boxes on lines 1b and 1e of Form 982 and enter $750,000 on line 2 ($250,000 excluded under the qualified principal residence indebtedness exclusion plus $500,000 excluded under the insolvency exclusion). Free state tax return online   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. Free state tax return online Because Kathy and Frank no longer own the home due to the foreclosure, Kathy and Frank have no remaining basis in the home at the time of the debt cancellation. Free state tax return online Thus, Kathy and Frank leave line 10b of Form 982 blank. Free state tax return online However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. Free state tax return online As a result, Kathy and Frank must reduce the basis of property they own based on the amount of canceled debt they are excluding from income under the insolvency rules. Free state tax return online Because Kathy and Frank have no tax attributes other than basis of personal-use property to reduce, Kathy and Frank figure the amount they must include on line 10a of Form 982 by taking the smallest of: The $46,000 bases of their personal-use property held at the beginning of 2014 ($16,000 basis in the car plus $30,000 basis in household furnishings), The $500,000 of the nonbusiness debt (other than qualified principal residence indebtedness) that they are excluding from income on line 2 of Form 982, or The $43,000 excess of the total bases of the property and the amount of money they held immediately after the cancellation over their total liabilities immediately after the cancellation ($15,000 in savings account plus $30,000 basis in household furnishings plus $16,000 adjusted basis in car minus $18,000 credit card debt). Free state tax return online Kathy and Frank enter $43,000 on Form 982, line 10a and reduce their bases in the car and the household furnishings in proportion to the total adjusted bases in all their property. Free state tax return online Kathy and Frank reduce the basis in the car by $14,956. Free state tax return online 52 ($43,000 x $16,000/$46,000). Free state tax return online And they reduce the basis in the household furnishings by $28,043. Free state tax return online 48 ($43,000 x $30,000/$46,000). Free state tax return online   Following are Kathy and Frank's sample forms and worksheets. Free state tax return online Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 1099-C, Cancellation of Debt Table 1-1. Free state tax return online Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. Free state tax return online Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free state tax return online Otherwise, go to Part 2. Free state tax return online 1. Free state tax return online Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $1,750,000. Free state tax return online 00 2. Free state tax return online Enter the fair market value of the transferred property $1,750,000. Free state tax return online 00 3. Free state tax return online Ordinary income from the cancellation of debt upon foreclosure or repossession. Free state tax return online * Subtract line 2 from line 1. Free state tax return online If less than zero, enter zero. Free state tax return online Next, go to Part 2 $0. Free state tax return online 00 Part 2. Free state tax return online Gain or loss from foreclosure or repossession. Free state tax return online   4. Free state tax return online Enter the smaller of line 1 or line 2. Free state tax return online If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property. Free state tax return online $1,750,000. Free state tax return online 00 5. Free state tax return online Enter any proceeds you received from the foreclosure sale   6. Free state tax return online Add line 4 and line 5 $1,750,000. Free state tax return online 00 7. Free state tax return online Enter the adjusted basis of the transferred property $3,000,000. Free state tax return online 00 8. Free state tax return online Gain or loss from foreclosure or repossession. Free state tax return online Subtract line 7 from line 6 ($1,250,000. Free state tax return online 00) * The income may not be taxable. Free state tax return online See chapter 1 for more details. Free state tax return online    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. Free state tax return online Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. Free state tax return online Credit card debt $ 18,000 2. Free state tax return online Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 750,000 3. Free state tax return online Car and other vehicle loans $ 4. Free state tax return online Medical bills owed $ 5. Free state tax return online Student loans $ 6. Free state tax return online Accrued or past-due mortgage interest $ 7. Free state tax return online Accrued or past-due real estate taxes $ 8. Free state tax return online Accrued or past-due utilities (water, gas, electric) $ 9. Free state tax return online Accrued or past-due child care costs $ 10. Free state tax return online Federal or state income taxes remaining due (for prior tax years) $ 11. Free state tax return online Judgments $ 12. Free state tax return online Business debts (including those owed as a sole proprietor or partner) $ 13. Free state tax return online Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. Free state tax return online Other liabilities (debts) not included above $ 15. Free state tax return online Total liabilities immediately before the cancellation. Free state tax return online Add lines 1 through 14. Free state tax return online $ 768,000 Part II. Free state tax return online Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. Free state tax return online Cash and bank account balances $ 15,000 17. Free state tax return online Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 18. Free state tax return online Cars and other vehicles $ 10,000 19. Free state tax return online Computers $ 20. Free state tax return online Household goods and furnishings (for example, appliances, electronics, furniture, etc. Free state tax return online ) $ 17,000 21. Free state tax return online Tools $ 22. Free state tax return online Jewelry $ 23. Free state tax return online Clothing $ 24. Free state tax return online Books $ 25. Free state tax return online Stocks and bonds $ 26. Free state tax return online Investments in coins, stamps, paintings, or other collectibles $ 27. Free state tax return online Firearms, sports, photographic, and other hobby equipment $ 28. Free state tax return online Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. Free state tax return online Interest in a pension plan $ 30. Free state tax return online Interest in education accounts $ 31. Free state tax return online Cash value of life insurance $ 32. Free state tax return online Security deposits with landlords, utilities, and others $ 33. Free state tax return online Interests in partnerships $ 34. Free state tax return online Value of investment in a business $ 35. Free state tax return online Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. Free state tax return online Other assets not included above $ 37. Free state tax return online FMV of total assets immediately before the cancellation. Free state tax return online Add lines 16 through 36. Free state tax return online $ 42,000 Part III. Free state tax return online Insolvency 38. Free state tax return online Amount of Insolvency. Free state tax return online Subtract line 37 from line 15. Free state tax return online If zero or less, you are not insolvent. Free state tax return online $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. Free state tax return online Please click the link to view the image. Free state tax return online Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications