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H&r free file Publication 561 - Main Contents Table of Contents What Is Fair Market Value (FMV)?Factors. H&r free file Stock. H&r free file Options. H&r free file Determining Fair Market Value Problems in Determining Fair Market Value Valuation of Various Kinds of PropertyHousehold Goods Used Clothing Jewelry and Gems Paintings, Antiques, and Other Objects of Art Collections Cars, Boats, and Aircraft Inventory Patents Stocks and Bonds Real Estate Interest in a Business Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Certain Life Insurance and Annuity Contracts Partial Interest in Property Not in Trust AppraisalsDeductions of More Than $5,000 Deductions of More Than $500,000 Qualified Appraisal Form 8283 Internal Revenue Service Review of Appraisals Penalty How To Get Tax HelpLow income tax clinics (LITCs). H&r free file What Is Fair Market Value (FMV)? To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution. H&r free file Fair market value. H&r free file   Fair market value (FMV) is the price that property would sell for on the open market. H&r free file It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. H&r free file If you put a restriction on the use of property you donate, the FMV must reflect that restriction. H&r free file Example 1. H&r free file If you give used clothing to the Salvation Army, the FMV would be the price that typical buyers actually pay for clothing of this age, condition, style, and use. H&r free file Usually, such items are worth far less than what you paid for them. H&r free file Example 2. H&r free file If you donate land and restrict its use to agricultural purposes, you must value the land at its value for agricultural purposes, even though it would have a higher FMV if it were not restricted. H&r free file Factors. H&r free file   In making and supporting the valuation of property, all factors affecting value are relevant and must be considered. H&r free file These include: The cost or selling price of the item, Sales of comparable properties, Replacement cost, and Opinions of experts. H&r free file   These factors are discussed later. H&r free file Also, see Table 1 for a summary of questions to ask as you consider each factor. H&r free file Date of contribution. H&r free file   Ordinarily, the date of a contribution is the date that the transfer of the property takes place. H&r free file Stock. H&r free file   If you deliver, without any conditions, a properly endorsed stock certificate to a qualified organization or to an agent of the organization, the date of the contribution is the date of delivery. H&r free file If the certificate is mailed and received through the regular mail, it is the date of mailing. H&r free file If you deliver the certificate to a bank or broker acting as your agent or to the issuing corporation or its agent, for transfer into the name of the organization, the date of the contribution is the date the stock is transferred on the books of the corporation. H&r free file Options. H&r free file   If you grant an option to a qualified organization to buy real property, you have not made a charitable contribution until the organization exercises the option. H&r free file The amount of the contribution is the FMV of the property on the date the option is exercised minus the exercise price. H&r free file Example. H&r free file You grant an option to a local university, which is a qualified organization, to buy real property. H&r free file Under the option, the university could buy the property at any time during a 2-year period for $40,000. H&r free file The FMV of the property on the date the option is granted is $50,000. H&r free file In the following tax year, the university exercises the option. H&r free file The FMV of the property on the date the option is exercised is $55,000. H&r free file Therefore, you have made a charitable contribution of $15,000 ($55,000, the FMV, minus $40,000, the exercise price) in the tax year the option is exercised. H&r free file Determining Fair Market Value Determining the value of donated property would be a simple matter if you could rely only on fixed formulas, rules, or methods. H&r free file Usually it is not that simple. H&r free file Using such formulas, etc. H&r free file , seldom results in an acceptable determination of FMV. H&r free file There is no single formula that always applies when determining the value of property. H&r free file This is not to say that a valuation is only guesswork. H&r free file You must consider all the facts and circumstances connected with the property, such as its desirability, use, and scarcity. H&r free file For example, donated furniture should not be evaluated at some fixed rate such as 15% of the cost of new replacement furniture. H&r free file When the furniture is contributed, it may be out of style or in poor condition, therefore having little or no market value. H&r free file On the other hand, it may be an antique, the value of which could not be determined by using any formula. H&r free file Cost or Selling Price of the Donated Property The cost of the property to you or the actual selling price received by the qualified organization may be the best indication of its FMV. H&r free file However, because conditions in the market change, the cost or selling price of property may have less weight if the property was not bought or sold reasonably close to the date of contribution. H&r free file The cost or selling price is a good indication of the property's value if: The purchase or sale took place close to the valuation date in an open market, The purchase or sale was at “arm's-length,” The buyer and seller knew all relevant facts, The buyer and seller did not have to act, and The market did not change between the date of purchase or sale and the valuation date. H&r free file Example. H&r free file Tom Morgan, who is not a dealer in gems, bought an assortment of gems for $5,000 from a promoter. H&r free file The promoter claimed that the price was “wholesale” even though he and other dealers made similar sales at similar prices to other persons who were not dealers. H&r free file The promoter said that if Tom kept the gems for more than 1 year and then gave them to charity, Tom could claim a charitable deduction of $15,000, which, according to the promoter, would be the value of the gems at the time of contribution. H&r free file Tom gave the gems to a qualified charity 13 months after buying them. H&r free file The selling price for these gems had not changed from the date of purchase to the date he donated them to charity. H&r free file The best evidence of FMV depends on actual transactions and not on some artificial estimate. H&r free file The $5,000 charged Tom and others is, therefore, the best evidence of the maximum FMV of the gems. H&r free file Terms of the purchase or sale. H&r free file   The terms of the purchase or sale should be considered in determining FMV if they influenced the price. H&r free file These terms include any restrictions, understandings, or covenants limiting the use or disposition of the property. H&r free file Rate of increase or decrease in value. H&r free file   Unless you can show that there were unusual circumstances, it is assumed that the increase or decrease in the value of your donated property from your cost has been at a reasonable rate. H&r free file For time adjustments, an appraiser may consider published price indexes for information on general price trends, building costs, commodity costs, securities, and works of art sold at auction in arm's-length sales. H&r free file Example. H&r free file Bill Brown bought a painting for $10,000. H&r free file Thirteen months later he gave it to an art museum, claiming a charitable deduction of $15,000 on his tax return. H&r free file The appraisal of the painting should include information showing that there were unusual circumstances that justify a 50% increase in value for the 13 months Bill held the property. H&r free file Arm's-length offer. H&r free file   An arm's-length offer to buy the property close to the valuation date may help to prove its value if the person making the offer was willing and able to complete the transaction. H&r free file To rely on an offer, you should be able to show proof of the offer and the specific amount to be paid. H&r free file Offers to buy property other than the donated item will help to determine value if the other property is reasonably similar to the donated property. H&r free file Sales of Comparable Properties The sales prices of properties similar to the donated property are often important in determining the FMV. H&r free file The weight to be given to each sale depends on the following. H&r free file The degree of similarity between the property sold and the donated property. H&r free file The time of the sale—whether it was close to the valuation date. H&r free file The circumstances of the sale—whether it was at arm's-length with a knowledgeable buyer and seller, with neither having to act. H&r free file The conditions of the market in which the sale was made—whether unusually inflated or deflated. H&r free file The comparable sales method of valuing real estate is explained later under Valuation of Various Kinds of Property. H&r free file Example 1. H&r free file Mary Black, who is not a book dealer, paid a promoter $10,000 for 500 copies of a single edition of a modern translation of the Bible. H&r free file The promoter had claimed that the price was considerably less than the “retail” price, and gave her a statement that the books had a total retail value of $30,000. H&r free file The promoter advised her that if she kept the Bibles for more than 1 year and then gave them to a qualified organization, she could claim a charitable deduction for the “retail” price of $30,000. H&r free file Thirteen months later she gave all the Bibles to a church that she selected from a list provided by the promoter. H&r free file At the time of her donation, wholesale dealers were selling similar quantities of Bibles to the general public for $10,000. H&r free file The FMV of the Bibles is $10,000, the price at which similar quantities of Bibles were being sold to others at the time of the contribution. H&r free file Example 2. H&r free file The facts are the same as in Example 1, except that the promoter gave Mary Black a second option. H&r free file The promoter said that if Mary wanted a charitable deduction within 1 year of the purchase, she could buy the 500 Bibles at the “retail” price of $30,000, paying only $10,000 in cash and giving a promissory note for the remaining $20,000. H&r free file The principal and interest on the note would not be due for 12 years. H&r free file According to the promoter, Mary could then, within 1 year of the purchase, give the Bibles to a qualified organization and claim the full $30,000 retail price as a charitable contribution. H&r free file She purchased the Bibles under the second option and, 3 months later, gave them to a church, which will use the books for church purposes. H&r free file At the time of the gift, the promoter was selling similar lots of Bibles for either $10,000 or $30,000. H&r free file The difference between the two prices was solely at the discretion of the buyer. H&r free file The promoter was a willing seller for $10,000. H&r free file Therefore, the value of Mary's contribution of the Bibles is $10,000, the amount at which similar lots of Bibles could be purchased from the promoter by members of the general public. H&r free file Replacement Cost The cost of buying, building, or manufacturing property similar to the donated item should be considered in determining FMV. H&r free file However, there must be a reasonable relationship between the replacement cost and the FMV. H&r free file The replacement cost is the amount it would cost to replace the donated item on the valuation date. H&r free file Often there is no relationship between the replacement cost and the FMV. H&r free file If the supply of the donated property is more or less than the demand for it, the replacement cost becomes less important. H&r free file To determine the replacement cost of the donated property, find the “estimated replacement cost new. H&r free file ” Then subtract from this figure an amount for depreciation due to the physical condition and obsolescence of the donated property. H&r free file You should be able to show the relationship between the depreciated replacement cost and the FMV, as well as how you arrived at the “estimated replacement cost new. H&r free file ” Opinions of Experts Generally, the weight given to an expert's opinion on matters such as the authenticity of a coin or a work of art, or the most profitable and best use of a piece of real estate, depends on the knowledge and competence of the expert and the thoroughness with which the opinion is supported by experience and facts. H&r free file For an expert's opinion to deserve much weight, the facts must support the opinion. H&r free file For additional information, see Appraisals, later. H&r free file Table 1. H&r free file Factors That Affect FMV IF the factor you are considering is. H&r free file . H&r free file . H&r free file THEN you should ask these questions. H&r free file . H&r free file . H&r free file     cost or selling price Was the purchase or sale of the property reasonably close to the date of contribution? Was any increase or decrease in value, as compared to your cost, at a reasonable rate? Do the terms of purchase or sale limit what can be done with the property? Was there an arm's-length offer to buy the property close to the valuation date?     sales of comparable properties How similar is the property sold to the property donated? How close is the date of sale to the valuation date? Was the sale at arm's-length? What was the condition of the market at the time of sale?     replacement cost What would it cost to replace the donated property? Is there a reasonable relationship between replacement cost and FMV? Is the supply of the donated property more or less than the demand for it?     opinions of experts Is the expert knowledgeable and competent? Is the opinion thorough and supported by facts and experience? Problems in Determining Fair Market Value There are a number of problems in determining the FMV of donated property. H&r free file Unusual Market Conditions The sale price of the property itself in an arm's-length transaction in an open market is often the best evidence of its value. H&r free file When you rely on sales of comparable property, the sales must have been made in an open market. H&r free file If those sales were made in a market that was artificially supported or stimulated so as not to be truly representative, the prices at which the sales were made will not indicate the FMV. H&r free file For example, liquidation sale prices usually do not indicate the FMV. H&r free file Also, sales of stock under unusual circumstances, such as sales of small lots, forced sales, and sales in a restricted market, may not represent the FMV. H&r free file Selection of Comparable Sales Using sales of comparable property is an important method for determining the FMV of donated property. H&r free file However, the amount of weight given to a sale depends on the degree of similarity between the comparable and the donated properties. H&r free file The degree of similarity must be close enough so that this selling price would have been given consideration by reasonably well-informed buyers or sellers of the property. H&r free file Example. H&r free file You give a rare, old book to your former college. H&r free file The book is a third edition and is in poor condition because of a missing back cover. H&r free file You discover that there was a sale for $300, near the valuation date, of a first edition of the book that was in good condition. H&r free file Although the contents are the same, the books are not at all similar because of the different editions and their physical condition. H&r free file Little consideration would be given to the selling price of the $300 property by knowledgeable buyers or sellers. H&r free file Future Events You may not consider unexpected events happening after your donation of property in making the valuation. H&r free file You may consider only the facts known at the time of the gift, and those that could be reasonably expected at the time of the gift. H&r free file Example. H&r free file You give farmland to a qualified charity. H&r free file The transfer provides that your mother will have the right to all income and full use of the property for her life. H&r free file Even though your mother dies 1 week after the transfer, the value of the property on the date it is given is its present value, subject to the life interest as estimated from actuarial tables. H&r free file You may not take a higher deduction because the charity received full use and possession of the land only 1 week after the transfer. H&r free file Using Past Events to Predict the Future A common error is to rely too much on past events that do not fairly reflect the probable future earnings and FMV. H&r free file Example. H&r free file You give all your rights in a successful patent to your favorite charity. H&r free file Your records show that before the valuation date there were three stages in the patent's history of earnings. H&r free file First, there was rapid growth in earnings when the invention was introduced. H&r free file Then, there was a period of high earnings when the invention was being exploited. H&r free file Finally, there was a decline in earnings when competing inventions were introduced. H&r free file The entire history of earnings may be relevant in estimating the future earnings. H&r free file However, the appraiser must not rely too much on the stage of rapid growth in earnings, or of high earnings. H&r free file The market conditions at those times do not represent the condition of the market at the valuation date. H&r free file What is most significant is the trend of decline in earnings up to the valuation date. H&r free file For more information about donations of patents, see Patents, later. H&r free file Valuation of Various Kinds of Property This section contains information on determining the FMV of ordinary kinds of donated property. H&r free file For information on appraisals, see Appraisals, later. H&r free file Household Goods The FMV of used household goods, such as furniture, appliances, and linens, is usually much lower than the price paid when new. H&r free file Such used property may have little or no market value because of its worn condition. H&r free file It may be out of style or no longer useful. H&r free file You cannot take a deduction for household goods donated after August 17, 2006, unless they are in good used condition or better. H&r free file A household good that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. H&r free file See Deduction over $500 for certain clothing or household items, later. H&r free file If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art. H&r free file Used Clothing Used clothing and other personal items are usually worth far less than the price you paid for them. H&r free file Valuation of items of clothing does not lend itself to fixed formulas or methods. H&r free file The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value. H&r free file You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better. H&r free file An item of clothing that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. H&r free file See Deduction over $500 for certain clothing or household items, later. H&r free file For valuable furs or very expensive gowns, a Form 8283 may have to be sent with your tax return. H&r free file Jewelry and Gems Jewelry and gems are of such a specialized nature that it is almost always necessary to get an appraisal by a specialized jewelry appraiser. H&r free file The appraisal should describe, among other things, the style of the jewelry, the cut and setting of the gem, and whether it is now in fashion. H&r free file If not in fashion, the possibility of having the property redesigned, recut, or reset should be reported in the appraisal. H&r free file The stone's coloring, weight, cut, brilliance, and flaws should be reported and analyzed. H&r free file Sentimental personal value has no effect on FMV. H&r free file But if the jewelry was owned by a famous person, its value might increase. H&r free file Paintings, Antiques, and Other Objects of Art Your deduction for contributions of paintings, antiques, and other objects of art, should be supported by a written appraisal from a qualified and reputable source, unless the deduction is $5,000 or less. H&r free file Examples of information that should be included in appraisals of art objects—paintings in particular—are found later under Qualified Appraisal. H&r free file Art valued at $20,000 or more. H&r free file   If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the signed appraisal to your return. H&r free file For individual objects valued at $20,000 or more, a photograph of a size and quality fully showing the object, preferably an 8 x 10 inch color photograph or a color transparency no smaller than 4 x 5 inches, must be provided upon request. H&r free file Art valued at $50,000 or more. H&r free file   If you donate an item of art that has been appraised at $50,000 or more, you can request a Statement of Value for that item from the IRS. H&r free file You must request the statement before filing the tax return that reports the donation. H&r free file Your request must include the following. H&r free file A copy of a qualified appraisal of the item. H&r free file See Qualified Appraisal, later. H&r free file A $2,500 check or money order payable to the Internal Revenue Service for the user fee that applies to your request regarding one, two, or three items of art. H&r free file Add $250 for each item in excess of three. H&r free file A completed Form 8283, Section B. H&r free file The location of the IRS territory that has examination responsibility for your return. H&r free file If your request lacks essential information, you will be notified and given 30 days to provide the missing information. H&r free file   Send your request to: Internal Revenue Service Attention: Art Appraisal (C:AP:ART) P. H&r free file O. H&r free file Box 27720 McPherson Station Washington, DC 20038 Refunds. H&r free file   You can withdraw your request for a Statement of Value at any time before it is issued. H&r free file However, the IRS will not refund the user fee if you do. H&r free file   If the IRS declines to issue a Statement of Value in the interest of efficient tax administration, the IRS will refund the user fee. H&r free file Authenticity. H&r free file   The authenticity of the donated art must be determined by the appraiser. H&r free file Physical condition. H&r free file   Important items in the valuation of antiques and art are physical condition and extent of restoration. H&r free file These have a significant effect on the value and must be fully reported in an appraisal. H&r free file An antique in damaged condition, or lacking the “original brasses,” may be worth much less than a similar piece in excellent condition. H&r free file Art appraisers. H&r free file   More weight will usually be given to an appraisal prepared by an individual specializing in the kind and price range of the art being appraised. H&r free file Certain art dealers or appraisers specialize, for example, in old masters, modern art, bronze sculpture, etc. H&r free file Their opinions on the authenticity and desirability of such art would usually be given more weight than the opinions of more generalized art dealers or appraisers. H&r free file They can report more recent comparable sales to support their opinion. H&r free file   To identify and locate experts on unique, specialized items or collections, you may wish to use the current Official Museum Directory of the American Association of Museums. H&r free file It lists museums both by state and by category. H&r free file   To help you locate a qualified appraiser for your donation, you may wish to ask an art historian at a nearby college or the director or curator of a local museum. H&r free file The Yellow Pages often list specialized art and antique dealers, auctioneers, and art appraisers. H&r free file You may be able to find a qualified appraiser on the Internet. H&r free file You may also contact associations of dealers for guidance. H&r free file Collections Since many kinds of hobby collections may be the subject of a charitable donation, it is not possible to discuss all of the possible collectibles in this publication. H&r free file Most common are rare books, autographs, sports memorabilia, dolls, manuscripts, stamps, coins, guns, phonograph records, and natural history items. H&r free file Many of the elements of valuation that apply to paintings and other objects of art, discussed earlier, also apply to miscellaneous collections. H&r free file Reference material. H&r free file   Publications available to help you determine the value of many kinds of collections include catalogs, dealers' price lists, and specialized hobby periodicals. H&r free file When using one of these price guides, you must use the current edition at the date of contribution. H&r free file However, these sources are not always reliable indicators of FMV and should be supported by other evidence. H&r free file   For example, a dealer may sell an item for much less than is shown on a price list, particularly after the item has remained unsold for a long time. H&r free file The price an item sold for in an auction may have been the result of a rigged sale or a mere bidding duel. H&r free file The appraiser must analyze the reference material, and recognize and make adjustments for misleading entries. H&r free file If you are donating a valuable collection, you should get an appraisal. H&r free file If your donation appears to be of little value, you may be able to make a satisfactory valuation using reference materials available at a state, city, college, or museum library. H&r free file Stamp collections. H&r free file   Most libraries have catalogs or other books that report the publisher's estimate of values. H&r free file Generally, two price levels are shown for each stamp: the price postmarked and the price not postmarked. H&r free file Stamp dealers generally know the value of their merchandise and are able to prepare satisfactory appraisals of valuable collections. H&r free file Coin collections. H&r free file   Many catalogs and other reference materials show the writer's or publisher's opinion of the value of coins on or near the date of the publication. H&r free file Like many other collectors' items, the value of a coin depends on the demand for it, its age, and its rarity. H&r free file Another important factor is the coin's condition. H&r free file For example, there is a great difference in the value of a coin that is in mint condition and a similar coin that is only in good condition. H&r free file   Catalogs usually establish a category for coins, based on their physical condition—mint or uncirculated, extremely fine, very fine, fine, very good, good, fair, or poor—with a different valuation for each category. H&r free file Books. H&r free file   The value of books is usually determined by selecting comparable sales and adjusting the prices according to the differences between the comparable sales and the item being evaluated. H&r free file This is difficult to do and, except for a collection of little value, should be done by a specialized appraiser. H&r free file Within the general category of literary property, there are dealers who specialize in certain areas, such as Americana, foreign imports, Bibles, and scientific books. H&r free file Modest value of collection. H&r free file   If the collection you are donating is of modest value, not requiring a written appraisal, the following information may help you in determining the FMV. H&r free file   A book that is very old, or very rare, is not necessarily valuable. H&r free file There are many books that are very old or rare, but that have little or no market value. H&r free file Condition of book. H&r free file   The condition of a book may have a great influence on its value. H&r free file Collectors are interested in items that are in fine, or at least good, condition. H&r free file When a book has a missing page, a loose binding, tears, stains, or is otherwise in poor condition, its value is greatly lowered. H&r free file Other factors. H&r free file   Some other factors in the valuation of a book are the kind of binding (leather, cloth, paper), page edges, and illustrations (drawings and photographs). H&r free file Collectors usually want first editions of books. H&r free file However, because of changes or additions, other editions are sometimes worth as much as, or more than, the first edition. H&r free file Manuscripts, autographs, diaries, and similar items. H&r free file   When these items are handwritten, or at least signed by famous people, they are often in demand and are valuable. H&r free file The writings of unknowns also may be of value if they are of unusual historical or literary importance. H&r free file Determining the value of such material is difficult. H&r free file For example, there may be a great difference in value between two diaries that were kept by a famous person—one kept during childhood and the other during a later period in his or her life. H&r free file The appraiser determines a value in these cases by applying knowledge and judgment to such factors as comparable sales and conditions. H&r free file Signatures. H&r free file   Signatures, or sets of signatures, that were cut from letters or other papers usually have little or no value. H&r free file But complete sets of the signatures of U. H&r free file S. H&r free file presidents are in demand. H&r free file Cars, Boats, and Aircraft If you donate a car, a boat, or an aircraft to a charitable organization, its FMV must be determined. H&r free file Certain commercial firms and trade organizations publish monthly or seasonal guides for different regions of the country, containing complete dealer sale prices or dealer average prices for recent model years. H&r free file Prices are reported for each make, model, and year. H&r free file These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. H&r free file The prices are not “official,” and these publications are not considered an appraisal of any specific donated property. H&r free file But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. H&r free file These publications are sometimes available from public libraries or at a bank, credit union, or finance company. H&r free file You can also find pricing information about used cars on the Internet. H&r free file An acceptable measure of the FMV of a donated car, boat, or airplane is an amount not in excess of the price listed in a used vehicle pricing guide for a private party sale, not the dealer retail value, of a similar vehicle. H&r free file However, the FMV may be less than that amount if the vehicle has engine trouble, body damage, high mileage, or any type of excessive wear. H&r free file The FMV of a donated vehicle is the same as the price listed in a used vehicle pricing guide for a private party sale only if the guide lists a sales price for a vehicle that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated vehicle. H&r free file Example. H&r free file You donate a used car in poor condition to a local high school for use by students studying car repair. H&r free file A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. H&r free file However, the guide shows the price for a private party sale of the car is only $750. H&r free file The FMV of the car is considered to be no more than $750. H&r free file Boats. H&r free file   Except for inexpensive small boats, the valuation of boats should be based on an appraisal by a marine surveyor because the physical condition is so critical to the value. H&r free file More information. H&r free file   Your deduction for a donated car, boat, or airplane generally is limited to the gross proceeds from its sale by the qualified organization. H&r free file This rule applies if the claimed value of the donated vehicle is more than $500. H&r free file In certain cases, you can deduct the vehicle's FMV. H&r free file For details, see Publication 526. H&r free file Inventory If you donate any inventory item to a charitable organization, the amount of your deductible contribution generally is the FMV of the item, minus any gain you would have realized if you had sold the item at its FMV on the date of the gift. H&r free file For more information, see Publication 526. H&r free file Patents To determine the FMV of a patent, you must take into account, among other factors: Whether the patented technology has been made obsolete by other technology; Any restrictions on the donee's use of, or ability to transfer, the patented technology; and The length of time remaining before the patent expires. H&r free file However, your deduction for a donation of a patent or other intellectual property is its FMV, minus any gain you would have realized if you had sold the property at its FMV on the date of the gift. H&r free file Generally, this means your deduction is the lesser of the property's FMV or its basis. H&r free file For details, see Publication 526. H&r free file Stocks and Bonds The value of stocks and bonds is the FMV of a share or bond on the valuation date. H&r free file See Date of contribution, earlier, under What Is Fair Market Value (FMV). H&r free file Selling prices on valuation date. H&r free file   If there is an active market for the contributed stocks or bonds on a stock exchange, in an over-the-counter market, or elsewhere, the FMV of each share or bond is the average price between the highest and lowest quoted selling prices on the valuation date. H&r free file For example, if the highest selling price for a share was $11, and the lowest $9, the average price is $10. H&r free file You get the average price by adding $11 and $9 and dividing the sum by 2. H&r free file No sales on valuation date. H&r free file   If there were no sales on the valuation date, but there were sales within a reasonable period before and after the valuation date, you determine FMV by taking the average price between the highest and lowest sales prices on the nearest date before and on the nearest date after the valuation date. H&r free file Then you weight these averages in inverse order by the respective number of trading days between the selling dates and the valuation date. H&r free file Example. H&r free file   On the day you gave stock to a qualified organization, there were no sales of the stock. H&r free file Sales of the stock nearest the valuation date took place two trading days before the valuation date at an average selling price of $10 and three trading days after the valuation date at an average selling price of $15. H&r free file The FMV on the valuation date was $12, figured as follows: [(3 x $10) + (2 x $15)] ÷ 5 = $12 Listings on more than one stock exchange. H&r free file   Stocks or bonds listed on more than one stock exchange are valued based on the prices of the exchange on which they are principally dealt. H&r free file This applies if these prices are published in a generally available listing or publication of general circulation. H&r free file If this is not applicable, and the stocks or bonds are reported on a composite listing of combined exchanges in a publication of general circulation, use the composite list. H&r free file See also Unavailable prices or closely held corporation, later. H&r free file Bid and asked prices on valuation date. H&r free file   If there were no sales within a reasonable period before and after the valuation date, the FMV is the average price between the bona fide bid and asked prices on the valuation date. H&r free file Example. H&r free file Although there were no sales of Blue Corporation stock on the valuation date, bona fide bid and asked prices were available on that date of $14 and $16, respectively. H&r free file The FMV is $15, the average price between the bid and asked prices. H&r free file No prices on valuation date. H&r free file   If there were no prices available on the valuation date, you determine FMV by taking the average prices between the bona fide bid and asked prices on the closest trading date before and after the valuation date. H&r free file Both dates must be within a reasonable period. H&r free file Then you weight these averages in inverse order by the respective number of trading days between the bid and asked dates and the valuation date. H&r free file Example. H&r free file On the day you gave stock to a qualified organization, no prices were available. H&r free file Bona fide bid and asked prices 3 days before the valuation date were $10 and 2 days after the valuation date were $15. H&r free file The FMV on the valuation date is $13, figured as follows: [(2 x $10) + (3 x $15)] ÷ 5 = $13 Prices only before or after valuation date, but not both. H&r free file   If no selling prices or bona fide bid and asked prices are available on a date within a reasonable period before the valuation date, but are available on a date within a reasonable period after the valuation date, or vice versa, then the average price between the highest and lowest of such available prices may be treated as the value. H&r free file Large blocks of stock. H&r free file   When a large block of stock is put on the market, it may lower the selling price of the stock if the supply is greater than the demand. H&r free file On the other hand, market forces may exist that will afford higher prices for large blocks of stock. H&r free file Because of the many factors to be considered, determining the value of large blocks of stock usually requires the help of experts specializing in underwriting large quantities of securities, or in trading in the securities of the industry of which the particular company is a part. H&r free file Unavailable prices or closely held corporation. H&r free file   If selling prices or bid and asked prices are not available, or if securities of a closely held corporation are involved, determine the FMV by considering the following factors. H&r free file For bonds, the soundness of the security, the interest yield, the date of maturity, and other relevant factors. H&r free file For shares of stock, the company's net worth, prospective earning power and dividend-paying capacity, and other relevant factors. H&r free file Other factors. H&r free file   Other relevant factors include: The nature and history of the business, especially its recent history, The goodwill of the business, The economic outlook in the particular industry, The company's position in the industry, its competitors, and its management, and The value of securities of corporations engaged in the same or similar business. H&r free file For preferred stock, the most important factors are its yield, dividend coverage, and protection of its liquidation preference. H&r free file   You should keep complete financial and other information on which the valuation is based. H&r free file This includes copies of reports of examinations of the company made by accountants, engineers, or any technical experts on or close to the valuation date. H&r free file Restricted securities. H&r free file   Some classes of stock cannot be traded publicly because of restrictions imposed by the Securities and Exchange Commission, or by the corporate charter or a trust agreement. H&r free file These restricted securities usually trade at a discount in relation to freely traded securities. H&r free file   To arrive at the FMV of restricted securities, factors that you must consider include the resale provisions found in the restriction agreements, the relative negotiating strengths of the buyer and seller, and the market experience of freely traded securities of the same class as the restricted securities. H&r free file Real Estate Because each piece of real estate is unique and its valuation is complicated, a detailed appraisal by a professional appraiser is necessary. H&r free file The appraiser must be thoroughly trained in the application of appraisal principles and theory. H&r free file In some instances the opinions of equally qualified appraisers may carry unequal weight, such as when one appraiser has a better knowledge of local conditions. H&r free file The appraisal report must contain a complete description of the property, such as street address, legal description, and lot and block number, as well as physical features, condition, and dimensions. H&r free file The use to which the property is put, zoning and permitted uses, and its potential use for other higher and better uses are also relevant. H&r free file In general, there are three main approaches to the valuation of real estate. H&r free file An appraisal may require the combined use of two or three methods rather than one method only. H&r free file 1. H&r free file Comparable Sales The comparable sales method compares the donated property with several similar properties that have been sold. H&r free file The selling prices, after adjustments for differences in date of sale, size, condition, and location, would then indicate the estimated FMV of the donated property. H&r free file If the comparable sales method is used to determine the value of unimproved real property (land without significant buildings, structures, or any other improvements that add to its value), the appraiser should consider the following factors when comparing the potential comparable property and the donated property: Location, size, and zoning or use restrictions, Accessibility and road frontage, and available utilities and water rights, Riparian rights (right of access to and use of the water by owners of land on the bank of a river) and existing easements, rights-of-way, leases, etc. H&r free file , Soil characteristics, vegetative cover, and status of mineral rights, and Other factors affecting value. H&r free file For each comparable sale, the appraisal must include the names of the buyer and seller, the deed book and page number, the date of sale and selling price, a property description, the amount and terms of mortgages, property surveys, the assessed value, the tax rate, and the assessor's appraised FMV. H&r free file The comparable selling prices must be adjusted to account for differences between the sale property and the donated property. H&r free file Because differences of opinion may arise between appraisers as to the degree of comparability and the amount of the adjustment considered necessary for comparison purposes, an appraiser should document each item of adjustment. H&r free file Only comparable sales having the least adjustments in terms of items and/or total dollar adjustments should be considered as comparable to the donated property. H&r free file 2. H&r free file Capitalization of Income This method capitalizes the net income from the property at a rate that represents a fair return on the particular investment at the particular time, considering the risks involved. H&r free file The key elements are the determination of the income to be capitalized and the rate of capitalization. H&r free file 3. H&r free file Replacement Cost New or Reproduction Cost Minus Observed Depreciation This method, used alone, usually does not result in a determination of FMV. H&r free file Instead, it generally tends to set the upper limit of value, particularly in periods of rising costs, because it is reasonable to assume that an informed buyer will not pay more for the real estate than it would cost to reproduce a similar property. H&r free file Of course, this reasoning does not apply if a similar property cannot be created because of location, unusual construction, or some other reason. H&r free file Generally, this method serves to support the value determined from other methods. H&r free file When the replacement cost method is applied to improved realty, the land and improvements are valued separately. H&r free file The replacement cost of a building is figured by considering the materials, the quality of workmanship, and the number of square feet or cubic feet in the building. H&r free file This cost represents the total cost of labor and material, overhead, and profit. H&r free file After the replacement cost has been figured, consideration must be given to the following factors: Physical deterioration—the wear and tear on the building itself, Functional obsolescence—usually in older buildings with, for example, inadequate lighting, plumbing, or heating, small rooms, or a poor floor plan, and Economic obsolescence—outside forces causing the whole area to become less desirable. H&r free file Interest in a Business The FMV of any interest in a business, whether a sole proprietorship or a partnership, is the amount that a willing buyer would pay for the interest to a willing seller after consideration of all relevant factors. H&r free file The relevant factors to be considered in valuing the business are: The FMV of the assets of the business, The demonstrated earnings capacity of the business, based on a review of past and current earnings, and The other factors used in evaluating corporate stock, if they apply. H&r free file The value of the goodwill of the business should also be taken into consideration. H&r free file You should keep complete financial and other information on which you base the valuation. H&r free file This includes copies of reports of examinations of the business made by accountants, engineers, or any technical experts on or close to the valuation date. H&r free file Annuities, Interests for Life or Terms of Years, Remainders, and Reversions The value of these kinds of property is their present value, except in the case of annuities under contracts issued by companies regularly engaged in their sale. H&r free file The valuation of these commercial annuity contracts and of insurance policies is discussed later under Certain Life Insurance and Annuity Contracts. H&r free file To determine present value, you must know the applicable interest rate and use actuarial tables. H&r free file Interest rate. H&r free file   The applicable interest rate varies. H&r free file It is announced monthly in a news release and published in the Internal Revenue Bulletin as a Revenue Ruling. H&r free file The interest rate to use is under the heading “Rate Under Section 7520” for a given month and year. H&r free file You can call the IRS office at 1-800-829-1040 to obtain this rate. H&r free file Actuarial tables. H&r free file   You need to refer to actuarial tables to determine a qualified interest in the form of an annuity, any interest for life or a term of years, or any remainder interest to a charitable organization. H&r free file   Use the valuation tables set forth in IRS Publications 1457, Actuarial Values (Book Aleph), and 1458, Actuarial Values (Book Beth). H&r free file Both of these publications provide tables containing actuarial factors to be used in determining the present value of an annuity, an interest for life or for a term of years, or a remainder or reversionary interest. H&r free file For qualified charitable transfers, you can use the factor for the month in which you made the contribution or for either of the 2 months preceding that month. H&r free file   Publication 1457 also contains actuarial factors for computing the value of a remainder interest in a charitable remainder annuity trust and a pooled income fund. H&r free file Publication 1458 contains the factors for valuing the remainder interest in a charitable remainder unitrust. H&r free file You can download Publications 1457 and 1458 from www. H&r free file irs. H&r free file gov. H&r free file In addition, they are available for purchase via the website of the U. H&r free file S. H&r free file Government Printing Office, by phone at (202) 512-1800, or by mail from the: Superintendent of Documents P. H&r free file O. H&r free file Box 371954 Pittsburgh, PA 15250-7954 Tables containing actuarial factors for transfers to pooled income funds may also be found in Income Tax Regulation 1. H&r free file 642(c)-6(e)(6), transfers to charitable remainder unitrusts in Regulation 1. H&r free file 664-4(e), and other transfers in Regulation 20. H&r free file 2031-7(d)(6). H&r free file Special factors. H&r free file   If you need a special factor for an actual transaction, you can request a letter ruling. H&r free file Be sure to include the date of birth of each person the duration of whose life may affect the value of the interest. H&r free file Also include copies of the relevant instruments. H&r free file IRS charges a user fee for providing special factors. H&r free file   For more information about requesting a ruling, see Revenue Procedure 2006-1 (or annual update), 2006-1 I. H&r free file R. H&r free file B. H&r free file 1. H&r free file Revenue Procedure 2006-1 is available at www. H&r free file irs. H&r free file gov/irb/2006-01_IRB/ar06. H&r free file html. H&r free file   For information on the circumstances under which a charitable deduction may be allowed for the donation of a partial interest in property not in trust, see Partial Interest in Property Not in Trust, later. H&r free file Certain Life Insurance and Annuity Contracts The value of an annuity contract or a life insurance policy issued by a company regularly engaged in the sale of such contracts or policies is the amount that company would charge for a comparable contract. H&r free file But if the donee of a life insurance policy may reasonably be expected to cash the policy rather than hold it as an investment, then the FMV is the cash surrender value rather than the replacement cost. H&r free file If an annuity is payable under a combination annuity contract and life insurance policy (for example, a retirement income policy with a death benefit) and there was no insurance element when it was transferred to the charity, the policy is treated as an annuity contract. H&r free file Partial Interest in Property Not in Trust Generally, no deduction is allowed for a charitable contribution, not made in trust, of less than your entire interest in property. H&r free file However, this does not apply to a transfer of less than your entire interest if it is a transfer of: A remainder interest in your personal residence or farm, An undivided part of your entire interest in property, or A qualified conservation contribution. H&r free file Remainder Interest in Real Property The amount of the deduction for a donation of a remainder interest in real property is the FMV of the remainder interest at the time of the contribution. H&r free file To determine this value, you must know the FMV of the property on the date of the contribution. H&r free file Multiply this value by the appropriate factor. H&r free file Publications 1457 and 1458 contain these factors. H&r free file You must make an adjustment for depreciation or depletion using the factors shown in Publication 1459, Actuarial Values (Book Gimel). H&r free file You can use the factors for the month in which you made the contribution or for either of the two months preceding that month. H&r free file See the earlier discussion on Annuities, Interests for Life or Terms of Years, Remainders, and Reversions. H&r free file You can download Publication 1459 from www. H&r free file irs. H&r free file gov. H&r free file For this purpose, the term “depreciable property” means any property subject to wear and tear or obsolescence, even if not used in a trade or business or for the production of income. H&r free file If the remainder interest includes both depreciable and nondepreciable property, for example a house and land, the FMV must be allocated between each kind of property at the time of the contribution. H&r free file This rule also applies to a gift of a remainder interest that includes property that is part depletable and part not depletable. H&r free file Take into account depreciation or depletion only for the property that is subject to depreciation or depletion. H&r free file For more information, see section 1. H&r free file 170A-12 of the Income Tax Regulations. H&r free file Undivided Part of Your Entire Interest A contribution of an undivided part of your entire interest in property must consist of a part of each and every substantial interest or right you own in the property. H&r free file It must extend over the entire term of your interest in the property. H&r free file For example, you are entitled to the income from certain property for your life (life estate) and you contribute 20% of that life estate to a qualified organization. H&r free file You can claim a deduction for the contribution if you do not have any other interest in the property. H&r free file To figure the value of a contribution involving a partial interest, see Publication 1457. H&r free file If the only interest you own in real property is a remainder interest and you transfer part of that interest to a qualified organization, see the previous discussion on valuation of a remainder interest in real property. H&r free file Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. H&r free file Qualified organization. H&r free file   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charitable, religious, scientific, literary, educational, etc. H&r free file , organization, or An organization that is controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. H&r free file The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. H&r free file Conservation purposes. H&r free file   Your contribution must be made only for one of the following conservation purposes. H&r free file Preserving land areas for outdoor recreation by, or for the education of, the general public. H&r free file Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. H&r free file Preserving open space, including farmland and forest land, if it yields a significant public benefit. H&r free file It must be either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. H&r free file Preserving a historically important land area or a certified historic structure. H&r free file There must be some visual public access to the property. H&r free file Factors used in determining the type and amount of public access required include the historical significance of the property, the remoteness or accessibility of the site, and the extent to which intrusions on the privacy of individuals living on the property would be unreasonable. H&r free file Building in registered historic district. H&r free file   A contribution after July 25, 2006, of a qualified real property interest that is an easement or other restriction on the exterior of a building in a registered historic district is deductible only if it meets all of the following three conditions. H&r free file The restriction must preserve the entire exterior of the building and must prohibit any change to the exterior of the building that is inconsistent with its historical character. H&r free file You and the organization receiving the contribution must enter into a written agreement certifying, that the organization is a qualified organization and that it has the resources and commitment to maintain the property as donated. H&r free file If you make the contribution in a tax year beginning after August 17, 2006, you must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. H&r free file   If you make this type of contribution after February 12, 2007, and claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. H&r free file See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. H&r free file Qualified real property interest. H&r free file   This is any of the following interests in real property. H&r free file Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). H&r free file A remainder interest. H&r free file A restriction (granted in perpetuity) on the use that may be made of the real property. H&r free file Valuation. H&r free file   A qualified real property interest described in (1) should be valued in a manner that is consistent with the type of interest transferred. H&r free file If you transferred all the interest in the property, the FMV of the property is the amount of the contribution. H&r free file If you do not transfer the mineral interest, the FMV of the surface rights in the property is the amount of the contribution. H&r free file   If you owned only a remainder interest or an income interest (life estate), see Undivided Part of Your Entire Interest, earlier. H&r free file If you owned the entire property but transferred only a remainder interest (item (2)), see Remainder Interest in Real Property, earlier. H&r free file   In determining the value of restrictions, you should take into account the selling price in arm's-length transactions of other properties that have comparable restrictions. H&r free file If there are no comparable sales, the restrictions are valued indirectly as the difference between the FMVs of the property involved before and after the grant of the restriction. H&r free file   The FMV of the property before contribution of the restriction should take into account not only current use but the likelihood that the property, without the restriction, would be developed. H&r free file You should also consider any zoning, conservation, or historical preservation laws that would restrict development. H&r free file Granting an easement may increase, rather than reduce, the value of property, and in such a situation no deduction would be allowed. H&r free file Example. H&r free file   You own 10 acres of farmland. H&r free file Similar land in the area has an FMV of $2,000 an acre. H&r free file However, land in the general area that is restricted solely to farm use has an FMV of $1,500 an acre. H&r free file Your county wants to preserve open space and prevent further development in your area. H&r free file   You grant to the county an enforceable open space easement in perpetuity on 8 of the 10 acres, restricting its use to farmland. H&r free file The value of this easement is $4,000, determined as follows: FMV of the property before granting easement:   $2,000 × 10 acres $20,000 FMV of the property after granting easement:   $1,500 × 8 acres $12,000   $2,000 × 2 acres 4,000 16,000 Value of easement   $4,000   If you later transfer in fee your remaining interest in the 8 acres to another qualified organization, the FMV of your remaining interest is the FMV of the 8 acres reduced by the FMV of the easement granted to the first organization. H&r free file More information. H&r free file   For more information about qualified conservation contributions, see Publication 526. H&r free file Appraisals Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. H&r free file (There is one exception, described next, for certain clothing and household items. H&r free file ) However, you generally will need an appraisal for donated property for which you claim a deduction of more than $5,000. H&r free file There are exceptions. H&r free file See Deductions of More Than $5,000, later. H&r free file The weight given an appraisal depends on the completeness of the report, the qualifications of the appraiser, and the appraiser's demonstrated knowledge of the donated property. H&r free file An appraisal must give all the facts on which to base an intelligent judgment of the value of the property. H&r free file The appraisal will not be given much weight if: All the factors that apply are not considered, The opinion is not supported with facts, such as purchase price and comparable sales, or The opinion is not consistent with known facts. H&r free file The appraiser's opinion is never more valid than the facts on which it is based; without these facts it is simply a guess. H&r free file The opinion of a person claiming to be an expert is not binding on the Internal Revenue Service. H&r free file All facts associated with the donation must be considered. H&r free file Deduction over $500 for certain clothing or household items. H&r free file   You must include with your return a qualified appraisal of any single item of clothing or any household item that is not in good used condition or better, that you donated after August 17, 2006, and for which you deduct more than $500. H&r free file See Household Goods and Used Clothing, earlier. H&r free file Cost of appraisals. H&r free file   You may not take a charitable contribution deduction for fees you pay for appraisals of your donated property. H&r free file However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit, on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution. H&r free file Deductions of More Than $5,000 Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return. H&r free file There are exceptions, discussed later. H&r free file You should keep the appraiser's report with your written records. H&r free file Records are discussed in Publication 526. H&r free file The phrase “similar items” means property of the same generic category or type (whether or not donated to the same donee), such as stamp collections, coin collections, lithographs, paintings, photographs, books, nonpublicly traded stock, nonpublicly traded securities other than nonpublicly traded stock, land, buildings, clothing, jewelry, furniture, electronic equipment, household appliances, toys, everyday kitchenware, china, crystal, or silver. H&r free file For example, if you give books to three schools and you deduct $2,000, $2,500, and $900, respectively, your claimed deduction is more than $5,000 for these books. H&r free file You must get a qualified appraisal of the books and for each school you must attach a fully completed Form 8283, Section B, to your tax return. H&r free file Exceptions. H&r free file   You do not need an appraisal if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane) for which your deduction is limited to the gross proceeds from its sale, Qualified intellectual property, such as a patent, Certain publicly traded securities described next, Inventory and other property donated by a corporation that are “qualified contributions” for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A) of the Internal Revenue Code, or Stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. H&r free file   Although an appraisal is not required for the types of property just listed, you must provide certain information about a donation of any of these types of property on Form 8283. H&r free file Publicly traded securities. H&r free file   Even if your claimed deduction is more than $5,000, neither a qualified appraisal nor Section B of Form 8283 is required for publicly traded securities that are: Listed on a stock exchange in which quotations are published on a daily basis, Regularly traded in a national or regional over-the-counter market for which published quotations are available, or Shares of an open-end investment company (mutual fund) for which quotations are published on a daily basis in a newspaper of general circulation throughout the United States. H&r free file Publicly traded securities that meet these requirements must be reported on Form 8283, Section A. H&r free file   A qualified appraisal is not required, but Form 8283, Section B, Parts I and IV, must be completed, for an issue of a security that does not meet the requirements just listed but does meet these requirements: The issue is regularly traded during the computation period (defined later) in a market for which there is an “interdealer quotation system” (defined later), The issuer or agent computes the “average trading price” (defined later) for the same issue for the computation period, The average trading price and total volume of the issue during the computation period are published in a newspaper of general circulation throughout the United States, not later than the last day of the month following the end of the calendar quarter in which the computation period ends, The issuer or agent keeps books and records that list for each transaction during the computation period the date of settlement of the transaction, the name and address of the broker or dealer making the market in which the transaction occurred, and the trading price and volume, and The issuer or agent permits the Internal Revenue Service to review the books and records described in item (4) with respect to transactions during the computation period upon receiving reasonable notice. H&r free file   An interdealer quotation system is any system of general circulation to brokers and dealers that regularly disseminates quotations of obligations by two or more identified brokers or dealers who are not related to either the issuer or agent who computes the average trading price of the security. H&r free file A quotation sheet prepared and distributed by a broker or dealer in the regular course of business and containing only quotations of that broker or dealer is not an interdealer quotation system. H&r free file   The average trading price is the average price of all transactions (weighted by volume), other than original issue or redemption transactions, conducted through a United States office of a broker or dealer who maintains a market in the issue of the security during the computation period. H&r free file Bid and asked quotations are not taken into account. H&r free file   The computation period is weekly during October through December and monthly during January through September. H&r free file The weekly computation periods during October through December begin with the first Monday in October and end with the first Sunday following the last Monday in December. H&r free file Nonpublicly traded stock. H&r free file   If you contribute nonpublicly traded stock, for which you claim a deduction of $10,000 or less, a qualified appraisal is not required. H&r free file However, you must attach Form 8283 to your tax return, with Section B, Parts I and IV, completed. H&r free file Deductions of More Than $500,000 If you claim a deduction of more than $500,000 for a donation of property, you must attach a qualified appraisal of the property to your return. H&r free file This does not apply to contributions of cash, inventory, publicly traded stock, or intellectual property. H&r free file If you do not attach the appraisal, you cannot deduct your contribution, unless your failure to attach the appraisal is due to reasonable cause and not to willful neglect. H&r free file Qualified Appraisal Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser. H&r free file You must also complete Form 8283, Section B, and attach it to your tax return. H&r free file See Deductions of More Than $5,000, earlier. H&r free file A qualified appraisal is an appraisal document that: Is made, signed, and dated by a qualified appraiser (defined later) in accordance with generally accepted appraisal standards, Meets the relevant requirements of Regulations section 1. H&r free file 170A-13(c)(3) and Notice 2006-96, 2006-46 I. H&r free file R. H&r free file B. H&r free file 902 (available at www. H&r free file irs. H&r free file gov/irb/2006-46_IRB/ar13. H&r free file html), Relates to an appraisal made not earlier than 60 days before the date of contribution of the appraised property, Does not involve a prohibited appraisal fee, and Includes certain information (covered later). H&r free file You must receive the qualified appraisal before the due date, including extensions, of the return on which a charitable contribution deduction is first claimed for the donated property. H&r free file If the deduction is first claimed on an amended return, the qualified appraisal must be received before the date on which the amended return is filed. H&r free file Form 8283, Section B, must be attached to your tax return. H&r free file Generally, you do not need to attach the qualified appraisal itself, but you should keep a copy as long as it may be relevant under the tax law. H&r free file There are four exceptions. H&r free file If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the appraisal. H&r free file See Paintings, Antiques, and Other Objects of Art, earlier. H&r free file If you claim a deduction of more than $500,000 for a donation of property, you must attach the appraisal. H&r free file See Deductions of More Than $500,000, earlier. H&r free file If you claim a deduction of more than $500 for an article of clothing, or a household item, that is not in good used condition or better, that you donated after August 17, 2006, you must attach the appraisal. H&r free file See Deduction over $500 for certain clothing or household items, earlier. H&r free file If you claim a deduction in a tax year beginning after August 17, 2006, for an easement or other restriction on the exterior of a building in a historic district, you must attach the appraisal. H&r free file See Building in registered historic district, earlier. H&r free file Prohibited appraisal fee. H&r free file   Generally, no part of the fee arrangement for a qualified appraisal can be based on a percentage of the appraised value of the property. H&r free file If a fee arrangement is based on what is allowed as a deduction, after Internal Revenue Service examination or otherwise, it is treated as a fee based on a percentage of appraised value. H&r free file However, appraisals are not disqualified when an otherwise prohi
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Page Last Reviewed or Updated: 06-Mar-2014

The H&r Free File

H&r free file Publication 524 - Main Content Table of Contents Are You Eligible for the Credit?Qualified Individual Income Limits Credit Figured for You Figuring the Credit YourselfStep 1. H&r free file Determine Initial Amount Step 2. H&r free file Total Certain Nontaxable Pensions and Benefits Step 3. H&r free file Determine Excess Adjusted Gross Income Step 4. H&r free file Determine the Total of Steps 2 and 3 Step 5. H&r free file Determine Your Credit Examples How To Get Tax Help Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. H&r free file You are a qualified individual. H&r free file Your income is not more than certain limits. H&r free file You can use Figure A and Table 1 as guides to see if you are eligible for the credit. H&r free file Use Figure A first to see if you are a qualified individual. H&r free file If you are, go to Table 1 to make sure your income is not too high to take the credit. H&r free file You can take the credit only if you file Form 1040 or Form 1040A. H&r free file You cannot take the credit if you file Form 1040EZ or Form 1040NR. H&r free file Qualified Individual You are a qualified individual for this credit if you are a U. H&r free file S. H&r free file citizen or resident alien, and either of the following applies. H&r free file You were age 65 or older at the end of 2013. H&r free file You were under age 65 at the end of 2013 and all three of the following statements are true. H&r free file You retired on permanent and total disability (explained later). H&r free file You received taxable disability income for 2013. H&r free file On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). H&r free file Age 65. H&r free file   You are considered to be age 65 on the day before your 65th birthday. H&r free file As a result, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. H&r free file U. H&r free file S. H&r free file Citizen or Resident Alien You must be a U. H&r free file S. H&r free file citizen or resident alien (or be treated as a resident alien) to take the credit. H&r free file Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. H&r free file Exceptions. H&r free file   You may be able to take the credit if you are a nonresident alien who is married to a U. H&r free file S. H&r free file citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. H&r free file S. H&r free file resident alien. H&r free file If you make that choice, both you and your spouse are taxed on your worldwide incomes. H&r free file   If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. H&r free file S. H&r free file citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. H&r free file S. H&r free file resident alien for the entire year. H&r free file In that case, you may be allowed to take the credit. H&r free file   For information on these choices, see chapter 1 of Publication 519, U. H&r free file S. H&r free file Tax Guide for Aliens. H&r free file Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. H&r free file However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. H&r free file Head of household. H&r free file   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet all the following tests. H&r free file You file a separate return. H&r free file You paid more than half the cost of keeping up your home during the tax year. H&r free file Your spouse did not live in your home at any time during the last 6 months of the tax year and the absence was not temporary. H&r free file (See Temporary absences under Head of Household in Publication 501. H&r free file ) Your home was the main home of your child, stepchild, or an eligible foster child for more than half the year. H&r free file An eligible foster child is a child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. H&r free file You can claim an exemption for that child, or you cannot claim the exemption only because the noncustodial parent can claim the child using the rules for children of divorced or separated parents. H&r free file For more information, see Publication 501, Exemptions, Standard Deduction, and Filing Information. H&r free file Figure A. H&r free file Are You a Qualified Individual? Please click here for the text description of the image. H&r free file figure a Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). H&r free file You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. H&r free file Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. H&r free file If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. H&r free file You are considered to be under age 65 at the end of 2013 if you were born after January 1, 1949. H&r free file Permanent and total disability. H&r free file    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. H&r free file A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. H&r free file See Physician's statement , later. H&r free file Substantial gainful activity. H&r free file   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. H&r free file Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. H&r free file   Substantial gainful activity is not work you do to take care of yourself or your home. H&r free file It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. H&r free file However, doing this kind of work may show that you are able to engage in substantial gainful activity. H&r free file    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. H&r free file   The following examples illustrate the tests of substantial gainful activity. H&r free file Example 1. H&r free file Trisha, a sales clerk, retired on disability. H&r free file She is 53 years old and now works as a full-time babysitter for the minimum wage. H&r free file Even though Trisha is doing different work, she is able to do the duties of her new job in a full-time competitive work situation for the minimum wage. H&r free file She cannot take the credit because she is able to engage in substantial gainful activity. H&r free file Example 2. H&r free file Tom, a bookkeeper, retired on disability. H&r free file He is 59 years old and now drives a truck for a charitable organization. H&r free file He sets his own hours and is not paid. H&r free file Duties of this nature generally are performed for pay or profit. H&r free file Some weeks he works 10 hours, and some weeks he works 40 hours. H&r free file Over the year he averages 20 hours a week. H&r free file The kind of work and his average hours a week conclusively show that Tom is able to engage in substantial gainful activity. H&r free file This is true even though Tom is not paid and he sets his own hours. H&r free file He cannot take the credit. H&r free file Example 3. H&r free file John, who retired on disability, took a job with a former employer on a trial basis. H&r free file The purpose of the job was to see if John could do the work. H&r free file The trial period lasted for 6 months during which John was paid the minimum wage. H&r free file Because of John's disability, he was assigned only light duties of a nonproductive “make-work” nature. H&r free file The activity was gainful because John was paid at least the minimum wage. H&r free file But the activity was not substantial because his duties were nonproductive. H&r free file These facts do not, by themselves, show that John is able to engage in substantial gainful activity. H&r free file Example 4. H&r free file Joan, who retired on disability from a job as a bookkeeper, lives with her sister who manages several motel units. H&r free file Joan helps her sister for 1 or 2 hours a day by performing duties such as washing dishes, answering phones, registering guests, and bookkeeping. H&r free file Joan can select the time of day when she feels most fit to work. H&r free file Work of this nature, performed off and on during the day at Joan's convenience, is not activity of a “substantial and gainful” nature even if she is paid for the work. H&r free file The performance of these duties does not, of itself, show that Joan is able to engage in substantial gainful activity. H&r free file Sheltered employment. H&r free file   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. H&r free file These qualified locations are in sheltered workshops, hospitals and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. H&r free file   Compared to commercial employment, pay is lower for sheltered employment. H&r free file Therefore, one usually does not look for sheltered employment if he or she can get other employment. H&r free file The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. H&r free file Physician's statement. H&r free file   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. H&r free file You can use the statement in the Instructions for Schedule R. H&r free file   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. H&r free file Veterans. H&r free file    If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. H&r free file VA Form 21-0172 must be signed by a person authorized by the VA to do so. H&r free file You can get this form from your local VA regional office. H&r free file Physician's statement obtained in earlier year. H&r free file   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. H&r free file For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. H&r free file If you meet the required conditions, check the box on your Schedule R, Part II, line 2. H&r free file   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. H&r free file Disability income. H&r free file   If you are under age 65, you must also have taxable disability income to qualify for the credit. H&r free file Disability income must meet both of the following requirements. H&r free file It must be paid under your employer's accident or health plan or pension plan. H&r free file It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. H&r free file Payments that are not disability income. H&r free file    Any payment you receive from a plan that does not provide for disability retirement is not disability income. H&r free file Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. H&r free file    For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. H&r free file Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. H&r free file Income Limits To determine if you can claim the credit, you must consider two income limits. H&r free file The first limit is the amount of your adjusted gross income (AGI). H&r free file The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. H&r free file The limits are shown in Table 1. H&r free file If your AGI and your nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. H&r free file See Figuring the Credit Yourself , later. H&r free file Table 1. H&r free file Income Limits IF your filing status is THEN, even if you qualify (see Figure A), you CANNOT take the credit if   Your adjusted gross income (AGI)* is equal to or more than. H&r free file . H&r free file . H&r free file     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. H&r free file . H&r free file . H&r free file   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. H&r free file If your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. H&r free file Credit Figured for You You can figure the credit yourself, or the Internal Revenue Service (IRS) will figure it for you. H&r free file See Figuring the Credit Yourself , next. H&r free file If you can take the credit and you want the IRS to figure the credit for you, attach Schedule R to your return. H&r free file Check the appropriate box in Part I of Schedule R and fill in Part II and lines 11, 13a, and 13b of Part III, if they apply to you. H&r free file If you file Form 1040A, enter “CFE” in the space to the left of Form 1040A, line 30. H&r free file If you file Form 1040, check box c on Form 1040, line 53, and enter “CFE” on the line next to that box. H&r free file Attach Schedule R to your return. H&r free file Table 2. H&r free file Initial Amounts IF your filing status is. H&r free file . H&r free file . H&r free file   THEN enter on line 10 of Schedule R. H&r free file . H&r free file . H&r free file single,head of household, or qualifying widow(er) with dependent child and, by the end of 2013, you were       • 65 or older $5,000   • under 65 and retired on permanent and total disability1 $5,000 married filing a joint return and by the end of 2013       • both of you were 65 or older $7,500   • both of you were under 65 and one of you retired on permanent and total disability1 $5,000   • both of you were under 65 and both of you retired on permanent and total disability2 $7,500   • one of you was 65 or older, and the other was under 65 and retired on permanent  and total disability3 $7,500   • one of you was 65 or older, and the other was under 65 and not retired on permanent  and total disability $5,000 married filing a separate return and you did not live with your spouse at any time during the year and, by the end of 2013, you were       • 65 or older $3,750   • under 65 and retired on permanent and total disability1 $3,750   1 Amount cannot be more than the taxable disability income. H&r free file     2 Amount cannot be more than your combined taxable disability income. H&r free file     3 Amount is $5,000 plus the taxable disability income of the spouse under age 65, but not more than $7,500. H&r free file   Figuring the Credit Yourself If you figure the credit yourself, fill out the front of Schedule R. H&r free file Next, fill out Schedule R, Part III. H&r free file If you file Form 1040A, enter the amount from Schedule R, line 22 on line 30. H&r free file If you file Form 1040, include the amount from Schedule R, line 22 on line 53, check box c, and enter “Sch R” on the line next to that box. H&r free file There are five steps in Part III to determine the amount of your credit. H&r free file Determine your initial amount (lines 10–12). H&r free file Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c). H&r free file Determine your excess adjusted gross income (lines 14–17). H&r free file Determine the total of steps 2 and 3 (line 18). H&r free file Determine your credit (lines 19–22). H&r free file These steps are discussed in more detail next. H&r free file Step 1. H&r free file Determine Initial Amount To figure the credit, you must first determine your initial amount using lines 10 through 12. H&r free file See Table 2. H&r free file Your initial amount is on line 12. H&r free file Initial amounts for persons under age 65. H&r free file   If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income. H&r free file Special rules for joint returns. H&r free file   If you are a qualified individual under age 65, and your spouse is also a qualified individual, your initial amount is your taxable disability income plus $5,000. H&r free file   If you are a qualified individual, and both you and your spouse are under age 65, your initial amount cannot be more than your combined taxable disability income. H&r free file Step 2. H&r free file Total Certain Nontaxable Pensions and Benefits Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. H&r free file You must reduce your initial amount by these payments. H&r free file Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. H&r free file If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received. H&r free file Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable. H&r free file Include the following nontaxable payments in the amounts you enter on lines 13a and 13b. H&r free file Nontaxable social security payments. H&r free file This is the nontaxable part of the benefits shown in box 5 of Form SSA-1099, Social Security Benefit Statement, before deducting any amounts withheld to pay premiums on supplementary Medicare insurance, and before any reduction because of benefits received under workers' compensation. H&r free file (Do not include a lump-sum death benefit payment you may receive as a surviving spouse, or a surviving child's insurance benefit payments you may receive as a guardian. H&r free file ) Nontaxable railroad retirement pension payments treated as social security. H&r free file This is the nontaxable part of the benefits shown in box 5 of Form RRB-1099, Payments by the Railroad Retirement Board. H&r free file Nontaxable pension or annuity payments or disability benefits that are paid under a law administered by the Department of Veterans Affairs (VA). H&r free file (Do not include amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the National Oceanic and Atmospheric Administration or the Public Health Service, or as a disability annuity under section 808 of the Foreign Service Act of 1980. H&r free file ) Pension or annuity payments or disability benefits that are excluded from income under any provision of federal law other than the Internal Revenue Code. H&r free file (Do not include amounts that are a return of your cost of a pension or annuity. H&r free file These amounts do not reduce your initial amount. H&r free file ) You should be sure to take into account all of the nontaxable amounts you receive. H&r free file These amounts are verified by the IRS through information supplied by other government agencies. H&r free file Step 3. H&r free file Determine Excess Adjusted Gross Income You also must reduce your initial amount by your excess adjusted gross income. H&r free file Figure your excess adjusted gross income on lines 14–17. H&r free file You figure your excess adjusted gross income as follows. H&r free file Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status. H&r free file $7,500 if you are single, a head of household, or a qualifying widow(er) with dependent child, $10,000 if you are married filing jointly, or $5,000 if you are married filing separately and you and your spouse did not live in the same household at any time during the tax year. H&r free file Divide the result of (1) by 2. H&r free file Step 4. H&r free file Determine the Total of Steps 2 and 3 To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17). H&r free file Step 5. H&r free file Determine Your Credit Subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12), and multiply the result by 15% (. H&r free file 15). H&r free file In certain cases, the amount of your credit may be limited. H&r free file See Limit on credit , later. H&r free file Example. H&r free file You are 66 years old and your spouse is 64. H&r free file Your spouse is not disabled. H&r free file You file a joint return on Form 1040. H&r free file Your adjusted gross income is $14,630. H&r free file Together you received $3,200 from social security, which was nontaxable. H&r free file You figure the credit as follows: Example applying the 5 step process Amount (Line references (shown in parentheses) are to the Schedule R)      1. H&r free file Initial amount (line 12) $5,000 2. H&r free file Total nontaxable social security  and other nontaxable  pensions (line 13c) $3,200   3. H&r free file Excess adjusted gross income  ($14,630–$10,000) ÷ 2 (line 17) 2,315   4. H&r free file Add (2) and (3) (line 18) 5,515 5. H&r free file Subtract (4) from (1) (line 12 – line 18 = line 19) (Do not enter less than -0-) $ -0- You cannot take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount. H&r free file Limit on credit. H&r free file   The amount of credit you can claim is generally limited to the amount of your tax. H&r free file Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. H&r free file Examples The following examples illustrate the credit for the elderly or the disabled. H&r free file The initial amounts are taken from Table 2, earlier. H&r free file Example 1. H&r free file James Davis is 58 years old, single, and files Form 1040A. H&r free file In 2011 he retired on permanent and total disability, and he is still permanently and totally disabled. H&r free file He got the required physician's statement in 2011 and kept it with his tax records. H&r free file His physician signed on line B of the statement. H&r free file This year James checks the box in Schedule R, Part II. H&r free file He does not need to get another statement for 2013. H&r free file He received the following income for the year: Nontaxable social security $1,500 Interest (taxable) 100 Taxable disability pension 11,400       James' adjusted gross income is $11,500 ($11,400 + $100). H&r free file He figures the credit on Schedule R as follows: 1. H&r free file Initial amount   $5,000 2. H&r free file Taxable disability pension   11,400 3. H&r free file Smaller of line 1 or line 2   5,000 4. H&r free file Nontaxable social security  benefits $1,500     5. H&r free file Excess adjusted gross income  ($11,500 − $7,500) ÷ 2 2,000     6. H&r free file Add lines 4 and 5   3,500 7. H&r free file Subtract line 6 from line 3  (Do not enter less than (-0-))   1,500 8. H&r free file Multiply line 7 by 15% (. H&r free file 15)   225 9. H&r free file Enter the amount from the  Credit Limit Worksheet in the  Instructions for Schedule R, line 21   151 10. H&r free file Credit (Enter the smaller of  line 8 or line 9)   $ 151 He enters $151 on line 30 of Form 1040A. H&r free file The Schedule R for James Davis is not shown. H&r free file Example 2. H&r free file William White is 53. H&r free file His wife Helen is 49. H&r free file William had a stroke 3 years ago and retired on permanent and total disability. H&r free file He is still permanently and totally disabled because of the stroke. H&r free file In November, Helen was injured in an accident at work and retired on permanent and total disability. H&r free file William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. H&r free file Helen earned $12,500 from her job and received a taxable disability pension of $1,700. H&r free file Their joint return on Form 1040 shows adjusted gross income of $20,400 ($6,200 + $12,500 + $1,700). H&r free file They do not itemize deductions. H&r free file They do not have any amounts that would increase their standard deduction. H&r free file Helen's doctor completed the physician's statement in the Instructions for Schedule R. H&r free file Helen is not required to include the statement with their return, but she must keep it for her records. H&r free file William got a physician's statement for the year he had the stroke. H&r free file His doctor had signed on line B of that physician's statement to certify that William was permanently and totally disabled. H&r free file William has kept the physician's statement with his records. H&r free file He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2. H&r free file William and Helen use Schedule R to figure their $41 credit for the elderly or the disabled. H&r free file They attach Schedule R to their Form 1040 and enter $41 on line 53. H&r free file They check box c on line 53 and enter “Sch R” on the line next to that box. H&r free file See their filled-in Schedule R and Helen's filled-in physician's statement, later. H&r free file Instructions for Physician's Statement     Taxpayer Physician If you retired after 1976, enter the date you retired in the space provided on the statement below. H&r free file A person is permanently and totally disabled if both of the following apply:   1. H&r free file He or she cannot engage in any substantial gainful activity because of a physical or mental condition. H&r free file   2. H&r free file A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death. H&r free file Physician's Statement     I certify that Helen A. H&r free file White Name of disabled person was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. H&r free file If retired after 1976, enter the date retired ▶ November 1, 2013   Physician: Sign your name on either A or B below. H&r free file AThe disability has lasted or can be expected to last continuously for at least a year     Physician's signatureDate BThere is no reasonable probability that the disabled condition will ever improve Ayden D. H&r free file Doctor 2/8/14   Physician's signatureDate Physician's name Physician's address Ayden D. H&r free file Doctor 1900 Green St. H&r free file , Hometown, MD 20000         This image is too large to be displayed in the current screen. H&r free file Please click the link to view the image. H&r free file Page 1 of Schedule R for the Whites This image is too large to be displayed in the current screen. H&r free file Please click the link to view the image. H&r free file Page 2 of Schedule R for the Whites How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. H&r free file Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. H&r free file Free help with your tax return. H&r free file   Free help in preparing your return is available nationwide from IRS-certified volunteers. H&r free file The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. H&r free file The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. H&r free file 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. H&r free file Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. H&r free file To find the nearest VITA or TCE site, visit IRS. H&r free file gov or call 1-800-906-9887. H&r free file   As part of the TCE program, AARP offers the Tax-Aide counseling program. H&r free file To find the nearest AARP Tax-Aide site, visit AARP's website at www. H&r free file aarp. H&r free file org/money/taxaide or call 1-888-227-7669. H&r free file   For more information on these programs, go to IRS. H&r free file gov and enter “VITA” in the search box. H&r free file Internet. H&r free file IRS. H&r free file gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. H&r free file Apply for an Employer Identification Number (EIN). H&r free file Go to IRS. H&r free file gov and enter Apply for an EIN in the search box. H&r free file Request an Electronic Filing PIN by going to IRS. H&r free file gov and entering Electronic Filing PIN in the search box. H&r free file Check the status of your 2013 refund with Where's My Refund? Go to IRS. H&r free file gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r free file If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H&r free file Check the status of your amended return. H&r free file Go to IRS. H&r free file gov and enter Where's My Amended Return in the search box. H&r free file Download forms, instructions, and publications, including some accessible versions. H&r free file Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. H&r free file gov or IRS2Go. H&r free file Tax return and tax account transcripts are generally available for the current year and past three years. H&r free file Figure your income tax withholding with the IRS Withholding Calculator on IRS. H&r free file gov. H&r free file 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. H&r free file Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. H&r free file gov. H&r free file Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. H&r free file gov or IRS2Go. H&r free file Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. H&r free file An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. H&r free file Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. H&r free file If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. H&r free file Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. H&r free file Locate the nearest volunteer help site with the VITA Locator Tool on IRS. H&r free file gov. H&r free file Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H&r free file The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. H&r free file Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. H&r free file AARP offers the Tax-Aide counseling program as part of the TCE program. H&r free file Visit AARP's website to find the nearest Tax-Aide location. H&r free file Research your tax questions. H&r free file Search publications and instructions by topic or keyword. H&r free file Read the Internal Revenue Code, regulations, or other official guidance. H&r free file Read Internal Revenue Bulletins. H&r free file Sign up to receive local and national tax news by email. H&r free file Phone. H&r free file You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. H&r free file Download the free IRS2Go mobile app from the iTunes app store or from Google Play. H&r free file Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, 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. H&r free file Call to locate the nearest volunteer help site, 1-800-906-9887. H&r free file Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H&r free file The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. H&r free file Most VITA and TCE sites offer free electronic filing. H&r free file Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. H&r free file Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. H&r free file Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. H&r free file The automated Where's My Refund? information is available 24 hours a day, 7 days a week. H&r free file If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H&r free file Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. H&r free file Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. H&r free file Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. H&r free file Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. H&r free file Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). H&r free file You should receive your order within 10 business days. H&r free file Call to order transcripts of your tax returns or tax account, 1-800-908-9946. H&r free file Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. H&r free file Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. H&r free file Call to ask tax questions, 1-800-829-1040. H&r free file Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. H&r free file The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. H&r free file These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. H&r free file gsa. H&r free file gov/fedrelay. H&r free file Walk-in. H&r free file You can find a selection of forms, publications and services — in-person, face-to-face. H&r free file Products. H&r free file You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. H&r free file Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. H&r free file Services. H&r free file You can walk in to your local TAC most business days for personal, face-to-face tax help. H&r free file An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. H&r free file If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. H&r free file No appointment is necessary—just walk in. H&r free file Before visiting, check www. H&r free file irs. H&r free file gov/localcontacts for hours of operation and services provided. H&r free file Mail. H&r free file You can send your order for forms, instructions, and publications to the address below. H&r free file You should receive a response within 10 business days after your request is received. H&r free file  Internal Revenue Service 1201 N. H&r free file Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. H&r free file   The Taxpayer Advocate Service (TAS) is your voice at the IRS. H&r free file Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. H&r free file What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. H&r free file We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. H&r free file You face (or your business is facing) an immediate threat of adverse action. H&r free file You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. H&r free file   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. H&r free file Here's why we can help: TAS is an independent organization within the IRS. H&r free file Our advocates know how to work with the IRS. H&r free file Our services are free and tailored to meet your needs. H&r free file We have offices in every state, the District of Columbia, and Puerto Rico. H&r free file How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. H&r free file irs. H&r free file gov/advocate, or call us toll-free at 1-877-777-4778. H&r free file How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. H&r free file If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. H&r free file irs. H&r free file gov/sams. H&r free file Low Income Taxpayer Clinics. H&r free file   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. H&r free file Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. H&r free file Visit www. H&r free file TaxpayerAdvocate. H&r free file irs. H&r free file gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. H&r free file Prev  Up  Next   Home   More Online Publications