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Irs Gov Form1040ez

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Irs Gov Form1040ez

Irs gov form1040ez Publication 970 - Additional Material Table of Contents AppendicesAppendix A. Irs gov form1040ez Illustrated Example of Education Credits Glossary Appendices The following appendices are provided to help you claim the education benefits that will give you the lowest tax. Irs gov form1040ez Appendix A—An illustrated example of education credits, including a filled-in Form 8863 showing how to claim both the American opportunity credit and lifetime learning credit for 2013. Irs gov form1040ez Appendix B—A chart summarizing some of the major differences between the education tax benefits discussed in this publication. Irs gov form1040ez It is intended only as a guide. Irs gov form1040ez Look in this publication for more complete information. Irs gov form1040ez   Appendix A. Irs gov form1040ez Illustrated Example of Education Credits Dave and Valerie Jones are married and on their 2013 joint tax return they claim exemptions for their two dependent children, Sean (age 21, social security number: 000-00-0001) and Carey (age 18, social security number: 000–00–0002). Irs gov form1040ez Their modified adjusted gross income (MAGI) on Form 1040, line 38 is $110,000. Irs gov form1040ez Because Dave and Valerie have unusually high itemized deductions, their taxable income is $10,000 and their tax before credits is $1,000. Irs gov form1040ez Sean enrolled as a full-time graduate student in August 2013 at California State College. Irs gov form1040ez He graduated with his bachelor's degree in 2012 and did not attend school from January 2013 through July 2013. Irs gov form1040ez His parents claimed the Hope Scholarship Credit for Sean for 2008 and the American opportunity credit for Sean for 2010, 2011, and 2012. Irs gov form1040ez Carey enrolled full time as a freshman at the same college in January 2013 to begin working on her bachelor's degree. Irs gov form1040ez In 2013, Dave and Valerie paid $7,000 in tuition for Sean and $8,500 in tuition for Carey. Irs gov form1040ez California State College issued two Forms 1098-T, one for Sean and one for Carey, and sent them to the Joneses' residence. Irs gov form1040ez California State College reports amounts billed in 2013 instead of amounts paid during 2013. Irs gov form1040ez In completing Form 8863, the Joneses use the amounts they paid. Irs gov form1040ez Neither Sean nor Carey has been convicted of a felony for possession or distribution of a controlled substance before the end of 2013. Irs gov form1040ez Dave and Valerie figure their education credits by completing Form 8863. Irs gov form1040ez They begin Form 8863 on page 2 before completing Part I on page 1. Irs gov form1040ez Because the Joneses have two eligible students, they will complete page 2 twice, once for their son, Sean, and once for their daughter, Carey. Irs gov form1040ez The Joneses decide to complete Part III for Carey first, as shown later. Irs gov form1040ez They carry over the amount of $2,500 entered on Part III, line 30, to Part I, line 1. Irs gov form1040ez The Joneses complete a separate Part III for their son Sean. Irs gov form1040ez They check the “Yes” box on line 23, determine that Sean is not eligible for the American opportunity credit, and go to line 31 as instructed. Irs gov form1040ez They figure their line 31 adjusted qualified education expenses for Sean to be $7,000. Irs gov form1040ez Once they have completed Part III for each student, they figure their credits. Irs gov form1040ez The Joneses figure their refundable American opportunity credit of $1,000 by completing Form 8863, Part I, lines 1 through 8. Irs gov form1040ez They enter the amount from line 8, $1,000, on line 66 of their Form 1040. Irs gov form1040ez The Joneses enter $7,000 on Part II, line 10, of Form 8863 and figure their tentative lifetime learning credit for 2013 to be $1,400 (line 12). Irs gov form1040ez They cannot claim the full amount because their MAGI of $110,000 is greater than $107,000. Irs gov form1040ez They enter the reduced amount of $1,190 (figured on Part II, line 18) on the Credit Limit Worksheet, line 1. Irs gov form1040ez The $1,190 is added to their nonrefundable American opportunity credit ($1,500 on line 2 of the Credit Limit Worksheet) for a total nonrefundable credit of $2,690. Irs gov form1040ez The Joneses enter $1,000 on line 7 of the Credit Limit Worksheet, which is the smaller of their tax from line 46 of their Form 1040 (which is $1,000) or the $2,690 on line 3 of the Credit Limit Worksheet. Irs gov form1040ez They enter $1,000 on line 19, Part II of Form 8863 and on line 49 of Form 1040. Irs gov form1040ez This image is too large to be displayed in the current screen. Irs gov form1040ez Please click the link to view the image. Irs gov form1040ez Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Irs gov form1040ez Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 8,500 2. Irs gov form1040ez Less adjustments:     a. Irs gov form1040ez Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Irs gov form1040ez Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Irs gov form1040ez Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Irs gov form1040ez Total adjustments (add lines 2a, 2b, and 2c) 0 4. Irs gov form1040ez Adjusted qualified education expenses. Irs gov form1040ez Subtract line 3 from line 1. Irs gov form1040ez If zero or less, enter -0- 8,500 This image is too large to be displayed in the current screen. Irs gov form1040ez Please click the link to view the image. Irs gov form1040ez Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Irs gov form1040ez Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 7,000 2. Irs gov form1040ez Less adjustments:     a. Irs gov form1040ez Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Irs gov form1040ez Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Irs gov form1040ez Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Irs gov form1040ez Total adjustments (add lines 2a, 2b, and 2c) 0 4. Irs gov form1040ez Adjusted qualified education expenses. Irs gov form1040ez Subtract line 3 from line 1. Irs gov form1040ez If zero or less, enter -0- 7,000 Credit Limit Worksheet (Form 8863 instructions) Nonrefundable Credit Worksheet 1. Irs gov form1040ez Enter the amount from Form 8863, line 18 1. Irs gov form1040ez 1,190 2. Irs gov form1040ez Enter the amount from Form 8863, line 9 2. Irs gov form1040ez 1,500 3. Irs gov form1040ez Add lines 1 and 2 3. Irs gov form1040ez 2,690 4. Irs gov form1040ez Enter the amount from: Form 1040, line 46; or Form 1040A, line 28 4. Irs gov form1040ez 1,000 5. Irs gov form1040ez Enter the amount from either: Form 1040, lines 47 and 48, and the amount from Schedule R included on Form 1040, line 53; or Form 1040A, lines 29 and 30 5. Irs gov form1040ez 0 6. Irs gov form1040ez Subtract line 5 from line 4 6. Irs gov form1040ez 1,000 7. Irs gov form1040ez   Enter the smaller of line 3 or line 6 here and on Form 8863, line 19 7. Irs gov form1040ez 1,000 This image is too large to be displayed in the current screen. Irs gov form1040ez Please click the link to view the image. Irs gov form1040ez Form 8863 for Dave and Valerie Jones This image is too large to be displayed in the current screen. Irs gov form1040ez Please click the link to view the image. Irs gov form1040ez Carey Jones page 2 This image is too large to be displayed in the current screen. Irs gov form1040ez Please click the link to view the image. Irs gov form1040ez Filled-in Form 8863 Jones page 2 Appendix B. Irs gov form1040ez Highlights of Education Tax Benefits for Tax Year 2013 This chart highlights some differences among the benefits discussed in this publication. Irs gov form1040ez See the text for definitions and details. Irs gov form1040ez Do not rely on this chart alone. Irs gov form1040ez    Caution:You generally cannot claim more than one benefit for the same education expense. Irs gov form1040ez   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What is your  benefit? Amounts received may not be taxable   Credits can reduce the amount of tax you have to pay. Irs gov form1040ez    40% of the credit may be refundable (limited to $1,000 per student). Irs gov form1040ez Credits can reduce amount of tax you must pay Can deduct interest paid Can deduct expenses Earnings not  taxed Earnings not taxed No 10%  additional tax on early distribution Interest not taxed Employer benefits not taxed Can deduct expenses What is the annual limit? None $2,500 credit per student $2,000 credit per tax return     $2,500 deduction $4,000 deduction $2,000 contribution per beneficiary None Amount of qualified  education expenses Amount of qualified  education expenses $5,250 exclusion Amount of qualifying work-related education expenses What expenses  qualify besides  tuition and required enrollment fees? Course-related expenses such as fees, books, supplies, and equipment Course-related books, supplies, and equipment Amounts paid for required books, etc. Irs gov form1040ez , that must be paid to the educational institution, etc. Irs gov form1040ez , are required fees Books Supplies Equipment  Room & board  Transportation  Other necessary expenses  None Books Supplies Equipment  Expenses for special needs services  Payments to QTP  Higher education: Room & board if  at least half-time  student  Elem/sec (K–12) education: Tutoring Room & board Uniforms Transportation Computer  access Supplementary expenses Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Payments to Coverdell ESA  Payments to QTP Books Supplies Equipment Transportation  Travel  Other necessary expenses   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What education qualifies? Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate  Courses to acquire or improve job skills    Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Required by employer or law to keep present job, salary, status  Maintain or improve job skills What are some of the other  conditions that  apply? Must be in degree or vocational program  Payment of tuition and required fees must be allowed under the grant Can be claimed for only 4 tax years (which includes years Hope Scholarship Credit claimed)  Must be enrolled at least half-time in degree program  No felony drug conviction(s)  Must not have completed first 4 years of postsecondary education before end of preceding tax year. Irs gov form1040ez   No other conditions Must have been at least half-time  student in degree program Cannot claim both deduction & education credit for same student in same year Assets must be distributed at age 30 unless special  needs beneficiary No other conditions No other conditions Applies only to qualified series  EE bonds issued after 1989 or series I bonds No other conditions Cannot be to  meet minimum educational requirements of present trade/business  Cannot qualify  you for new trade/business   In what income  range do benefits  phase out? No phaseout $80,000 – $90,000  $160,000 – $180,000 for joint returns $53,000 – $63,000  $107,000 – $127,000 for joint returns $60,000 – $75,000  $125,000 –  $155,000 for  joint returns  $60,000 – $80,000  $130,000 –  $160,000 for  joint returns  $95,000 – $110,000  $190,000 – $220,000 for  joint returns No phaseout No phaseout   No phaseout No phaseout † Any nontaxable distribution is limited to the amount that does not exceed qualified education expenses. Irs gov form1040ez Glossary The education benefits included in this publication were enacted over many years, leading to a number of common terms being defined differently from one benefit to the next. Irs gov form1040ez For example, an eligible educational institution means one thing when determining if earnings from a Coverdell education savings account are not taxable and something else when determining if a scholarship or fellowship is not taxable. Irs gov form1040ez For each term listed below that has more than one definition, the definition for each education benefit is listed. Irs gov form1040ez Academic period:   A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Irs gov form1040ez If an educational institution uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Irs gov form1040ez Adjusted qualified education expenses (AQEE):    Qualified education expenses (defined later) reduced by any tax-free educational assistance, such as a tax-free scholarship or employer-provided educational assistance. Irs gov form1040ez They must also be reduced by any qualified education expenses deducted elsewhere on your return, used to determine an education credit or other benefit, or used to determine a tax-free distribution. Irs gov form1040ez For information on a specific benefit, see the appropriate chapter in this publication. Irs gov form1040ez Candidate for a degree:   A student who meets either of the following requirements. Irs gov form1040ez Attends a primary or secondary school or pursues a degree at a college or university, or Attends an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Irs gov form1040ez Designated beneficiary:   The individual named in the document creating the account/plan who is to receive the benefit of the funds in the account/plan. Irs gov form1040ez Eligible educational institution:    American opportunity credit. Irs gov form1040ez Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Irs gov form1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs gov form1040ez Coverdell education savings account (ESA). Irs gov form1040ez Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Irs gov form1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs gov form1040ez Also included is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Irs gov form1040ez Education savings bond program. Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez IRA, early distributions from. Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez Lifetime learning credit. Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez Qualified tuition program (QTP). Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez Scholarships and fellowships. Irs gov form1040ez An institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Irs gov form1040ez Student loan, cancellation of. Irs gov form1040ez Same as Scholarships and fellowships in this category. Irs gov form1040ez Student loan interest deduction. Irs gov form1040ez Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Irs gov form1040ez It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Irs gov form1040ez Also included is an institution that conducts an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Irs gov form1040ez Tuition and fees deduction. Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez Eligible student:    American opportunity credit. Irs gov form1040ez A student who meets all of the following requirements for the tax year for which the credit is being determined. Irs gov form1040ez Did not have expenses that were used to figure an American opportunity or Hope Scholarship Credit in any 4 earlier tax years. Irs gov form1040ez Had not completed the first 4 years of postsecondary education (generally the freshman through senior years). Irs gov form1040ez For at least one academic period beginning in the tax year, was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Irs gov form1040ez Was free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. Irs gov form1040ez Lifetime learning credit. Irs gov form1040ez A student who is enrolled in one or more courses at an eligible educational institution. Irs gov form1040ez Student loan interest deduction. Irs gov form1040ez A student who was enrolled at least half-time in a program leading to a postsecondary degree, certificate, or other recognized educational credential at an eligible educational institution. Irs gov form1040ez Tuition and fees deduction. Irs gov form1040ez A student who is enrolled in one or more courses at an eligible educational institution. Irs gov form1040ez Half-time student:   A student who is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Irs gov form1040ez Modified adjusted gross income (MAGI):    American opportunity credit. Irs gov form1040ez Adjusted gross income (AGI) as figured on the federal income tax return, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Irs gov form1040ez Coverdell education savings account (ESA). Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez Education savings bond program. Irs gov form1040ez Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. Irs gov form1040ez Lifetime learning credit. Irs gov form1040ez Same as American opportunity credit in this category. Irs gov form1040ez Student loan interest deduction. Irs gov form1040ez Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any student loan interest deduction, tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Irs gov form1040ez Tuition and fees deduction. Irs gov form1040ez Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Irs gov form1040ez Phaseout:   The amount of credit or deduction allowed is reduced when modified adjusted gross income (MAGI) is greater than a specified amount of income. Irs gov form1040ez Qualified education expenses:   See pertinent chapter for specific items. Irs gov form1040ez    American opportunity credit. Irs gov form1040ez Tuition and certain related expenses (including student activity fees) required for enrollment or attendance at an eligible educational institution. Irs gov form1040ez Books, supplies, and equipment needed for a course of study are included even if not purchased from the educational institution. Irs gov form1040ez Does not include expenses for room and board. Irs gov form1040ez Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program. Irs gov form1040ez Coverdell education savings account (ESA). Irs gov form1040ez Expenses related to or required for enrollment or attendance of the designated beneficiary at an eligible elementary, secondary, or postsecondary school. Irs gov form1040ez Many specialized expenses included for K–12. Irs gov form1040ez Also includes expenses for special needs services and contribution to qualified tuition program (QTP). Irs gov form1040ez Education savings bond program. Irs gov form1040ez Tuition and fees required to enroll at or attend an eligible educational institution. Irs gov form1040ez Also includes contributions to a qualified tuition program (QTP) or Coverdell education savings account (ESA). Irs gov form1040ez Does not include expenses for room and board. Irs gov form1040ez Does not include expenses for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Irs gov form1040ez IRA, early distributions from. Irs gov form1040ez Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Irs gov form1040ez Also includes expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. Irs gov form1040ez Lifetime learning credit. Irs gov form1040ez Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Irs gov form1040ez Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Irs gov form1040ez Does not include expenses for room and board. Irs gov form1040ez Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program, unless taken by the student to acquire or improve job skills. Irs gov form1040ez Qualified tuition program (QTP). Irs gov form1040ez Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Irs gov form1040ez Includes expenses for special needs services and computer access. Irs gov form1040ez Scholarships and fellowships. Irs gov form1040ez Expenses for tuition and fees required to enroll at or attend an eligible educational institution, and course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Irs gov form1040ez Course-related items must be required of all students in the course of instruction. Irs gov form1040ez Student loan interest deduction. Irs gov form1040ez Total costs of attending an eligible educational institution, including graduate school (however, limitations may apply to the cost of room and board allowed). Irs gov form1040ez Tuition and fees deduction. Irs gov form1040ez Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Irs gov form1040ez Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Irs gov form1040ez Recapture:   To include as income on your current year's return an amount allowed as a deduction in a prior year. Irs gov form1040ez To include as tax on your current year's return an amount allowed as a credit in a prior year. Irs gov form1040ez Rollover:   A tax-free distribution to you of cash or other assets from a tax-favored plan that you contribute to another tax-favored plan. Irs gov form1040ez Transfer:   A movement of funds in a tax-favored plan from one trustee directly to another, either at your request or at the trustee's request. Irs gov form1040ez Prev  Up  Next   Home   More Online Publications
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The Irs Gov Form1040ez

Irs gov form1040ez 6. Irs gov form1040ez   Retail Tax on Heavy Trucks, Trailers, and Tractors Table of Contents Highway vehicle. Irs gov form1040ez Vehicles not considered highway vehicles. Irs gov form1040ez Idling reduction device. Irs gov form1040ez Separate purchase. Irs gov form1040ez Leases. Irs gov form1040ez Exported vehicle. Irs gov form1040ez Tax on resale of tax-paid trailers and semitrailers. Irs gov form1040ez Use treated as sale. Irs gov form1040ez Sale. Irs gov form1040ez Long-term lease. Irs gov form1040ez Short-term lease. Irs gov form1040ez Related person. Irs gov form1040ez Exclusions from tax base. Irs gov form1040ez Sales not at arm's length. Irs gov form1040ez Installment sales. Irs gov form1040ez Repairs and modifications. Irs gov form1040ez Further manufacture. Irs gov form1040ez Rail trailers and rail vans. Irs gov form1040ez Parts and accessories. Irs gov form1040ez Trash containers. Irs gov form1040ez House trailers. Irs gov form1040ez Camper coaches or bodies for self-propelled mobile homes. Irs gov form1040ez Farm feed, seed, and fertilizer equipment. Irs gov form1040ez Ambulances and hearses. Irs gov form1040ez Truck-tractors. Irs gov form1040ez Concrete mixers. Irs gov form1040ez Registration requirement. Irs gov form1040ez Further manufacture. Irs gov form1040ez A tax of 12% of the sales price is imposed on the first retail sale of the following articles, including related parts and accessories sold on or in connection with, or with the sale of, the articles. Irs gov form1040ez Truck chassis and bodies. Irs gov form1040ez Truck trailer and semitrailer chassis and bodies. Irs gov form1040ez Tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Irs gov form1040ez A truck is a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it is equipped to tow a vehicle, such as a trailer or semitrailer. Irs gov form1040ez A tractor is a highway vehicle designed to tow a vehicle, such as a trailer or semitrailer. Irs gov form1040ez A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. Irs gov form1040ez A sale of a truck, truck trailer, or semitrailer is considered a sale of a chassis and a body. Irs gov form1040ez The seller is liable for the tax. Irs gov form1040ez Chassis or body. Irs gov form1040ez   A chassis or body is taxable only if you sell it for use as a component part of a highway vehicle that is a truck, truck trailer or semitrailer, or a tractor of the kind chiefly used for highway transportation in combination with a trailer or semitrailer. Irs gov form1040ez Highway vehicle. Irs gov form1040ez   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Irs gov form1040ez Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Irs gov form1040ez A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Irs gov form1040ez A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Irs gov form1040ez A special kind of cargo, goods, supplies, or materials. Irs gov form1040ez Some off-highway task unrelated to highway transportation, except as discussed next. Irs gov form1040ez Vehicles not considered highway vehicles. Irs gov form1040ez   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the retail tax. Irs gov form1040ez Specially designed mobile machinery for nontransportation functions. Irs gov form1040ez A self-propelled vehicle is not a highway vehicle if all the following apply. Irs gov form1040ez The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Irs gov form1040ez The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Irs gov form1040ez The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Irs gov form1040ez Vehicles specially designed for off-highway transportation. Irs gov form1040ez A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicles's capability to transport a load over a public highway is substantially limited or impaired. Irs gov form1040ez To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Irs gov form1040ez It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Irs gov form1040ez Nontransportation trailers and semitrailers. Irs gov form1040ez A trailer or semitrailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Irs gov form1040ez For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Irs gov form1040ez Gross vehicle weight. Irs gov form1040ez   The tax does not apply to truck chassis and bodies suitable for use with a vehicle that has a gross vehicle weight (defined below) of 33,000 pounds or less. Irs gov form1040ez It also does not apply to truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer that has a gross vehicle weight of 26,000 pounds or less. Irs gov form1040ez Tractors that have a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% retail tax. Irs gov form1040ez   The following four classifications of truck body types meet the suitable for use standard and will be excluded from the retail excise tax. Irs gov form1040ez Platform truck bodies 21 feet or less in length. Irs gov form1040ez Dry freight and refrigerated truck van bodies 24 feet or less in length. Irs gov form1040ez Dump truck bodies with load capacities of 8 cubic yards or less. Irs gov form1040ez Refuse packer truck bodies with load capacities of 20 cubic yards or less. Irs gov form1040ez For more information on these classifications, see Revenue Procedure 2005-19, which is on page 832 of I. Irs gov form1040ez R. Irs gov form1040ez B. Irs gov form1040ez 2005-14 at www. Irs gov form1040ez irs. Irs gov form1040ez gov/pub/irs-irbs/irb05-14. Irs gov form1040ez pdf. Irs gov form1040ez   The gross vehicle weight means the maximum total weight of a loaded vehicle. Irs gov form1040ez Generally, this maximum total weight is the gross vehicle weight rating provided by the manufacturer or determined by the seller of the completed article. Irs gov form1040ez The seller's gross vehicle weight rating is determined solely on the basis of the strength of the chassis frame and the axle capacity and placement. Irs gov form1040ez The seller may not take into account any readily attachable components (such as tires or rim assemblies) in determining the gross vehicle weight. Irs gov form1040ez See Regulations section 145. Irs gov form1040ez 4051-1(e)(3) for more information. Irs gov form1040ez Parts or accessories. Irs gov form1040ez   The tax applies to parts or accessories sold on or in connection with, or with the sale of, a taxable article. Irs gov form1040ez For example, if at the time of the sale by the retailer, the part or accessory has been ordered from the retailer, the part or accessory will be considered as sold in connection with the sale of the vehicle. Irs gov form1040ez The tax applies in this case whether or not the retailer bills the parts or accessories separately. Irs gov form1040ez   If the retailer sells a taxable chassis, body, or tractor without parts or accessories considered essential for the operation or appearance of the taxable article, the sale of the parts or accessories by the retailer to the purchaser is considered made in connection with the sale of the taxable article even though they are shipped separately, at the same time, or on a different date. Irs gov form1040ez The tax applies unless there is evidence to the contrary. Irs gov form1040ez For example, if a retailer sells to any person a chassis and the bumpers for the chassis, or sells a taxable tractor and the fifth wheel and attachments, the tax applies to the parts or accessories regardless of the method of billing or the time at which the shipments were made. Irs gov form1040ez The tax does not apply to parts and accessories that are spares or replacements. Irs gov form1040ez   The tax imposed on parts and accessories sold on or in connection with the taxable articles listed earlier and the tax imposed on the separate purchase of parts and accessories (discussed next) for the taxable articles listed earlier do not apply to an idling reduction device or insulation that has an R value of at least R35 per inch. Irs gov form1040ez Idling reduction device. Irs gov form1040ez   An idling reduction device is any device or system of devices that provide the tractor with services, such as heat, air conditioning, and electricity, without the use of the main drive engine while the tractor is temporarily parked or stationary. Irs gov form1040ez The device must be affixed to the tractor and determined by the Administrator of the EPA, in consultation with the Secretary of Energy and Secretary of Transportation, to reduce idling while parked or stationary. Irs gov form1040ez The EPA discusses idling reduction technologies on its website at www. Irs gov form1040ez epa. Irs gov form1040ez gov/smartway/technology/idling. Irs gov form1040ez htm. Irs gov form1040ez Separate purchase. Irs gov form1040ez   The tax generally applies to the price of a part or accessory and its installation if the following conditions are met. Irs gov form1040ez The owner, lessee, or operator of any vehicle that contains a taxable article installs any part or accessory on the vehicle. Irs gov form1040ez The installation occurs within 6 months after the vehicle is first placed in service. Irs gov form1040ez   The owners of the trade or business installing the parts or accessories are secondarily liable for the tax. Irs gov form1040ez   A vehicle is placed in service on the date the owner takes actual possession of the vehicle. Irs gov form1040ez This date is established by a signed delivery ticket or other comparable document indicating delivery to and acceptance by the owner. Irs gov form1040ez   The tax does not apply if the installed part or accessory is a replacement part or accessory. Irs gov form1040ez The tax also does not apply if the total price of the parts and accessories, including installation charges, during the 6-month period is $1,000 or less. Irs gov form1040ez However, if the total price is more than $1,000, the tax applies to the cost of all parts and accessories (and installation charges) during that period. Irs gov form1040ez Example. Irs gov form1040ez You bought a taxable vehicle and placed it in service on April 8. Irs gov form1040ez On May 3, you bought and installed parts and accessories at a cost of $850. Irs gov form1040ez On July 15, you bought and installed parts and accessories for $300. Irs gov form1040ez Tax of $138 (12% of $1,150) applies on July 15. Irs gov form1040ez Also, tax will apply to any costs of additional parts and accessories installed on the vehicle before October 8. Irs gov form1040ez First retail sale defined. Irs gov form1040ez   The sale of an article is treated as the first retail sale, and the seller will be liable for the tax imposed on the sale unless one of the following exceptions applies. Irs gov form1040ez There has been a prior taxable sale, lease, or use of the article (however, see Tax on resale of tax-paid trailers and semitrailers, later). Irs gov form1040ez The sale qualifies as a tax-free sale under section 4221 (see Sales exempt from tax, later). Irs gov form1040ez The seller in good faith accepts from the purchaser a statement signed under penalties of perjury and executed in good faith that the purchaser intends to resell the article or lease it on a long-term basis. Irs gov form1040ez There is no registration requirement. Irs gov form1040ez Leases. Irs gov form1040ez   A long-term lease (a lease with a term of 1 year or more, taking into account options to renew) before a first retail sale is treated as a taxable sale. Irs gov form1040ez The tax is imposed on the lessor at the time of the lease. Irs gov form1040ez   A short-term lease (a lease with a term of less than 1 year, taking into account options to renew) before a first retail sale is treated as a taxable use. Irs gov form1040ez The tax is imposed on the lessor at the time of the lease. Irs gov form1040ez Exported vehicle. Irs gov form1040ez   A vehicle exported before its first retail sale, used in a foreign country, and then returned to the United States is subject to the retail tax on its first domestic use or retail sale after importation. Irs gov form1040ez Tax on resale of tax-paid trailers and semitrailers. Irs gov form1040ez   The tax applies to a trailer or semitrailer resold within 6 months after having been sold in a taxable sale. Irs gov form1040ez The seller liable for the tax on the resale can claim a credit equal to the tax paid on the prior taxable sale. Irs gov form1040ez The credit cannot exceed the tax on the resale. Irs gov form1040ez See Regulations section 145. Irs gov form1040ez 4052-1(a)(4) for information on the conditions to allowance for the credit. Irs gov form1040ez Use treated as sale. Irs gov form1040ez   If any person uses a taxable article before the first retail sale of the article, that person is liable for the tax as if the article had been sold at retail by that person. Irs gov form1040ez Figure the tax on the price at which similar articles are sold in the ordinary course of trade by retailers. Irs gov form1040ez The tax attaches when the use begins. Irs gov form1040ez   If the seller of an article regularly sells the articles at retail in arm's-length transactions, figure the tax on its use on the lowest established retail price for the articles in effect at the time of the taxable use. Irs gov form1040ez   If the seller of an article does not regularly sell the articles at retail in arm's-length transactions, a constructive price on which the tax is figured will be determined by the IRS after considering the selling practices and price structures of sellers of similar articles. Irs gov form1040ez   If a seller of an article incurs liability for tax on the use of the article and later sells or leases the article in a transaction that otherwise would be taxable, liability for tax is not incurred on the later sale or lease. Irs gov form1040ez Presumptive retail sales price. Irs gov form1040ez   There are rules to ensure that the tax base of transactions considered to be taxable sales includes either an actual or presumed markup percentage. Irs gov form1040ez If the person liable for tax is the vehicle's manufacturer, producer, or importer, the following discussions show how you figure the presumptive retail sales price depending on the type of transaction and the persons involved in the transaction. Irs gov form1040ez Table 6-1 outlines the appropriate tax base calculation for various transactions. Irs gov form1040ez   The presumed markup percentage to be used for trucks and truck-tractors is 4%. Irs gov form1040ez But for truck trailers and semitrailers and remanufactured trucks and tractors, the presumed markup percentage is zero. Irs gov form1040ez Sale. Irs gov form1040ez   For a taxable sale by a manufacturer, producer, importer, or related person, you generally figure the tax on a tax base of the sales price plus an amount equal to the presumed markup percentage times that sales price. Irs gov form1040ez Long-term lease. Irs gov form1040ez   In the case of a long-term lease by a manufacturer, producer, importer, or related person, figure the tax on a tax base of the constructive sales price plus an amount equal to the presumed markup percentage times the constructive sales price. Irs gov form1040ez Short-term lease. Irs gov form1040ez   When a manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a constructive sales price at which those or similar articles generally are sold in the ordinary course of trade by retailers. Irs gov form1040ez   But if the lessor in this situation regularly sells articles at retail in arm's-length transactions, figure the tax on the lowest established retail price in effect at the time of the taxable use. Irs gov form1040ez   If a person other than the manufacturer, producer, importer, or related person leases an article in a short-term lease considered a taxable use, figure the tax on a tax base of the price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor and a presumed markup percentage. Irs gov form1040ez Related person. Irs gov form1040ez   A related person is any member of the same controlled group as the manufacturer, producer, or importer. Irs gov form1040ez Do not treat as a related person a person that sells the articles through a permanent retail establishment in the normal course of being a retailer if that person has records to prove the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Irs gov form1040ez Table 6-1. Irs gov form1040ez Tax Base IF the transaction is a. Irs gov form1040ez . Irs gov form1040ez . Irs gov form1040ez THEN figuring the base by using the. Irs gov form1040ez . Irs gov form1040ez . Irs gov form1040ez Sale by the manufacturer, producer, importer, or related person Sales price plus (presumed markup percentage × sales price) Sale by the dealer Total consideration paid for the item including any charges incident to placing it in a condition ready for use Long-term lease by the manufacturer, producer, importer, or related person Constructive sales price plus (presumed markup percentage × constructive sales price) Short-term lease by the manufacturer, producer, importer, or related person Constructive sales price at which such or similar articles are sold Short-term lease by a lessor other than the manufacturer, producer, importer, or related person Price for which the article was sold to the lessor plus the cost of parts and accessories installed by the lessor plus a presumed markup percentage Short-term lease where the articles are regularly sold at arm's length Lowest established retail price in effect at the time of the taxable use General rule for sales by dealers to the consumer. Irs gov form1040ez   For a taxable sale, other than a long-term lease, by a person other than a manufacturer, producer, importer, or related person, your tax base is the retail sales price as discussed next under Determination of tax base. Irs gov form1040ez   When you sell an article to the consumer, generally you do not add a presumed markup to the tax base. Irs gov form1040ez However, you do add a markup if all the following apply. Irs gov form1040ez You do not perform any significant activities relating to the processing of the sale of a taxable article. Irs gov form1040ez The main reason for processing the sale through you is to avoid or evade the presumed markup. Irs gov form1040ez You do not have records proving that the article was sold for a price that included a markup equal to or greater than the presumed markup percentage. Irs gov form1040ez In these situations, your tax base is the sales price plus an amount equal to the presumed markup percentage times that selling price. Irs gov form1040ez Determination of tax base. Irs gov form1040ez   These rules apply to both normal retail sales price and presumptive retail sales price computations. Irs gov form1040ez To arrive at the tax base, the price is the total consideration paid (including trade-in allowance) for the item and includes any charge incident to placing the article in a condition ready for use. Irs gov form1040ez However, see Presumptive retail sales price, earlier. Irs gov form1040ez Exclusions from tax base. Irs gov form1040ez   Exclude from the tax base the retail excise tax imposed on the sale. Irs gov form1040ez Exclude any state or local retail sales tax if stated as a separate charge from the price whether the sales tax is imposed on the seller or purchaser. Irs gov form1040ez Also exclude the value of any used component of the article furnished by the first user of the article. Irs gov form1040ez   Exclude charges for transportation, delivery, insurance, and installation (other than installation charges for parts and accessories, discussed earlier) and other expenses incurred in connection with the delivery of an article to a purchaser. Irs gov form1040ez These expenses are those incurred in delivery from the retail dealer to the customer. Irs gov form1040ez In the case of delivery directly from the manufacturer to the dealer's customer, include the transportation and delivery charges to the extent the charges do not exceed what it would have cost to ship the article to the dealer. Irs gov form1040ez   Exclude amounts charged for machinery or equipment that does not contribute to the highway transportation function of the vehicle, provided those charges are supported by adequate records. Irs gov form1040ez For example, for an industrial vacuum loader vehicle, exclude amounts charged for the vacuum pump and hose, filter system, material separator, silencer or muffler, control cabinet, and ladder. Irs gov form1040ez Similarly, for a sewer cleaning vehicle, exclude amounts charged for the high pressure water pump, hose components, and the vacuum pipe. Irs gov form1040ez Sales not at arm's length. Irs gov form1040ez   For any taxable article sold (not at arm's length) at less than the fair market price, figure the excise tax on the price for which similar articles are sold at retail in the ordinary course of trade. Irs gov form1040ez   A sale is not at arm's length if either of the following apply. Irs gov form1040ez One of the parties is controlled (in law or in fact) by the other or there is common control, whether or not the control is actually exercised to influence the sales price. Irs gov form1040ez The sale is made under special arrangements between a seller and a purchaser. Irs gov form1040ez Installment sales. Irs gov form1040ez   If the first retail sale is an installment sale, or other form of sale in which the sales price is paid in installments, tax liability arises at the time of the sale. Irs gov form1040ez The tax is figured on the entire sales price. Irs gov form1040ez No part of the tax is deferred because the sales price is paid in installments. Irs gov form1040ez Repairs and modifications. Irs gov form1040ez   The tax does not apply to the sale or use of an article that has been repaired or modified unless the cost of the repairs and modifications is more than 75% of the retail price of a comparable new article. Irs gov form1040ez This includes modifications that change the transportation function of an article or restore a wrecked article to a functional condition. Irs gov form1040ez However, this exception generally does not apply to an article that was not subject to the tax when it was new. Irs gov form1040ez Further manufacture. Irs gov form1040ez   The tax does not apply to the use by a person of a taxable article as material in the manufacture or production of, or as a component part of, another article to be manufactured or produced by that person. Irs gov form1040ez Do not treat a person as engaged in the manufacture of any article merely because that person combines the article with a: Coupling device (including any fifth wheel); Wrecker crane; Loading and unloading equipment (including any crane, hoist, winch, or power liftgate); Aerial ladder or tower; Ice and snow control equipment; Earth moving, excavation, and construction equipment; Spreader; Sleeper cab; Cab shield; or Wood or metal floor. Irs gov form1040ez Combining an article with an item in this list does not give rise to taxability. Irs gov form1040ez However, see Parts or accessories discussed earlier. Irs gov form1040ez Articles exempt from tax. Irs gov form1040ez   The tax on heavy trucks, trailers, and tractors does not apply to sales of the articles described in the following discussions. Irs gov form1040ez Rail trailers and rail vans. Irs gov form1040ez   This is any chassis or body of a trailer or semitrailer designed for use both as a highway vehicle and a railroad car (including any parts and accessories designed primarily for use on and in connection with it). Irs gov form1040ez Do not treat a piggyback trailer or semitrailer as designed for use as a railroad car. Irs gov form1040ez Parts and accessories. Irs gov form1040ez   This is any part or accessory sold separately from the truck or trailer, except as described earlier under Parts or accessories and Separate purchase. Irs gov form1040ez Trash containers. Irs gov form1040ez   This is any box, container, receptacle, bin, or similar article that meets all the following conditions. Irs gov form1040ez It is designed to be used as a trash container. Irs gov form1040ez It is not designed to carry freight other than trash. Irs gov form1040ez It is not designed to be permanently mounted on or affixed to a truck chassis or body. Irs gov form1040ez House trailers. Irs gov form1040ez   This is any house trailer (regardless of size) suitable for use in connection with either passenger automobiles or trucks. Irs gov form1040ez Camper coaches or bodies for self-propelled mobile homes. Irs gov form1040ez   This is any article designed to be mounted or placed on trucks, truck chassis, or automobile chassis and to be used primarily as living quarters or camping accommodations. Irs gov form1040ez Further, the tax does not apply to chassis specifically designed and constructed to accommodate and transport self-propelled mobile home bodies. Irs gov form1040ez Farm feed, seed, and fertilizer equipment. Irs gov form1040ez   This is any body primarily designed to process or prepare, haul, spread, load, or unload feed, seed, or fertilizer to or on farms. Irs gov form1040ez This exemption applies only to the farm equipment body (and parts and accessories) and not to the chassis upon which the farm equipment is mounted. Irs gov form1040ez Ambulances and hearses. Irs gov form1040ez   This is any ambulance, hearse, or combination ambulance-hearse. Irs gov form1040ez Truck-tractors. Irs gov form1040ez   This is any truck-tractor specifically designed for use in shifting semitrailers in and around freight yards and freight terminals. Irs gov form1040ez Concrete mixers. Irs gov form1040ez   This is any article designed to be placed or mounted on a truck, truck trailer, or semitrailer chassis to be used to process or prepare concrete. Irs gov form1040ez This exemption does not apply to the chassis on which the article is mounted. Irs gov form1040ez Sales exempt from tax. Irs gov form1040ez   The following sales are ordinarily exempt from tax. Irs gov form1040ez Sales to a state or local government for its exclusive use. Irs gov form1040ez Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function. Irs gov form1040ez Sales to a nonprofit educational organization for its exclusive use. Irs gov form1040ez Sales to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Irs gov form1040ez Sales for use by the purchaser for further manufacture of other taxable articles (see below). Irs gov form1040ez Sales for export or for resale by the purchaser to a second purchaser for export. Irs gov form1040ez Sales to the United Nations for official use. Irs gov form1040ez Registration requirement. Irs gov form1040ez   In general, the seller and buyer must be registered for a sale to be tax free. Irs gov form1040ez See the Form 637 instructions for more information. Irs gov form1040ez Certain registration exceptions apply in the case of sales to state and local governments, sales to foreign purchasers for export, and sales for resale or long term leasing. Irs gov form1040ez Further manufacture. Irs gov form1040ez   If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and made the first retail sale of them. Irs gov form1040ez Credits or refunds. Irs gov form1040ez   A credit or refund (without interest) of the retail tax on the taxable articles described earlier may be allowable if the tax has been paid with respect to an article and, before any other use, such article is used by any person as a component part of another taxable article manufactured or produced. Irs gov form1040ez The person using the article as a component part is eligible for the credit or refund. Irs gov form1040ez   A credit or refund is allowable if, before any other use, an article is, by any person: Exported, Used or sold for use as supplies for vessels, Sold to a state or local government for its exclusive use, Sold to a nonprofit educational organization for its exclusive use, or Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in the collection, storage, or transportation of blood. Irs gov form1040ez A credit or refund is also allowable if there is a price readjustment by reason of the return or repossession of an article or by reason of a bona fide discount, rebate, or allowance. Irs gov form1040ez   See also Conditions to allowance in chapter 5. Irs gov form1040ez Tire credit. Irs gov form1040ez   A credit is allowed against the retail tax on the taxable articles described earlier if taxable tires are sold on or in connection with the sale of the article. Irs gov form1040ez The credit is equal to the manufacturers excise tax imposed on the taxable tires (discussed earlier). Irs gov form1040ez This is the section 4051(d) taxable tire credit and is claimed on Schedule C (Form 720) for the same quarter for which the tax on the heavy vehicle is reported. Irs gov form1040ez Prev  Up  Next   Home   More Online Publications