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Turbo Tax 2011 Download

Turbo tax 2011 download 2. Turbo tax 2011 download   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. Turbo tax 2011 download Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. Turbo tax 2011 download Sales and Exchanges Between Related PersonsGain Is Ordinary Income Nondeductible Loss Other DispositionsSale of a Business Dispositions of Intangible Property Subdivision of Land Timber Precious Metals and Stones, Stamps, and Coins Coal and Iron Ore Conversion Transactions Introduction You must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). Turbo tax 2011 download You must do this to figure your net capital gain or loss. Turbo tax 2011 download For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. Turbo tax 2011 download See Capital Gains Tax Rates in chapter 4. Turbo tax 2011 download Your deduction for a net capital loss may be limited. Turbo tax 2011 download See Treatment of Capital Losses in chapter 4. Turbo tax 2011 download Capital gain or loss. Turbo tax 2011 download   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. Turbo tax 2011 download You also may have a capital gain if your section 1231 transactions result in a net gain. Turbo tax 2011 download Section 1231 transactions. Turbo tax 2011 download   Section 1231 transactions are sales and exchanges of property held longer than 1 year and either used in a trade or business or held for the production of rents or royalties. Turbo tax 2011 download They also include certain involuntary conversions of business or investment property, including capital assets. Turbo tax 2011 download See Section 1231 Gains and Losses in chapter 3 for more information. Turbo tax 2011 download Topics - This chapter discusses: Capital assets Noncapital assets Sales and exchanges between  related persons Other dispositions Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 4797 Sales of Business Property 8594 Asset Acquisition Statement Under Section 1060 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. Turbo tax 2011 download Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. Turbo tax 2011 download For exceptions, see Noncapital Assets, later. Turbo tax 2011 download The following items are examples of capital assets. Turbo tax 2011 download Stocks and bonds. Turbo tax 2011 download A home owned and occupied by you and your family. Turbo tax 2011 download Timber grown on your home property or investment property, even if you make casual sales of the timber. Turbo tax 2011 download Household furnishings. Turbo tax 2011 download A car used for pleasure or commuting. Turbo tax 2011 download Coin or stamp collections. Turbo tax 2011 download Gems and jewelry. Turbo tax 2011 download Gold, silver, and other metals. Turbo tax 2011 download Personal-use property. Turbo tax 2011 download   Generally, property held for personal use is a capital asset. Turbo tax 2011 download Gain from a sale or exchange of that property is a capital gain. Turbo tax 2011 download Loss from the sale or exchange of that property is not deductible. Turbo tax 2011 download You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Turbo tax 2011 download Investment property. Turbo tax 2011 download   Investment property (such as stocks and bonds) is a capital asset, and a gain or loss from its sale or exchange is a capital gain or loss. Turbo tax 2011 download This treatment does not apply to property used to produce rental income. Turbo tax 2011 download See Business assets, later, under Noncapital Assets. Turbo tax 2011 download Release of restriction on land. Turbo tax 2011 download   Amounts you receive for the release of a restrictive covenant in a deed to land are treated as proceeds from the sale of a capital asset. Turbo tax 2011 download Noncapital Assets A noncapital asset is property that is not a capital asset. Turbo tax 2011 download The following kinds of property are not capital assets. Turbo tax 2011 download Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. Turbo tax 2011 download Inventories are discussed in Publication 538, Accounting Periods and Methods. Turbo tax 2011 download But, see the Tip below. Turbo tax 2011 download Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of any properties described in (1), above. Turbo tax 2011 download Depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later), even if the property is fully depreciated (or amortized). Turbo tax 2011 download Sales of this type of property are discussed in chapter 3. Turbo tax 2011 download Real property used in your trade or business or as rental property, even if the property is fully depreciated. Turbo tax 2011 download A copyright; a literary, musical, or artistic composition; a letter; a memorandum; or similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs): Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Received from a person who created the property or for whom the property was prepared under circumstances (for example, by gift) entitling you to the basis of the person who created the property, or for whom it was prepared or produced. Turbo tax 2011 download But, see the Tip below. Turbo tax 2011 download U. Turbo tax 2011 download S. Turbo tax 2011 download Government publications you got from the government for free or for less than the normal sales price or that you acquired under circumstances entitling you to the basis of someone who got the publications for free or for less than the normal sales price. Turbo tax 2011 download Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. Turbo tax 2011 download It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. Turbo tax 2011 download The instrument is clearly identified in the dealer's records as meeting (a) by the end of the day on which it was acquired, originated, or entered into. Turbo tax 2011 download Any hedging transaction (defined later) that is clearly identified as a hedging transaction by the end of the day on which it was acquired, originated, or entered into. Turbo tax 2011 download Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Turbo tax 2011 download You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. Turbo tax 2011 download See chapter 4 of Publication 550 for details. Turbo tax 2011 download Property held mainly for sale to customers. Turbo tax 2011 download   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. Turbo tax 2011 download Inventories are discussed in Publication 538. Turbo tax 2011 download Business assets. Turbo tax 2011 download   Real property and depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later under Dispositions of Intangible Property) are not capital assets. Turbo tax 2011 download The sale or disposition of business property is discussed in chapter 3. Turbo tax 2011 download Letters and memoranda. Turbo tax 2011 download   Letters, memoranda, and similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs) are not treated as capital assets (as discussed earlier) if your personal efforts created them or if they were prepared or produced for you. Turbo tax 2011 download Nor is this property a capital asset if your basis in it is determined by reference to the person who created it or the person for whom it was prepared. Turbo tax 2011 download For this purpose, letters and memoranda addressed to you are considered prepared for you. Turbo tax 2011 download If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. Turbo tax 2011 download Commodities derivative financial instrument. Turbo tax 2011 download   A commodities derivative financial instrument is a commodities contract or other financial instrument for commodities (other than a share of corporate stock, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract) the value or settlement price of which is calculated or determined by reference to a specified index (as defined in section 1221(b) of the Internal Revenue Code). Turbo tax 2011 download Commodities derivative dealer. Turbo tax 2011 download   A commodities derivative dealer is a person who regularly offers to enter into, assume, offset, assign, or terminate positions in commodities derivative financial instruments with customers in the ordinary course of a trade or business. Turbo tax 2011 download Hedging transaction. Turbo tax 2011 download   A hedging transaction is any transaction you enter into in the normal course of your trade or business primarily to manage any of the following. Turbo tax 2011 download Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. Turbo tax 2011 download Risk of interest rate or price changes or currency fluctuations for borrowings you make or will make, or ordinary obligations you incur or will incur. Turbo tax 2011 download Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. Turbo tax 2011 download If these rules apply, gains may be treated as ordinary income and losses may not be deductible. Turbo tax 2011 download See Transfers to Spouse in chapter 1 for rules that apply to spouses. Turbo tax 2011 download Gain Is Ordinary Income If a gain is recognized on the sale or exchange of property to a related person, the gain may be ordinary income even if the property is a capital asset. Turbo tax 2011 download It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. Turbo tax 2011 download Depreciable property transaction. Turbo tax 2011 download   Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it is ordinary income if the transaction is either directly or indirectly between any of the following pairs of entities. Turbo tax 2011 download A person and the person's controlled entity or entities. Turbo tax 2011 download A taxpayer and any trust in which the taxpayer (or his or her spouse) is a beneficiary unless the beneficiary's interest in the trust is a remote contingent interest; that is, the value of the interest computed actuarially is 5% or less of the value of the trust property. Turbo tax 2011 download An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest (a bequest for a sum of money). Turbo tax 2011 download An employer (or any person related to the employer under rules (1), (2), or (3)) and a welfare benefit fund (within the meaning of section 419(e) of the Internal Revenue Code) that is controlled directly or indirectly by the employer (or any person related to the employer). Turbo tax 2011 download Controlled entity. Turbo tax 2011 download   A person's controlled entity is either of the following. Turbo tax 2011 download A corporation in which more than 50% of the value of all outstanding stock, or a partnership in which more than 50% of the capital interest or profits interest, is directly or indirectly owned by or for that person. Turbo tax 2011 download An entity whose relationship with that person is one of the following. Turbo tax 2011 download A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. Turbo tax 2011 download Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 50%” is substituted for “at least 80%” in that definition. Turbo tax 2011 download Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. Turbo tax 2011 download Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Turbo tax 2011 download Controlled partnership transaction. Turbo tax 2011 download   A gain recognized in a controlled partnership transaction may be ordinary income. Turbo tax 2011 download The gain is ordinary income if it results from the sale or exchange of property that, in the hands of the party who receives it, is a noncapital asset such as trade accounts receivable, inventory, stock in trade, or depreciable or real property used in a trade or business. Turbo tax 2011 download   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. Turbo tax 2011 download A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Turbo tax 2011 download Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Turbo tax 2011 download Determining ownership. Turbo tax 2011 download   In the transactions under Depreciable property transaction and Controlled partnership transaction, earlier, use the following rules to determine the ownership of stock or a partnership interest. Turbo tax 2011 download Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Turbo tax 2011 download (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. Turbo tax 2011 download ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Turbo tax 2011 download Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Turbo tax 2011 download For purposes of applying (1) or (2), above, stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. Turbo tax 2011 download But stock or a partnership interest constructively owned by an individual under (2) is not treated as owned by the individual for reapplying (2) to make another person the constructive owner of that stock or partnership interest. Turbo tax 2011 download Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. Turbo tax 2011 download This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. Turbo tax 2011 download For the list of related persons, see Related persons next. Turbo tax 2011 download If a sale or exchange is between any of these related persons and involves the lump-sum sale of a number of blocks of stock or pieces of property, the gain or loss must be figured separately for each block of stock or piece of property. Turbo tax 2011 download The gain on each item is taxable. Turbo tax 2011 download The loss on any item is nondeductible. Turbo tax 2011 download Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. Turbo tax 2011 download Related persons. Turbo tax 2011 download   The following is a list of related persons. Turbo tax 2011 download Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Turbo tax 2011 download ), and lineal descendants (children, grandchildren, etc. Turbo tax 2011 download ). Turbo tax 2011 download An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Turbo tax 2011 download Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. Turbo tax 2011 download A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Turbo tax 2011 download A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Turbo tax 2011 download Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Turbo tax 2011 download A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of that person's family. Turbo tax 2011 download A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. Turbo tax 2011 download Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Turbo tax 2011 download Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Turbo tax 2011 download An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. Turbo tax 2011 download Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Turbo tax 2011 download A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Turbo tax 2011 download Partnership interests. Turbo tax 2011 download   The nondeductible loss rule does not apply to a sale or exchange of an interest in the partnership between the related persons described in (12) or (13) above. Turbo tax 2011 download Controlled groups. Turbo tax 2011 download   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. Turbo tax 2011 download   For more information, see section 267(f) of the Internal Revenue Code. Turbo tax 2011 download Ownership of stock or partnership interests. Turbo tax 2011 download   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership for a loss on a sale or exchange, the following rules apply. Turbo tax 2011 download Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Turbo tax 2011 download (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. Turbo tax 2011 download ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Turbo tax 2011 download Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Turbo tax 2011 download An individual owning (other than by applying (2)) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Turbo tax 2011 download For purposes of applying (1), (2), or (3), stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. Turbo tax 2011 download But stock or a partnership interest constructively owned by an individual under (2) or (3) is not treated as owned by the individual for reapplying either (2) or (3) to make another person the constructive owner of that stock or partnership interest. Turbo tax 2011 download Indirect transactions. Turbo tax 2011 download   You cannot deduct your loss on the sale of stock through your broker if under a prearranged plan a related person or entity buys the same stock you had owned. Turbo tax 2011 download This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. Turbo tax 2011 download Property received from a related person. Turbo tax 2011 download   If, in a purchase or exchange, you received property from a related person who had a loss that was not allowable and you later sell or exchange the property at a gain, you recognize the gain only to the extent it is more than the loss previously disallowed to the related person. Turbo tax 2011 download This rule applies only to the original transferee. Turbo tax 2011 download Example 1. Turbo tax 2011 download Your brother sold stock to you for $7,600. Turbo tax 2011 download His cost basis was $10,000. Turbo tax 2011 download His loss of $2,400 was not deductible. Turbo tax 2011 download You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). Turbo tax 2011 download Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. Turbo tax 2011 download Example 2. Turbo tax 2011 download Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. Turbo tax 2011 download Your recognized loss is only $700 ($7,600 − $6,900). Turbo tax 2011 download You cannot deduct the loss not allowed to your brother. Turbo tax 2011 download Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. Turbo tax 2011 download Sale of a Business The sale of a business usually is not a sale of one asset. Turbo tax 2011 download Instead, all the assets of the business are sold. Turbo tax 2011 download Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. Turbo tax 2011 download A business usually has many assets. Turbo tax 2011 download When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. Turbo tax 2011 download The gain or loss on each asset is figured separately. Turbo tax 2011 download The sale of capital assets results in capital gain or loss. Turbo tax 2011 download The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction (discussed in chapter 3). Turbo tax 2011 download The sale of inventory results in ordinary income or loss. Turbo tax 2011 download Partnership interests. Turbo tax 2011 download   An interest in a partnership or joint venture is treated as a capital asset when sold. Turbo tax 2011 download The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. Turbo tax 2011 download For more information, see Disposition of Partner's Interest in Publication 541. Turbo tax 2011 download Corporation interests. Turbo tax 2011 download   Your interest in a corporation is represented by stock certificates. Turbo tax 2011 download When you sell these certificates, you usually realize capital gain or loss. Turbo tax 2011 download For information on the sale of stock, see chapter 4 in Publication 550. Turbo tax 2011 download Corporate liquidations. Turbo tax 2011 download   Corporate liquidations of property generally are treated as a sale or exchange. Turbo tax 2011 download Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. Turbo tax 2011 download Gain or loss generally is recognized also on a liquidating distribution of assets as if the corporation sold the assets to the distributee at fair market value. Turbo tax 2011 download   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. Turbo tax 2011 download For more information, see section 332 of the Internal Revenue Code and the related regulations. Turbo tax 2011 download Allocation of consideration paid for a business. Turbo tax 2011 download   The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. Turbo tax 2011 download Except for assets exchanged under any nontaxable exchange rules, both the buyer and seller of a business must use the residual method (explained later) to allocate the consideration to each business asset transferred. Turbo tax 2011 download This method determines gain or loss from the transfer of each asset and how much of the consideration is for goodwill and certain other intangible property. Turbo tax 2011 download It also determines the buyer's basis in the business assets. Turbo tax 2011 download Consideration. Turbo tax 2011 download   The buyer's consideration is the cost of the assets acquired. Turbo tax 2011 download The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. Turbo tax 2011 download Residual method. Turbo tax 2011 download   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. Turbo tax 2011 download This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b) of the Internal Revenue Code. Turbo tax 2011 download Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. Turbo tax 2011 download   A group of assets constitutes a trade or business if either of the following applies. Turbo tax 2011 download Goodwill or going concern value could, under any circumstances, attach to them. Turbo tax 2011 download The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. Turbo tax 2011 download   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). Turbo tax 2011 download The consideration remaining after this reduction must be allocated among the various business assets in a certain order. Turbo tax 2011 download See Classes of assets next for the complete order. Turbo tax 2011 download Classes of assets. Turbo tax 2011 download   The following definitions are the classifications for deemed or actual asset acquisitions. Turbo tax 2011 download Allocate the consideration among the assets in the following order. Turbo tax 2011 download The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. Turbo tax 2011 download The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. Turbo tax 2011 download Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). Turbo tax 2011 download Class II assets are certificates of deposit, U. Turbo tax 2011 download S. Turbo tax 2011 download Government securities, foreign currency, and actively traded personal property, including stock and securities. Turbo tax 2011 download Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. Turbo tax 2011 download However, see section 1. Turbo tax 2011 download 338-6(b)(2)(iii) of the regulations for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. Turbo tax 2011 download Class IV assets are property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. Turbo tax 2011 download Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. Turbo tax 2011 download    Note. Turbo tax 2011 download Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. Turbo tax 2011 download Class VI assets are section 197 intangibles (other than goodwill and going concern value). Turbo tax 2011 download Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). Turbo tax 2011 download   If an asset described in one of the classifications described above can be included in more than one class, include it in the lower numbered class. Turbo tax 2011 download For example, if an asset is described in both Class II and Class IV, choose Class II. Turbo tax 2011 download Example. Turbo tax 2011 download The total paid in the sale of the assets of Company SKB is $21,000. Turbo tax 2011 download No cash or deposit accounts or similar accounts were sold. Turbo tax 2011 download The company's U. Turbo tax 2011 download S. Turbo tax 2011 download Government securities sold had a fair market value of $3,200. Turbo tax 2011 download The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. Turbo tax 2011 download Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. Turbo tax 2011 download S. Turbo tax 2011 download Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. Turbo tax 2011 download Agreement. Turbo tax 2011 download   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. Turbo tax 2011 download This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Turbo tax 2011 download Reporting requirement. Turbo tax 2011 download   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. Turbo tax 2011 download Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. Turbo tax 2011 download Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Turbo tax 2011 download See the Instructions for Form 8594. Turbo tax 2011 download Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. Turbo tax 2011 download It includes such items as patents, copyrights, and the goodwill value of a business. Turbo tax 2011 download Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss. Turbo tax 2011 download The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. Turbo tax 2011 download See chapter 8 of Publication 535, Business Expenses, for information on amortizable intangible property and chapter 1 of Publication 946, How To Depreciate Property, for information on intangible property that can and cannot be depreciated. Turbo tax 2011 download Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset. Turbo tax 2011 download The following discussions explain special rules that apply to certain dispositions of intangible property. Turbo tax 2011 download Section 197 Intangibles Section 197 intangibles are certain intangible assets acquired after August 10, 1993 (after July 25, 1991, if chosen), and held in connection with the conduct of a trade or business or an activity entered into for profit whose costs are amortized over 15 years. Turbo tax 2011 download They include the following assets. Turbo tax 2011 download Goodwill. Turbo tax 2011 download Going concern value. Turbo tax 2011 download Workforce in place. Turbo tax 2011 download Business books and records, operating systems, and other information bases. Turbo tax 2011 download Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. Turbo tax 2011 download Customer-based intangibles. Turbo tax 2011 download Supplier-based intangibles. Turbo tax 2011 download Licenses, permits, and other rights granted by a governmental unit. Turbo tax 2011 download Covenants not to compete entered into in connection with the acquisition of a business. Turbo tax 2011 download Franchises, trademarks, and trade names. Turbo tax 2011 download See chapter 8 of Publication 535 for a description of each intangible. Turbo tax 2011 download Dispositions. Turbo tax 2011 download   You cannot deduct a loss from the disposition or worthlessness of a section 197 intangible you acquired in the same transaction (or series of related transactions) as another section 197 intangible you still hold. Turbo tax 2011 download Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. Turbo tax 2011 download If you retain more than one section 197 intangible, increase each intangible's adjusted basis. Turbo tax 2011 download Figure the increase by multiplying the nondeductible loss by a fraction, the numerator (top number) of which is the retained intangible's adjusted basis on the date of the loss and the denominator (bottom number) of which is the total adjusted basis of all retained intangibles on the date of the loss. Turbo tax 2011 download   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. Turbo tax 2011 download For example, a corporation cannot deduct a loss on the sale of a section 197 intangible if, after the sale, a member of the same controlled group retains other section 197 intangibles acquired in the same transaction as the intangible sold. Turbo tax 2011 download Covenant not to compete. Turbo tax 2011 download   A covenant not to compete (or similar arrangement) that is a section 197 intangible cannot be treated as disposed of or worthless before you have disposed of your entire interest in the trade or business for which the covenant was entered into. Turbo tax 2011 download Members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity in determining whether a member has disposed of its entire interest in a trade or business. Turbo tax 2011 download Anti-churning rules. Turbo tax 2011 download   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. Turbo tax 2011 download However, these rules do not apply to part of the basis of property acquired by certain related persons if the transferor elects to do both the following. Turbo tax 2011 download Recognize gain on the transfer of the property. Turbo tax 2011 download Pay income tax on the gain at the highest tax rate. Turbo tax 2011 download   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. Turbo tax 2011 download But each partner or shareholder must pay the tax on his or her share of gain. Turbo tax 2011 download   To make the election, you, as the transferor, must attach a statement containing certain information to your income tax return for the year of the transfer. Turbo tax 2011 download You must file the tax return by the due date (including extensions). Turbo tax 2011 download You must also notify the transferee of the election in writing by the due date of the return. Turbo tax 2011 download   If you timely filed your return without making the election, you can make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). Turbo tax 2011 download Attach the statement to the amended return and write “Filed pursuant to section 301. Turbo tax 2011 download 9100-2” at the top of the statement. Turbo tax 2011 download File the amended return at the same address the original return was filed. Turbo tax 2011 download For more information about making the election, see Regulations section 1. Turbo tax 2011 download 197-2(h)(9). Turbo tax 2011 download For information about reporting the tax on your income tax return, see the Instructions for Form 4797. Turbo tax 2011 download Patents The transfer of a patent by an individual is treated as a sale or exchange of a capital asset held longer than 1 year. Turbo tax 2011 download This applies even if the payments for the patent are made periodically during the transferee's use or are contingent on the productivity, use, or disposition of the patent. Turbo tax 2011 download For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. Turbo tax 2011 download This treatment applies to your transfer of a patent if you meet all the following conditions. Turbo tax 2011 download You are the holder of the patent. Turbo tax 2011 download You transfer the patent other than by gift, inheritance, or devise. Turbo tax 2011 download You transfer all substantial rights to the patent or an undivided interest in all such rights. Turbo tax 2011 download You do not transfer the patent to a related person. Turbo tax 2011 download Holder. Turbo tax 2011 download   You are the holder of a patent if you are either of the following. Turbo tax 2011 download The individual whose effort created the patent property and who qualifies as the original and first inventor. Turbo tax 2011 download The individual who bought an interest in the patent from the inventor before the invention was tested and operated successfully under operating conditions and who is neither related to, nor the employer of, the inventor. Turbo tax 2011 download All substantial rights. Turbo tax 2011 download   All substantial rights to patent property are all rights that have value when they are transferred. Turbo tax 2011 download A security interest (such as a lien), or a reservation calling for forfeiture for nonperformance, is not treated as a substantial right for these rules and may be kept by you as the holder of the patent. Turbo tax 2011 download   All substantial rights to a patent are not transferred if any of the following apply to the transfer. Turbo tax 2011 download The rights are limited geographically within a country. Turbo tax 2011 download The rights are limited to a period less than the remaining life of the patent. Turbo tax 2011 download The rights are limited to fields of use within trades or industries and are less than all the rights that exist and have value at the time of the transfer. Turbo tax 2011 download The rights are less than all the claims or inventions covered by the patent that exist and have value at the time of the transfer. Turbo tax 2011 download Related persons. Turbo tax 2011 download   This tax treatment does not apply if the transfer is directly or indirectly between you and a related person as defined earlier in the list under Nondeductible Loss, with the following changes. Turbo tax 2011 download Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. Turbo tax 2011 download Substitute “25% or more” ownership for “more than 50%. Turbo tax 2011 download ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. Turbo tax 2011 download For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. Turbo tax 2011 download The brother-sister exception does not apply because the trust relationship is independent of family status. Turbo tax 2011 download Franchise, Trademark, or Trade Name If you transfer or renew a franchise, trademark, or trade name for a price contingent on its productivity, use, or disposition, the amount you receive generally is treated as an amount realized from the sale of a noncapital asset. Turbo tax 2011 download A franchise includes an agreement that gives one of the parties the right to distribute, sell, or provide goods, services, or facilities within a specified area. Turbo tax 2011 download Significant power, right, or continuing interest. Turbo tax 2011 download   If you keep any significant power, right, or continuing interest in the subject matter of a franchise, trademark, or trade name that you transfer or renew, the amount you receive is ordinary royalty income rather than an amount realized from a sale or exchange. Turbo tax 2011 download   A significant power, right, or continuing interest in a franchise, trademark, or trade name includes, but is not limited to, the following rights in the transferred interest. Turbo tax 2011 download A right to disapprove any assignment of the interest, or any part of it. Turbo tax 2011 download A right to end the agreement at will. Turbo tax 2011 download A right to set standards of quality for products used or sold, or for services provided, and for the equipment and facilities used to promote such products or services. Turbo tax 2011 download A right to make the recipient sell or advertise only your products or services. Turbo tax 2011 download A right to make the recipient buy most supplies and equipment from you. Turbo tax 2011 download A right to receive payments based on the productivity, use, or disposition of the transferred item of interest if those payments are a substantial part of the transfer agreement. Turbo tax 2011 download Subdivision of Land If you own a tract of land and, to sell or exchange it, you subdivide it into individual lots or parcels, the gain normally is ordinary income. Turbo tax 2011 download However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. Turbo tax 2011 download See section 1237 of the Internal Revenue Code. Turbo tax 2011 download Timber Standing timber held as investment property is a capital asset. Turbo tax 2011 download Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. Turbo tax 2011 download If you held the timber primarily for sale to customers, it is not a capital asset. Turbo tax 2011 download Gain or loss on its sale is ordinary business income or loss. Turbo tax 2011 download It is reported in the gross receipts or sales and cost of goods sold items of your return. Turbo tax 2011 download Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. Turbo tax 2011 download These sales constitute a very minor part of their farm businesses. Turbo tax 2011 download In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. Turbo tax 2011 download , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. Turbo tax 2011 download Different rules apply if you owned the timber longer than 1 year and elect to either: Treat timber cutting as a sale or exchange, or Enter into a cutting contract. Turbo tax 2011 download Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Turbo tax 2011 download This is true whether the timber is cut under contract or whether you cut it yourself. Turbo tax 2011 download Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. Turbo tax 2011 download See chapter 3. Turbo tax 2011 download Gain or loss is reported on Form 4797. Turbo tax 2011 download Christmas trees. Turbo tax 2011 download   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. Turbo tax 2011 download They qualify for both rules discussed below. Turbo tax 2011 download Election to treat cutting as a sale or exchange. Turbo tax 2011 download   Under the general rule, the cutting of timber results in no gain or loss. Turbo tax 2011 download It is not until a sale or exchange occurs that gain or loss is realized. Turbo tax 2011 download But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year the timber is cut. Turbo tax 2011 download Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. Turbo tax 2011 download Any later sale results in ordinary business income or loss. Turbo tax 2011 download See Example, later. Turbo tax 2011 download   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or for use in your trade or business. Turbo tax 2011 download Making the election. Turbo tax 2011 download   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of the gain or loss. Turbo tax 2011 download You do not have to make the election in the first year you cut timber. Turbo tax 2011 download You can make it in any year to which the election would apply. Turbo tax 2011 download If the timber is partnership property, the election is made on the partnership return. Turbo tax 2011 download This election cannot be made on an amended return. Turbo tax 2011 download   Once you have made the election, it remains in effect for all later years unless you cancel it. Turbo tax 2011 download   If you previously elected to treat the cutting of timber as a sale or exchange, you may revoke this election without the consent of the IRS. Turbo tax 2011 download The prior election (and revocation) is disregarded for purposes of making a subsequent election. Turbo tax 2011 download See Form T (Timber), Forest Activities Schedule, for more information. Turbo tax 2011 download Gain or loss. Turbo tax 2011 download   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its fair market value on the first day of your tax year in which it is cut. Turbo tax 2011 download   Your adjusted basis for depletion of cut timber is based on the number of units (feet board measure, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. Turbo tax 2011 download Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 of the Internal Revenue Code and the related regulations. Turbo tax 2011 download   Timber depletion is discussed in chapter 9 of Publication 535. Turbo tax 2011 download Example. Turbo tax 2011 download In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Turbo tax 2011 download It had an adjusted basis for depletion of $40 per MBF. Turbo tax 2011 download You are a calendar year taxpayer. Turbo tax 2011 download On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. Turbo tax 2011 download It was cut in April for sale. Turbo tax 2011 download On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Turbo tax 2011 download You report the difference between the fair market value and your adjusted basis for depletion as a gain. Turbo tax 2011 download This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as capital gain or as ordinary gain. Turbo tax 2011 download You figure your gain as follows. Turbo tax 2011 download FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000 The fair market value becomes your basis in the cut timber and a later sale of the cut timber including any by-product or tree tops will result in ordinary business income or loss. Turbo tax 2011 download Outright sales of timber. Turbo tax 2011 download   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined below). Turbo tax 2011 download However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see below). Turbo tax 2011 download Cutting contract. Turbo tax 2011 download   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Turbo tax 2011 download You are the owner of the timber. Turbo tax 2011 download You held the timber longer than 1 year before its disposal. Turbo tax 2011 download You kept an economic interest in the timber. Turbo tax 2011 download   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. Turbo tax 2011 download   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. Turbo tax 2011 download Include this amount on Form 4797 along with your other section 1231 gains or losses to figure whether it is treated as capital or ordinary gain or loss. Turbo tax 2011 download Date of disposal. Turbo tax 2011 download   The date of disposal is the date the timber is cut. Turbo tax 2011 download However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. Turbo tax 2011 download   This election applies only to figure the holding period of the timber. Turbo tax 2011 download It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Turbo tax 2011 download   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Turbo tax 2011 download The statement must identify the advance payments subject to the election and the contract under which they were made. Turbo tax 2011 download   If you timely filed your return for the year you received payment without making the election, you still can make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). Turbo tax 2011 download Attach the statement to the amended return and write “Filed pursuant to section 301. Turbo tax 2011 download 9100-2” at the top of the statement. Turbo tax 2011 download File the amended return at the same address the original return was filed. Turbo tax 2011 download Owner. Turbo tax 2011 download   The owner of timber is any person who owns an interest in it, including a sublessor and the holder of a contract to cut the timber. Turbo tax 2011 download You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. Turbo tax 2011 download Tree stumps. Turbo tax 2011 download   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. Turbo tax 2011 download Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Turbo tax 2011 download However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Turbo tax 2011 download Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Turbo tax 2011 download   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Turbo tax 2011 download Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. Turbo tax 2011 download , are capital assets except when they are held for sale by a dealer. Turbo tax 2011 download Any gain or loss from their sale or exchange generally is a capital gain or loss. Turbo tax 2011 download If you are a dealer, the amount received from the sale is ordinary business income. Turbo tax 2011 download Coal and Iron Ore You must treat the disposal of coal (including lignite) or iron ore mined in the United States as a section 1231 transaction if both the following apply to you. Turbo tax 2011 download You owned the coal or iron ore longer than 1 year before its disposal. Turbo tax 2011 download You kept an economic interest in the coal or iron ore. Turbo tax 2011 download For this rule, the date the coal or iron ore is mined is considered the date of its disposal. Turbo tax 2011 download Your gain or loss is the difference between the amount realized from disposal of the coal or iron ore and the adjusted basis you use to figure cost depletion (increased by certain expenses not allowed as deductions for the tax year). Turbo tax 2011 download This amount is included on Form 4797 along with your other section 1231 gains and losses. Turbo tax 2011 download You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. Turbo tax 2011 download If you own only an option to buy the coal in place, you do not qualify as an owner. Turbo tax 2011 download In addition, this gain or loss treatment does not apply to income realized by an owner who is a co-adventurer, partner, or principal in the mining of coal or iron ore. Turbo tax 2011 download The expenses of making and administering the contract under which the coal or iron ore was disposed of and the expenses of preserving the economic interest kept under the contract are not allowed as deductions in figuring taxable income. Turbo tax 2011 download Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. Turbo tax 2011 download If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. Turbo tax 2011 download Special rule. Turbo tax 2011 download   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. Turbo tax 2011 download A related person whose relationship to you would result in the disallowance of a loss (see Nondeductible Loss under Sales and Exchanges Between Related Persons, earlier). Turbo tax 2011 download An individual, trust, estate, partnership, association, company, or corporation owned or controlled directly or indirectly by the same interests that own or control your business. Turbo tax 2011 download Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. Turbo tax 2011 download This applies if substantially all your expected return is attributable to the time value of your net investment (like interest on a loan) and the transaction is any of the following. Turbo tax 2011 download An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). Turbo tax 2011 download A transaction in which you acquire property and, at or about the same time, you contract to sell the same or substantially identical property at a specified price. Turbo tax 2011 download Any other transaction that is marketed and sold as producing capital gain from a transaction in which substantially all of your expected return is due to the time value of your net investment. Turbo tax 2011 download For more information, see chapter 4 of Publication 550. Turbo tax 2011 download Prev  Up  Next   Home   More Online Publications
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New Tax Guide Helps People With Their 2013 Taxes

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IR-2013-102, Dec. 23, 2013

WASHINGTON — Taxpayers can get the most out of various tax benefits and get a jump on preparing their 2013 federal income tax returns by consulting a newly revised comprehensive tax guide now available on IRS.gov.

Publication 17, Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American Opportunity Tax Credit for parents and college students, and the Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers. It also features a rundown on tax changes for 2013 including information on revised tax rates and new limits on various tax benefits for some taxpayers.  This useful 292-page guide also provides thousands of interactive links to help taxpayers quickly get answers to their questions.

Publication 17 has been published annually by the IRS since the 1940s and has been available on the IRS web site since 1996. As in prior years, this publication is packed with basic tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions, and using IRAs to save for retirement.

Besides Publication 17, IRS.gov offers many other helpful resources for those doing year-end tax planning. Many 2013 forms are already posted, and updated versions of other forms, instructions and publications are being posted almost every day. Forms already available include Form 1040 and short Forms 1040A and1040EZ.

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Page Last Reviewed or Updated: 23-Dec-2013

The Turbo Tax 2011 Download

Turbo tax 2011 download Publication 521 - Main Content Table of Contents Who Can Deduct Moving ExpensesMove Related to Start of Work Distance Test Time Test Retirees or Survivors Who Move to the United States Deductible Moving ExpensesMoves to Locations in the United States Moves to Locations Outside the United States Nondeductible Expenses ReimbursementsTypes of Reimbursement Plans Tax Withholding and Estimated Tax How and When To ReportForm 3903 When To Deduct Expenses Illustrated Example Members of the Armed Forces How To Get Tax Help Who Can Deduct Moving Expenses You can deduct your moving expenses if you meet all three of the following requirements. Turbo tax 2011 download Your move is closely related to the start of work. Turbo tax 2011 download You meet the distance test. Turbo tax 2011 download You meet the time test. Turbo tax 2011 download After you have read these rules, you may want to use Figure B to help you decide if you can deduct your moving expenses. Turbo tax 2011 download Retirees, survivors, and Armed Forces members. Turbo tax 2011 download   Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. Turbo tax 2011 download These rules are discussed later in this publication. Turbo tax 2011 download Move Related to Start of Work Your move must be closely related, both in time and in place, to the start of work at your new job location. Turbo tax 2011 download Closely related in time. Turbo tax 2011 download   In most cases, you can consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. Turbo tax 2011 download It is not necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location. Turbo tax 2011 download    Figure A. Turbo tax 2011 download Illustration of Distance Test Please click here for the text description of the image. Turbo tax 2011 download Figure A   If you do not move within 1 year of the date you begin work, you ordinarily cannot deduct the expenses unless you can show that circumstances existed that prevented the move within that time. Turbo tax 2011 download Example. Turbo tax 2011 download Your family moved more than a year after you started work at a new location. Turbo tax 2011 download You delayed the move for 18 months to allow your child to complete high school. Turbo tax 2011 download You can deduct your moving expenses. Turbo tax 2011 download Closely related in place. Turbo tax 2011 download   You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. Turbo tax 2011 download If your move does not meet this requirement, you may still be able to deduct moving expenses if you can show that: You are required to live at your new home as a condition of your employment, or You will spend less time or money commuting from your new home to your new job location. Turbo tax 2011 download Home defined. Turbo tax 2011 download   Your home means your main home (residence). Turbo tax 2011 download It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. Turbo tax 2011 download It does not include other homes owned or kept up by you or members of your family. Turbo tax 2011 download It also does not include a seasonal home, such as a summer beach cottage. Turbo tax 2011 download Your former home means your home before you left for your new job location. Turbo tax 2011 download Your new home means your home within the area of your new job location. Turbo tax 2011 download Retirees or survivors. Turbo tax 2011 download   You may be able to deduct the expenses of moving to the United States or its possessions even though the move is not related to the start of work at a new job location. Turbo tax 2011 download You must have worked outside the United States or be a survivor of someone who did. Turbo tax 2011 download See Retirees or Survivors Who Move to the United States, later. Turbo tax 2011 download Distance Test Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. Turbo tax 2011 download For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. Turbo tax 2011 download You can use Worksheet 1 to see if you meet this test. Turbo tax 2011 download Worksheet 1. Turbo tax 2011 download Distance Test   Note. Turbo tax 2011 download Members of the Armed Forces may not have to meet this test. Turbo tax 2011 download See Members of the Armed Forces. Turbo tax 2011 download     1. Turbo tax 2011 download Enter the number of miles from your old home to your new workplace 1. Turbo tax 2011 download miles 2. Turbo tax 2011 download Enter the number of miles from your old home to your old workplace 2. Turbo tax 2011 download miles 3. Turbo tax 2011 download Subtract line 2 from line 1. Turbo tax 2011 download If zero or less, enter -0- 3. Turbo tax 2011 download miles 4. Turbo tax 2011 download Is line 3 at least 50 miles? □ Yes. Turbo tax 2011 download You meet this test. Turbo tax 2011 download  □ No. Turbo tax 2011 download You do not meet this test. Turbo tax 2011 download You cannot deduct your moving expenses. Turbo tax 2011 download The distance between a job location and your home is the shortest of the more commonly traveled routes between them. Turbo tax 2011 download The distance test considers only the location of your former home. Turbo tax 2011 download It does not take into account the location of your new home. Turbo tax 2011 download See Figure A, earlier. Turbo tax 2011 download Example. Turbo tax 2011 download You moved to a new home less than 50 miles from your former home because you changed main job locations. Turbo tax 2011 download Your old main job location was 3 miles from your former home. Turbo tax 2011 download Your new main job location is 60 miles from that home. Turbo tax 2011 download Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test. Turbo tax 2011 download First job or return to full-time work. Turbo tax 2011 download   If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test. Turbo tax 2011 download   If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home. Turbo tax 2011 download Armed Forces. Turbo tax 2011 download   If you are in the Armed Forces and you moved because of a permanent change of station, you do not have to meet the distance test. Turbo tax 2011 download See Members of the Armed Forces, later. Turbo tax 2011 download Main job location. Turbo tax 2011 download   Your main job location is usually the place where you spend most of your working time. Turbo tax 2011 download This could be your office, plant, store, shop, or other location. Turbo tax 2011 download If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. Turbo tax 2011 download Union members. Turbo tax 2011 download   If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall. Turbo tax 2011 download More than one job. Turbo tax 2011 download   If you have more than one job at any time, your main job location depends on the facts in each case. Turbo tax 2011 download The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. Turbo tax 2011 download    Table 1. Turbo tax 2011 download Satisfying the Time Test for Employees and Self-Employed Persons IF you are. Turbo tax 2011 download . Turbo tax 2011 download . Turbo tax 2011 download THEN you satisfy the time test by meeting the. Turbo tax 2011 download . Turbo tax 2011 download . Turbo tax 2011 download an employee 39-week test for employees. Turbo tax 2011 download self-employed 78-week test for self-employed persons. Turbo tax 2011 download both self-employed and an employee at the same time 78-week test for a self-employed person or the 39-week  test for an employee. Turbo tax 2011 download Your principal place of work  determines which test applies. Turbo tax 2011 download both self-employed and an employee, but unable to satisfy the 39-week test for employees 78-week test for self-employed persons. Turbo tax 2011 download Time Test To deduct your moving expenses, you also must meet one of the following two time tests. Turbo tax 2011 download The time test for employees. Turbo tax 2011 download The time test for self-employed persons. Turbo tax 2011 download Both of these tests are explained below. Turbo tax 2011 download See Table 1, below, for a summary of these tests. Turbo tax 2011 download You can deduct your moving expenses before you meet either of the time tests. Turbo tax 2011 download See Time Test Not Yet Met, later. Turbo tax 2011 download Time Test for Employees If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). Turbo tax 2011 download Full-time employment depends on what is usual for your type of work in your area. Turbo tax 2011 download For purposes of this test, the following four rules apply. Turbo tax 2011 download You count only your full-time work as an employee, not any work you do as a self-employed person. Turbo tax 2011 download You do not have to work for the same employer for all 39 weeks. Turbo tax 2011 download You do not have to work 39 weeks in a row. Turbo tax 2011 download You must work full time within the same general commuting area for all 39 weeks. Turbo tax 2011 download Temporary absence from work. Turbo tax 2011 download   You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. Turbo tax 2011 download You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement. Turbo tax 2011 download Seasonal work. Turbo tax 2011 download   If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. Turbo tax 2011 download For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months. Turbo tax 2011 download    Figure B. Turbo tax 2011 download Can You Deduct Expenses for a Non-Military Move Within the United States? Please click here for the text description of the image. Turbo tax 2011 download Figure B Time Test for Self-Employed Persons If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test). Turbo tax 2011 download For purposes of the time test for self-employed persons, the following three rules apply. Turbo tax 2011 download You count any full-time work you do either as an employee or as a self-employed person. Turbo tax 2011 download You do not have to work for the same employer or be self-employed in the same trade or business for the 78 weeks. Turbo tax 2011 download You must work within the same general commuting area for all 78 weeks. Turbo tax 2011 download Example. Turbo tax 2011 download You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2013. Turbo tax 2011 download You pay moving expenses in 2013 and 2014 in connection with this move. Turbo tax 2011 download On April 15, 2014, when you file your income tax return for the year 2013, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. Turbo tax 2011 download Although you have not satisfied the 78-week employment condition at this time, you can deduct your 2013 moving expenses on your 2013 income tax return as there is still sufficient time remaining before December 1, 2015, to satisfy such condition. Turbo tax 2011 download You can deduct any moving expenses you pay in 2014 on your 2014 income tax return even if you have not met the 78-week test. Turbo tax 2011 download You have until December 1, 2015, to satisfy this requirement. Turbo tax 2011 download Self-employment. Turbo tax 2011 download   You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. Turbo tax 2011 download You are not considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week. Turbo tax 2011 download Full-time work. Turbo tax 2011 download   You can count only those weeks during which you work full time as a week of work. Turbo tax 2011 download Whether you work full time during any week depends on what is usual for your type of work in your area. Turbo tax 2011 download For example, you are a self-employed dentist and maintain office hours 4 days a week. Turbo tax 2011 download You are considered to perform services full time if maintaining office hours 4 days a week is not unusual for other self-employed dentists in your area. Turbo tax 2011 download Temporary absence from work. Turbo tax 2011 download   You are considered to be self-employed on a full-time basis during any week you are temporarily absent from work because of illness, strikes, natural disasters, or similar causes. Turbo tax 2011 download Seasonal trade or business. Turbo tax 2011 download   If your trade or business is seasonal, the off-season weeks when no work is required or available may be counted as weeks during which you worked full time. Turbo tax 2011 download The off-season must be less than 6 months and you must work full time before and after the off-season. Turbo tax 2011 download Example. Turbo tax 2011 download You own and operate a motel at a beach resort. Turbo tax 2011 download The motel is closed for 5 months during the off-season. Turbo tax 2011 download You work full time as the operator of the motel before and after the off-season. Turbo tax 2011 download You are considered self-employed on a full-time basis during the weeks of the off-season. Turbo tax 2011 download   If you were both an employee and self-employed, see Table 1 earlier, for the requirements. Turbo tax 2011 download Example. Turbo tax 2011 download Justin quit his job and moved from the east coast to the west coast to begin a full-time job as a cabinet-maker for C and L Cabinet Shop. Turbo tax 2011 download He generally worked at the shop about 40 hours each week. Turbo tax 2011 download Shortly after the move, Justin also began operating a cabinet-installation business from his home for several hours each afternoon and all day on weekends. Turbo tax 2011 download Because Justin's principal place of business is the cabinet shop, he can satisfy the time test by meeting the 39-week test. Turbo tax 2011 download    If Justin is unable to satisfy the requirements of the 39-week test during the 12-month period immediately following his arrival in the general location of his new principal place of work, he can satisfy the 78-week test. Turbo tax 2011 download Joint Return If you are married, file a joint return, and both you and your spouse work full-time, either of you can satisfy the full-time work test. Turbo tax 2011 download However, you cannot add the weeks your spouse worked to the weeks you worked to satisfy that test. Turbo tax 2011 download Time Test Not Yet Met You can deduct your moving expenses on your 2013 tax return even though you have not met the time test by the date your 2013 return is due. Turbo tax 2011 download You can do this if you expect to meet the 39-week test in 2014 or the 78-week test in 2014 or 2015. Turbo tax 2011 download If you do not deduct your moving expenses on your 2013 return, and you later meet the time test, you can file an amended return for 2013 to take the deduction. Turbo tax 2011 download See When To Deduct Expenses later, for more details. Turbo tax 2011 download Failure to meet the time test. Turbo tax 2011 download    If you deduct moving expenses but do not meet the time test in 2014 or 2015, you must either: Report your moving expense deduction as other income on your Form 1040 for the year you cannot meet the test, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. Turbo tax 2011 download Example. Turbo tax 2011 download You arrive in the general area of your new job location, as an employee, on September 15, 2013. Turbo tax 2011 download You deduct your moving expenses on your 2013 return, the year of the move, even though you have not yet met the time test by the date your return is due. Turbo tax 2011 download If you do not meet the 39-week test during the 12-month period following your arrival in the general area of your new job location, you must either: Report your moving expense deduction as other income on your Form 1040 for 2014, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. Turbo tax 2011 download Exceptions to the Time Test You do not have to meet the time test if one of the following applies. Turbo tax 2011 download You are in the Armed Forces and you moved because of a permanent change of station. Turbo tax 2011 download See Members of the Armed Forces , later. Turbo tax 2011 download Your main job location was outside the United States and you moved to the United States because you retired. Turbo tax 2011 download See Retirees or Survivors Who Move to the United States, later. Turbo tax 2011 download You are the survivor of a person whose main job location at the time of death was outside the United States. Turbo tax 2011 download See Retirees or Survivors Who Move to the United States, later. Turbo tax 2011 download Your job at the new location ends because of death or disability. Turbo tax 2011 download You are transferred for your employer's benefit or laid off for a reason other than willful misconduct. Turbo tax 2011 download For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job. Turbo tax 2011 download Retirees or Survivors Who Move to the United States If you are a retiree who was working abroad or a survivor of a decedent who was working abroad and you move to the United States or one of its possessions, you do not have to meet the time test, discussed earlier. Turbo tax 2011 download However, you must meet the requirements discussed below under Retirees who were working abroad or Survivors of decedents who were working abroad. Turbo tax 2011 download If you are living in the United States, retire, and then move and remain retired, you cannot claim a moving expense deduction for that move. Turbo tax 2011 download United States defined. Turbo tax 2011 download   For this section of this publication, the term “United States” includes the possessions of the United States. Turbo tax 2011 download Retirees who were working abroad. Turbo tax 2011 download   You can deduct moving expenses for a move to a new home in the United States when you permanently retire. Turbo tax 2011 download However, both your former main job location and your former home must have been outside the United States. Turbo tax 2011 download Permanently retired. Turbo tax 2011 download   You are considered permanently retired when you cease gainful full-time employment or self-employment. Turbo tax 2011 download If, at the time you retire, you intend your retirement to be permanent, you will be considered retired even though you later return to work. Turbo tax 2011 download Your intention to retire permanently may be determined by: Your age and health, The customary retirement age for people who do similar work, Whether you receive retirement payments from a pension or retirement fund, and The length of time before you return to full-time work. Turbo tax 2011 download Decedents. Turbo tax 2011 download   Qualified deductible moving expenses are allowed on a final return (Form 1040 or 1040NR) when a taxpayer has moved and dies within the same calendar year. Turbo tax 2011 download The personal representative filing on behalf of that taxpayer should complete and attach Form 3903 to the final return. Turbo tax 2011 download   A personal representative can be an executor, administrator, or anyone who is in charge of the deceased person's property. Turbo tax 2011 download For more information, see Publication 559, Survivors, Executors, and Administrators. Turbo tax 2011 download Survivors of decedents who were working abroad. Turbo tax 2011 download   If you are the spouse or the dependent of a person whose main job location at the time of death was outside the United States, you can deduct moving expenses if the following five requirements are met. Turbo tax 2011 download The move is to a home in the United States. Turbo tax 2011 download The move begins within 6 months after the decedent's death. Turbo tax 2011 download (When a move begins is described below. Turbo tax 2011 download ) The move is from the decedent's former home. Turbo tax 2011 download The decedent's former home was outside the United States. Turbo tax 2011 download The decedent's former home was also your home. Turbo tax 2011 download When a move begins. Turbo tax 2011 download   A move begins when one of the following events occurs. Turbo tax 2011 download You contract for your household goods and personal effects to be moved to your home in the United States, but only if the move is completed within a reasonable time. Turbo tax 2011 download Your household goods and personal effects are packed and on the way to your home in the United States. Turbo tax 2011 download You leave your former home to travel to your new home in the United States. Turbo tax 2011 download Deductible Moving Expenses If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses, you can deduct the reasonable expenses of: Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and Traveling (including lodging but not meals) to your new home. Turbo tax 2011 download You cannot deduct any expenses for meals. Turbo tax 2011 download Reasonable expenses. Turbo tax 2011 download   You can deduct only those expenses that are reasonable for the circumstances of your move. Turbo tax 2011 download For example, the cost of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. Turbo tax 2011 download If during your trip to your new home, you stop over, or make side trips for sightseeing, the additional expenses for your stopover or side trips are not deductible as moving expenses. Turbo tax 2011 download Example. Turbo tax 2011 download Beth's employer transferred her from Boston, Massachusetts, to Buffalo, New York. Turbo tax 2011 download On her way to Buffalo, Beth drove into Canada to visit the Toronto Zoo. Turbo tax 2011 download Since Beth's excursion into Canada was away from the usual Boston-Buffalo route, the expenses paid or incurred for the excursion are not deductible. Turbo tax 2011 download Beth can only deduct what it would have cost to drive directly from Boston to Buffalo. Turbo tax 2011 download Likewise, Beth cannot deduct any expenses, such as the cost of a hotel room, caused by the delay for sightseeing. Turbo tax 2011 download Travel by car. Turbo tax 2011 download   If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either: Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or The standard mileage rate of 24 cents per mile. Turbo tax 2011 download Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct the parking fees and tolls you pay to move. Turbo tax 2011 download You cannot deduct any part of general repairs, general maintenance, insurance, or depreciation for your car. Turbo tax 2011 download Member of your household. Turbo tax 2011 download   You can deduct moving expenses you pay for yourself and members of your household. Turbo tax 2011 download A member of your household is anyone who has both your former and new home as his or her home. Turbo tax 2011 download It does not include a tenant or employee, unless that person is your dependent. Turbo tax 2011 download Moves to Locations in the United States If you meet the requirements under Who Can Deduct Moving Expenses, earlier, you can deduct expenses for a move to the area of a new main job location within the United States or its possessions. Turbo tax 2011 download Your move may be from one U. Turbo tax 2011 download S. Turbo tax 2011 download location to another or from a foreign country to the United States. Turbo tax 2011 download Household goods and personal effects. Turbo tax 2011 download   You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. Turbo tax 2011 download For purposes of moving expenses, the term “personal effects” includes, but is not limited to, movable personal property that the taxpayer owns and frequently uses. Turbo tax 2011 download   If you use your own car to move your things, see Travel by car, earlier. Turbo tax 2011 download   You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects. Turbo tax 2011 download   You can deduct the cost of shipping your car and your household pets to your new home. Turbo tax 2011 download   You can deduct the cost of moving your household goods and personal effects from a place other than your former home. Turbo tax 2011 download Your deduction is limited to the amount it would have cost to move them from your former home. Turbo tax 2011 download Example. Turbo tax 2011 download Paul Brown has been living and working in North Carolina for the last 4 years. Turbo tax 2011 download Because he has been renting a small apartment, he stored some furniture at his parents' home in Georgia. Turbo tax 2011 download Paul got a job in Washington, DC. Turbo tax 2011 download It cost him $900 to move the furniture from his North Carolina apartment to Washington and $3,000 to move the stored furniture from Georgia to Washington. Turbo tax 2011 download It would have cost $1,800 to ship the stored furniture from North Carolina to Washington. Turbo tax 2011 download He can deduct only $1,800 of the $3,000 he paid. Turbo tax 2011 download The amount he can deduct for moving his furniture is $2,700 ($900 + $1,800). Turbo tax 2011 download You cannot deduct the cost of moving furniture you buy on the way to your new home. Turbo tax 2011 download   Storage expenses. Turbo tax 2011 download   You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home. Turbo tax 2011 download Travel expenses. Turbo tax 2011 download   You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. Turbo tax 2011 download This includes expenses for the day you arrive. Turbo tax 2011 download    The day of arrival is the day you secure lodging at the new place of residence, even if the lodging is on a temporary basis. Turbo tax 2011 download   You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved. Turbo tax 2011 download   The members of your household do not have to travel together or at the same time. Turbo tax 2011 download However, you can only deduct expenses for one trip per person. Turbo tax 2011 download If you use your own car, see Travel by car, earlier. Turbo tax 2011 download Example. Turbo tax 2011 download   In February 2013, Josh and Robyn Black moved from Minneapolis to Washington, DC, where Josh was starting a new job. Turbo tax 2011 download Josh drove the family car to Washington, DC, a trip of 1,100 miles. Turbo tax 2011 download His expenses were $264. Turbo tax 2011 download 00 for mileage (1,100 miles x 24 cents per mile) plus $40 for tolls and $150 for lodging, for a total of $454. Turbo tax 2011 download 00. Turbo tax 2011 download One week later, Robyn flew from Minneapolis to Washington, DC. Turbo tax 2011 download Her only expense was her $400 plane ticket. Turbo tax 2011 download The Blacks' deduction is $854. Turbo tax 2011 download 00 (Josh's $454. Turbo tax 2011 download 00 + Robyn's $400). Turbo tax 2011 download Moves to Locations Outside the United States To deduct expenses for a move outside the United States, you must move to the area of a new place of work outside the United States and its possessions. Turbo tax 2011 download You must meet the requirements under Who Can Deduct Moving Expenses , earlier. Turbo tax 2011 download Deductible expenses. Turbo tax 2011 download   If your move is to a location outside the United States and its possessions, you can deduct the following expenses. Turbo tax 2011 download The cost of moving household goods and personal effects from your former home to your new home. Turbo tax 2011 download The cost of traveling (including lodging) from your former home to your new home. Turbo tax 2011 download The cost of moving household goods and personal effects to and from storage. Turbo tax 2011 download The cost of storing household goods and personal effects while you are at the new job location. Turbo tax 2011 download The first two items were explained earlier under Moves to Locations in the United States . Turbo tax 2011 download The last two items are discussed, later. Turbo tax 2011 download Moving goods and effects to and from storage. Turbo tax 2011 download   You can deduct the reasonable expenses of moving your personal effects to and from storage. Turbo tax 2011 download Storage expenses. Turbo tax 2011 download   You can deduct the reasonable expenses of storing your household goods and personal effects for all or part of the time the new job location remains your main job location. Turbo tax 2011 download Moving expenses allocable to excluded foreign income. Turbo tax 2011 download   If you live and work outside the United States, you may be able to exclude from income part or all of the income you earn in the foreign country. Turbo tax 2011 download You may also be able to claim a foreign housing exclusion or deduction. Turbo tax 2011 download If you claim the foreign earned income or foreign housing exclusion, you cannot deduct the part of your moving expenses that relates to the excluded income. Turbo tax 2011 download    Publication 54, Tax Guide for U. Turbo tax 2011 download S. Turbo tax 2011 download Citizens and Resident Aliens Abroad, explains how to figure the part of your moving expenses that relates to excluded income. Turbo tax 2011 download You can get the publication from most U. Turbo tax 2011 download S. Turbo tax 2011 download embassies and consulates, or see How To Get Tax Help at the end of this publication. Turbo tax 2011 download Nondeductible Expenses You cannot deduct the following items as moving expenses. Turbo tax 2011 download Any part of the purchase price of your new home. Turbo tax 2011 download Car tags. Turbo tax 2011 download Driver's license. Turbo tax 2011 download Expenses of buying or selling a home (including closing costs, mortgage fees, and points). Turbo tax 2011 download Expenses of entering into or breaking a lease. Turbo tax 2011 download Home improvements to help sell your home. Turbo tax 2011 download Loss on the sale of your home. Turbo tax 2011 download Losses from disposing of memberships in clubs. Turbo tax 2011 download Mortgage penalties. Turbo tax 2011 download Pre-move househunting expenses. Turbo tax 2011 download Real estate taxes. Turbo tax 2011 download Refitting of carpet and draperies. Turbo tax 2011 download Return trips to your former residence. Turbo tax 2011 download Security deposits (including any given up due to the move). Turbo tax 2011 download Storage charges except those incurred in transit and for foreign moves. Turbo tax 2011 download No double deduction. Turbo tax 2011 download   You cannot take a moving expense deduction and a business expense deduction for the same expenses. Turbo tax 2011 download You must decide if your expenses are deductible as moving expenses or as business expenses. Turbo tax 2011 download For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. Turbo tax 2011 download In most cases, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for one year or less. Turbo tax 2011 download   See Publication 463, Travel, Entertainment, Gift, and Car Expenses, for information on deducting your business expenses. Turbo tax 2011 download Reimbursements This section explains how to report a reimbursement (including advances and allowances) on your tax return. Turbo tax 2011 download It covers reimbursements for any of your moving expenses discussed in this publication. Turbo tax 2011 download It also explains the types of reimbursements on which your employer must withhold income, social security, and Medicare taxes. Turbo tax 2011 download Types of Reimbursement Plans If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan. Turbo tax 2011 download For a quick overview of how to report your reimbursement and moving expenses, see Table 2 in the section on How and When To Report, later. Turbo tax 2011 download Your employer should tell you what method of reimbursement is used and what records are required. Turbo tax 2011 download Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Turbo tax 2011 download Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Turbo tax 2011 download Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. Turbo tax 2011 download You must adequately account to your employer for these expenses within a reasonable period of time. Turbo tax 2011 download You must return any excess reimbursement or allowance within a reasonable period of time. Turbo tax 2011 download Adequate accounting. Turbo tax 2011 download   You adequately account for your moving expenses by giving your employer documentation of those expenses, such as a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it. Turbo tax 2011 download Documentation includes receipts, canceled checks, and bills. Turbo tax 2011 download Reasonable period of time. Turbo tax 2011 download   What constitutes a “reasonable period of time” depends on the facts and circumstances of your situation. Turbo tax 2011 download However, regardless of the facts and circumstances, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. Turbo tax 2011 download You receive an advance within 30 days of the time you have an expense. Turbo tax 2011 download You adequately account for your expenses within 60 days after they were paid or incurred. Turbo tax 2011 download You return any excess reimbursement within 120 days after the expense was paid or incurred. Turbo tax 2011 download You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. Turbo tax 2011 download Excess reimbursement. Turbo tax 2011 download   This includes any amount you are paid (including advances and allowances) that is more than the moving expenses that you adequately accounted for to your employer within a reasonable period of time. Turbo tax 2011 download Returning excess reimbursements. Turbo tax 2011 download   You must be required to return any excess reimbursement for your moving expenses to the person paying the reimbursement. Turbo tax 2011 download Excess reimbursement includes any amount for which you did not adequately account within a reasonable period of time. Turbo tax 2011 download For example, if you received an advance and you did not spend all the money on deductible moving expenses, or you do not have proof of all your expenses, you have an excess reimbursement. Turbo tax 2011 download You meet accountable plan rules. Turbo tax 2011 download   If for all reimbursements you meet the three rules for an accountable plan (listed earlier), your employer should not include any reimbursements of expenses in your income in box 1 of your Form W-2, Wage and Tax Statement. Turbo tax 2011 download Instead, your employer should include the reimbursements in box 12 of your Form W-2. Turbo tax 2011 download Example. Turbo tax 2011 download You lived in Boston and accepted a job in Atlanta. Turbo tax 2011 download Under an accountable plan, your employer reimbursed you for your actual traveling expenses from Boston to Atlanta and the cost of moving your furniture to Atlanta. Turbo tax 2011 download Your employer will include the reimbursement on your Form W-2, box 12, with Code P. Turbo tax 2011 download If your moving expenses are more than your reimbursement, you may be able to deduct your additional expenses (see How and When To Report, later). Turbo tax 2011 download You do not meet accountable plan rules. Turbo tax 2011 download   You may be reimbursed by your employer, but you may not meet all three rules for part of your expenses. Turbo tax 2011 download   If your deductible expenses are reimbursed under an otherwise accountable plan but you do not return, within a reasonable period, any reimbursement of expenses for which you did not adequately account, then only the amount for which you did adequately account is considered as paid under an accountable plan. Turbo tax 2011 download The remaining expenses are treated as having been reimbursed under a nonaccountable plan (discussed below). Turbo tax 2011 download Reimbursement of nondeductible expenses. Turbo tax 2011 download   You may be reimbursed by your employer for moving expenses, some of which are deductible expenses and some of which are not deductible. Turbo tax 2011 download The reimbursements you receive for the nondeductible expenses and any allowances for miscellaneous or unspecified expenses are treated as paid under a nonaccountable plan (see below) and are included in your income. Turbo tax 2011 download If you are reimbursed by your employer for the taxes you must pay (including social security and Medicare taxes) because you have received taxable moving expense reimbursements, you must pay tax on this reimbursement as well, and it is treated as paid under a nonaccountable plan. Turbo tax 2011 download Nonaccountable Plans A nonaccountable plan is a reimbursement arrangement that does not meet the three rules listed earlier under Accountable Plans. Turbo tax 2011 download In addition, the following payments will be treated as paid under a nonaccountable plan. Turbo tax 2011 download Excess reimbursements you fail to return to your employer. Turbo tax 2011 download Reimbursements of nondeductible expenses. Turbo tax 2011 download See Reimbursement of nondeductible expenses, earlier. Turbo tax 2011 download If an arrangement pays for your moving expenses by reducing your wages, salary, or other pay, the amount of the reduction will be treated as a payment made under a nonaccountable plan. Turbo tax 2011 download This is because you are entitled to receive the full amount of your pay regardless of whether you had any moving expenses. Turbo tax 2011 download If you are not sure if the moving expense reimbursement arrangement is an accountable or nonaccountable plan, ask your employer. Turbo tax 2011 download Your employer will add the amount of any reimbursement paid to you under a nonaccountable plan to your wages, salary, or other pay. Turbo tax 2011 download Your employer will report the total in box 1 of your Form W-2. Turbo tax 2011 download Example. Turbo tax 2011 download To get you to work in another city, your new employer reimburses you under an accountable plan for the $7,500 loss on the sale of your home. Turbo tax 2011 download Because this is a reimbursement of a nondeductible expense, it is treated as paid under a nonaccountable plan and must be included as income in box 1 of your Form W-2. Turbo tax 2011 download Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 Do not include in income any moving expense payment you received under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Turbo tax 2011 download These payments are made to persons displaced from their homes, businesses, or farms by federal projects. Turbo tax 2011 download Tax Withholding and Estimated Tax Your employer must withhold income, social security, and Medicare taxes from reimbursements and allowances paid to you that are included in your income. Turbo tax 2011 download See Reimbursements included in income, later. Turbo tax 2011 download Reimbursements excluded from income. Turbo tax 2011 download   Your employer should not include in your wages reimbursements paid under an accountable plan (explained earlier) for moving expenses that you: Could deduct if you had paid or incurred them, and Did not deduct in an earlier year. Turbo tax 2011 download These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements. Turbo tax 2011 download Your employer should report these reimbursements on your Form W-2, box 12, with Code P. Turbo tax 2011 download    You cannot claim a moving expense deduction for expenses covered by reimbursements excluded from income (see Accountable Plans under Types of Reimbursement Plans, earlier). Turbo tax 2011 download Expenses deducted in earlier year. Turbo tax 2011 download   If you receive a reimbursement this year for moving expenses deducted in an earlier year, and the reimbursement is not included as wages in box 1 of your Form W-2, you must include the reimbursement in income on Form 1040, line 21. Turbo tax 2011 download Your employer should show the amount of your reimbursement in box 12 of your Form W-2. Turbo tax 2011 download Reimbursements included in income. Turbo tax 2011 download   Your employer must include in your income any reimbursements made (or treated as made) under a nonaccountable plan, even though they are for deductible moving expenses. Turbo tax 2011 download See Nonaccountable Plans under Types of Reimbursement Plans, earlier. Turbo tax 2011 download Your employer also must include in your gross income as wages any reimbursements of, or payments for, nondeductible moving expenses. Turbo tax 2011 download This includes amounts your employer reimbursed you under an accountable plan (explained earlier) for meals, househunting trips, and real estate expenses. Turbo tax 2011 download It also includes reimbursements that exceed your deductible expenses and that you do not return to your employer. Turbo tax 2011 download Reimbursement for deductible and nondeductible expenses. Turbo tax 2011 download    If your employer reimburses you for both deductible and nondeductible moving expenses, your employer must determine the amount of the reimbursement that is not taxable and not subject to withholding. Turbo tax 2011 download Your employer must treat any remaining amount as taxable wages and withhold income, social security, and Medicare taxes. Turbo tax 2011 download Amount of income tax withheld. Turbo tax 2011 download   If the reimbursements or allowances you receive are taxable, the amount of income tax your employer will withhold depends on several factors. Turbo tax 2011 download It depends in part on whether income tax is withheld from your regular wages, on whether the reimbursements and allowances are added to your regular wages, and on any information you have given to your employer on Form W-4, Employee's Withholding Allowance Certificate. Turbo tax 2011 download   Your employer can treat your reimbursements as supplemental wages and not include the reimbursements and allowances in your regular wages. Turbo tax 2011 download The employer can withhold income tax on supplemental wages at a flat rate which may be different from your regular tax rate. Turbo tax 2011 download Estimated tax. Turbo tax 2011 download    If you must make estimated tax payments, you need to take into account any taxable reimbursements and deductible moving expenses in figuring your estimated tax. Turbo tax 2011 download For details about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. Turbo tax 2011 download How and When To Report This section explains how and when to report your moving expenses and any reimbursements or allowances you received for your move. Turbo tax 2011 download For a quick overview, see Table 2, later. Turbo tax 2011 download Form 3903 Use Form 3903 to figure your moving expense deduction. Turbo tax 2011 download Use a separate Form 3903 for each move for which you are deducting expenses. Turbo tax 2011 download Do not file Form 3903 if all of the following apply. Turbo tax 2011 download You moved to a location outside the United States in an earlier year. Turbo tax 2011 download You are claiming only storage fees while you were away from the United States. Turbo tax 2011 download Any amount your employer paid for the storage fees is included as wages in box 1 of your Form W-2. Turbo tax 2011 download Instead, enter the storage fees (after the reduction for the part that is allocable to excluded income) on Form 1040, line 26, and enter “Storage” on the dotted line next to the amount. Turbo tax 2011 download If you meet the special rules for members of the Armed Forces, see How to complete Form 3903 for members of the Armed Forces under Members of the Armed Forces, later. Turbo tax 2011 download Completing Form 3903. Turbo tax 2011 download   Complete Worksheet 1, earlier, or the Distance Test Worksheet in the instructions for Form 3903 to see whether you meet the distance test. Turbo tax 2011 download If so, complete lines 1 through 3 of the form using your actual expenses (except, if you use your own car, you can figure expenses based on the standard mileage rate, instead of actual amounts for gas and oil). Turbo tax 2011 download Enter on line 4 the total amount of your moving expense reimbursement that was excluded from your wages. Turbo tax 2011 download This excluded amount should be identified on Form W-2, box 12, with code P. Turbo tax 2011 download Expenses greater than reimbursement. Turbo tax 2011 download   If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. Turbo tax 2011 download This is your moving expense deduction. Turbo tax 2011 download Expenses equal to or less than reimbursement. Turbo tax 2011 download    If line 3 is equal to or less than line 4, you have no moving expense deduction. Turbo tax 2011 download Subtract line 3 from line 4 and, if the result is more than zero, include it as income on Form 1040, line 7. Turbo tax 2011 download Table 2. Turbo tax 2011 download Reporting Your Moving Expenses and Reimbursements IF your Form W-2 shows. Turbo tax 2011 download . Turbo tax 2011 download . Turbo tax 2011 download AND you have. Turbo tax 2011 download . Turbo tax 2011 download . Turbo tax 2011 download THEN. Turbo tax 2011 download . Turbo tax 2011 download . Turbo tax 2011 download your reimbursement reported only  in box 12 with code P moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses* and reimbursements. Turbo tax 2011 download your reimbursement reported only  in box 12 with code P moving expenses equal to the amount  in box 12 do not file Form 3903. Turbo tax 2011 download your reimbursement divided  between box 12 and box 1 moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses,* but only the  reimbursements reported in box 12 of  Form W-2. Turbo tax 2011 download your entire reimbursement reported  as wages in box 1 moving expenses file Form 3903 showing all allowable  expenses,* but do not show any  reimbursements. Turbo tax 2011 download no reimbursement moving expenses file Form 3903 showing all allowable  expenses. Turbo tax 2011 download * * See Deductible Moving Expenses, earlier, for allowable expenses. Turbo tax 2011 download    Where to deduct. Turbo tax 2011 download   Deduct your moving expenses on Form 1040, line 26. Turbo tax 2011 download The amount of moving expenses you can deduct is shown on Form 3903, line 5. Turbo tax 2011 download    You cannot deduct moving expenses on Form 1040EZ or Form 1040A. Turbo tax 2011 download   When To Deduct Expenses You may have a choice of when to deduct your moving expenses. Turbo tax 2011 download Expenses not reimbursed. Turbo tax 2011 download   If you were not reimbursed, deduct your moving expenses in the year you paid or incurred the expenses. Turbo tax 2011 download Example. Turbo tax 2011 download In December 2012, your employer transferred you to another city in the United States, where you still work. Turbo tax 2011 download You are single and were not reimbursed for your moving expenses. Turbo tax 2011 download In 2012, you paid for moving your furniture and deducted these expenses on your 2012 tax return. Turbo tax 2011 download In January 2013, you paid for travel to the new city. Turbo tax 2011 download You can deduct these additional expenses on your 2013 tax return. Turbo tax 2011 download Expenses reimbursed. Turbo tax 2011 download   If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. Turbo tax 2011 download If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. Turbo tax 2011 download See Choosing when to deduct, next. Turbo tax 2011 download   If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21. Turbo tax 2011 download Choosing when to deduct. Turbo tax 2011 download   If you use the cash method of accounting, which is used by most individuals, you can choose to deduct moving expenses in the year your employer reimburses you if: You paid the expenses in a year before the year of reimbursement, or You paid the expenses in the year immediately after the year of reimbursement but by the due date, including extensions, for filing your return for the reimbursement year. Turbo tax 2011 download How to make the choice. Turbo tax 2011 download   You choose to deduct moving expenses in the year you received reimbursement by taking the deduction on your return, or amended return, for that year. Turbo tax 2011 download    You cannot deduct any moving expenses for which you received a reimbursement that was not included in your income. Turbo tax 2011 download Illustrated Example Tom and Peggy Smith are married and have two children. Turbo tax 2011 download They owned a home in Detroit where Tom worked. Turbo tax 2011 download On February 8, 2013, Tom's employer told him that he would be transferred to San Diego as of April 10 that year. Turbo tax 2011 download Peggy flew to San Diego on March 1 to look for a new home. Turbo tax 2011 download She put a down payment of $25,000 on a house being built and returned to Detroit on March 4. Turbo tax 2011 download The Smiths sold their Detroit home for $1,500 less than they paid for it. Turbo tax 2011 download They contracted to have their personal effects moved to San Diego on April 3. Turbo tax 2011 download The family drove to San Diego where they found that their new home was not finished. Turbo tax 2011 download They stayed in a nearby motel until the house was ready on May 1. Turbo tax 2011 download On April 10, Tom went to work in the San Diego plant where he still works. Turbo tax 2011 download Their records for the move show: 1) Peggy's pre-move househunting  trip:       Travel and lodging   $ 449       Meals   75   $ 524 2) Down payment on San Diego  home 25,000 3) Real estate commission paid on  sale of Detroit home 3,500 4) Loss on sale of Detroit home (not  including real estate commission) 1,500 5) Amount paid for moving personal  effects (furniture, other household  goods, etc. Turbo tax 2011 download ) 8,000 6) Expenses of driving to San Diego:       Mileage (Start 14,278;  End 16,478) 2,200 miles at 24 cents a mile   $ 528       Lodging   180       Meals   320   1,028 7) Cost of temporary living  expenses in San Diego:       Motel rooms   $1,450       Meals   2,280   3,730 Total $43,282   Tom was reimbursed $10,907 under an accountable plan. Turbo tax 2011 download His employer gave him the following breakdown of the reimbursement that was allowed under the employer's plan. Turbo tax 2011 download Moving personal effects   $6,800 Travel (and lodging) to San Diego   708 Travel (and lodging) for househunting trip   449 Lodging for temporary quarters   1,450 Loss on sale of home   1,500 Total reimbursement   $10,907 The employer included this reimbursement on Tom's Form W-2 for the year. Turbo tax 2011 download The reimbursement of allowable expenses, $7,508 for moving household goods and travel to San Diego, was included in box 12 of Form W-2. Turbo tax 2011 download His employer identified this amount with code P. Turbo tax 2011 download The employer included the balance, $3,399 reimbursement of nonallowable expenses, in box 1 of Form W-2 with Tom's other wages. Turbo tax 2011 download Tom must include this amount on Form 1040, line 7. Turbo tax 2011 download The employer withholds taxes from the $3,399, as discussed under Reimbursement for deductible and nondeductible expenses under Tax Withholding and Estimated Tax, earlier. Turbo tax 2011 download Also, Tom's employer could have given him a separate Form W-2 for his moving expense reimbursement. Turbo tax 2011 download To figure his tax deduction for moving expenses, Tom enters the following amounts on Form 3903. Turbo tax 2011 download Item 5 — moving personal effects (line 1)   $8,000 Item 6 — driving to San Diego ($528 + $180)  (line 2)   708 Total tax deductible moving expenses (line 3)   $8,708 Minus: Reimbursement included in box 12  of Form W-2 (line 4)   7,508 Tax deduction for moving expenses (line 5)   $1,200   Tom's Form 3903 is shown, later. Turbo tax 2011 download He also enters his deduction, $1,200, on Form 1040, line 26. Turbo tax 2011 download Nondeductible expenses. Turbo tax 2011 download   Of the $43,282 expenses that Tom and Peggy incurred, the following items totaling $34,574 ($43,282 – $8,708) cannot be deducted. Turbo tax 2011 download Item 1 — pre-move househunting expenses of $524. Turbo tax 2011 download Item 2 — the $25,000 down payment on the San Diego home. Turbo tax 2011 download If any part of it were for payment of deductible taxes or interest on the mortgage on the house, that part would be deductible as an itemized deduction. Turbo tax 2011 download Item 3 — the $3,500 real estate commission paid on the sale of the Detroit home. Turbo tax 2011 download The commission is used to figure the gain or loss on the sale. Turbo tax 2011 download Item 4 — the $1,500 loss on the sale of the Detroit home. Turbo tax 2011 download Item 6 — the $320 expense for meals while driving to San Diego. Turbo tax 2011 download (However, the lodging and car expenses are deductible. Turbo tax 2011 download ) Item 7 — temporary living expenses of $3,730. Turbo tax 2011 download    This image is too large to be displayed in the current screen. Turbo tax 2011 download Please click the link to view the image. Turbo tax 2011 download 2012 Form 3903 Moving Expenses Members of the Armed Forces If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet the distance and time tests, discussed earlier. Turbo tax 2011 download You can deduct your unreimbursed moving expenses. Turbo tax 2011 download A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. Turbo tax 2011 download The move must occur within one year of ending your active duty or within the period allowed under the Joint Travel Regulations. Turbo tax 2011 download Spouse and dependents. Turbo tax 2011 download   If a member of the Armed Forces dies, is imprisoned, or deserts, a permanent change of station for the spouse or dependent includes a move to: The place of enlistment, The member's, spouse's, or dependent's home of record, or A nearer point in the United States. Turbo tax 2011 download   If the military moves you, your spouse, and dependents, to or from separate locations, the moves are treated as a single move to your new main job location. Turbo tax 2011 download Services or reimbursements provided by government. Turbo tax 2011 download   Do not include in income the value of moving and storage services provided by the government because of a permanent change of station. Turbo tax 2011 download In general, if the total reimbursements or allowances you receive from the government because of the move are more than your actual moving expenses, the government must include the excess in your wages on Form W-2. Turbo tax 2011 download However, the excess portion of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance is not included in income and should not be included in box 1 of Form W-2. Turbo tax 2011 download   If your reimbursements or allowances are less than your actual moving expenses, do not include the reimbursements or allowances in income. Turbo tax 2011 download You can deduct the expenses that are more than your reimbursements. Turbo tax 2011 download See Deductible Moving Expenses, earlier. Turbo tax 2011 download How to complete Form 3903 for members of the Armed Forces. Turbo tax 2011 download    Take the following steps. Turbo tax 2011 download Complete lines 1 through 3 of the form, using your actual expenses. Turbo tax 2011 download Do not include any expenses for moving services provided by the government. Turbo tax 2011 download Also, do not include any expenses that were reimbursed by an allowance you do not have to include in your income. Turbo tax 2011 download Enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2. Turbo tax 2011 download Do not include the value of moving or storage services provided by the government. Turbo tax 2011 download Also, do not include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance. Turbo tax 2011 download Complete line 5. Turbo tax 2011 download If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. Turbo tax 2011 download This is your moving expense deduction. Turbo tax 2011 download If line 3 is equal to or less than line 4, you do not have a moving expense deduction. Turbo tax 2011 download Subtract line 3 from line 4 and, if the result is more than zero, enter it on Form 1040, line 7. Turbo tax 2011 download If the military moves you, your spouse and dependents, to or from different locations, treat these moves as a single move. Turbo tax 2011 download    Do not deduct any expenses for moving or storage services provided by the government. Turbo tax 2011 download How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. Turbo tax 2011 download 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. Turbo tax 2011 download Free help with your tax return. Turbo tax 2011 download   Free help in preparing your return is available nationwide from IRS-certified volunteers. 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