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Turbotax Military Discount 2011

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Turbotax Military Discount 2011

Turbotax military discount 2011 36. Turbotax military discount 2011   Earned Income Credit (EIC) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. Turbotax military discount 2011 Rules for EveryoneRule 1. Turbotax military discount 2011 Your AGI Must Be Less Than: Rule 2. Turbotax military discount 2011 You Must Have a Valid Social Security Number (SSN) Rule 3. Turbotax military discount 2011 Your Filing Status Cannot Be Married Filing Separately Rule 4. Turbotax military discount 2011 You Must Be a U. Turbotax military discount 2011 S. Turbotax military discount 2011 Citizen or Resident Alien All Year Rule 5. Turbotax military discount 2011 You Cannot File Form 2555 or Form 2555-EZ Rule 6. Turbotax military discount 2011 Your Investment Income Must Be $3,300 or Less Rule 7. Turbotax military discount 2011 You Must Have Earned Income Part B. Turbotax military discount 2011 Rules If You Have a Qualifying ChildRule 8. Turbotax military discount 2011 Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. Turbotax military discount 2011 Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. Turbotax military discount 2011 You Cannot Be a Qualifying Child of Another Taxpayer Part C. Turbotax military discount 2011 Rules If You Do Not Have a Qualifying ChildRule 11. Turbotax military discount 2011 You Must Be at Least Age 25 but Under Age 65 Rule 12. Turbotax military discount 2011 You Cannot Be the Dependent of Another Person Rule 13. Turbotax military discount 2011 You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. Turbotax military discount 2011 You Must Have Lived in the United States More Than Half of the Year Part D. Turbotax military discount 2011 Figuring and Claiming the EICRule 15. Turbotax military discount 2011 Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. Turbotax military discount 2011 John and Janet Smith (Form 1040A) Example 2. Turbotax military discount 2011 Kelly Green (Form 1040EZ) What's New Earned income amount is more. Turbotax military discount 2011  The maximum amount of income you can earn and still get the credit has increased. Turbotax military discount 2011 You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Turbotax military discount 2011 Your adjusted gross income also must be less than the amount in the above list that applies to you. Turbotax military discount 2011 For details, see Rules 1 and 15. Turbotax military discount 2011 Investment income amount is more. Turbotax military discount 2011  The maximum amount of investment income you can have and still get the credit has increased to $3,300. Turbotax military discount 2011 See Rule 6. Turbotax military discount 2011 Reminders Increased EIC on certain joint returns. Turbotax military discount 2011  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Turbotax military discount 2011 As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Turbotax military discount 2011 When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Turbotax military discount 2011 Online help. Turbotax military discount 2011  You can use the EITC Assistant at www. Turbotax military discount 2011 irs. Turbotax military discount 2011 gov/eitc to find out if you are eligible for the credit. Turbotax military discount 2011 The EITC Assistant is available in English and Spanish. Turbotax military discount 2011 EIC questioned by IRS. Turbotax military discount 2011  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Turbotax military discount 2011 We will tell you what documents to send us. Turbotax military discount 2011 These may include: birth certificates, school records, medical records, etc. Turbotax military discount 2011 The process of establishing your eligibility will delay your refund. Turbotax military discount 2011 Introduction The earned income credit (EIC) is a tax credit for certain people who work and have less than $51,567 of earned income. Turbotax military discount 2011 A tax credit usually means more money in your pocket. Turbotax military discount 2011 It reduces the amount of tax you owe. Turbotax military discount 2011 The EIC may also give you a refund. Turbotax military discount 2011 How do you get the earned income credit?   To claim the EIC, you must: Qualify by meeting certain rules, and File a tax return, even if you: Do not owe any tax, Did not earn enough money to file a return, or Did not have income taxes withheld from your pay. Turbotax military discount 2011 When you complete your return, you can figure your EIC by using a worksheet in the instructions for Form 1040, Form 1040A, or Form 1040EZ. Turbotax military discount 2011 Or, if you prefer, you can let the IRS figure the credit for you. Turbotax military discount 2011 How will this chapter help you?   This chapter will explain the following. Turbotax military discount 2011 The rules you must meet to qualify for the EIC. Turbotax military discount 2011 How to figure the EIC. Turbotax military discount 2011 Useful Items - You may want to see: Publication 596 Earned Income Credit (EIC) Form (and Instructions) Schedule EIC Earned Income Credit (Qualifying Child Information) 8862 Information To Claim Earned Income Credit After Disallowance Do You Qualify for the Credit? To qualify to claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone . Turbotax military discount 2011 Then you must meet the rules in Part B, Rules If You Have a Qualifying Child , or Part C, Rules If You Do Not Have a Qualifying Child . Turbotax military discount 2011 There is one final rule you must meet in Part D, Figuring and Claiming the EIC . Turbotax military discount 2011 You qualify for the credit if you meet all the rules in each part that applies to you. Turbotax military discount 2011 If you have a qualifying child, the rules in Parts A, B, and D apply to you. Turbotax military discount 2011 If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. Turbotax military discount 2011 Table 36-1, Earned Income Credit in a Nutshell. Turbotax military discount 2011   Use Table 36–1 as a guide to Parts A, B, C, and D. Turbotax military discount 2011 The table is a summary of all the rules in each part. Turbotax military discount 2011 Do you have a qualifying child?   You have a qualifying child only if you have a child who meets the four tests described in Rule 8 and illustrated in Figure 36–1. Turbotax military discount 2011 If Improper Claim Made in Prior Year If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. Turbotax military discount 2011 You must also qualify to claim the EIC by meeting all the rules described in this chapter. Turbotax military discount 2011 However, if your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. Turbotax military discount 2011 For example, if your arithmetic is incorrect, the IRS can correct it. Turbotax military discount 2011 If you do not provide a correct social security number, the IRS can deny the EIC. Turbotax military discount 2011 These kinds of errors are called math or clerical errors. Turbotax military discount 2011 If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. Turbotax military discount 2011 If your error was due to fraud, then you cannot claim the EIC for the next 10 years. Turbotax military discount 2011 More information. Turbotax military discount 2011   See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862. Turbotax military discount 2011 Part A. Turbotax military discount 2011 Rules for Everyone This part of the chapter discusses Rules 1 through 7. Turbotax military discount 2011 You must meet all seven rules to qualify for the earned income credit. Turbotax military discount 2011 If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the chapter. Turbotax military discount 2011 If you meet all seven rules in this part, then read either Part B or Part C (whichever applies) for more rules you must meet. Turbotax military discount 2011 Rule 1. Turbotax military discount 2011 Your AGI Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Turbotax military discount 2011 Adjusted gross income (AGI). Turbotax military discount 2011   AGI is the amount on line 38 (Form 1040), line 22 (Form 1040A), or line 4 (Form 1040EZ). Turbotax military discount 2011 If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Turbotax military discount 2011 Example. Turbotax military discount 2011 Your AGI is $38,550, you are single, and you have one qualifying child. Turbotax military discount 2011 You cannot claim the EIC because your AGI is not less than $37,870. Turbotax military discount 2011 However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. Turbotax military discount 2011 Community property. Turbotax military discount 2011   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. Turbotax military discount 2011 This is different from the community property rules that apply under Rule 7 . Turbotax military discount 2011 Rule 2. Turbotax military discount 2011 You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). Turbotax military discount 2011 Any qualifying child listed on Schedule EIC also must have a valid SSN. Turbotax military discount 2011 (See Rule 8 if you have a qualifying child. Turbotax military discount 2011 ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. Turbotax military discount 2011 An example of a federally funded benefit is Medicaid. Turbotax military discount 2011 If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. Turbotax military discount 2011 S. Turbotax military discount 2011 citizen or permanent resident, ask the SSA for a new social security card without the legend. Turbotax military discount 2011 U. Turbotax military discount 2011 S. Turbotax military discount 2011 citizen. Turbotax military discount 2011   If you were a U. Turbotax military discount 2011 S. Turbotax military discount 2011 citizen when you received your SSN, you have a valid SSN. Turbotax military discount 2011 Valid for work only with INS or DHS authorization. Turbotax military discount 2011   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. Turbotax military discount 2011 SSN missing or incorrect. Turbotax military discount 2011   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Turbotax military discount 2011 Other taxpayer identification number. Turbotax military discount 2011   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). Turbotax military discount 2011 ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Turbotax military discount 2011 No SSN. Turbotax military discount 2011   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax military discount 2011 You cannot claim the EIC. Turbotax military discount 2011 Getting an SSN. Turbotax military discount 2011   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5, Application for a Social Security Card, with the SSA. Turbotax military discount 2011 You can get Form SS-5 online at www. Turbotax military discount 2011 socialsecurity. Turbotax military discount 2011 gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Turbotax military discount 2011 Filing deadline approaching and still no SSN. Turbotax military discount 2011   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Turbotax military discount 2011 Request an automatic 6-month extension of time to file your return. Turbotax military discount 2011 You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Turbotax military discount 2011 S. Turbotax military discount 2011 Individual Income Tax Return. Turbotax military discount 2011 For more information, see chapter 1 . Turbotax military discount 2011 File the return on time without claiming the EIC. Turbotax military discount 2011 After receiving the SSN, file an amended return (Form 1040X, Amended U. Turbotax military discount 2011 S. Turbotax military discount 2011 Individual Income Tax Return) claiming the EIC. Turbotax military discount 2011 Attach a filled-in Schedule EIC if you have a qualifying child. Turbotax military discount 2011 Table 36-1. Turbotax military discount 2011 Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Turbotax military discount 2011 Second, you must meet all the rules in one of these columns, whichever applies. Turbotax military discount 2011 Third, you must meet the rule in this column. Turbotax military discount 2011 Part A. Turbotax military discount 2011  Rules for Everyone Part B. Turbotax military discount 2011  Rules If You Have a Qualifying Child Part C. Turbotax military discount 2011  Rules If You Do Not Have a Qualifying Child Part D. Turbotax military discount 2011  Figuring and Claiming the EIC 1. Turbotax military discount 2011 Your adjusted gross income (AGI) must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Turbotax military discount 2011 2. Turbotax military discount 2011 You must have a valid social security number. Turbotax military discount 2011  3. Turbotax military discount 2011 Your filing status cannot be “Married filing separately. Turbotax military discount 2011 ” 4. Turbotax military discount 2011 You must be a U. Turbotax military discount 2011 S. Turbotax military discount 2011 citizen or resident alien all year. Turbotax military discount 2011  5. Turbotax military discount 2011 You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Turbotax military discount 2011  6. Turbotax military discount 2011 Your investment income must be $3,300 or less. Turbotax military discount 2011  7. Turbotax military discount 2011 You must have earned income. Turbotax military discount 2011 8. Turbotax military discount 2011 Your child must meet the relationship, age, residency, and joint return tests. Turbotax military discount 2011  9. Turbotax military discount 2011 Your qualifying child cannot be used by more than one person to claim the EIC. Turbotax military discount 2011  10. Turbotax military discount 2011 You cannot be a qualifying child of another person. Turbotax military discount 2011 11. Turbotax military discount 2011 You must be at least age 25 but under age 65. Turbotax military discount 2011  12. Turbotax military discount 2011 You cannot be the dependent of another person. Turbotax military discount 2011  13. Turbotax military discount 2011 You cannot be a qualifying child of another person. Turbotax military discount 2011  14. Turbotax military discount 2011 You must have lived in the United States more than half of the year. Turbotax military discount 2011 15. Turbotax military discount 2011 Your earned income must be less than: • $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,  • $43,038 ($48,378 for married filing jointly) if you have two qualifying children,  • $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or   • $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Turbotax military discount 2011 Rule 3. Turbotax military discount 2011 Your Filing Status Cannot Be Married Filing Separately If you are married, you usually must file a joint return to claim the EIC. Turbotax military discount 2011 Your filing status cannot be “Married filing separately. Turbotax military discount 2011 ” Spouse did not live with you. Turbotax military discount 2011   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. Turbotax military discount 2011 In that case, you may be able to claim the EIC. Turbotax military discount 2011 For detailed information about filing as head of household, see chapter 2 . Turbotax military discount 2011 Rule 4. Turbotax military discount 2011 You Must Be a U. Turbotax military discount 2011 S. Turbotax military discount 2011 Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. Turbotax military discount 2011 You can use that filing status only if one spouse is a U. Turbotax military discount 2011 S. Turbotax military discount 2011 citizen or resident alien and you choose to treat the nonresident spouse as a U. Turbotax military discount 2011 S. Turbotax military discount 2011 resident. Turbotax military discount 2011 If you make this choice, you and your spouse are taxed on your worldwide income. Turbotax military discount 2011 If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). Turbotax military discount 2011 If you need more information on making this choice, get Publication 519, U. Turbotax military discount 2011 S. Turbotax military discount 2011 Tax Guide for Aliens. Turbotax military discount 2011 Rule 5. Turbotax military discount 2011 You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Turbotax military discount 2011 You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Turbotax military discount 2011 U. Turbotax military discount 2011 S. Turbotax military discount 2011 possessions are not foreign countries. Turbotax military discount 2011 See Publication 54, Tax Guide for U. Turbotax military discount 2011 S. Turbotax military discount 2011 Citizens and Resident Aliens Abroad, for more detailed information. Turbotax military discount 2011 Rule 6. Turbotax military discount 2011 Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. Turbotax military discount 2011 If your investment income is more than $3,300, you cannot claim the credit. Turbotax military discount 2011 For most people, investment income is the total of the following amounts. Turbotax military discount 2011 Taxable interest (line 8a of Form 1040 or 1040A). Turbotax military discount 2011 Tax-exempt interest (line 8b of Form 1040 or 1040A). Turbotax military discount 2011 Dividend income (line 9a of Form 1040 or 1040A). Turbotax military discount 2011 Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). Turbotax military discount 2011 If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Turbotax military discount 2011 However, see Rule 6 in chapter 1 of Publication 596 if: You are filing Schedule E (Form 1040), Form 4797, or Form 8814, or You are reporting income from the rental of personal property on Form 1040, line 21. Turbotax military discount 2011 Rule 7. Turbotax military discount 2011 You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Turbotax military discount 2011 If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Turbotax military discount 2011 If you are an employee, earned income includes all the taxable income you get from your employer. Turbotax military discount 2011 If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the instructions for Form 1040. Turbotax military discount 2011 Earned Income Earned income includes all of the following types of income. Turbotax military discount 2011 Wages, salaries, tips, and other taxable employee pay. Turbotax military discount 2011 Employee pay is earned income only if it is taxable. Turbotax military discount 2011 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Turbotax military discount 2011 But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below. Turbotax military discount 2011 Net earnings from self-employment. Turbotax military discount 2011 Gross income received as a statutory employee. Turbotax military discount 2011 Wages, salaries, and tips. Turbotax military discount 2011   Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Turbotax military discount 2011 You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Turbotax military discount 2011 Nontaxable combat pay election. Turbotax military discount 2011   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Turbotax military discount 2011 Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Turbotax military discount 2011 Figure the credit with and without your nontaxable combat pay before making the election. Turbotax military discount 2011   If you make the election, you must include in earned income all nontaxable combat pay you received. Turbotax military discount 2011 If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Turbotax military discount 2011 In other words, if one of you makes the election, the other one can also make it but does not have to. Turbotax military discount 2011   The amount of your nontaxable combat pay should be shown in box 12 of your Form W-2 with code “Q. Turbotax military discount 2011 ” Self-employed persons and statutory employees. Turbotax military discount 2011   If you are self-employed or received income as a statutory employee, you must use the Form 1040 instructions to see if you qualify to get the EIC. Turbotax military discount 2011 Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Turbotax military discount 2011 Each approved form exempts certain income from social security taxes. Turbotax military discount 2011 Each form is discussed here in terms of what is or is not earned income for the EIC. Turbotax military discount 2011 Form 4361. Turbotax military discount 2011   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Turbotax military discount 2011 This includes wages, salaries, tips, and other taxable employee compensation. Turbotax military discount 2011 A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Turbotax military discount 2011 Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Turbotax military discount 2011 Examples include fees for performing marriages and honoraria for delivering speeches. Turbotax military discount 2011 Form 4029. Turbotax military discount 2011   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Turbotax military discount 2011 However, amounts you received as a self-employed individual do not count as earned income. Turbotax military discount 2011 Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Turbotax military discount 2011 Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Turbotax military discount 2011 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Turbotax military discount 2011 You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Turbotax military discount 2011 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Turbotax military discount 2011 Report taxable pension payments on Form 1040, lines 16a and 16b (or Form 1040A, lines 12a and 12b). Turbotax military discount 2011 Disability insurance payments. Turbotax military discount 2011   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Turbotax military discount 2011 It does not matter whether you have reached minimum retirement age. Turbotax military discount 2011 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Turbotax military discount 2011 ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Turbotax military discount 2011 Do not include any of these items in your earned income. Turbotax military discount 2011 Earnings while an inmate. Turbotax military discount 2011   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Turbotax military discount 2011 This includes amounts for work performed while in a work release program or while in a halfway house. Turbotax military discount 2011 Workfare payments. Turbotax military discount 2011   Nontaxable workfare payments are not earned income for the EIC. Turbotax military discount 2011 These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if private sector employment is not available, or (2) community service program activities. Turbotax military discount 2011 Community property. Turbotax military discount 2011   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3 ), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. Turbotax military discount 2011 That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Turbotax military discount 2011 Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Turbotax military discount 2011 Nevada, Washington, and California domestic partners. Turbotax military discount 2011   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Turbotax military discount 2011 Your earned income for the EIC does not include any amount earned by your partner. Turbotax military discount 2011 Your earned income includes the entire amount you earned. Turbotax military discount 2011 For details, see Publication 555. Turbotax military discount 2011 Conservation Reserve Program (CRP) payments. Turbotax military discount 2011   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. Turbotax military discount 2011 Nontaxable military pay. Turbotax military discount 2011   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Turbotax military discount 2011 Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Turbotax military discount 2011 See Publication 3, Armed Forces' Tax Guide, for more information. Turbotax military discount 2011    Combat pay. Turbotax military discount 2011 You can elect to include your nontaxable combat pay in earned income for the EIC. Turbotax military discount 2011 See Nontaxable combat pay election, earlier. Turbotax military discount 2011 Part B. Turbotax military discount 2011 Rules If You Have a Qualifying Child If you have met all of the rules in Part A , read Part B to see if you have a qualifying child. Turbotax military discount 2011 Part B discusses Rules 8 through 10. Turbotax military discount 2011 You must meet all three of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit with a qualifying child. Turbotax military discount 2011 You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Turbotax military discount 2011 (You cannot file Form 1040EZ. Turbotax military discount 2011 ) You also must complete Schedule EIC and attach it to your return. Turbotax military discount 2011 If you meet all the rules in Part A and this part, read Part D to find out what to do next. Turbotax military discount 2011 If you do not meet Rule 8, you do not have a qualifying child. Turbotax military discount 2011 Read Part C to find out if you can get the earned income credit without a qualifying child. Turbotax military discount 2011 Rule 8. Turbotax military discount 2011 Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Turbotax military discount 2011 The four tests are: Relationship, Age, Residency, and Joint return. Turbotax military discount 2011 The four tests are illustrated in Figure 36–1. Turbotax military discount 2011 The paragraphs that follow contain more information about each test. Turbotax military discount 2011 Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). Turbotax military discount 2011 The following definitions clarify the relationship test. Turbotax military discount 2011 Adopted child. Turbotax military discount 2011   An adopted child is always treated as your own child. Turbotax military discount 2011 The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Turbotax military discount 2011 Foster child. Turbotax military discount 2011   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction. Turbotax military discount 2011 An authorized placement agency includes a state or local government agency. Turbotax military discount 2011 It also includes a tax-exempt organization licensed by a state. Turbotax military discount 2011 In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Turbotax military discount 2011 Example. Turbotax military discount 2011 Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. Turbotax military discount 2011 Debbie is your foster child. Turbotax military discount 2011 Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during 2013, regardless of age. Turbotax military discount 2011    The following examples and definitions clarify the age test. Turbotax military discount 2011 Example 1—child not under age 19. Turbotax military discount 2011 Your son turned 19 on December 10. Turbotax military discount 2011 Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. Turbotax military discount 2011 Example 2—child not younger than you or your spouse. Turbotax military discount 2011 Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Turbotax military discount 2011 He is not disabled. Turbotax military discount 2011 Both you and your spouse are 21 years old and you file a joint return. Turbotax military discount 2011 Your brother is not your qualifying child because he is not younger than you or your spouse. Turbotax military discount 2011 Example 3—child younger than your spouse but not younger than you. Turbotax military discount 2011 The facts are the same as in Example 2 except that your spouse is 25 years old. Turbotax military discount 2011 Because your brother is younger than your spouse, he is your qualifying child even though he is not younger than you. Turbotax military discount 2011 Student defined. Turbotax military discount 2011   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. Turbotax military discount 2011 The 5 calendar months need not be consecutive. Turbotax military discount 2011   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. Turbotax military discount 2011 School defined. Turbotax military discount 2011   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Turbotax military discount 2011 However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Turbotax military discount 2011 Vocational high school students. Turbotax military discount 2011   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. Turbotax military discount 2011 Permanently and totally disabled. Turbotax military discount 2011   Your child is permanently and totally disabled if both of the following apply. Turbotax military discount 2011 He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Turbotax military discount 2011 A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Turbotax military discount 2011 Residency Test Your child must have lived with you in the United States for more than half of 2013. Turbotax military discount 2011 The following definitions clarify the residency test. Turbotax military discount 2011 United States. Turbotax military discount 2011   This means the 50 states and the District of Columbia. Turbotax military discount 2011 It does not include Puerto Rico or U. Turbotax military discount 2011 S. Turbotax military discount 2011 possessions such as Guam. Turbotax military discount 2011 Homeless shelter. Turbotax military discount 2011   Your home can be any location where you regularly live. Turbotax military discount 2011 You do not need a traditional home. Turbotax military discount 2011 For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. Turbotax military discount 2011 Military personnel stationed outside the United States. Turbotax military discount 2011    U. Turbotax military discount 2011 S. Turbotax military discount 2011 military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Turbotax military discount 2011 Figure 36-1. Turbotax military discount 2011 Tests for Qualifying Child Please click here for the text description of the image. Turbotax military discount 2011 Qualifying child Extended active duty. Turbotax military discount 2011   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Turbotax military discount 2011 Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Turbotax military discount 2011 Birth or death of a child. Turbotax military discount 2011   A child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. Turbotax military discount 2011 Temporary absences. Turbotax military discount 2011   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. Turbotax military discount 2011 Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Turbotax military discount 2011 Kidnapped child. Turbotax military discount 2011    A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. Turbotax military discount 2011 The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or your child's family. Turbotax military discount 2011 This treatment applies for all years until the child is returned. Turbotax military discount 2011 However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. Turbotax military discount 2011   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Turbotax military discount 2011 Joint Return Test To meet this test, the child cannot file a joint return for the year. Turbotax military discount 2011 Exception. Turbotax military discount 2011   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 Example 1—child files joint return. Turbotax military discount 2011 You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Turbotax military discount 2011 He earned $25,000 for the year. Turbotax military discount 2011 The couple files a joint return. Turbotax military discount 2011 Because your daughter and her husband filed a joint return, she is not your qualifying child. Turbotax military discount 2011 Example 2—child files joint return only to claim a refund of withheld tax. Turbotax military discount 2011 Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Turbotax military discount 2011 They do not have a child. Turbotax military discount 2011 Neither is required to file a tax return. Turbotax military discount 2011 Taxes were taken out of their pay, so they filed a joint return only to get a refund of the withheld taxes. Turbotax military discount 2011 The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Turbotax military discount 2011 Example 3—child files joint return to claim American opportunity credit. Turbotax military discount 2011 The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Turbotax military discount 2011 He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Turbotax military discount 2011 Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 The exception to the joint return test does not apply, so your son is not your qualifying child. Turbotax military discount 2011 Married child. Turbotax military discount 2011   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) , described later. Turbotax military discount 2011 Social security number. Turbotax military discount 2011   The qualifying child must have a valid social security number (SSN) unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. Turbotax military discount 2011 You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), which is issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Turbotax military discount 2011   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. Turbotax military discount 2011 For more information about SSNs, see Rule 2 . Turbotax military discount 2011 Rule 9. Turbotax military discount 2011 Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. Turbotax military discount 2011 However, only one of these persons can actually treat the child as a qualifying child. Turbotax military discount 2011 Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). Turbotax military discount 2011 The exemption for the child. Turbotax military discount 2011 The child tax credit. Turbotax military discount 2011 Head of household filing status. Turbotax military discount 2011 The credit for child and dependent care expenses. Turbotax military discount 2011 The exclusion for dependent care benefits. Turbotax military discount 2011 The EIC. Turbotax military discount 2011 The other person cannot take any of these benefits based on this qualifying child. Turbotax military discount 2011 In other words, you and the other person cannot agree to divide these tax benefits between you. Turbotax military discount 2011 The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Turbotax military discount 2011 The tiebreaker rules explained next explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Turbotax military discount 2011 However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Turbotax military discount 2011 Tiebreaker rules. Turbotax military discount 2011   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. Turbotax military discount 2011 If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Turbotax military discount 2011 If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. Turbotax military discount 2011 If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. Turbotax military discount 2011 If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. Turbotax military discount 2011 If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. Turbotax military discount 2011 If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. Turbotax military discount 2011 If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. Turbotax military discount 2011 See Example 8 . Turbotax military discount 2011   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. Turbotax military discount 2011 See Examples 1 through 13 . Turbotax military discount 2011   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in Part C for people who do not have a qualifying child. Turbotax military discount 2011 If the other person cannot claim the EIC. Turbotax military discount 2011   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. Turbotax military discount 2011 See Examples 6 and 7 . Turbotax military discount 2011 But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier. Turbotax military discount 2011 Examples. Turbotax military discount 2011 The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Turbotax military discount 2011 Example 1. Turbotax military discount 2011 You and your 2-year-old son Jimmy lived with your mother all year. Turbotax military discount 2011 You are 25 years old, unmarried, and your AGI is $9,000. Turbotax military discount 2011 Your only income was $9,000 from a part-time job. Turbotax military discount 2011 Your mother's only income was $20,000 from her job, and her AGI is $20,000. Turbotax military discount 2011 Jimmy's father did not live with you or Jimmy. Turbotax military discount 2011 The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Turbotax military discount 2011 Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. Turbotax military discount 2011 However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier for which that person qualifies). Turbotax military discount 2011 He is not a qualifying child of anyone else, including his father. Turbotax military discount 2011 If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). Turbotax military discount 2011 Example 2. Turbotax military discount 2011 The facts are the same as in Example 1 except your AGI is $25,000. Turbotax military discount 2011 Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Turbotax military discount 2011 Only you can claim him. Turbotax military discount 2011 Example 3. Turbotax military discount 2011 The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Turbotax military discount 2011 In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. Turbotax military discount 2011 The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. Turbotax military discount 2011 Example 4. Turbotax military discount 2011 The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. Turbotax military discount 2011 Only one of you can claim each child. Turbotax military discount 2011 However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Turbotax military discount 2011 For example, if you claim one child, your mother can claim the other two. Turbotax military discount 2011 Example 5. Turbotax military discount 2011 The facts are the same as in Example 1 except that you are only 18 years old. Turbotax military discount 2011 This means you are a qualifying child of your mother. Turbotax military discount 2011 Because of Rule 10 , discussed next, you cannot claim the EIC and cannot claim Jimmy as a qualifying child. Turbotax military discount 2011 Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Turbotax military discount 2011 If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. Turbotax military discount 2011 Example 6. Turbotax military discount 2011 The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Turbotax military discount 2011 Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Turbotax military discount 2011 Example 7. Turbotax military discount 2011 The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Turbotax military discount 2011 Your earned income is too high for you to claim the EIC. Turbotax military discount 2011 But your mother cannot claim the EIC either, because her AGI is not higher than yours. Turbotax military discount 2011 Example 8. Turbotax military discount 2011 The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have an AGI of $30,000 on a joint return. Turbotax military discount 2011 If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. Turbotax military discount 2011 Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. Turbotax military discount 2011 In other words, each parent's AGI can be treated as $15,000. Turbotax military discount 2011 Example 9. Turbotax military discount 2011 You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Turbotax military discount 2011 In August and September, Joey lived with you. Turbotax military discount 2011 For the rest of the year, Joey lived with your husband, who is Joey's father. Turbotax military discount 2011 Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. Turbotax military discount 2011 At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents (or parents who live apart) does not apply. Turbotax military discount 2011 You and your husband will file separate returns. Turbotax military discount 2011 Your husband agrees to let you treat Joey as a qualifying child. Turbotax military discount 2011 This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. Turbotax military discount 2011 However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Turbotax military discount 2011 See Rule 3 . Turbotax military discount 2011 Example 10. Turbotax military discount 2011 The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Turbotax military discount 2011 In this case, only your husband will be allowed to treat Joey as a qualifying child. Turbotax military discount 2011 This is because, during 2013, the boy lived with him longer than with you. Turbotax military discount 2011 You cannot claim the EIC (either with or without a qualifying child). Turbotax military discount 2011 However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. Turbotax military discount 2011 See Rule 3 . Turbotax military discount 2011 Example 11. Turbotax military discount 2011 You, your 5-year-old son and your son's father lived together all year. Turbotax military discount 2011 You and your son's father are not married. Turbotax military discount 2011 Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. Turbotax military discount 2011 Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Turbotax military discount 2011 Neither of you had any other income. Turbotax military discount 2011 Your son's father agrees to let you treat the child as a qualifying child. Turbotax military discount 2011 This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. Turbotax military discount 2011 Example 12. Turbotax military discount 2011 The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. Turbotax military discount 2011 In this case, only your son's father will be allowed to treat your son as a qualifying child. Turbotax military discount 2011 This is because his AGI, $14,000, is more than your AGI, $12,000. Turbotax military discount 2011 You cannot claim the EIC (either with or without a qualifying child). Turbotax military discount 2011 Example 13. Turbotax military discount 2011 You and your 7-year-old niece, your sister's child, lived with your mother all year. Turbotax military discount 2011 You are 25 years old, and your AGI is $9,300. Turbotax military discount 2011 Your only income was from a part-time job. Turbotax military discount 2011 Your mother's AGI is $15,000. Turbotax military discount 2011 Her only income was from her job. Turbotax military discount 2011 Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Turbotax military discount 2011 Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. Turbotax military discount 2011 However, only your mother can treat her as a qualifying child. Turbotax military discount 2011 This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Turbotax military discount 2011 Special rule for divorced or separated parents (or parents who live apart). Turbotax military discount 2011   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. Turbotax military discount 2011 The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of 2013, whether or not they are or were married. Turbotax military discount 2011 The child received over half of his or her support for the year from the parents. Turbotax military discount 2011 The child is in the custody of one or both parents for more than half of 2013. Turbotax military discount 2011 Either of the following statements is true. Turbotax military discount 2011 The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. Turbotax military discount 2011 If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Turbotax military discount 2011 A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. Turbotax military discount 2011  For details, see chapter 3. Turbotax military discount 2011 Also see Applying Rule 9 to divorced or separated parents (or parents who live apart) , next. Turbotax military discount 2011 Applying Rule 9 to divorced or separated parents (or parents who live apart). Turbotax military discount 2011   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. Turbotax military discount 2011 However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. Turbotax military discount 2011 If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. Turbotax military discount 2011 Example 1. Turbotax military discount 2011 You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Turbotax military discount 2011 Your AGI is $10,000. Turbotax military discount 2011 Your mother’s AGI is $25,000. Turbotax military discount 2011 Your son's father did not live with you or your son. Turbotax military discount 2011 Under the special rule for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. Turbotax military discount 2011 However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. Turbotax military discount 2011 You and your mother did not have any child care expenses or dependent care benefits. Turbotax military discount 2011 If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. Turbotax military discount 2011 Example 2. Turbotax military discount 2011 The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Turbotax military discount 2011 Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Turbotax military discount 2011 Example 3. Turbotax military discount 2011 The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. Turbotax military discount 2011 Your mother also claims him as a qualifying child for head of household filing status. Turbotax military discount 2011 You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Turbotax military discount 2011 The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Turbotax military discount 2011 Rule 10. Turbotax military discount 2011 You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Turbotax military discount 2011 ) if all of the following statements are true. Turbotax military discount 2011 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Turbotax military discount 2011 Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Turbotax military discount 2011 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Turbotax military discount 2011 You lived with that person in the United States for more than half of the year. Turbotax military discount 2011 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Turbotax military discount 2011 For more details about the tests to be a qualifying child, see Rule 8 . Turbotax military discount 2011 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Turbotax military discount 2011 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Turbotax military discount 2011 Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Turbotax military discount 2011 Example. Turbotax military discount 2011 You and your daughter lived with your mother all year. Turbotax military discount 2011 You are 22 years old, unmarried, and attended a trade school full time. Turbotax military discount 2011 You had a part-time job and earned $5,700. Turbotax military discount 2011 You had no other income. Turbotax military discount 2011 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Turbotax military discount 2011 She can claim the EIC if she meets all the other requirements. Turbotax military discount 2011 Because you are your mother's qualifying child, you cannot claim the EIC. Turbotax military discount 2011 This is so even if your mother cannot or does not claim the EIC. Turbotax military discount 2011 Child of person not required to file a return. Turbotax military discount 2011   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 Example. Turbotax military discount 2011 The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Turbotax military discount 2011 As a result, you are not your mother's qualifying child. Turbotax military discount 2011 You can claim the EIC if you meet all the other requirements to do so. Turbotax military discount 2011   See Rule 10 in Publication 596 for additional examples. Turbotax military discount 2011 Part C. Turbotax military discount 2011 Rules If You Do Not Have a Qualifying Child Read this part if you: Do not have a qualifying child, and Have met all the rules in Part A . Turbotax military discount 2011  Part C discusses Rules 11 through 14. Turbotax military discount 2011 You must meet all four of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit without a qualifying child. Turbotax military discount 2011 If you have a qualifying child, the rules in this part do not apply to you. Turbotax military discount 2011 You can claim the credit only if you meet all the rules in Parts A, B, and D. Turbotax military discount 2011 See Rule 8 to find out if you have a qualifying child. Turbotax military discount 2011 Rule 11. Turbotax military discount 2011 You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. Turbotax military discount 2011 If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. Turbotax military discount 2011 It does not matter which spouse meets the age test, as long as one of the spouses does. Turbotax military discount 2011 You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Turbotax military discount 2011 If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. Turbotax military discount 2011 If neither you nor your spouse meets the age test, you cannot claim the EIC. Turbotax military discount 2011 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax military discount 2011 Death of spouse. Turbotax military discount 2011   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. Turbotax military discount 2011 Example 1. Turbotax military discount 2011 You are age 28 and unmarried. Turbotax military discount 2011 You meet the age test. Turbotax military discount 2011 Example 2—spouse meets age test. Turbotax military discount 2011 You are married and filing a joint return. Turbotax military discount 2011 You are age 23 and your spouse is age 27. Turbotax military discount 2011 You meet the age test because your spouse is at least age 25 but under age 65. Turbotax military discount 2011 Example 3—spouse dies in 2013. Turbotax military discount 2011 You are married and filing a joint return with your spouse who died in August 2013. Turbotax military discount 2011 You are age 67. Turbotax military discount 2011 Your spouse would have become age 65 in November 2013. Turbotax military discount 2011 Because your spouse was under age 65 when she died, you meet the age test. Turbotax military discount 2011 Rule 12. Turbotax military discount 2011 You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. Turbotax military discount 2011 If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. Turbotax military discount 2011 If you are not sure whether someone else can claim you (or your spouse, if filing a joint return) as a dependent, read the rules for claiming a dependent in chapter 3. Turbotax military discount 2011 If someone else can claim you (or your spouse, if filing a joint return) as a dependent on his or her return, but does not, you still cannot claim the credit. Turbotax military discount 2011 Example 1. Turbotax military discount 2011 In 2013, you were age 25, single, and living at home with your parents. Turbotax military discount 2011 You worked and were not a student. Turbotax military discount 2011 You earned $7,500. Turbotax military discount 2011 Your parents cannot claim you as a dependent. Turbotax military discount 2011 When you file your return, you claim an exemption for yourself by not checking the “You” box on line 5 of your Form 1040EZ and by entering $10,000 on that line. Turbotax military discount 2011 You meet this rule. Turbotax military discount 2011 You can claim the EIC if you meet all the other requirements. Turbotax military discount 2011 Example 2. Turbotax military discount 2011 The facts are the same as in Example 1 , except that you earned $2,000. Turbotax military discount 2011 Your parents can claim you as a dependent but decide not to. Turbotax military discount 2011 You do not meet this rule. Turbotax military discount 2011 You cannot claim the credit because your parents could have claimed you as a dependent. Turbotax military discount 2011 Joint returns. Turbotax military discount 2011   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Turbotax military discount 2011   However, another person may be able to claim you as a dependent if you and your spouse file a joint return only to get a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Turbotax military discount 2011 Example 1. Turbotax military discount 2011 You are 26 years old. Turbotax military discount 2011 You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Turbotax military discount 2011 Neither you nor your wife is required to file a tax return. Turbotax military discount 2011 You do not have a child. Turbotax military discount 2011 Taxes were taken out of your pay, so you file a joint return only to get a refund of the withheld taxes. Turbotax military discount 2011 Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Turbotax military discount 2011 They can claim exemptions for you and your wife if all the other tests to do so are met. Turbotax military discount 2011 Example 2. Turbotax military discount 2011 The facts are the same as in Example 1 except no taxes were taken out of your pay. Turbotax military discount 2011 Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. Turbotax military discount 2011 Because claiming the EIC is your reason for filing the return, you are not filing it only to get a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 Your parents cannot claim an exemption for either you or your wife. Turbotax military discount 2011 Rule 13. Turbotax military discount 2011 You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Turbotax military discount 2011 ) if all of the following statements are true. Turbotax military discount 2011 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Turbotax military discount 2011 Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Turbotax military discount 2011 You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student (as defined in Rule 8 ), and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Turbotax military discount 2011 You lived with that person in the United States for more than half of the year. Turbotax military discount 2011 You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Turbotax military discount 2011 For more details about the tests to be a qualifying child, see Rule 8 . Turbotax military discount 2011 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Turbotax military discount 2011 This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Turbotax military discount 2011 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax military discount 2011 Example. Turbotax military discount 2011 You lived with your mother all year. Turbotax military discount 2011 You are age 26, unmarried, and permanently and totally disabled. Turbotax military discount 2011 Your only income was from a community center where you went three days a week to answer telephones. Turbotax military discount 2011 You earned $5,000 for the year and provided more than half of your own support. Turbotax military discount 2011 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Turbotax military discount 2011 She can claim the EIC if she meets all the other requirements. Turbotax military discount 2011 Because you are a qualifying child of your mother, you cannot claim the EIC. Turbotax military discount 2011 This is so even if your mother cannot or does not claim the EIC. Turbotax military discount 2011 Joint returns. Turbotax military discount 2011   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Turbotax military discount 2011   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return for the year only to get a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Turbotax military discount 2011 Child of person not required to file a return. Turbotax military discount 2011   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Turbotax military discount 2011 Example. Turbotax military discount 2011 You lived all year with your father. Turbotax military discount 2011 You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Turbotax military discount 2011 You have no other income, no children, and provided more than half of your own support. Turbotax military discount 2011 Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Turbotax military discount 2011 As a result, you are not your father's qualifying child. Turbotax military discount 2011 You can claim the EIC if you meet all the other requirements to do so. Turbotax military discount 2011   See Rule 13 in Publication 596 for additional examples. Turbotax military discount 2011 Rule 14. Turbotax military discount 2011 You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. Turbotax military discount 2011 If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax military discount 2011 United States. Turbotax military discount 2011   This means the 50 states and the District of Columbia. Turbotax military discount 2011 It does not include Puerto Rico or U. Turbotax military discount 2011 S. Turbotax military discount 2011 possessions such as Guam. Turbotax military discount 2011 Homeless shelter. Turbotax military discount 2011   Your home can be any location where you regularly live. Turbotax military discount 2011 You do not need a traditional home. Turbotax military discount 2011 If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Turbotax military discount 2011 Military personnel stationed outside the United States. Turbotax military discount 2011   U. Turbotax military discount 2011 S. Turbotax military discount 2011 military personnel stationed outside the United States on extended active duty (defined in Rule 8 ) are considered to live in the United States during that duty period for purposes of the EIC. Turbotax military discount 2011 Part D. Turbotax military discount 2011 Figuring and Claiming the EIC Read this part if you have met all the rules in Parts A and B, or all the rules in Parts A and C. Turbotax military discount 2011 Part D discusses Rule 15 . Turbotax military discount 2011 You must meet this rule, in addition to the rules in Parts A and B , or Parts A and C , to qualify for the earned income credit. Turbotax military discount 2011 This part of the chapter also explains how to figure the amount of your credit. Turbotax military discount 2011 You have two choices. Turbotax military discount 2011 Have the IRS figure the EIC for you. Turbotax military discount 2011 If you want to do this, see IRS Will Figure the EIC for You . Turbotax military discount 2011 Figure the EIC yourself. Turbotax military discount 2011 If you want to do this, see How To Figure the EIC Yourself . Turbotax military discount 2011 Rule 15. Turbotax military discount 2011 Your Earned Income Must Be Less Than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Turbotax military discount 2011 Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Turbotax military discount 2011 Employee pay is earned income only if it is taxable. Turbotax military discount 2011 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Turbotax military discount 2011 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Turbotax military discount 2011 Earned income is explained in detail in Rule 7 . Turbotax military discount 2011 Figuring earned income. Turbotax military discount 2011   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. Turbotax military discount 2011   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. Turbotax military discount 2011   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Turbotax military discount 2011 You will then reduce that amount by any amount included on that line and described in the following list: Scholarship or fellowship grants not reported on a Form W-2, Inmate's income, and Pension or annuity from deferred compensation plans. Turbotax military discount 2011 Scholarship or fellowship grants not reported on a Form W-2. Turbotax military discount 2011   A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. Turbotax military discount 2011 Inmate's income. Turbotax military discount 2011   Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Turbotax military discount 2011 This includes amounts received for work performed while in a work release program or while in a halfway house. Turbotax military discount 2011 If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Turbotax military discount 2011 Pension or annuity from deferred compensation plans. Turbotax military discount 2011   A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. Turbotax military discount 2011 If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Turbotax military discount 2011 This amount may be reported in box 11 of your Form W-2. Turbotax military discount 2011 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. Turbotax military discount 2011 Clergy. Turbotax military discount 2011   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. Turbotax military discount 2011 Put “Clergy” on the dotted line next to line 64a (Form 1040). Turbotax military discount 2011 Church employees. Turbotax military discount 2011    A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Turbotax military discount 2011 If you received wages as a
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Oklahoma Attorney General

Website: Oklahoma Attorney General

Address: Oklahoma Attorney General
Public Protection Unit
313 N.E. 21st St.
Oklahoma City, OK 73105

Phone Number: 405-521-3921 (Oklahoma City) 918-581-2885 (Tulsa)

Oklahoma Department of Consumer Credit

Website: Oklahoma Department of Consumer Credit

Address: Oklahoma Department of Consumer Credit
3613 N.W. 56th St., Suite 240
Oklahoma City, OK 73112-4512

Phone Number: 405-521-3653

Toll-free: 1-800-448-4904 (Consumer Hotline)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

State Banking Department

Website: State Banking Department

Address: State Banking Department
2900 N. Lincoln Blvd.
Oklahoma City, OK 73105

Phone Number: 405-521-2782

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Insurance Department

Website: Insurance Department

Address: Insurance Department
Consumer Assistance Division
Five Corporate Plaza
3625 N.W. 56th St., Suite 100
Oklahoma City, OK 73112

Phone Number: 405-521-2991

Toll-free: 1-800-522-0071 (OK)

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Department of Securities

Website: Department of Securities

Address: Department of Securities
First National Center
120 N. Robinson Ave., Suite 860
Oklahoma City, OK 73102

Phone Number: 405-280-7700

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Corporation Commission

Website: Corporation Commission

Address: Corporation Commission
Consumer Services Division
PO Box 52000
Oklahoma City, OK 73152-2000

Phone Number: 405-522-0478

Toll-free: 1-800-522-8154 (OK)

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The Turbotax Military Discount 2011

Turbotax military discount 2011 Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). Turbotax military discount 2011 Low Income Taxpayer Clinics (LITCs). Turbotax military discount 2011 Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. Turbotax military discount 2011 All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. Turbotax military discount 2011 The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). Turbotax military discount 2011 After notice and hearing, the bankruptcy court may extend the period for another 30 days. Turbotax military discount 2011 Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. Turbotax military discount 2011 Note. Turbotax military discount 2011 Individual debtors should use their home address when filing Form 1040 with the IRS. Turbotax military discount 2011 Returns should not be filed “in care of” the trustee's address. Turbotax military discount 2011 Ordering tax transcripts and copies of returns. Turbotax military discount 2011   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. Turbotax military discount 2011 The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. Turbotax military discount 2011 If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. Turbotax military discount 2011 Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. Turbotax military discount 2011 Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. Turbotax military discount 2011 A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. Turbotax military discount 2011 To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. Turbotax military discount 2011 It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. Turbotax military discount 2011 00 per tax return for copies of the returns. Turbotax military discount 2011 Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. Turbotax military discount 2011 If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. Turbotax military discount 2011 Tax returns and payment of taxes in chapter 11 cases. Turbotax military discount 2011   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. Turbotax military discount 2011 Disclosure of debtor's return information to trustee. Turbotax military discount 2011   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. Turbotax military discount 2011 If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. Turbotax military discount 2011    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. Turbotax military discount 2011 Material interest is generally defined as a financial or monetary interest. Turbotax military discount 2011 Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Turbotax military discount 2011   However, the U. Turbotax military discount 2011 S. Turbotax military discount 2011 Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. Turbotax military discount 2011 Disclosure of bankruptcy estate's return information to debtor. Turbotax military discount 2011    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. Turbotax military discount 2011 Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. Turbotax military discount 2011 Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Turbotax military discount 2011 Chapter 13 relief is not available to corporations or partnerships. Turbotax military discount 2011 The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. Turbotax military discount 2011 In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. Turbotax military discount 2011 S. Turbotax military discount 2011 Individual Income Tax Return. Turbotax military discount 2011 On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. Turbotax military discount 2011 Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. Turbotax military discount 2011 To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. Turbotax military discount 2011 See Debt Cancellation, later. Turbotax military discount 2011 Interest on trust accounts in chapter 13 cases. Turbotax military discount 2011   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. Turbotax military discount 2011 This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. Turbotax military discount 2011 S. Turbotax military discount 2011 Trustee system. Turbotax military discount 2011 The interest is also not taxable to the trustee as income. Turbotax military discount 2011 Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. Turbotax military discount 2011 The bankruptcy estate in a chapter 7 case is represented by a trustee. Turbotax military discount 2011 The trustee is appointed to administer the estate and liquidate any nonexempt assets. Turbotax military discount 2011 In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. Turbotax military discount 2011 However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. Turbotax military discount 2011 During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. Turbotax military discount 2011 The bankruptcy trustee files a Form 1041 for the bankruptcy estate. Turbotax military discount 2011 However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). Turbotax military discount 2011 Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. Turbotax military discount 2011 Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). Turbotax military discount 2011 For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Turbotax military discount 2011 Debtor's Election To End Tax Year – Form 1040 Short tax years. Turbotax military discount 2011   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. Turbotax military discount 2011 If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. Turbotax military discount 2011 The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. Turbotax military discount 2011   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Turbotax military discount 2011 Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. Turbotax military discount 2011    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. Turbotax military discount 2011 Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. Turbotax military discount 2011 Note. Turbotax military discount 2011 The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. Turbotax military discount 2011 Making the Election - Filing Requirements First short tax year. Turbotax military discount 2011   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. Turbotax military discount 2011 The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. Turbotax military discount 2011 Second short tax year. Turbotax military discount 2011   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. Turbotax military discount 2011   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. Turbotax military discount 2011 To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. Turbotax military discount 2011 Example. Turbotax military discount 2011 Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. Turbotax military discount 2011 If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. Turbotax military discount 2011 Jane's second short year runs from May 8, 2012, through December 31, 2012. Turbotax military discount 2011 To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. Turbotax military discount 2011 To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. Turbotax military discount 2011 The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. Turbotax military discount 2011 S. Turbotax military discount 2011 Individual Tax Return. Turbotax military discount 2011 The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. Turbotax military discount 2011 The debtor must file Form 4868 by the due date of the return for the first short tax year. Turbotax military discount 2011 The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. Turbotax military discount 2011 Election by debtor's spouse. Turbotax military discount 2011   If the debtor is married, the debtor's spouse may join in the election to end the tax year. Turbotax military discount 2011 If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. Turbotax military discount 2011 The debtor must elect by the due date for filing the return for the first short tax year. Turbotax military discount 2011 Once the election is made, it cannot be revoked for the first short tax year. Turbotax military discount 2011 However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. Turbotax military discount 2011 Later bankruptcy of spouse. Turbotax military discount 2011    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. Turbotax military discount 2011   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. Turbotax military discount 2011 If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. Turbotax military discount 2011 However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. Turbotax military discount 2011 The debtor and the spouse are precluded from this election because they have different tax years. Turbotax military discount 2011 This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. Turbotax military discount 2011 Example 1. Turbotax military discount 2011 Paul and Mary Harris are calendar-year taxpayers. Turbotax military discount 2011 Paul's voluntary chapter 7 bankruptcy case begins on March 4. Turbotax military discount 2011 If Paul does not make an election, his tax year does not end on March 3. Turbotax military discount 2011 If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. Turbotax military discount 2011 Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. Turbotax military discount 2011 They must make the election by July 15, the due date for filing the joint return. Turbotax military discount 2011 Example 2. Turbotax military discount 2011 Fred and Ethel Barnes are calendar-year taxpayers. Turbotax military discount 2011 Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. Turbotax military discount 2011 Ethel could elect to end her tax year on October 31. Turbotax military discount 2011 If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. Turbotax military discount 2011 Her first tax year is January 1–October 31, and her second year is November 1–December 31. Turbotax military discount 2011 If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. Turbotax military discount 2011 If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. Turbotax military discount 2011 Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. Turbotax military discount 2011 Example 3. Turbotax military discount 2011 Jack and Karen Thomas are calendar-year taxpayers. Turbotax military discount 2011 Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. Turbotax military discount 2011 Karen elected to close her tax year on April 9 and Jack joins in Karen's election. Turbotax military discount 2011 Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. Turbotax military discount 2011 The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. Turbotax military discount 2011 Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). Turbotax military discount 2011 If Karen does join in, she would have the same 3 short tax years as Jack. Turbotax military discount 2011 Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. Turbotax military discount 2011 Annualizing taxable income. Turbotax military discount 2011   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. Turbotax military discount 2011 See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. Turbotax military discount 2011 Dismissal of bankruptcy case. Turbotax military discount 2011   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. Turbotax military discount 2011 It is as if no bankruptcy estate was created for tax purposes. Turbotax military discount 2011 In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. Turbotax military discount 2011 Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. Turbotax military discount 2011 Attach a statement to the amended returns explaining why the debtor is filing an amended return. Turbotax military discount 2011 Taxes and the Bankruptcy Estate Property of the bankruptcy estate. Turbotax military discount 2011   At the commencement of a bankruptcy case a bankruptcy estate is created. Turbotax military discount 2011 Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. Turbotax military discount 2011 This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. Turbotax military discount 2011 However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. Turbotax military discount 2011 Note. Turbotax military discount 2011 Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. Turbotax military discount 2011 Excluded property is never included in the estate. Turbotax military discount 2011 Transfer of assets between debtor and bankruptcy estate. Turbotax military discount 2011   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. Turbotax military discount 2011 The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. Turbotax military discount 2011 For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. Turbotax military discount 2011 The estate assumes the same basis, holding period, and character of the transferred assets. Turbotax military discount 2011 Also, the estate generally accounts for the transferred assets in the same manner as debtor. Turbotax military discount 2011   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. Turbotax military discount 2011 The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. Turbotax military discount 2011 Abandoned property. Turbotax military discount 2011    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. Turbotax military discount 2011 If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. Turbotax military discount 2011 Separate taxable entity. Turbotax military discount 2011   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. Turbotax military discount 2011 The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. Turbotax military discount 2011 S. Turbotax military discount 2011 Income Tax Return for Estates and Trusts, and paying its taxes. Turbotax military discount 2011 The debtor remains responsible for filing his or her own returns on Form 1040, U. Turbotax military discount 2011 S. Turbotax military discount 2011 Individual Income Tax Return, and paying taxes on income that does not belong to the estate. Turbotax military discount 2011 Employer identification number. Turbotax military discount 2011   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Turbotax military discount 2011 The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Turbotax military discount 2011 See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Turbotax military discount 2011    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Turbotax military discount 2011 Income, deductions, and credits – Form 1040. Turbotax military discount 2011   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). Turbotax military discount 2011 Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. Turbotax military discount 2011 The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. Turbotax military discount 2011 See Debt Cancellation, below. Turbotax military discount 2011 Note. Turbotax military discount 2011 The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. Turbotax military discount 2011 Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. Turbotax military discount 2011 However, other exclusions, such as the insolvency exclusion, may apply. Turbotax military discount 2011 Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. Turbotax military discount 2011    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. Turbotax military discount 2011 Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. Turbotax military discount 2011   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. Turbotax military discount 2011 Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. Turbotax military discount 2011 Income of the estate in individual chapter 11 cases. Turbotax military discount 2011    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. Turbotax military discount 2011 Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. Turbotax military discount 2011 S. Turbotax military discount 2011 C. Turbotax military discount 2011 section 1115). Turbotax military discount 2011 Note. Turbotax military discount 2011 A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. Turbotax military discount 2011 Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). Turbotax military discount 2011 Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. Turbotax military discount 2011 See Administrative expenses, below. Turbotax military discount 2011 Conversion or dismissal of chapter 11 cases. Turbotax military discount 2011   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. Turbotax military discount 2011 If the chapter 11 case is converted to a chapter 7 case, 11 U. Turbotax military discount 2011 S. Turbotax military discount 2011 C. Turbotax military discount 2011 section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. Turbotax military discount 2011 Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. Turbotax military discount 2011 If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. Turbotax military discount 2011 Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. Turbotax military discount 2011 Note. Turbotax military discount 2011 Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). Turbotax military discount 2011 Administrative expenses. Turbotax military discount 2011   Allowable expenses include administrative expenses. Turbotax military discount 2011    Administrative expenses can only be deducted by the estate, never by the debtor. Turbotax military discount 2011   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. Turbotax military discount 2011 These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. Turbotax military discount 2011 See IRC section 67(e). Turbotax military discount 2011 Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. Turbotax military discount 2011 Note. Turbotax military discount 2011 The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. Turbotax military discount 2011 See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. Turbotax military discount 2011 Administrative expense loss. Turbotax military discount 2011   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. Turbotax military discount 2011 The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. Turbotax military discount 2011 The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. Turbotax military discount 2011 For a discussion of NOLs, see Publication 536. Turbotax military discount 2011 Attribute carryovers. Turbotax military discount 2011   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. Turbotax military discount 2011 These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. Turbotax military discount 2011 The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. Turbotax military discount 2011   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. Turbotax military discount 2011 See Debt Cancellation, later. Turbotax military discount 2011   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. Turbotax military discount 2011 The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. Turbotax military discount 2011 Note. Turbotax military discount 2011 The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. Turbotax military discount 2011 See Administrative expense loss, above. Turbotax military discount 2011 Passive and at-risk activities. Turbotax military discount 2011   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. Turbotax military discount 2011 Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. Turbotax military discount 2011 These transfers include the return of exempt property and abandonment of estate property to the debtor. Turbotax military discount 2011 Carrybacks from the debtor's activities. Turbotax military discount 2011   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. Turbotax military discount 2011 Carrybacks from the bankruptcy estate. Turbotax military discount 2011   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. Turbotax military discount 2011 The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. Turbotax military discount 2011 Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. Turbotax military discount 2011    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. Turbotax military discount 2011 The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. Turbotax military discount 2011 These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. Turbotax military discount 2011 The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. Turbotax military discount 2011 The same method must be used to allocate the income and the withheld tax. Turbotax military discount 2011 Example. Turbotax military discount 2011 If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. Turbotax military discount 2011 Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. Turbotax military discount 2011 See IRC section 31(a). Turbotax military discount 2011   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. Turbotax military discount 2011 In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. Turbotax military discount 2011    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. Turbotax military discount 2011 The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. Turbotax military discount 2011 Note. Turbotax military discount 2011 The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). Turbotax military discount 2011   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. Turbotax military discount 2011 Self-employment taxes in individual chapter 11 cases. Turbotax military discount 2011   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. Turbotax military discount 2011 Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. Turbotax military discount 2011   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. Turbotax military discount 2011 Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. Turbotax military discount 2011 This schedule includes self-employment income earned post-petition and the attributable deductions. Turbotax military discount 2011 The debtor must pay any self-employment tax imposed by IRC section 1401. Turbotax military discount 2011 Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Turbotax military discount 2011   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. Turbotax military discount 2011 However, section 1115 of the Bankruptcy Code (11 U. Turbotax military discount 2011 S. Turbotax military discount 2011 C. Turbotax military discount 2011 section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. Turbotax military discount 2011 See Notice 2006-83. Turbotax military discount 2011   The reporting and withholding obligations of a debtor's employer also do not change. Turbotax military discount 2011 An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. Turbotax military discount 2011 Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. Turbotax military discount 2011   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. Turbotax military discount 2011 See IRC section 6109(a)(2). Turbotax military discount 2011 As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). Turbotax military discount 2011   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. Turbotax military discount 2011 See Notice 2006-83. Turbotax military discount 2011 An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. Turbotax military discount 2011   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. Turbotax military discount 2011 However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. Turbotax military discount 2011 See Employment Tax Regulations section 31. Turbotax military discount 2011 3402(f)(2)-1. Turbotax military discount 2011 Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. Turbotax military discount 2011 See IRC section 6654(a). Turbotax military discount 2011 Notice required in converted and dismissed cases. Turbotax military discount 2011   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. Turbotax military discount 2011 The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. Turbotax military discount 2011 This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. Turbotax military discount 2011   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. Turbotax military discount 2011 Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. Turbotax military discount 2011 However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. Turbotax military discount 2011 After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. Turbotax military discount 2011 Employment taxes. Turbotax military discount 2011   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Turbotax military discount 2011 See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. Turbotax military discount 2011   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Turbotax military discount 2011 For a further discussion of employment taxes, see Employment Taxes, later. Turbotax military discount 2011 Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . Turbotax military discount 2011 The bankruptcy court case number is . Turbotax military discount 2011 Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. Turbotax military discount 2011   Year Taxpayer   Estate 1. Turbotax military discount 2011 Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. Turbotax military discount 2011 Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. Turbotax military discount 2011 Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. Turbotax military discount 2011 Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. Turbotax military discount 2011   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. Turbotax military discount 2011 This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. Turbotax military discount 2011   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). Turbotax military discount 2011   These amounts are generally adjusted annually. Turbotax military discount 2011 See the present year Form 1041 Instructions at www. Turbotax military discount 2011 irs. Turbotax military discount 2011 gov/form1041 for the current dollar amounts. Turbotax military discount 2011 Accounting period. Turbotax military discount 2011   A bankruptcy estate may have a fiscal year. Turbotax military discount 2011 However, this period cannot be longer than 12 months. Turbotax military discount 2011 Change of accounting period. Turbotax military discount 2011   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. Turbotax military discount 2011 This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. Turbotax military discount 2011 The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. Turbotax military discount 2011 Employer identification number. Turbotax military discount 2011   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Turbotax military discount 2011 The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Turbotax military discount 2011    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Turbotax military discount 2011   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. Turbotax military discount 2011 irs. Turbotax military discount 2011 gov/businesses/small. Turbotax military discount 2011 The EIN is issued immediately once the application information is validated. Turbotax military discount 2011 By telephone at 1-800-829-4933 from 7:00 a. Turbotax military discount 2011 m. Turbotax military discount 2011 to 7:00 p. Turbotax military discount 2011 m. Turbotax military discount 2011 in the trustee's or debtor-in-possession's local time zone. Turbotax military discount 2011 Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. Turbotax military discount 2011   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. Turbotax military discount 2011 For more details, see Pub. Turbotax military discount 2011 583, Starting a Business and Keeping Records. Turbotax military discount 2011   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. Turbotax military discount 2011 Figuring tax due. Turbotax military discount 2011   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. Turbotax military discount 2011 However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. Turbotax military discount 2011 The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. Turbotax military discount 2011 The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. Turbotax military discount 2011 Tax rate schedule. Turbotax military discount 2011 The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. Turbotax military discount 2011 When to file. Turbotax military discount 2011   Calendar year bankruptcy estates must file Form 1041 by April 15th. Turbotax military discount 2011 Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. Turbotax military discount 2011 For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. Turbotax military discount 2011 If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Turbotax military discount 2011 Note. Turbotax military discount 2011 The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Turbotax military discount 2011 Transmittal for Form 1040. Turbotax military discount 2011   Form 1041 is used as a transmittal for Form 1040. Turbotax military discount 2011 If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. Turbotax military discount 2011   Prepare the bankruptcy estate's return by completing Form 1040. Turbotax military discount 2011 In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. Turbotax military discount 2011 ” Then, attach Form 1040 to the Form 1041 transmittal. Turbotax military discount 2011 Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. Turbotax military discount 2011 An example of a bankruptcy estate's tax return is prepared below. Turbotax military discount 2011 Note. Turbotax military discount 2011 The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. Turbotax military discount 2011 Payment of Tax Due Payment methods. Turbotax military discount 2011   Payment of tax due may be made by check or money order or by credit or debit card. Turbotax military discount 2011 For information on how to make payments electronically by credit or debit card, go to irs. Turbotax military discount 2011 gov/e-pay. Turbotax military discount 2011      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. Turbotax military discount 2011 To enroll in EFTPS, go to eftps. Turbotax military discount 2011 gov or call 1-800-555-4477. Turbotax military discount 2011 For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Turbotax military discount 2011 Payment voucher – Form 1041-V. Turbotax military discount 2011   Form 1041-V accompanies payments made by check or money order for Form 1041. Turbotax military discount 2011 The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. Turbotax military discount 2011 Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. Turbotax military discount 2011 We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. Turbotax military discount 2011 Estimated tax – Form 1041-ES. Turbotax military discount 2011   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. Turbotax military discount 2011 See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. Turbotax military discount 2011 Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Turbotax military discount 2011 Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. Turbotax military discount 2011 If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. Turbotax military discount 2011   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. Turbotax military discount 2011 Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. Turbotax military discount 2011 The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Turbotax military discount 2011 If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Turbotax military discount 2011 , with their individual income tax returns. Turbotax military discount 2011 Tax Return Example – Form 1041 This publication is not revised annually. Turbotax military discount 2011 Future changes to the forms and their instructions may not be reflected in this example. Turbotax military discount 2011 Note. Turbotax military discount 2011 The following return was prepared for tax year 2011. Turbotax military discount 2011 In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). Turbotax military discount 2011 Facts and circumstances. Turbotax military discount 2011   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. Turbotax military discount 2011 Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. Turbotax military discount 2011   The estate received the following assets from Mr. Turbotax military discount 2011 Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. Turbotax military discount 2011   Also, the estate received a $251,500 capital loss carryover. Turbotax military discount 2011   Mr. Turbotax military discount 2011 Smith's bankruptcy case was closed on December 31, 2011. Turbotax military discount 2011 During 2011, Mr. Turbotax military discount 2011 Smith was relieved of $70,000 of debt by the bankruptcy court. Turbotax military discount 2011 The estate chose a calendar year as its tax year. Turbotax military discount 2011 Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. Turbotax military discount 2011 Schedule B (Form 1040). Turbotax military discount 2011    The certificate of deposit earned $5,500 of interest during 2011. Turbotax military discount 2011 Joan reports this interest on Schedule B. Turbotax military discount 2011 She completes this schedule and enters the result on Form 1040. Turbotax military discount 2011 Form 4562. Turbotax military discount 2011   Joan enters the depreciation allowed on Form 4562. Turbotax military discount 2011 She completes the form and enters the result on Schedule E. Turbotax military discount 2011 Schedule E (Form 1040). Turbotax military discount 2011   The commercial real estate was rented through the date of sale. Turbotax military discount 2011 Joan reports the income and expenses on Schedule E. Turbotax military discount 2011 She enters the net income on Form 1040. Turbotax military discount 2011 Form 4797. Turbotax military discount 2011   The commercial real estate was sold on July 1, 2011, for $280,000. Turbotax military discount 2011 The property was purchased in 2001 at a cost of $250,000. Turbotax military discount 2011 The total depreciation allowable as of the date of sale was $120,000. Turbotax military discount 2011 Additionally, $25,000 of selling expenses were incurred. Turbotax military discount 2011 Joan reports the gain or loss from the sale on Form 4797. Turbotax military discount 2011 She completes the form and enters the gain on Schedule D (Form 1040). Turbotax military discount 2011   Mr. Turbotax military discount 2011 Smith's former residence was sold on September 30, 2011. Turbotax military discount 2011 The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. Turbotax military discount 2011 This sale is excluded from gross income under IRC section 121. Turbotax military discount 2011 Note. Turbotax military discount 2011 Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). Turbotax military discount 2011 Bankruptcy estates succeed to this exclusion at the commencement of the case. Turbotax military discount 2011 See Regulation section 1. Turbotax military discount 2011 1398-3. Turbotax military discount 2011 Schedule D (Form 1040). Turbotax military discount 2011   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). Turbotax military discount 2011 She enters the results on Form 1040. Turbotax military discount 2011 Form 1040, page 1. Turbotax military discount 2011   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. Turbotax military discount 2011 Schedule A (Form 1040). Turbotax military discount 2011   During 2011, the estate paid mortgage interest and real property tax on Mr. Turbotax military discount 2011 Smith's former residence. Turbotax military discount 2011 It also paid income tax to the state. Turbotax military discount 2011 Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. Turbotax military discount 2011 Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. Turbotax military discount 2011 She completes the Schedule A and enters the result on page 2 of Form 1040. Turbotax military discount 2011 Form 1040, page 2. Turbotax military discount 2011   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. Turbotax military discount 2011 She then enters the estate's estimated tax payments and figures the amount the estate still owes. Turbotax military discount 2011 Form 982. Turbotax military discount 2011   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. Turbotax military discount 2011 Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. Turbotax military discount 2011 See Debt Cancellation, later. Turbotax military discount 2011 After the bankruptcy case ends, Mr. Turbotax military discount 2011 Smith will assume the estate's tax attributes. Turbotax military discount 2011 Mr. Turbotax military discount 2011 Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). Turbotax military discount 2011 Note. Turbotax military discount 2011 If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. Turbotax military discount 2011 Form 1041. Turbotax military discount 2011   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. Turbotax military discount 2011 She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. Turbotax military discount 2011 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Schedule A This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Schedule B This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Schedule D This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Schedule E This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 2119 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 4562 This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. Turbotax military discount 2011 Please click the link to view the image. Turbotax military discount 2011 Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. Turbotax military discount 2011 Otherwise, you do not have any carryovers. Turbotax military discount 2011 1. Turbotax military discount 2011 Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. Turbotax military discount 2011 If a loss, enclose the amount in parentheses 1. Turbotax military discount 2011 19,880   2. Turbotax military discount 2011 Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. Turbotax military discount 2011 1,500   3. Turbotax military discount 2011 Combine lines 1 and 2. Turbotax military discount 2011 If zero or less, enter -0- 3. Turbotax military discount 2011 21,380   4. Turbotax military discount 2011 Enter the smaller of line 2 or line 3 4. Turbotax military discount 2011 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. Turbotax military discount 2011       5. Turbotax military discount 2011 Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. Turbotax military discount 2011 0   6. Turbotax military discount 2011 Enter any gain from your 2010 Schedule D, line 15. Turbotax military discount 2011 If a loss, enter -0- 6. Turbotax military discount 2011         7. Turbotax military discount 2011 Add lines 4 and 6 7. Turbotax military discount 2011 1,500   8. Turbotax military discount 2011 Short-term capital loss carryover for 2011. Turbotax military discount 2011 Subtract line 7 from line 5. Turbotax military discount 2011 If zero or less, enter -0-. Turbotax military discount 2011 If more than zero, also enter this amount on Schedule D, line 6 8. Turbotax military discount 2011 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. Turbotax military discount 2011       9. Turbotax military discount 2011 Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. Turbotax military discount 2011 251,500   10. Turbotax military discount 2011 Enter any gain from your 2010 Schedule D, line 7. Turbotax military discount 2011 If a loss, enter -0- 10. Turbotax military discount 2011 0       11. Turbotax military discount 2011 Subtract line 5 from line 4. Turbotax military discount 2011 If zero or less, enter -0- 11. Turbotax military discount 2011 1,500       12. Turbotax military discount 2011 Add lines 10 and 11 12. Turbotax military discount 2011 1,500   13. Turbotax military discount 2011 Long-term capital loss carryover for 2011. Turbotax military discount 2011 Subtract line 12 from line 9. Turbotax military discount 2011 If zero or less, enter -0-. Turbotax military discount 2011 If more than zero, also enter this amount on Schedule D, line 14 13. Turbotax military discount 2011 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. Turbotax military discount 2011 The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. Turbotax military discount 2011 In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. Turbotax military discount 2011 The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. Turbotax military discount 2011 Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. Turbotax military discount 2011 However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. Turbotax military discount 2011 A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. Turbotax military discount 2011 However, It may or may not be included in the individual partners' income. Turbotax military discount 2011 See Partnerships, below under Debt Cancellation. Turbotax military discount 2011 Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. Turbotax military discount 2011 A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. Turbotax military discount 2011 The following discussion only highlights bankruptcy tax rules applying to corporations. Turbotax military discount 2011 The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. Turbotax military discount 2011 Therefore, you may wish to seek the help of a professional tax advisor. Turbotax military discount 2011 See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. Turbotax military discount 2011 Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. Turbotax military discount 2011 However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. Turbotax military discount 2011 A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. Turbotax military discount 2011 In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. Turbotax military discount 2011 In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. Turbotax military discount 2011 Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. Turbotax military discount 2011 In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. Turbotax military discount 2011 IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. Turbotax military discount 2011 IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. Turbotax military discount 2011 In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. Turbotax military discount 2011 No loss is recognized in this situation. Turbotax military discount 2011 Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. Turbotax military discount 2011 To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. Turbotax military discount 2011 The exemption request must be submitted to the local IRS Insolvency Office handling the case. Turbotax military discount 2011 The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. Turbotax military discount 2011 The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. Turbotax military discount 2011 ” The statement must be signed by the trustee, receiver or assignee. Turbotax military discount 2011 The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). Turbotax military discount 2011 The IRS will act on your request within 90 days. Turbotax military discount 2011 Disclosure of return information to trustee. Turbotax military discount 2011   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. Turbotax military discount 2011 However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. Turbotax military discount 2011 Material interest is generally defined as a financial or monetary interest. Turbotax military discount 2011 Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Turbotax military discount 2011 Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. Turbotax military discount 2011 Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. Turbotax military discount 2011 QSFs are required to file an annual income tax return, Form 1120-SF, U. Turbotax military discount 2011 S. Turbotax military discount 2011 Income Tax Return for Settlement Funds. Turbotax military discount 2011 More information about QSFs may be found in Treasury Regulation sections 1. Turbotax military discount 2011 468B-1 through -5. Turbotax military discount 2011 Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. Turbotax military discount 2011 After a return is filed, the IRS will either accept the return as filed or select the return for examination. Turbotax military discount 2011 Under examination the IRS may redetermine the tax liability shown on the return. Turbotax military discount 2011 If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. Turbotax military discount 2011 See Court Jurisdiction over Tax Matters, later. Turbotax military discount 2011 Prompt Determination Requests Pursuant to Rev. Turbotax military discount 2011 Proc. Turbotax military discount 2011 2006-24, 2006-22 I. Turbotax military discount 2011 R. Turbotax military discount 2011 B. Turbotax military discount 2011 943, www. Turbotax military discount 2011 irs. Turbotax military discount 2011 gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. Turbotax military discount 2011 irs. Turbotax military discount 2011 gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. Turbotax military discount 2011 Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). Turbotax military discount 2011 Making the request for determination. Turbotax military discount 2011   As detailed in Rev. Turbotax military discount 2011 Proc. Turbotax military discount 2011 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. Turbotax military discount 2011 O. Turbotax military discount 2011 Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). Turbotax military discount 2011   The request must be submitted in duplicate and must be executed under penalties of perjury. Turbotax military discount 2011 In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. Turbotax military discount 2011 The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. Turbotax military discount 2011 The name and location of the office where the return was filed. Turbotax military discount 2011 The name of the debtor. Turbotax military discount 2011 Debtor's social security number, TIN, or EIN. Turbotax military discount 2011 Type of bankruptcy estate. Turbotax military discount 2011 Bankruptcy case number. Turbotax military discount 2011 Court where the bankruptcy case is pending. Turbotax military discount 2011   The copy of the return(s) submitted with the request must be an exact copy of a valid return. Turbotax military discount 2011 A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. Turbotax military discount 2011    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. Turbotax military discount 2011 A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. Turbotax military discount 2011 Examination of return. Turbotax military discount 2011   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. Turbotax military discount 2011 If the return is selected for examination, it will be examined as soon as possible. Turbotax military discount 2011 The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. Turbotax military discount 2011   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. Turbotax military discount 2011   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. Turbotax military discount 2011   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. Turbotax military discount 2011 Note. Turbotax military discount 2011 An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. Turbotax military discount 2011   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei