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File 2009 Taxes For Free

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File 2009 Taxes For Free

File 2009 taxes for free Publication 531 - Main Content Table of Contents Keeping a Daily Tip RecordElectronic tip record. File 2009 taxes for free Reporting Tips to Your EmployerElectronic tip statement. File 2009 taxes for free Final report. File 2009 taxes for free Tip Rate Determination and Education Program Reporting Tips on Your Tax Return Allocated Tips How To Get Tax Help Keeping a Daily Tip Record Why keep a daily tip record. File 2009 taxes for free   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. File 2009 taxes for free How to keep a daily tip record. File 2009 taxes for free   There are two ways to keep a daily tip record. File 2009 taxes for free You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. File 2009 taxes for free You should keep your daily tip record with your tax or other personal records. File 2009 taxes for free You must keep your records for as long as they are important for administration of the federal tax law. File 2009 taxes for free For information on how long to keep records, see How Long to Keep Records in chapter 1 of Publication 17, Your Federal Income Tax. File 2009 taxes for free    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. File 2009 taxes for free To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244, Employee's Daily Record of Tips and Report to Employer. File 2009 taxes for free Publication 1244 is also available at www. File 2009 taxes for free irs. File 2009 taxes for free gov/pub1244. File 2009 taxes for free Publication 1244 includes a 1-year supply of Form 4070A. File 2009 taxes for free Each day, write in the information asked for on the form. File 2009 taxes for free A filled-in Form 4070A is shown on the following page. File 2009 taxes for free   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. File 2009 taxes for free Although you do not report these tips to your employer, you must report them on your tax return. File 2009 taxes for free   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). File 2009 taxes for free Then, each workday, write the date and the following information. File 2009 taxes for free Cash tips you get directly from customers or from other employees. File 2009 taxes for free Tips from credit and debit card charge customers that your employer pays you. File 2009 taxes for free The value of any noncash tips you get, such as tickets, passes, or other items of value. File 2009 taxes for free The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. File 2009 taxes for free Please click here for the text description of the image. File 2009 taxes for free Sample Filled-in Form 4070A from Publication 1244 Electronic tip record. File 2009 taxes for free   You can use an electronic system provided by your employer to record your daily tips. File 2009 taxes for free If you do, you must receive and keep a paper copy of this record. File 2009 taxes for free Service charges. File 2009 taxes for free    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. File 2009 taxes for free This is part of your wages, not a tip. File 2009 taxes for free The following factors determine if you have a tip or service charge: The payment is made free from compulsion; The customer has the right to determine the amount of payment; The payment is not subject to negotiation or dictated by employer policy; and The customer generally has the right to determine who receives the payment. File 2009 taxes for free See examples below. File 2009 taxes for free Example 1. File 2009 taxes for free Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. File 2009 taxes for free Jane's bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. File 2009 taxes for free Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. File 2009 taxes for free Do not include the 18% charge in your tip diary. File 2009 taxes for free Service charges that are paid to you are considered wages, not tips. File 2009 taxes for free Example 2. File 2009 taxes for free Good Food Restaurant includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. File 2009 taxes for free David's bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of the charges for food and beverages at the bottom of the bill beneath the signature line. File 2009 taxes for free Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. File 2009 taxes for free Be sure to include this amount in your tip diary. File 2009 taxes for free Sample Filled-in Form 4070 from Publication 1244 Please click here for the text description of the image. File 2009 taxes for free Filled-in Form 4070 Reporting Tips to Your Employer Why report tips to your employer. File 2009 taxes for free   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). File 2009 taxes for free What tips to report. File 2009 taxes for free   Report to your employer only cash, check, and debit and credit card tips you receive. File 2009 taxes for free   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. File 2009 taxes for free   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. File 2009 taxes for free Do not report to your employer any portion of the tips you receive that you pass on to other employees. File 2009 taxes for free However, you must report tips you receive from other employees. File 2009 taxes for free   Do not report the value of any noncash tips, such as tickets or passes, to your employer. File 2009 taxes for free You do not pay social security, Medicare, Additional Medicare, or railroad retirement taxes on these tips. File 2009 taxes for free How to report. File 2009 taxes for free   If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. File 2009 taxes for free Fill in the information asked for on the form, sign and date the form, and give it to your employer. File 2009 taxes for free A sample filled-in Form 4070 is shown above. File 2009 taxes for free To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. File 2009 taxes for free   If you do not use Form 4070, give your employer a statement with the following information. File 2009 taxes for free Your name, address, and social security number. File 2009 taxes for free Your employer's name, address, and business name (if it is different from your employer's name). File 2009 taxes for free The month (or the dates of any shorter period) in which you received tips. File 2009 taxes for free The total tips required to be reported for that period. File 2009 taxes for free You must sign and date the statement. File 2009 taxes for free Be sure to keep a copy with your tax or other personal records. File 2009 taxes for free   Your employer may require you to report your tips more than once a month. File 2009 taxes for free However, the statement cannot cover a period of more than 1 calendar month. File 2009 taxes for free Electronic tip statement. File 2009 taxes for free   Your employer can have you furnish your tip statements electronically. File 2009 taxes for free When to report. File 2009 taxes for free   Give your report for each month to your employer by the 10th of the next month. File 2009 taxes for free If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. File 2009 taxes for free Example. File 2009 taxes for free You must report your tips received in September 2014 by October 10, 2014. File 2009 taxes for free Final report. File 2009 taxes for free   If your employment ends during the month, you can report your tips when your employment ends. File 2009 taxes for free Penalty for not reporting tips. File 2009 taxes for free   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, Additional Medicare, or railroad retirement taxes you owe on the unreported tips. File 2009 taxes for free (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. File 2009 taxes for free ) The penalty amount is in addition to the taxes you owe. File 2009 taxes for free   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. File 2009 taxes for free To do so, attach a statement to your return explaining why you did not report them. File 2009 taxes for free Giving your employer money for taxes. File 2009 taxes for free   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. File 2009 taxes for free If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. File 2009 taxes for free   If you do not give your employer enough money, your employer will apply your regular pay and any money you give to the taxes, in the following order. File 2009 taxes for free All taxes on your regular pay. File 2009 taxes for free Social security, Medicare, Additional Medicare, or railroad retirement taxes on your reported tips. File 2009 taxes for free Federal, state, and local income taxes on your reported tips. File 2009 taxes for free    Any taxes that remain unpaid can be collected by your employer from your next paycheck. File 2009 taxes for free If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. File 2009 taxes for free See Publication 505, Tax Withholding and Estimated Tax, for more information. File 2009 taxes for free    Uncollected taxes. File 2009 taxes for free You must report on your tax return any social security and Medicare taxes, or railroad retirement taxes that remained uncollected at the end of 2013. File 2009 taxes for free These uncollected taxes will be shown on your 2013 Form W-2. File 2009 taxes for free See Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. File 2009 taxes for free Tip Rate Determination and Education Program Your employer may participate in the Tip Rate Determination and Education Program. File 2009 taxes for free The program was developed to help employees and employers understand and meet their tip reporting responsibilities. File 2009 taxes for free There are two agreements under the program: the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). File 2009 taxes for free A variation of the TRAC program, the Employer Tip Reporting Alternative Commitment, (EmTRAC) was designed to allow employers in the food and beverage industry to design and receive approval for their own TRAC programs. File 2009 taxes for free For information on the EmTRAC program, see Notice 2001-1, which is on page 261 of Internal Revenue Bulletin 2001-2 at www. File 2009 taxes for free irs. File 2009 taxes for free gov/pub/irs-irbs/irb01-02. File 2009 taxes for free pdf. File 2009 taxes for free If you are employed in the gaming industry, your employer may participate in the Gaming Industry Tip Compliance Agreement Program. File 2009 taxes for free See Revenue Procedure 2007-32, 2007-22 I. File 2009 taxes for free R. File 2009 taxes for free B. File 2009 taxes for free 1322, available at www. File 2009 taxes for free irs. File 2009 taxes for free gov/pub/irs-irbs/irb07_22. File 2009 taxes for free pdf. File 2009 taxes for free Your employer can provide you with a copy of any applicable agreement. File 2009 taxes for free To find out more about these agreements, visit IRS. File 2009 taxes for free gov and enter “restaurant tip reporting” in the search box. File 2009 taxes for free You may also call 1-800-829-4933, visit www. File 2009 taxes for free irs. File 2009 taxes for free gov/localcontacts for the IRS Taxpayer Assistance Center in your area, or send an email to Tip. File 2009 taxes for free Program@irs. File 2009 taxes for free gov and request information on this program. File 2009 taxes for free Reporting Tips on Your Tax Return How to report tips. File 2009 taxes for free   Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; Form 1040EZ, line 1; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. File 2009 taxes for free What tips to report. File 2009 taxes for free   Generally, you must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. File 2009 taxes for free Any tips you reported to your employer as required in 2013 are included in the wages shown in box 1 of your Form W-2. File 2009 taxes for free Add to the amount in box 1 only the tips you did not report to your employer. File 2009 taxes for free   However, any tips you received in 2013 that you reported to your employer as required after 2013 but before January 11, 2014, are not included in the wages shown in box 1 of your 2013 Form W-2. File 2009 taxes for free Do not include the amount of these tips on your 2013 tax return. File 2009 taxes for free Instead, include them on your 2014 tax return. File 2009 taxes for free Tips you received in 2012 that you reported to your employer as required after 2012 but before January 11, 2013, are included in the wages shown in box 1 of your 2013 Form W-2. File 2009 taxes for free Although these tips were received in 2012, you must report them on your 2013 tax return. File 2009 taxes for free   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. File 2009 taxes for free Do not report on your income tax return any portion of the tips you receive that you pass on to other employees. File 2009 taxes for free However, you must report tips you receive from other employees. File 2009 taxes for free    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. File 2009 taxes for free    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. File 2009 taxes for free   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. File 2009 taxes for free Cash and charge tips you received that totaled less than $20 for any month. File 2009 taxes for free The value of noncash tips, such as tickets, passes, or other items of value. File 2009 taxes for free Example. File 2009 taxes for free Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. File 2009 taxes for free Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. File 2009 taxes for free He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. File 2009 taxes for free Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages + $7,000 reported tips) in box 1. File 2009 taxes for free He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. File 2009 taxes for free Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. File 2009 taxes for free    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. File 2009 taxes for free To report these taxes, you must file a return even if you would not otherwise have to file. File 2009 taxes for free You must use Form 1040, Form 1040NR, Form 1040NR-EZ, Form 1040-SS, or 1040-PR (as appropriate) for this purpose. File 2009 taxes for free (You cannot file Form 1040EZ or Form 1040A. File 2009 taxes for free )    Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to figure social security and Medicare taxes. File 2009 taxes for free Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. File 2009 taxes for free Use Form 8959 to figure Additional Medicare Tax. File 2009 taxes for free If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. File 2009 taxes for free To get railroad retirement credit, you must report tips to your employer. File 2009 taxes for free Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. File 2009 taxes for free    You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. File 2009 taxes for free For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. File 2009 taxes for free   If your employer could not collect all the social security and Medicare taxes, or railroad retirement taxes you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). File 2009 taxes for free You must report these amounts as additional tax on your return. File 2009 taxes for free   If you worked in the U. File 2009 taxes for free S. File 2009 taxes for free possessions and received Form W-2AS, Form W-2CM, Form W-2GU, or Form W-2VI, any uncollected taxes on tips will be shown in box 12 with codes A and B. File 2009 taxes for free If you received Form 499R-2/W-2PR, any uncollected taxes will be shown in boxes 22 and 23. File 2009 taxes for free Unlike the uncollected portion of the regular (1. File 2009 taxes for free 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported on Form W-2. File 2009 taxes for free   To report these uncollected taxes, you must file a return even if you would not otherwise have to file. File 2009 taxes for free You can report these taxes on Form 1040, in the space next to line 60; Form 1040NR, line 59; Form 1040-SS, Part I, line 6; or Form 1040-PR, Part I, line 6. File 2009 taxes for free See the instructions for the appropriate form and line number indicated, and Form 8959. File 2009 taxes for free (You cannot file Form 1040A, Form 1040EZ, or Form 1040NR-EZ. File 2009 taxes for free ) Self-employed persons. File 2009 taxes for free    If you receive tips as a self-employed person, you should report these tips as income on Schedule C or C-EZ. File 2009 taxes for free See Publication 334, Tax Guide for Small Business, for more information on reporting business income. File 2009 taxes for free Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. File 2009 taxes for free They are not included in box 1 with your wages and reported tips. File 2009 taxes for free If box 8 is blank, this discussion does not apply to you. File 2009 taxes for free What are allocated tips. File 2009 taxes for free   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. File 2009 taxes for free Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. File 2009 taxes for free No income, social security, Medicare, Additional Medicare, or railroad retirement taxes are withheld on allocated tips. File 2009 taxes for free How were your allocated tips figured. File 2009 taxes for free   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). File 2009 taxes for free Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. File 2009 taxes for free For information about the exact allocation method used, ask your employer. File 2009 taxes for free Must you report your allocated tips on your tax return. File 2009 taxes for free   You must report tips you received in 2013 (including both cash and noncash tips) on your tax return as explained in What tips to report , earlier. File 2009 taxes for free Any tips you reported to your employer in 2013 as required (explained under Reporting Tips to Your Employer , earlier) are included in the wages shown in box 1 of your Form W-2. File 2009 taxes for free Add to the amount in box 1 only the tips you did not report to your employer as required. File 2009 taxes for free This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated amount. File 2009 taxes for free   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. File 2009 taxes for free How to report allocated tips. File 2009 taxes for free   If you received any tips in 2013 that you did not report to your employer as required (including allocated tips that you are required to report on your tax return), add these tips to the amount in box 1 of your Form(s) W-2 and report this amount as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. File 2009 taxes for free (You cannot file Form 1040A or Form 1040EZ). File 2009 taxes for free    Because social security, Medicare, or Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. File 2009 taxes for free Complete Form 4137 and include the allocated tips on line 1 of the form as provided in its instructions. File 2009 taxes for free See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. File 2009 taxes for free How to request an approved lower rate. File 2009 taxes for free   Your employer can use a tip rate lower than 8% (but not lower than 2%) to figure allocated tips only if the IRS approves the lower rate. File 2009 taxes for free Either the employer or the employees can request approval of a lower rate by filing a petition with the IRS. File 2009 taxes for free The petition must include specific information about the establishment that will justify the lower rate. File 2009 taxes for free A user fee must be paid with the petition. File 2009 taxes for free    An employee petition can be filed only with the consent of a majority of the directly tipped employees (waiters, bartenders, and others who receive tips directly from customers). File 2009 taxes for free The petition must state the total number of directly tipped employees and the number of employees consenting to the petition. File 2009 taxes for free Employees filing the petition must promptly notify the employer, and the employer must promptly give the IRS a copy of all Forms 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, filed for the establishment for the previous 3 years. File 2009 taxes for free   For more information about how to file a petition and what information to include, see Allocation of Tips in the Instructions for Form 8027. File 2009 taxes for free How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. File 2009 taxes for free Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. File 2009 taxes for free Free help with your tax return. File 2009 taxes for free   Free help in preparing your return is available nationwide from IRS-certified volunteers. File 2009 taxes for free The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. File 2009 taxes for free The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. File 2009 taxes for free Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. File 2009 taxes for free Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. File 2009 taxes for free To find the nearest VITA or TCE site, visit IRS. File 2009 taxes for free gov or call 1-800-906-9887. File 2009 taxes for free   As part of the TCE program, AARP offers the Tax-Aide counseling program. File 2009 taxes for free To find the nearest AARP Tax-Aide site, visit AARP's website at www. File 2009 taxes for free aarp. File 2009 taxes for free org/money/taxaide or call 1-888-227-7669. File 2009 taxes for free   For more information on these programs, go to IRS. File 2009 taxes for free gov and enter “VITA” in the search box. File 2009 taxes for free Internet. File 2009 taxes for free IRS. File 2009 taxes for free gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. File 2009 taxes for free Apply for an Employer Identification Number (EIN). File 2009 taxes for free Go to IRS. File 2009 taxes for free gov and enter Apply for an EIN in the search box. File 2009 taxes for free Request an Electronic Filing PIN by going to IRS. File 2009 taxes for free gov and entering Electronic Filing PIN in the search box. File 2009 taxes for free Check the status of your 2013 refund with Where's My Refund? Go to IRS. File 2009 taxes for free gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 2009 taxes for free If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File 2009 taxes for free Check the status of your amended return. File 2009 taxes for free Go to IRS. File 2009 taxes for free gov and enter Where's My Amended Return in the search box. File 2009 taxes for free Download forms, instructions, and publications, including some accessible versions. File 2009 taxes for free Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. File 2009 taxes for free gov or IRS2Go. 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File 2009 taxes for free An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. File 2009 taxes for free Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. File 2009 taxes for free If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. File 2009 taxes for free Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File 2009 taxes for free Locate the nearest volunteer help site with the VITA Locator Tool on IRS. File 2009 taxes for free gov. File 2009 taxes for free Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File 2009 taxes for free The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. File 2009 taxes for free Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. File 2009 taxes for free AARP offers the Tax-Aide counseling program as part of the TCE program. File 2009 taxes for free Visit AARP's website to find the nearest Tax-Aide location. File 2009 taxes for free Research your tax questions. File 2009 taxes for free Search publications and instructions by topic or keyword. File 2009 taxes for free Read the Internal Revenue Code, regulations, or other official guidance. File 2009 taxes for free Read Internal Revenue Bulletins. File 2009 taxes for free Sign up to receive local and national tax news by email. File 2009 taxes for free Phone. File 2009 taxes for free You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File 2009 taxes for free Download the free IRS2Go mobile app from the iTunes app store or from Google Play. File 2009 taxes for free Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. File 2009 taxes for free Call to locate the nearest volunteer help site, 1-800-906-9887. File 2009 taxes for free Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File 2009 taxes for free The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. File 2009 taxes for free Most VITA and TCE sites offer free electronic filing. File 2009 taxes for free Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File 2009 taxes for free Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File 2009 taxes for free Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. File 2009 taxes for free The automated Where's My Refund? information is available 24 hours a day, 7 days a week. File 2009 taxes for free If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File 2009 taxes for free Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. File 2009 taxes for free Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File 2009 taxes for free Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. File 2009 taxes for free Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File 2009 taxes for free Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). File 2009 taxes for free You should receive your order within 10 business days. File 2009 taxes for free Call to order transcripts of your tax returns or tax account, 1-800-908-9946. File 2009 taxes for free Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. File 2009 taxes for free Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. File 2009 taxes for free Call to ask tax questions, 1-800-829-1040. File 2009 taxes for free Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File 2009 taxes for free The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File 2009 taxes for free These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. File 2009 taxes for free gsa. File 2009 taxes for free gov/fedrelay. File 2009 taxes for free Walk-in. File 2009 taxes for free You can find a selection of forms, publications and services — in-person, face-to-face. File 2009 taxes for free Products. File 2009 taxes for free You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File 2009 taxes for free Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. File 2009 taxes for free Services. File 2009 taxes for free You can walk in to your local TAC most business days for personal, face-to-face tax help. File 2009 taxes for free An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. File 2009 taxes for free If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. File 2009 taxes for free No appointment is necessary—just walk in. File 2009 taxes for free Before visiting, check www. File 2009 taxes for free irs. File 2009 taxes for free gov/localcontacts for hours of operation and services provided. File 2009 taxes for free Mail. File 2009 taxes for free You can send your order for forms, instructions, and publications to the address below. File 2009 taxes for free You should receive a response within 10 business days after your request is received. File 2009 taxes for free  Internal Revenue Service 1201 N. File 2009 taxes for free Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. File 2009 taxes for free   The Taxpayer Advocate Service (TAS) is your voice at the IRS. File 2009 taxes for free Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File 2009 taxes for free What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. File 2009 taxes for free We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. File 2009 taxes for free You face (or your business is facing) an immediate threat of adverse action. File 2009 taxes for free You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File 2009 taxes for free   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. File 2009 taxes for free Here's why we can help: TAS is an independent organization within the IRS. File 2009 taxes for free Our advocates know how to work with the IRS. File 2009 taxes for free Our services are free and tailored to meet your needs. File 2009 taxes for free We have offices in every state, the District of Columbia, and Puerto Rico. File 2009 taxes for free How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. File 2009 taxes for free irs. File 2009 taxes for free gov/advocate, or call us toll-free at 1-877-777-4778. File 2009 taxes for free How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File 2009 taxes for free If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. File 2009 taxes for free irs. File 2009 taxes for free gov/sams. File 2009 taxes for free Low Income Taxpayer Clinics. File 2009 taxes for free   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. File 2009 taxes for free Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. File 2009 taxes for free Visit www. File 2009 taxes for free TaxpayerAdvocate. File 2009 taxes for free irs. File 2009 taxes for free gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. File 2009 taxes for free Prev  Up  Next   Home   More Online Publications
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Understanding your CP504B Notice

You have an unpaid amount due on your account. If you do not pay the amount due immediately, the
IRS will seize (levy) certain property or rights to property and apply it to pay the
amount you owe.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully — it explains your due date, amount due, and payment options.
  • Make your payment by your due date. Go to the payments page to find out more about your payment options.

You may want to...


Answers to Common Questions

What is the notice telling me?
This notice is telling you that we intend to issue a levy against certain property or rights to property because you still have a balance due on one of your tax accounts. You must pay this amount immediately to avoid this. It is also telling you that we will begin searching for other assets on which to issue a levy. We may also file a Federal Tax Lien, if we have not already done so.

What do I have to do?
Pay the amount due shown on the notice. Mail us your payment in the envelope we sent you. Include the bottom part of the notice to make sure we correctly credit your account.

If you can't pay the whole amount now, call us at the number printed at the top of the notice to see if you qualify for an installment agreement.

How much time do I have?
You should pay your balance due by the due date shown on your notice.

What happens if I don't pay or contact the IRS?
If you don't pay the amount due, we may send you a notice giving you a right to a hearing before the IRS Office of Appeals if you have not already received such a notice. We may then seize ("levy") your property or rights to property. Property includes:

  • Wages, real estate commissions, and other income
  • Bank accounts
  • Business assets
  • Personal assets (including your car and home)
  • Social Security benefits

This is your notice of intent to levy as required by Internal Revenue Code section 6331(d).

If you don't pay the amount due or call us to make payment arrangements, we can file a Notice of Federal Tax Lien on your property at any time, if we haven’t already done so.

If the lien is in place, you may find it difficult to sell or borrow against your property. The tax lien would also appear on your credit report ― which may harm your credit rating ― and your creditors would also be publicly notified that the IRS has priority to seize your property.

Who should I contact?
If you have any questions about the notice, call us at the number printed at the top of the notice. A customer service representative will assist you.

What if I don't agree or have already taken corrective action?
If you do not agree with this notice, contact us immediately at the number printed at the top of the notice. We will do our best to help you. If you have already paid this liability or arranged to pay it with an installment agreement, you should still call us at the number printed at the top of the notice to make sure your account reflects this.

Page Last Reviewed or Updated: 05-Mar-2014

The File 2009 Taxes For Free

File 2009 taxes for free 2. File 2009 taxes for free   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. File 2009 taxes for free You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. File 2009 taxes for free This chapter discusses accounting methods. File 2009 taxes for free For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. File 2009 taxes for free Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. File 2009 taxes for free Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. File 2009 taxes for free Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. File 2009 taxes for free A material item is one that affects the proper time for inclusion of income or allowance of a deduction. File 2009 taxes for free An item considered material for financial statement purposes is generally also considered material for income tax purposes. File 2009 taxes for free See Publication 538 for more information. File 2009 taxes for free You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. File 2009 taxes for free If you later want to change your accounting method, you generally must get IRS approval. File 2009 taxes for free How to obtain IRS approval is discussed later under Changes in Methods of Accounting . File 2009 taxes for free Types of accounting methods. File 2009 taxes for free   Generally, you can use any of the following accounting methods. File 2009 taxes for free Each method is discussed in detail below. File 2009 taxes for free Cash method. File 2009 taxes for free Accrual method. File 2009 taxes for free Special methods of accounting for certain items of income and expenses. File 2009 taxes for free Combination (hybrid) method using elements of two or more of the above. File 2009 taxes for free Business and other items. File 2009 taxes for free   You can account for business and personal items using different accounting methods. File 2009 taxes for free For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. File 2009 taxes for free Two or more businesses. File 2009 taxes for free   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. File 2009 taxes for free Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. File 2009 taxes for free Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. File 2009 taxes for free However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. File 2009 taxes for free See Accrual Method Required , later. File 2009 taxes for free Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. File 2009 taxes for free Items of income include money received as well as property or services received. File 2009 taxes for free If you receive property or services, you must include the fair market value (FMV) of the property or services in income. File 2009 taxes for free See chapter 3 for information on how to report farm income on your income tax return. File 2009 taxes for free Constructive receipt. File 2009 taxes for free   Income is constructively received when an amount is credited to your account or made available to you without restriction. File 2009 taxes for free You do not need to have possession of the income for it to be treated as income for the tax year. File 2009 taxes for free If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. File 2009 taxes for free Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. File 2009 taxes for free Direct payments and counter-cyclical payments. File 2009 taxes for free   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. File 2009 taxes for free Delaying receipt of income. File 2009 taxes for free   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. File 2009 taxes for free You must report the income in the year the money or property is received or made available to you without restriction. File 2009 taxes for free Example. File 2009 taxes for free Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. File 2009 taxes for free She was told in December that her payment was available. File 2009 taxes for free She requested not to be paid until January 2014. File 2009 taxes for free However, she must still include this payment in her 2013 income because it was made available to her in 2013. File 2009 taxes for free Debts paid by another person or canceled. File 2009 taxes for free   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. File 2009 taxes for free If you receive income in this way, you constructively receive the income when the debt is canceled or paid. File 2009 taxes for free See Cancellation of Debt in chapter 3. File 2009 taxes for free Deferred payment contract. File 2009 taxes for free   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. File 2009 taxes for free However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. File 2009 taxes for free Example. File 2009 taxes for free You are a farmer who uses the cash method and a calendar tax year. File 2009 taxes for free You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. File 2009 taxes for free You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. File 2009 taxes for free However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. File 2009 taxes for free Repayment of income. File 2009 taxes for free   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. File 2009 taxes for free If the repayment is more than $3,000, a special rule applies. File 2009 taxes for free For details, see Repayments in chapter 11 of Publication 535, Business Expenses. File 2009 taxes for free Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. File 2009 taxes for free This includes business expenses for which you contest liability. File 2009 taxes for free However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. File 2009 taxes for free See chapter 4 for information on how to deduct farm business expenses on your income tax return. File 2009 taxes for free Prepayment. File 2009 taxes for free   Generally, you cannot deduct expenses paid in advance. File 2009 taxes for free This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. File 2009 taxes for free Example. File 2009 taxes for free On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. File 2009 taxes for free In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. File 2009 taxes for free In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. File 2009 taxes for free An exception applies if the expense qualifies for the 12-month rule. File 2009 taxes for free See Publication 538 for more information and examples. File 2009 taxes for free See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. File 2009 taxes for free Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. File 2009 taxes for free The purpose of an accrual method of accounting is to correctly match income and expenses. File 2009 taxes for free Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. File 2009 taxes for free See Accrual Method Required and Farm Inventory , later. File 2009 taxes for free Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. File 2009 taxes for free Under this rule, include an amount in income on the earliest of the following dates. File 2009 taxes for free When you receive payment. File 2009 taxes for free When the income amount is due to you. File 2009 taxes for free When you earn the income. File 2009 taxes for free When title passes. File 2009 taxes for free If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. File 2009 taxes for free Inventory. File 2009 taxes for free   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. File 2009 taxes for free An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. File 2009 taxes for free See Publication 538 for more information. File 2009 taxes for free Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. File 2009 taxes for free Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. File 2009 taxes for free The all-events test has been met. File 2009 taxes for free This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. File 2009 taxes for free Economic performance has occurred. File 2009 taxes for free Economic performance. File 2009 taxes for free   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. File 2009 taxes for free If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. File 2009 taxes for free If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. File 2009 taxes for free Example. File 2009 taxes for free Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. File 2009 taxes for free She entered into a contract with ABC Farm Consulting in 2012. File 2009 taxes for free The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. File 2009 taxes for free It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. File 2009 taxes for free Jane paid ABC Farm Consulting $2,000 in December 2012. File 2009 taxes for free Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. File 2009 taxes for free Economic performance for Jane's liability in the contract occurs as the services are provided. File 2009 taxes for free Jane incurs the $2,000 cost in 2013. File 2009 taxes for free An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. File 2009 taxes for free For more information, see Economic Performance in Publication 538. File 2009 taxes for free Special rule for related persons. File 2009 taxes for free   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. File 2009 taxes for free Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. File 2009 taxes for free For more information, see Internal Revenue Code section 267. File 2009 taxes for free Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. File 2009 taxes for free A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. File 2009 taxes for free A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. File 2009 taxes for free A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. File 2009 taxes for free A tax shelter. File 2009 taxes for free Note. File 2009 taxes for free Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). File 2009 taxes for free Family corporation. File 2009 taxes for free   A family corporation is generally a corporation that meets one of the following ownership requirements. File 2009 taxes for free Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. File 2009 taxes for free Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. File 2009 taxes for free Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. File 2009 taxes for free For more information on family corporations, see Internal Revenue Code section 447. File 2009 taxes for free Tax shelter. File 2009 taxes for free   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. File 2009 taxes for free Its principal purpose is the avoidance or evasion of federal income tax. File 2009 taxes for free It is a farming syndicate. File 2009 taxes for free A farming syndicate is an entity that meets either of the following tests. File 2009 taxes for free Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. File 2009 taxes for free More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. File 2009 taxes for free   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. File 2009 taxes for free   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. File 2009 taxes for free Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. File 2009 taxes for free This record should show the actual count or measurement of the inventory. File 2009 taxes for free It should also show all factors that enter into its valuation, including quality and weight, if applicable. File 2009 taxes for free Hatchery business. File 2009 taxes for free   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. File 2009 taxes for free Products held for sale. File 2009 taxes for free   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. File 2009 taxes for free , must be included in inventory. File 2009 taxes for free Supplies. File 2009 taxes for free   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. File 2009 taxes for free Deduct the cost of supplies in the year used or consumed in operations. File 2009 taxes for free Do not include incidental supplies in inventory as these are deductible in the year of purchase. File 2009 taxes for free Livestock. File 2009 taxes for free   Livestock held primarily for sale must be included in inventory. File 2009 taxes for free Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. File 2009 taxes for free See also Unit-livestock-price method , later. File 2009 taxes for free If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. File 2009 taxes for free Growing crops. File 2009 taxes for free   Generally, growing crops are not required to be included in inventory. File 2009 taxes for free However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. File 2009 taxes for free See Uniform capitalization rules below. File 2009 taxes for free Also see Uniform Capitalization Rules in  chapter 6. File 2009 taxes for free Items to include in inventory. File 2009 taxes for free   Your inventory should include all items held for sale, or for use as feed, seed, etc. File 2009 taxes for free , whether raised or purchased, that are unsold at the end of the year. File 2009 taxes for free Uniform capitalization rules. File 2009 taxes for free   The following applies if you are required to use an accrual method of accounting. File 2009 taxes for free The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. File 2009 taxes for free The costs of animals are subject to the uniform capitalization rules. File 2009 taxes for free Inventory valuation methods. File 2009 taxes for free   The following methods, described below, are those generally available for valuing inventory. File 2009 taxes for free The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. File 2009 taxes for free Cost. File 2009 taxes for free Lower of cost or market. File 2009 taxes for free Farm-price method. File 2009 taxes for free Unit-livestock-price method. File 2009 taxes for free Cost and lower of cost or market methods. File 2009 taxes for free   See Publication 538 for information on these valuation methods. File 2009 taxes for free If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. File 2009 taxes for free However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. File 2009 taxes for free Farm-price method. File 2009 taxes for free   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. File 2009 taxes for free Market price is the current price at the nearest market in the quantities you usually sell. File 2009 taxes for free Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. File 2009 taxes for free If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. File 2009 taxes for free Unit-livestock-price method. File 2009 taxes for free   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. File 2009 taxes for free You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. File 2009 taxes for free The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. File 2009 taxes for free Unit prices and classifications are subject to approval by the IRS on examination of your return. File 2009 taxes for free You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. File 2009 taxes for free IRS approval is not required for these adjustments. File 2009 taxes for free Any other changes in unit prices or classifications do require IRS approval. File 2009 taxes for free   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. File 2009 taxes for free This method accounts only for the increase in cost of raising an animal to maturity. File 2009 taxes for free It does not provide for any decrease in the animal's market value after it reaches maturity. File 2009 taxes for free Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. File 2009 taxes for free   Do not include sold or lost animals in the year-end inventory. File 2009 taxes for free If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. File 2009 taxes for free The animals on hand at the end of the year are considered those most recently acquired. File 2009 taxes for free   You must include in inventory all livestock purchased primarily for sale. File 2009 taxes for free You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. File 2009 taxes for free However, you must be consistent from year to year, regardless of the method you have chosen. File 2009 taxes for free You cannot change your method without obtaining approval from the IRS. File 2009 taxes for free   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. File 2009 taxes for free If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. File 2009 taxes for free However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. File 2009 taxes for free This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. File 2009 taxes for free It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. File 2009 taxes for free Uniform capitalization rules. File 2009 taxes for free   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. File 2009 taxes for free This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. File 2009 taxes for free Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. File 2009 taxes for free Example 1. File 2009 taxes for free You are a farmer who uses an accrual method of accounting. File 2009 taxes for free You keep your books on the calendar year basis. File 2009 taxes for free You sell grain in December 2013 but you are not paid until January 2014. File 2009 taxes for free Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. File 2009 taxes for free Example 2. File 2009 taxes for free Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. File 2009 taxes for free Under this method, you include the sales proceeds in income for 2014, the year you receive payment. File 2009 taxes for free Deduct the costs of producing the grain in the year you pay for them. File 2009 taxes for free Special Methods of Accounting There are special methods of accounting for certain items of income and expense. File 2009 taxes for free Crop method. File 2009 taxes for free   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. File 2009 taxes for free You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. File 2009 taxes for free Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. File 2009 taxes for free    See chapter 4 for details on deducting the costs of operating a farm. File 2009 taxes for free Also see Regulations section 1. File 2009 taxes for free 162-12. File 2009 taxes for free Other special methods. File 2009 taxes for free   Other special methods of accounting apply to the following items. File 2009 taxes for free Amortization, see chapter 7. File 2009 taxes for free Casualties, see chapter 11. File 2009 taxes for free Condemnations, see chapter 11. File 2009 taxes for free Depletion, see chapter 7. File 2009 taxes for free Depreciation, see chapter 7. File 2009 taxes for free Farm business expenses, see chapter 4. File 2009 taxes for free Farm income, see chapter 3. File 2009 taxes for free Installment sales, see chapter 10. File 2009 taxes for free Soil and water conservation expenses, see chapter 5. File 2009 taxes for free Thefts, see chapter 11. File 2009 taxes for free Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. File 2009 taxes for free However, the following restrictions apply. File 2009 taxes for free If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. File 2009 taxes for free If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. File 2009 taxes for free Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). File 2009 taxes for free Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. File 2009 taxes for free You may also have to pay a fee. File 2009 taxes for free To obtain approval, you must generally file Form 3115. File 2009 taxes for free There are instances when you can obtain automatic consent to change certain methods of accounting. File 2009 taxes for free See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. File 2009 taxes for free For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. File 2009 taxes for free Also see Publication 538. File 2009 taxes for free Prev  Up  Next   Home   More Online Publications