Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free Tax 2011

1040 Ez Irs1042nr EzFederal Tax FormsCan I File 1040nr OnlineCan I File My 2011 Taxes On TurbotaxIrs Form 1040x 20131040nrHow To Amend 2012 Tax Return1040x TurbotaxTax Act 2011 Free DownloadWhere To File A 1040xAmend Federal Tax Return FreeE File State Income TaxIncome Tax 2012Irs Forms1040ez Tax TablesTax Act OnlineIrs 2012 Form 1040aFile Free State Income TaxFree Federal And State Tax E FileEz Tax FormFree Tax Extension OnlineFree 2011 Tax Software DownloadFree 2009 Tax SoftwareI Need To Amend My TaxesFile My State Taxes For FreeHow To File Amended Tax ReturnTurbotax MilitaryFree File Taxes 2011TaxFree Tax ReturnsFederal Income Tax Amendment2013 Income Tax Forms 1040ezFile 2011 Taxes Online TurbotaxHr Block Free TaxesH&r Block Free State Tax FilingHow To File Taxes From 2011InstructionsFile For Extension 2012 TaxesTax Act 2012 Login Return User

Free Tax 2011

Free tax 2011 1. Free tax 2011   Canceled Debts Table of Contents General RulesForm 1099-C Discounts and loan modifications Sales or other dispositions (such as foreclosures and repossessions) Abandonments Stockholder debt This chapter discusses the tax treatment of canceled debts. Free tax 2011 General Rules Generally, if a debt for which you are personally liable is forgiven or discharged for less than the full amount owed, the debt is considered canceled in whatever amount it remained unpaid. Free tax 2011 There are exceptions to this rule, discussed under Exceptions , later. Free tax 2011 Generally, you must include the canceled debt in your income. Free tax 2011 However, you may be able to exclude the canceled debt. Free tax 2011 See Exclusions , later. Free tax 2011 Example. Free tax 2011 John owed $1,000 to Mary. Free tax 2011 Mary agreed to accept and John paid $400 in satisfaction of the entire debt. Free tax 2011 John has canceled debt of $600. Free tax 2011 Example. Free tax 2011 Margaret owed $1,000 to Henry. Free tax 2011 Henry and Margaret agreed that Margaret would provide Henry with services (instead of money) in full satisfaction of the debt. Free tax 2011 Margaret does not have canceled debt. Free tax 2011 Instead, she has income from services. Free tax 2011 A debt includes any indebtedness: For which you are liable, or Subject to which you hold property. Free tax 2011 Debt for which you are personally liable is recourse debt. Free tax 2011 All other debt is nonrecourse debt. Free tax 2011 If you are not personally liable for the debt, you do not have ordinary income from the cancellation of debt unless you retain the collateral and either: The lender offers a discount for the early payment of the debt, or The lender agrees to a loan modification that results in the reduction of the principal balance of the debt. Free tax 2011 See Discounts and loan modifications , later. Free tax 2011 However, upon the disposition of the property securing a nonrecourse debt, the amount realized includes the entire unpaid amount of the debt, not just the FMV of the property. Free tax 2011 As a result, you may realize a gain or loss if the outstanding debt immediately before the disposition is more or less than your adjusted basis in the property. Free tax 2011 For more details on figuring your gain or loss, see chapter 2 of this publication or see Publication 544. Free tax 2011 There are several exceptions and exclusions that may result in part or all of a canceled debt being nontaxable. Free tax 2011 See Exceptions and Exclusions, later. Free tax 2011 You must report any taxable canceled debt as ordinary income on: Form 1040 or Form 1040NR, line 21, if the debt is a nonbusiness debt; Schedule C (Form 1040), line 6 (or Schedule C-EZ (Form 1040), line 1), if the debt is related to a nonfarm sole proprietorship; Schedule E (Form 1040), line 3, if the debt is related to nonfarm rental of real property; Form 4835, line 6, if the debt is related to a farm rental activity for which you use Form 4835 to report farm rental income based on crops or livestock produced by a tenant; or Schedule F (Form 1040), line 8, if the debt is farm debt and you are a farmer. Free tax 2011 Form 1099-C If you receive a Form 1099-C, that means an applicable entity has reported an identifiable event to the IRS regarding a debt you owe. Free tax 2011 The identifiable event may be an actual cancellation of the debt or it may be an event the applicable entity is required, solely for purposes of reporting to the IRS, to treat as a cancellation of debt. Free tax 2011 For information on the reasons an applicable entity files Form 1099-C, see Identifiable event codes, later. Free tax 2011 Unless you meet one of the exceptions or exclusions discussed later, this canceled debt is ordinary income and must be reported on the appropriate form discussed above. Free tax 2011 An applicable entity includes: A federal government agency, A financial institution, A credit union, and Any organization a significant trade or business of which is lending money. Free tax 2011 Identifiable event codes. Free tax 2011    Box 6 of Form 1099-C should indicate the reason the creditor filed this form. Free tax 2011 The codes shown in box 6 are explained below. Free tax 2011 Also see the chart after the explanation for a quick reference guide for the codes used in Box 6. Free tax 2011 Note. Free tax 2011 Codes A through G and I identify specific occurrences resulting from an actual discharge of indebtedness. Free tax 2011 However, Code H, Expiration of nonpayment testing period, does not necessarily identify an actual discharge of indebtedness. Free tax 2011 Code A — Bankruptcy. Free tax 2011 Code A is used to identify cancellation of debt as a result of a title 11 bankruptcy case. Free tax 2011 See Bankruptcy , later. Free tax 2011 Code B — Other judicial debt relief. Free tax 2011 Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy. Free tax 2011 Code C — Statute of limitations or expiration of deficiency period. Free tax 2011 Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. Free tax 2011 In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired. Free tax 2011 Code D — Foreclosure election. Free tax 2011 Code D is used to identify cancellation of debt when the creditor elects foreclosure remedies that statutorily end or bar the creditor's right to pursue collection of the debt. Free tax 2011 This event applies to a mortgage lender or holder who is barred from pursuing debt collection after a power of sale in the mortgage or deed of trust is exercised. Free tax 2011 Code E — Debt relief from probate or similar proceeding. Free tax 2011 Code E is used to identify cancellation of debt as a result of a probate court or similar legal proceeding. Free tax 2011 Code F — By agreement. Free tax 2011 Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration. Free tax 2011 Code G — Decision or policy to discontinue collection. Free tax 2011 Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. Free tax 2011 For purposes of this identifiable event, a defined policy includes both a written policy and the creditor's established business practice. Free tax 2011 Code H — Expiration of nonpayment testing period. Free tax 2011 Code H is used to indicate that the creditor has not received a payment on the debt during a testing period ending on December 31, 2013. Free tax 2011 The testing period is a 36-month period increased by the number of months the creditor was prevented from engaging in collection activity by a stay in bankruptcy or similar bar under state or local law. Free tax 2011 This identifiable event applies only for a creditor that is a financial institution or credit union (and certain of their subsidiaries), the Federal Deposit Insurance Corporation (FDIC), Resolution Trust Corporation (RTC), National Credit Union Administration (NCUA), and other Federal executive agencies. Free tax 2011 Expiration of the nonpayment testing period does not necessarily result from an actual discharge of indebtedness. Free tax 2011 Code I — Other actual discharge before identifiable event. Free tax 2011 Code I is used to identify an actual cancellation of debt that occurs before any of the identifiable events described in codes A through H. Free tax 2011 Form 1099-C Reference Guide for Box 6 Identifiable Event Codes A Bankruptcy B Other judicial debt relief C Statute of limitations or expiration of deficiency period D Foreclosure election E Debt relief from probate or similar proceeding F By agreement G Decision or policy to discontinue collection H Expiration of nonpayment testing period I Other actual discharge before identifiable event Even if you did not receive a Form 1099-C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies. Free tax 2011 Amount of canceled debt. Free tax 2011    The amount in box 2 of Form 1099-C may represent some or all of the debt that has been canceled or treated as canceled. Free tax 2011 The amount in box 2 will include principal and may include interest and other nonprincipal amounts (such as fees or penalties). Free tax 2011 Unless you meet one of the exceptions or exclusions discussed later, the amount of the debt that has been canceled is ordinary income and must be reported on the appropriate form as discussed earlier. Free tax 2011 Interest included in canceled debt. Free tax 2011    If any interest is included in the amount of canceled debt in box 2, it will be shown in box 3. Free tax 2011 Whether the interest portion of the canceled debt must be included in your income depends on whether the interest would be deductible if you paid it. Free tax 2011 See Deductible Debt under Exceptions, later. Free tax 2011 Persons who each receive a Form 1099-C showing the full amount of debt. Free tax 2011    If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. Free tax 2011 However, you may not have to report that entire amount as income. Free tax 2011 The amount, if any, you must report depends on all the facts and circumstances, including: State law, The amount of debt proceeds each person received, How much of any interest deduction from the debt was claimed by each person, How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner, and Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication. Free tax 2011 See Example 3 under Insolvency, later. Free tax 2011 Discounts and loan modifications If a lender discounts (reduces) the principal balance of a loan because you pay it off early, or agrees to a loan modification (a “workout”) that includes a reduction in the principal balance of a loan, the amount of the discount or the amount of principal reduction is canceled debt. Free tax 2011 However, if the debt is nonrecourse and you did not retain the collateral, you do not have cancellation of the debt income. Free tax 2011 The amount of the canceled debt must be included in income unless one of the exceptions or exclusions described later applies. Free tax 2011 For more details, see Exceptions and Exclusions, later. Free tax 2011 Sales or other dispositions (such as foreclosures and repossessions) Recourse debt. Free tax 2011   If you owned property that was subject to a recourse debt in excess of the FMV of the property, the lender's foreclosure or repossession of the property is treated as a sale or disposition of the property by you and may result in your realization of gain or loss. Free tax 2011 The gain or loss on the disposition of the property is measured by the difference between the FMV of the property at the time of the disposition and your adjusted basis (usually your cost) in the property. Free tax 2011 The character of the gain or loss (such as ordinary or capital) is determined by the character of the property. Free tax 2011 If the lender forgives all or part of the amount of the debt in excess of the FMV of the property, the cancellation of the excess debt may result in ordinary income. Free tax 2011 The ordinary income from the cancellation of debt (the excess of the canceled debt over the FMV of the property) must be included in your gross income reported on your tax return unless one of the exceptions or exclusions described later applies. Free tax 2011 For more details, see Exceptions and Exclusions, later. Free tax 2011 Nonrecourse debt. Free tax 2011   If you owned property that was subject to a nonrecourse debt in excess of the FMV of the property, the lender's foreclosure on the property does not result in ordinary income from the cancellation of debt. Free tax 2011 The entire amount of the nonrecourse debt is treated as an amount realized on the disposition of the property. Free tax 2011 The gain or loss on the disposition of the property is measured by the difference between the total amount realized (the entire amount of the nonrecourse debt plus the amount of cash and the FMV of any property received) and your adjusted basis in the property. Free tax 2011 The character of the gain or loss is determined by the character of the property. Free tax 2011 More information. Free tax 2011    See Publications 523, 544, and 551, and chapter 2 of this publication for more details. Free tax 2011 Abandonments Recourse debt. Free tax 2011   If you abandon property that secures a debt for which you are personally liable (recourse debt) and the debt is canceled, you will realize ordinary income equal to the canceled debt. Free tax 2011 You must report this income on your tax return unless one of the exceptions or exclusions described later applies. Free tax 2011 For more details, see Exceptions and Exclusions, later. Free tax 2011 This income is separate from any amount realized from the abandonment of the property. Free tax 2011 For more details, see chapter 3. Free tax 2011 Nonrecourse debt. Free tax 2011   If you abandon property that secures a debt for which you are not personally liable (nonrecourse debt), you may realize gain or loss but will not have cancellation of indebtedness income. Free tax 2011 Stockholder debt If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution. Free tax 2011 For more information, see Publication 542, Corporations. Free tax 2011 Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Tax Relief for Victims of Severe Storms, Flooding, Mudslides and Landslides in West Virginia

Updated 4/20/2012 to include Lincoln and Mingo counties

WVA-2012-2, March 27, 2012

CHARLESTON — Victims of the severe storms, flooding, mudslides and landslides that began on March 15, 2012 in parts of West Virginia may qualify for tax relief from the Internal Revenue Service.

The President has declared Lincoln, Logan and Mingo counties a federal disaster area. Individuals who reside or have a business in this county may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after March 15, and on or before May 31, have been postponed to May 31, 2012. This includes the April 17 deadline for filing 2011 individual income tax returns, making income tax payments and making 2011 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after March 15, and on or before March 30, as long as the deposits are made by March 30, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until May 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after March 15 and on or before May 31.

The IRS also gives affected taxpayers until May 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after March 15 and on or before May 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after March 15 and on or before March 30 provided the taxpayer makes these deposits by March 30.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “West Virginia/Severe Storms, Flooding, Mudslides, and Landslides” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 06-Mar-2014

The Free Tax 2011

Free tax 2011 Publication 1212 - Additional Material Prev  Up  Next   Home   More Online Publications