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Irs Gov Free File

Irs gov free file Index A Assistance (see Tax help) F Free tax services, How To Get Tax Help H Help (see Tax help) M More information (see Tax help) P Publications (see Tax help) T Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. Irs gov free file TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Understanding Your CP01S Notice

We received your Form 14039 or similar statement for your identity theft claim. We'll contact you when we finish processing your case or if we need additional information.


What you need to do

  • Continue to file your federal income tax returns as required by law.

You may want to


Answers to Common Questions

Q. Who should I contact if I have more questions about my account related to identity theft?

A. The Identity Protection Specialized Unit can assist you with questions regarding identity theft related to your account. You can call them at 1-800-908-4490. The number can also be found on your notice. For all other tax account related questions, contact the IRS help desk at 1-800-829-1040.

Where can I find more information on preventing identity theft?


Tips for next year

File your return as you normally would. If we find that someone is attempting to use your SSN for filing a tax return we will notify you and provide you with a PIN to use when filing your return.

 

 

 

Page Last Reviewed or Updated: 21-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Irs Gov Free File

Irs gov free file 2. Irs gov free file   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. Irs gov free file Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. Irs gov free file Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. Irs gov free file Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. Irs gov free file The annual accounting period for your income tax return is called a tax year. Irs gov free file You can use one of the following tax years. Irs gov free file A calendar tax year. Irs gov free file A fiscal tax year. Irs gov free file Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. Irs gov free file A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. Irs gov free file Calendar tax year. Irs gov free file   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Irs gov free file   You must adopt the calendar tax year if any of the following apply. Irs gov free file You do not keep books. Irs gov free file You have no annual accounting period. Irs gov free file Your present tax year does not qualify as a fiscal year. Irs gov free file Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. Irs gov free file   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Irs gov free file For more information, see Change in tax year, later. Irs gov free file   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. Irs gov free file Fiscal tax year. Irs gov free file   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Irs gov free file A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Irs gov free file   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. Irs gov free file   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. Irs gov free file Change in tax year. Irs gov free file   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. Irs gov free file See the Instructions for Form 1128 for exceptions. Irs gov free file If you qualify for an automatic approval request, a user fee is not required. Irs gov free file If you do not qualify for automatic approval, a ruling must be requested. Irs gov free file See the instructions for Form 1128 for information about user fees if you are requesting a ruling. Irs gov free file Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Irs gov free file Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. Irs gov free file You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. Irs gov free file After that, if you want to change your accounting method, you must generally get IRS approval. Irs gov free file See Change in Accounting Method, later. Irs gov free file Kinds of methods. Irs gov free file   Generally, you can use any of the following accounting methods. Irs gov free file Cash method. Irs gov free file An accrual method. Irs gov free file Special methods of accounting for certain items of income and expenses. Irs gov free file Combination method using elements of two or more of the above. Irs gov free file You must use the same accounting method to figure your taxable income and to keep your books. Irs gov free file Also, you must use an accounting method that clearly shows your income. Irs gov free file Business and personal items. Irs gov free file   You can account for business and personal items under different accounting methods. Irs gov free file For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Irs gov free file Two or more businesses. Irs gov free file   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. Irs gov free file They are separate and distinct only if you maintain complete and separate books and records for each business. Irs gov free file Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. Irs gov free file However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. Irs gov free file For more information, see Inventories, later. Irs gov free file Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. Irs gov free file If you receive property or services, you must include their fair market value in income. Irs gov free file Example. Irs gov free file On December 30, 2012, Mrs. Irs gov free file Sycamore sent you a check for interior decorating services you provided to her. Irs gov free file You received the check on January 2, 2013. Irs gov free file You must include the amount of the check in income for 2013. Irs gov free file Constructive receipt. Irs gov free file   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. Irs gov free file You do not need to have possession of it. Irs gov free file If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. Irs gov free file Example. Irs gov free file Interest is credited to your bank account in December 2013. Irs gov free file You do not withdraw it or enter it into your passbook until 2014. Irs gov free file You must include it in your gross income for 2013. Irs gov free file Delaying receipt of income. Irs gov free file   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Irs gov free file You must report the income in the year the property is received or made available to you without restriction. Irs gov free file Example. Irs gov free file Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. Irs gov free file She was told in December that her payment was available. Irs gov free file At her request, she was not paid until January 2014. Irs gov free file She must include this payment in her 2013 income because it was constructively received in 2013. Irs gov free file Checks. Irs gov free file   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. Irs gov free file Example. Irs gov free file Dr. Irs gov free file Redd received a check for $500 on December 31, 2013, from a patient. Irs gov free file She could not deposit the check in her business account until January 2, 2014. Irs gov free file She must include this fee in her income for 2013. Irs gov free file Debts paid by another person or canceled. Irs gov free file   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. Irs gov free file If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Irs gov free file For more information, see Canceled Debt under Kinds of Income in chapter 5. Irs gov free file Repayment of income. Irs gov free file   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. Irs gov free file If the amount you repay is over $3,000, a special rule applies. Irs gov free file For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. Irs gov free file Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. Irs gov free file This includes business expenses for which you contest liability. Irs gov free file However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. Irs gov free file Expenses paid in advance. Irs gov free file   You can deduct an expense you pay in advance only in the year to which it applies. Irs gov free file Example. Irs gov free file You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. Irs gov free file You can deduct $500 in 2013 and $500 in 2014. Irs gov free file 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. Irs gov free file The purpose of an accrual method of accounting is to match income and expenses in the correct year. Irs gov free file Income—General Rule Under an accrual method, you generally include an amount in your gross 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. Irs gov free file Example. Irs gov free file You are a calendar year accrual method taxpayer. Irs gov free file You sold a computer on December 28, 2013. Irs gov free file You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. Irs gov free file You must include the amount received for the computer in your 2013 income. Irs gov free file Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. Irs gov free file Estimated income. Irs gov free file   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. Irs gov free file Change in payment schedule for services. Irs gov free file   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. Irs gov free file Advance payments for services. Irs gov free file   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. Irs gov free file However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. Irs gov free file However, you cannot postpone including any payment beyond that tax year. Irs gov free file   For more information, see Advance Payment for Services under Accrual Method in Publication 538. Irs gov free file That publication also explains special rules for reporting the following types of income. Irs gov free file Advance payments for service agreements. Irs gov free file Prepaid rent. Irs gov free file Advance payments for sales. Irs gov free file   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. Irs gov free file If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. Irs gov free file An agreement includes a gift certificate that can be redeemed for goods. Irs gov free file Treat amounts that are due and payable as amounts you received. Irs gov free file   You generally include an advance payment in income for the tax year in which you receive it. Irs gov free file However, you can use an alternative method. Irs gov free file For information about the alternative method, see Publication 538. Irs gov free file Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. Irs gov free file The all-events test has been met. Irs gov free file The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Irs gov free file Economic performance has occurred. Irs gov free file Economic performance. Irs gov free file   You generally cannot deduct or capitalize a business expense until economic performance occurs. Irs gov free file 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. Irs gov free file If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Irs gov free file An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Irs gov free file For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. Irs gov free file Example. Irs gov free file You are a calendar year taxpayer and use an accrual method of accounting. Irs gov free file You buy office supplies in December 2013. Irs gov free file You receive the supplies and the bill in December, but you pay the bill in January 2014. Irs gov free file You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. Irs gov free file Your office supplies may qualify as a recurring expense. Irs gov free file In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). Irs gov free file Keeping inventories. Irs gov free file   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. Irs gov free file If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. Irs gov free file For more information, see Inventories , later. Irs gov free file Special rule for related persons. Irs gov free file   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. Irs gov free file Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Irs gov free file If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. Irs gov free file   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Irs gov free file For a list of other related persons, see section 267 of the Internal Revenue Code. Irs gov free file Combination Method You can generally 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. Irs gov free file However, the following restrictions apply. Irs gov free file If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. Irs gov free file (See, however, Inventories, later. Irs gov free file ) You can use the cash method for all other items of income and expenses. Irs gov free file If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Irs gov free file If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Irs gov free file If you use a combination method that includes the cash method, treat that combination method as the cash method. Irs gov free file Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. Irs gov free file However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. Irs gov free file These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). Irs gov free file A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Irs gov free file A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Irs gov free file Qualifying taxpayer. Irs gov free file   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. Irs gov free file (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. Irs gov free file ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. Irs gov free file Qualifying small business taxpayer. Irs gov free file   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. Irs gov free file (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. Irs gov free file ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. Irs gov free file Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). Irs gov free file Business not owned or not in existence for 3 years. Irs gov free file   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. Irs gov free file If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. Irs gov free file Materials and supplies that are not incidental. Irs gov free file   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. Irs gov free file If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. Irs gov free file Changing accounting method. Irs gov free file   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. Irs gov free file See Change in Accounting Method, later. Irs gov free file More information. Irs gov free file    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Irs gov free file For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Irs gov free file Items included in inventory. Irs gov free file   If you are required to account for inventories, include the following items when accounting for your inventory. Irs gov free file Merchandise or stock in trade. Irs gov free file Raw materials. Irs gov free file Work in process. Irs gov free file Finished products. Irs gov free file Supplies that physically become a part of the item intended for sale. Irs gov free file Valuing inventory. Irs gov free file   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). Irs gov free file To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. Irs gov free file   Inventory valuation rules cannot be the same for all kinds of businesses. Irs gov free file The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Irs gov free file Your inventory practices must be consistent from year to year. Irs gov free file More information. Irs gov free file   For more information about inventories, see Publication 538. Irs gov free file Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. Irs gov free file Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Irs gov free file You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Irs gov free file Activities subject to the uniform capitalization rules. Irs gov free file   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Irs gov free file Produce real or tangible personal property. Irs gov free file For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Irs gov free file Acquire property for resale. Irs gov free file Exceptions. Irs gov free file   These rules do not apply to the following property. Irs gov free file Personal property you acquire for resale if your average annual gross receipts are $10 million or less. Irs gov free file Property you produce if you meet either of the following conditions. Irs gov free file Your indirect costs of producing the property are $200,000 or less. Irs gov free file You use the cash method of accounting and do not account for inventories. Irs gov free file For more information, see Inventories, earlier. Irs gov free file Special Methods There are special methods of accounting for certain items of income or expense. Irs gov free file These include the following. Irs gov free file Amortization, discussed in chapter 8 of Publication 535, Business Expenses. Irs gov free file Bad debts, discussed in chapter 10 of Publication 535. Irs gov free file Depletion, discussed in chapter 9 of Publication 535. Irs gov free file Depreciation, discussed in Publication 946, How To Depreciate Property. Irs gov free file Installment sales, discussed in Publication 537, Installment Sales. Irs gov free file Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Irs gov free file A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. Irs gov free file To get approval, you must file Form 3115, Application for Change in Accounting Method. Irs gov free file You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. Irs gov free file You may have to pay a user fee. Irs gov free file For more information, see the form instructions. Irs gov free file Automatic change procedures. Irs gov free file   Certain taxpayers can presume to have IRS approval to change their method of accounting. Irs gov free file The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. Irs gov free file No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. Irs gov free file   Generally, you must use Form 3115 to request an automatic change. Irs gov free file For more information, see the Instructions for Form 3115. Irs gov free file Prev  Up  Next   Home   More Online Publications