Refund of Taxes Paid

The IRS will refund the following forgiven income tax liabilities.

1. Income tax liabilities that have been paid.
2. Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. See Minimum Amount of Relief, earlier.

Example 1.   A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. The total, $14,000, is eligible for tax forgiveness. However, he paid only $13,000 of that amount. The IRS will refund the $13,000 paid.

Example 2.   A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. The child qualifies for the minimum relief of $10,000. The $10,000 is treated as a tax payment for 2001 and will be refunded.

Period for filing a claim for credit or refund.    To obtain a tax refund on a previously filed income tax return, file an amended return (Form 1040X or an amended Form 1041) within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. For example, you have until April 15, 2004, to file an amended return on a 2000 Form 1040, 1040A, or 1040EZ that was filed by April 16, 2001, and for which the tax was paid when due. To obtain a refund on a return that has not been filed, file the return within 3 years of the original due date of the return.

Extension of time for victims of Oklahoma City attack.   The period described above has been extended for victims of the Oklahoma City attack. Survivors and personal representatives of these victims have until January 22, 2003, to file an original or amended return.

How To Claim Tax Forgiveness

Use the following procedures to claim income tax forgiveness.

Which Form To Use

The form you use depends on whether an income tax return for the eligible year was already filed for the decedent.

Return required but not yet filed.   File Form 1040 if the decedent was a U.S. citizen or resident. File Form 1040NR if the decedent was a nonresident alien. A nonresident alien is someone who is not a U.S. citizen or resident.

Return required and already filed.   File a separate Form 1040X for each year you are claiming tax relief.

Return not required and not filed.   File Form 1040 only for the year of death if the decedent was a U.S. citizen or resident. File Form 1040NR if the decedent was a nonresident alien.

Return not required but already filed.   File Form 1040X only for the year of death.

How to complete the returns.   Fill out Form 1040 or 1040NR according to its instructions but do not reduce the decedent's tax liability by any taxes that will be forgiven. Attach to each return a computation of the income tax to be forgiven or a copy of Worksheet A or B. If filing Form 1040 or Form 1040NR, also attach any Forms W-2. If the total forgiven tax liability for all eligible years is less than $10,000, attach to the decedent's final return a computation of the additional tax payment allowed or a copy of Worksheet C.

Also, please write one of the following across the top of page 1 of each return.

• KITA - Oklahoma City
• KITA - 9/11
• KITA - Anthrax

KITA means killed in terrorist attack.

Need a copy of a previously filed return?   You will find it easier to prepare Form 1040X if you have a copy of the decedent's previously filed tax return. If you need a copy, use Form 4506. The IRS will provide a free copy of the tax return if you write DISASTER in the top margin of Form 4506. Attach Letters Testamentary or other evidence to establish that you are authorized to act for the decedent's estate. Send Form 4506 to the address shown in the form instructions.

Taxpayer identification number.   A taxpayer identification number must be furnished on the decedent's returns. This is usually the decedent's social security number (SSN). However, a nonresident alien who is not eligible to get an SSN should have an individual taxpayer identification number (ITIN). If the decedent was a nonresident alien, had neither an SSN nor an ITIN, and was not required to file a U.S. income tax return for any tax year, do not apply for an ITIN. You may claim a refund by filing Form 1040NR without an SSN or ITIN.

Necessary Documents

Please attach the following documents to the return or amended return.

Proof of death.   Attach a copy of the death certificate. If the Department of Defense issued DD Form 1300, Report of Casualty, you can attach that form instead of the death certificate.

Form 1310.   You must send Form 1310 with all returns and claims for refund, unless either of the following applies.

• You are a surviving spouse filing an original or amended joint return with the decedent.
• You are a personal representative filing an original Form 1040 or Form 1040NR for the decedent and a court certificate showing your appointment is attached to the return.

A personal representative is an executor or administrator of a decedent's estate, as certified or appointed by the court. A copy of the decedent's will cannot be accepted as evidence that you are the personal representative.

If you have proof of death but do not have enough tax information to file a timely claim for a refund, file Form 1040X with Form 1310. Include a statement saying an amended return will be filed as soon as the necessary tax information is available.

Where To File

The IRS has set up a special office for processing returns and claims for tax forgiveness. Use one of the addresses shown below. Where you file the returns or claims depends on whether you use the U.S. Postal Service or a private delivery service.

Please do not send these returns or claims to any of the addresses shown in the tax form instructions.

U.S. Postal Service.   If you use the U.S. Postal Service, file these returns and claims at the following address.

Internal Revenue Service
P.O. Box 4053
Woburn, MA 01888

Private delivery service.   Private delivery services cannot deliver items to P.O. boxes. If you use a private delivery service, file these returns and claims at the following address.

Internal Revenue Service
Stop 661
310 Lowell St.
Andover, MA 01810

Designated private delivery services.   You can use the following private delivery services to file these returns and claims.

• Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service.
• DHL Worldwide Express (DHL): DHL Same Day Service, and DHL USA Overnight.
• Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day.
• United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

The private delivery service can tell you how to get written proof of the mailing date.

Payments to Survivors

The following section discusses the tax treatment of certain amounts received by survivors.

September 11th Victim Compensation Fund of 2001

Payments from the September 11th Victim Compensation Fund of 2001 are not included in income.

Qualified Disaster Relief Payments

Qualified disaster relief payments are not included in income. These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). No withholding applies to these payments.

Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses.

• Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack.
• Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. (A personal residence can be a rented residence or one you own.)
• Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack.

Qualified disaster relief payments also include the following.

• Payments made by common carriers (for example, American Airlines and United Airlines regarding the September 11 attacks) because of death or physical injury incurred as a result of a terrorist attack.
• Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack.

Qualified disaster relief payments do not include:

• Insurance or other reimbursements for expenses, or
• Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation.

Disability Payments

For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income.

Death Benefits

Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack.

If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. If that period has expired, you are granted an extension. You have until January 22, 2003, to file Form 1040X to exclude the death benefits. On top of page 1 of Form 1040X, write Extension of Limitations Under PL 107-134, sec. 102(b)(2).

Canceled Debt

Canceled debt is not included in your income (or the income of the estate) if:

• You (or the estate) were liable, or became liable, for the debt of a decedent, and
• The debt was canceled after September 10, 2001, and before January 1, 2002, because the decedent died as a result of the September 11 attacks or anthrax attacks.

The lender is not required to report the canceled debt on Form 1099-C, Cancellation of Debt.

Payments to Survivors of Public Safety Officers

If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income.

Bureau of Justice Assistance payments.   If you are a surviving dependent of a public safety officer (law enforcement officer or firefighter) who died in the line of duty, do not include in your income the death benefit paid to you by the Bureau of Justice Assistance.

Government plan annuity.   If you receive a survivor annuity as the child or spouse (or former spouse) of a public safety officer who was killed in the line of duty, you generally do not have to include it in income. This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer.

For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews.

More information.   For more information, see Publication 559.

Previous | First | Next

Publication Index | 2002 Tax Help Archives | Tax Help Archives | Home