Who must file. Generally, the amount of income you can receive before you must file a return has been increased. See Table 1-1, Table 1-2,
and Table 1-3 for the
specific amounts.
Telefile no longer available. You can no longer use Telefile to file your tax return. There are other IRS e-file options that you can use.
Automatic 6-month extension. You can now use Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, to obtain
an automatic 6-month
extension to file your tax return.
Mailing your return. You may be mailing your return to a different address this year because the IRS has changed the filing location for several
areas. If you received
an envelope with your tax package, please use it. Otherwise, see Where Do I File, later in this chapter.
Reminders
Alternative filing methods. Rather than filing a return on paper, you may be able to file electronically using IRS e-file. Create your own personal identification
number (PIN) and file a completely paperless tax return. For more information, see Does My Return Have To Be on Paper, later.
Change of address. If you change your address, you should notify the IRS. See Change of Address, later, under What Happens After I File. If you
were affected by Hurricane Katrina or Rita, you may be able to verbally change your address.
Enter your social security number. You must enter your social security number (SSN) in the spaces provided on your tax return. If you file a joint return, enter
the SSNs in the same
order as the names.
Direct deposit of refund. Instead of getting a paper check, you may be able to have your refund deposited directly into your account at a bank or other
financial
institution. See Direct Deposit under Refunds, later.
Alternative payment methods. If you owe additional tax, you may be able to pay electronically. See How To Pay, later.
Installment agreement. If you cannot pay the full amount due with your return, you may ask to make monthly installment payments. See Installment Agreement,
later, under Amount You Owe.
Service in combat zone. You are allowed extra time to take care of your tax matters if you are a member of the Armed Forces who served in a combat
zone, or if you served
in the combat zone in support of the Armed Forces. See Individuals Serving in Combat Zone, later, under When Do I Have To File.
Adoption taxpayer identification number. If a child has been placed in your home for purposes of legal adoption and you will not be able to get a social security number
for the child in
time to file your return, you may be able to get an adoption taxpayer identification number (ATIN). For more information,
see Social Security
Number, later.
Taxpayer identification number for aliens. If you or your dependent is a nonresident or resident alien who does not have and is not eligible to get a social security
number, file Form W-7,
Application for IRS Individual Taxpayer Identification Number, with the IRS. For more information, see Social Security Number, later.
Introduction
This chapter discusses:
Whether you have to file a return,
Which form to use,
How to file electronically,
When, how, and where to file your return,
What happens if you pay too little or too much tax,
What records you should keep and how long you should keep them, and
How you can change a return you have already filed.
Do I Have To File a Return?
You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico
and you meet the
filing requirements for any of the following categories that apply to you.
Individuals in general. (There are special rules for surviving spouses, executors, administrators, legal representatives,
U.S. citizens and
residents living outside the United States, residents of Puerto Rico, and individuals with income from U.S. possessions.)
Dependents.
Children under age 14.
Self-employed persons.
Aliens.
The filing requirements for each category are explained in this chapter.
The filing requirements apply even if you do not owe tax.
Even if you do not have to file a return, it may be to your advantage to do so. See Who Should File , later.
File only one federal income tax return for the year regardless of how many jobs you had, how many Forms W-2 you received,
or how many states you
lived in during the year.
Individuals—In General
If you are a U.S. citizen or resident, whether you must file a return depends on three factors:
Your gross income,
Your filing status, and
Your age.
To find out whether you must file, see Table 1-1, Table 1-2, and Table 1-3. Even if no table shows that you must file, you
may need to file to get
money back. (See Who Should File, later.)
Gross income.
This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax.
It also includes income from
sources outside the United States (even if you may exclude all or part of it). Common types of income are discussed in Part Two of this
publication.
Community income.
If you are married and your permanent home is in a community property state, half of any income described by state
law as community income may be
considered yours. This affects your federal taxes, including whether you must file if you do not file a joint return with
your spouse. See Publication
555, Community Property, for more information.
Self-employed individuals.
If you are self-employed, your gross income includes the amount on line 7 of Schedule C (Form 1040), Profit or Loss
From Business, line 1 of
Schedule C-EZ, (Form 1040), Net Profit From Business, and line 11 of Schedule F (Form 1040), Profit or Loss From Farming.
See Self-Employed
Persons, later, for more information about your filing requirements.
If you do not report all of your self-employment income, your social security benefits may be lower when you retire.
Filing status.
Your filing status depends on whether you are single or married and on your family situation. Your filing status is
determined on the last day of
your tax year, which is December 31 for most taxpayers. See chapter 2 for an explanation of each filing status.
Age.
If you are 65 or older at the end of the year, you generally can have a higher amount of gross income than other taxpayers
before you must file.
See Table 1-1. You are considered 65 on the day before your 65th birthday. For example, if your 65th birthday is on January
1, 2006, you are
considered 65 for 2005.
Table 1-1.2005 Filing Requirements for Most Taxpayers
IF your filing status is...
AND at the end of 2005 you
were...*
THEN file a return if
your gross income
was at least...**
single
under 65
$8,200
65 or older
$9,450
married filing jointly***
under 65 (both spouses)
$16,400
65 or older (one spouse)
$17,400
65 or older (both spouses)
$18,400
married filing separately
any age
$3,200
head of household
under 65
$10,500
65 or older
$11,750
qualifying widow(er) with
under 65
$13,200
dependent child
65 or older
$14,200
*
If you were born on January 1, 1941, you are considered to be age 65 at the end of 2005.
**
Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax,
including any
income from sources outside the United States (even if you may exclude part or all of it). Do not include social security benefits unless
you are married filing a separate return and you lived with your spouse at any time during 2005.
***
If you did not live with your spouse at the end of 2005 (or on the date your spouse died) and your gross income was at least
$3,200, you must
file a return regardless of your age.
Surviving Spouses, Executors, Administrators, and Legal Representatives
You must file a final return for a decedent (a person who died) if both of the following are true.
You are the surviving spouse, executor, administrator, or legal representative.
The decedent met the filing requirements at the date of death.
For more information on rules for filing a decedent's final return, see Publication 559, Survivors, Executors, and Administrators.
U.S. Citizens and Residents Living Outside the United States
If you are a U.S. citizen or resident living outside the United States, you must file a return if you meet the filing requirements.
For information
on special tax rules that may apply to you, get Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. It
is available at most U.S.
embassies and consulates. Also see How To Get Tax Help in the back of this publication.
Residents of Puerto Rico
Generally, if you are a U.S. citizen and a resident of Puerto Rico, you must file a U.S. income tax return if you meet the
filing requirements.
This is in addition to any legal requirement you may have to file an income tax return for Puerto Rico.
If you are a resident of Puerto Rico for the entire year, gross income does not include income from sources within Puerto
Rico, except for amounts
received as an employee of the United States or a U.S. agency. If you receive income from Puerto Rican sources that is not
subject to U.S. tax, you
must reduce your standard deduction. As a result, the amount of income you must have before you are required to file a U.S.
income tax return is lower
than the applicable amount in Table 1-1 or Table 1-2. For more information, see Publication 570, Tax Guide for Individuals
With Income From U.S.
Possessions.
Individuals With Income From U.S. Possessions
If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the Virgin Islands, special
rules may apply when
determining whether you must file a U.S. federal income tax return. In addition, you may have to file a return with the individual
island government.
See Publication 570 for more information.
Dependents
If you are a dependent (one who meets the dependency tests in chapter 3), see Table 1-2 to find whether you must file a return.
You also must file
if your situation is described in Table 1-3.
Responsibility of parent.
Generally, a child is responsible for filing his or her own tax return and for paying any tax on the return. But if
a dependent child who must file
an income tax return cannot file it for any reason, such as age, then a parent, guardian, or other legally responsible person
must file it for the
child. If the child cannot sign the return, the parent or guardian must sign the child's name followed by the words “By (your signature), parent for
minor child.”
Child's earnings.
Amounts a child earns by performing services are his or her gross income. This is true even if under local law the
child's parents have the right
to the earnings and may actually have received them. If the child does not pay the tax due on this income, the parent is liable
for the tax.
Children Under Age 14
If a child's only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends)
and certain other
conditions are met, a parent can elect to include the child's income on the parent's return. If this election is made, the
child does not have to file
a return. See Parent's Election To Report Child's Interest and Dividends in chapter 31.
Self-Employed Persons
You are self-employed if you:
Carry on a trade or business as a sole proprietor,
Are an independent contractor,
Are a member of a partnership, or
Are in business for yourself in any other way.
Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work
you do at home or in
addition to your regular job.
You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and
age (shown in Table
1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if:
Your net earnings from self-employment (excluding church employee income) were $400 or more, or
You had church employee income of $108.28 or more. (See Table 1-3.)
Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and
Medicare tax withheld
from an employee's wages. For more information about this tax, get Publication 334, Tax Guide for Small Business.
Employees of foreign governments or international organizations.
If you are a U.S. citizen who works in the United States for an international organization, a foreign government,
or a wholly owned instrumentality
of a foreign government, and your employer is not required to withhold social security and Medicare taxes from your wages,
you must include your
earnings from services performed in the United States when figuring your net earnings from self-employment.
Ministers.
You must include income from services you performed as a minister when figuring your net earnings from self-employment,
unless you have an
exemption from self-employment tax. This also applies to Christian Science practitioners and members of a religious order
who have not taken a vow of
poverty. For more information, get Publication 517, Social Security and Other Information for Members of the Clergy and Religious
Workers.
Table 1-2. 2005 Filing Requirements for Dependents
See chapter 3 to find out if someone can claim you as a dependent.
If your parents (or someone else) can claim you as a dependent, and any of the situations below apply
to you, you must file a return. (See Table 1-3 for other situations when you must file.)
In this table, earned income includes salaries, wages, tips, and professional fees. It also
includes taxable scholarship and fellowship grants. (See Scholarships and fellowships in chapter 12.) Unearned income includes
investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment
compensation,
taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Gross income is
the total of your earned and
unearned income.
Single dependents—Were you either age 65 or older or blind?
□
No.
You must file a return if any of the following apply.
•
Your unearned income was more than $800.
•
Your earned income was more than $5,000.
•
Your gross income was more than the larger of:
•
$800, or
•
Your earned income (up to $4,750) plus $250.
□
Yes.
You must file a return if any of the following apply.
•
Your unearned income was more than $2,050 ($3,300 if 65 or older and blind).
•
Your earned income was more than $6,250 ($7,500 if 65 or older and blind).
•
Your gross income was more than $1,250 ($2,500 if 65 or older and blind)
plus the larger of:
•
$800, or
•
Your earned income (up to $4,750) plus $250.
Married dependents—Were you either age 65 or older or blind?
□
No.
You must file a return if any of the following apply.
•
Your unearned income was more than $800.
•
Your earned income was more than $5,000.
•
Your gross income was at least $5 and your spouse files a separate return and itemizes
deductions.
•
Your gross income was more than the larger of:
•
$800, or
•
Your earned income (up to $4,750) plus $250.
□
Yes.
You must file a return if any of the following apply.
•
Your unearned income was more than $1,800 ($2,800 if 65 or older and blind).
•
Your earned income was more than $6,000 ($7,000 if 65 or older and blind).
•
Your gross income was at least $5 and your spouse files a separate return and itemizes
deductions.
•
Your gross income was more than $1,000 ($2,000 if 65 or older and blind)
plus the larger of:
•
$800, or
•
Your earned income (up to $4,750) plus $250.
Aliens
Your status as an alien—resident, nonresident, or dual-status—determines whether and how you must file an income tax return.
The rules used to determine your alien status are discussed in Publication 519, U.S. Tax Guide for Aliens.
Resident alien.
If you are a resident alien for the entire year, you must file a tax return following the same rules that apply to
U.S. citizens. Use the forms
discussed in this publication.
Nonresident alien.
If you are a nonresident alien, the rules and tax forms that apply to you are different from those that apply to U.S.
citizens and resident aliens.
See Publication 519 to find out if U.S. income tax laws apply to you and which forms you should file.
Dual-status taxpayer.
If you are a resident alien for part of the tax year and a nonresident alien for the rest of the year, you are a dual-status
taxpayer. Different
rules apply for each part of the year. For information on dual-status taxpayers, see Publication 519.
Who Should File
Even if you do not have to file, you should file a federal income tax return to get money back if any of the following conditions
apply.
You had federal income tax withheld from your pay.
You qualify for the earned income credit. See chapter 36 for more information.
You qualify for the additional child tax credit. See chapter 34 for more information.
You qualify for the health coverage tax credit. See chapter 37 for more information.
Which Form Should I Use?
You must use one of three forms to file your return: Form 1040EZ, Form 1040A, or Form 1040. (But also see Does My Return Have To Be on
Paper, later.)
Form 1040EZ
Form 1040EZ is the simplest form to use.
You can use Form 1040EZ if all of the following apply.
Your filing status is single or married filing jointly. If you were a nonresident alien at any time in 2005, your filing status
must be
married filing jointly.
You (and your spouse if married filing a joint return) were under age 65 and not blind at the end of 2005. If you were born
on January 1,
1941, you are considered to be age 65 at the end of 2005.
You do not claim any dependents.
Your taxable income is less than $100,000.
Your income is only from wages, salaries, tips, unemployment compensation, Alaska Permanent Fund dividends, taxable scholarship
and
fellowship grants, and taxable interest of $1,500 or less.
You did not receive any advance earned income credit (EIC) payments.
You do not claim any adjustments to income, such as a deduction for IRA contributions or student loan interest.
You do not claim any credits other than the earned income credit.
You do not owe any household employment taxes on wages you paid to a household employee.
You must meet all of these requirements to use Form 1040EZ. If you do not, you must use Form 1040A or Form 1040.
Figuring tax.
On Form 1040EZ, you can use only the tax table to figure your tax. You cannot use Form 1040EZ to report any other
tax.
Form 1040A
If you do not qualify to use Form 1040EZ, you may be able to use Form 1040A.
You can use Form 1040A if all of the following apply.
Your income is only from wages, salaries, tips, IRA distributions, pensions and annuities, taxable social security and railroad
retirement
benefits, taxable scholarship and fellowship grants, interest, ordinary dividends (including Alaska Permanent Fund dividends),
capital gain
distributions, and unemployment compensation.
Your taxable income is less than $100,000.
Your adjustments to income are for only the following items.
Educator expenses.
IRA deduction.
Student loan interest deduction.
Tuition and fees deduction.
You do not itemize your deductions.
Your taxes are from only the following items.
Tax Table.
Alternative minimum tax. (See chapter 30.)
Advance earned income credit (EIC) payments, if you received any. (See chapter 36.)
Recapture of an education credit. (See chapter 35.)
Form 8615, Tax for Children Under Age 14 With Investment Income of More Than $1,600.
Qualified Dividends and Capital Gain Tax Worksheet.
You claim only the following tax credits.
The credit for child and dependent care expenses. (See chapter 32.)
The credit for the elderly or the disabled. (See chapter 33.)
The child tax credit. (See chapter 34.)
The additional child tax credit. (See chapter 34.)
The education credits. (See chapter 35.)
The retirement savings contributions credit. (See chapter 37.)
The earned income credit. (See chapter 36.)
The adoption credit. (See chapter 37.)
You did not have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option.
(See
Publication 525, Taxable and Nontaxable Income.)
You must meet all of the above requirements to use Form 1040A. If you do not, you must use Form 1040.
If you meet the above requirements, you can use Form 1040A even if you received employer-provided adoption benefits
or dependent care benefits.
If you receive a capital gain distribution that includes unrecaptured section 1250 gain, section 1202 gain, or collectibles
(28%) gain, you cannot
use Form 1040A. You must use Form 1040.
Form 1040
If you cannot use Form 1040EZ or Form 1040A, you must use Form 1040. You can use Form 1040 to report all types of income,
deductions, and credits.
You may have received Form 1040A or Form 1040EZ in the mail because of the return you filed last year. If your situation has
changed this year, it
may be to your advantage to file Form 1040 instead. You may pay less tax by filing Form 1040 because you can take itemized
deductions, some
adjustments to income, and credits you cannot take on Form 1040A or Form 1040EZ.
You must use Form 1040 if any of the following apply.
Your taxable income is $100,000 or more.
You itemize your deductions.
You had income that cannot be reported on Form 1040EZ or Form 1040A, including tax-exempt interest from private activity bonds
issued after
August 7, 1986.
You claim any adjustments to gross income other than the adjustments listed earlier under Form 1040A.
Your Form W-2, box 12, shows uncollected employee tax (social security and Medicare tax) on tips (see chapter 6) or group-term
life
insurance (see chapter 5).
You received $20 or more in tips in any one month and did not report all of them to your employer. (See chapter 6.)
You claim any credits other than the credits listed earlier under Form 1040A.
You owe the excise tax on insider stock compensation from an expatriated corporation.
Your Form W-2 shows an amount in box 12 with a code Z.
You have to file other forms with your return to report certain exclusions, taxes, or transactions.
Table 1-3.Other Situations When You Must File a 2005 Return
If any of the four conditions listed below apply, you must file a return, even if your income is less than the
amount shown in Table 1-1 or Table 1-2.
1.
You owe any special taxes, such as:
•
•
•
•
•
•
•
•
•
•
•
•
•
Social security or Medicare tax on tips you did not report to your employer. (See chapter 6.)
Uncollected social security, Medicare, or railroad retirement tax on tips you reported to your employer. (See chapter 6.)
Uncollected social security, Medicare, or railroad retirement tax on your group-term life insurance. This amount should be
shown in box 12 of your
Form W-2.
Alternative minimum tax. (See chapter 30.)
Additional tax on a qualified retirement plan, including an individual retirement arrangement (IRA). (See chapter 17.)
Additional tax on an Archer MSA or health savings account. (See Publication 969, Health Savings Accounts and Other Tax-Favored
Health Plans.)
Additional tax on a Coverdell ESA or qualified tuition program. (See Publication 970, Tax Benefits for Education.)
Recapture of an investment credit or a low-income housing credit. (See the instructions for Form 4255, Recapture of Investment
Credit, or Form
8611, Recapture of Low-Income Housing Credit.)
Recapture tax on the disposition of a home purchased with a federally-subsidized mortgage. (See chapter 15.)
Recapture of the qualified electric vehicle credit. (See chapter 37.)
Recapture of an education credit. (See chapter 35.)
Recapture of the Indian employment credit. (See the instructions for Form 8845, Indian Employment Credit.)
Recapture of the new markets credit. (See Form 8874, New Markets Credit.)
2.
You received any advance earned income credit (EIC) payments from your employer. This amount should be
shown in box 9 of your Form W-2. (See chapter 36.)
3.
You had net earnings from self-employment of at least $400. (See Self-Employed Persons earlier
in this chapter.)
4.
You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt
from employer social security and Medicare taxes. (See Publication 334.)
Does My Return Have To Be on Paper?
You may be able to file a paperless return using IRS e-file (electronic filing). It's so easy, over 68 million taxpayers preferred
e-file over filing a paper tax return last year.
Table 1-4 lists the benefits of IRS e-file. IRS e-file uses automation to replace most of the manual steps needed to process
paper returns. As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. However, as
with a paper return, you are responsible for making sure your return contains accurate information and is filed on time.
Using e-file does not affect your chances of an IRS examination of your return.
Electronic signatures.
Create your own personal identification number (PIN) and use a tax professional or file your own paperless return
electronically. If you are
married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures.
A PIN is any combination of five numbers, except five zeros. If you use a PIN, there is nothing to sign and nothing
to mail—not even your
Forms W-2.
To verify your identity, you will be asked to enter your adjusted gross income (AGI) from your originally filed 2004
income tax return, if
applicable. Do not use your AGI from an amended return (Form 1040X), math error notice, or other changed amount from the IRS.
AGI is the amount shown
on your 2004 Form 1040, line 36; Form 1040A, line 21; Form 1040EZ, line 4; and on TeleFile Tax Record, line 1. If you do not
have your 2004 income tax
return, call the IRS at 1-800-829-1040 to get a free transcript of your account. You will also be asked to enter your date
of birth (DOB). Make sure
your DOB is accurate and matches the information on record with the Social Security Administration by checking your annual
Social Security Statement.
Table 1-4.Benefits of IRS e-file
Eligible for Free File
•
Free File allows qualified taxpayers to prepare and e-file their own tax returns for free using commercially available online tax
preparation software.
•
Review online tax software provider offerings and determine if you are eligible by visiting the Free File page at
www.irs.gov.
Fast! Easy! Convenient!
•
Get your refund in half the time as paper filers do, even faster and safer with direct deposit.
•
Sign electronically and file a completely paperless return.
•
Receive an electronic proof of receipt within 48 hours that the IRS received your return.
•
If you owe, you can e-file and authorize an electronic funds withdrawal or pay by credit card. If you e-file before April
17, 2006, you can schedule an electronic funds withdrawal from your checking or savings account as late as April 17, 2006.
•
Prepare and file your federal and state returns together and save time.
Accurate! Secure!
•
IRS computers quickly and automatically check for errors or other missing information.
•
The chance of being audited does not differ whether you e-file or file a paper tax return.
•
Your bank account information is safeguarded along with other tax return information. The IRS does not have access to credit
card
numbers.
You cannot sign your return electronically if you are a first-time filer under age 16 at the end of 2005, or if you are filing
Form 3115, 3468 (if
attachments are required), 5713, 8283 (if completing Section B), 8332, 8858, or 8885.
For more details on the PIN method, visit
www.irs.gov/efile and click on “IRS
e-file for Individual Taxpayers.”
An Authorized IRS e-file Provider can, with your authorization, generate a PIN for you.
Forms 8453 and 8453-OL.
Your return is not complete without your signature. If you are not eligible or choose not to sign your return electronically,
you must complete,
sign, and file Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return, or Form 8453-OL, U.S. Individual Income Tax
Declaration for an IRS e-file Online Return, whichever applies.
State returns.
In most states, you can file an electronic state return simultaneously with your federal return. For more information,
check with your local IRS
office, state tax agency, tax professional, or the IRS website at
www.irs.gov/efile.
Refunds.
You can have a refund check mailed to you, or you can have your refund deposited directly to your checking or savings
account. With
e-file, your refund will be issued in half the time as when filing on paper.
As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax,
state tax, a student loan, or
child support. See Offset against debts under Refunds, later.
Refund inquiries.
If you do not receive your refund within 3 weeks after your electronically-filed return was accepted by IRS, see Past-Due Refund, later.
Balance due.
If you owe tax, you must pay it by April 17, 2006, to avoid late-payment penalties and interest. You can make your
payment electronically by credit
card or by scheduling an electronic funds withdrawal from your checking or savings account.
See How To Pay, later, for information on how to pay the balance due.
Using an Authorized IRS e-file Provider
Many tax professionals electronically file tax returns for their clients. As a taxpayer, you have two options.
1)
You can prepare your return, take it to an Authorized IRS e-file Provider, and have the provider transmit it electronically to the
IRS.
2)
You can have a tax professional prepare your return and transmit it for you electronically.
You may personally enter your PIN or complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your PIN
on your return.
Note: Tax professionals may charge a fee for IRS e-file. Fees may vary depending on the professional and the specific services rendered.
Using Your Personal Computer
You can file your tax return in a fast, easy, convenient way using your personal computer. A computer with a modem or Internet
access and tax
preparation software are all you need. Best of all, you can e-file from the comfort of your home 24 hours a day, 7 days a week.
IRS approved tax preparation software is available for online use on the Internet, for download from the Internet, and in
retail stores.
Some businesses offer free e-file to their employees, members, or customers. Others offer it for a fee. Ask your employer or financial
institution if they offer IRS e-file as an employee, member, or customer benefit.
Free Help With Your Return
Free help in preparing your return is available nationwide from IRS-trained volunteers. The Volunteer Income Tax Assistance
(VITA) program is
designed to help low-income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers
age 60 or older with their
tax returns. Many VITA sites offer free electronic filing and all volunteers will let you know about the credits and deductions
you may be entitled to
claim. To find a site near you, call 1-800-829-1040. Or to find the nearest AARP TaxAide site, visit AARP's website at
www.aarp.org/taxaide/ or call 1-888-227-7669. For more
information on these programs, go to
www.irs.gov and enter keyword “VITA” in the upper right-hand corner.
When Do I Have To File?
April 17, 2006, is the due date for filing your 2005 income tax return if you use the calendar year. For a quick view of due
dates for filing a
return with or without an extension of time to file (discussed later), see Table 1-5.
Table 1-5. When To File Your 2005 Return
For U.S. citizens and residents who file returns on a calendar year.
For Most Taxpayers
For Certain Taxpayers
Outside the U.S.
No extension requested
April 17, 2006
June 15, 2006
Automatic extension Form 4868 filed, or credit
card payment made
October 16, 2006
October 16, 2006
If you use a fiscal year (a year ending on the last day of any month except December, or a 52-53-week year), your income tax
return is due by the
15th day of the 4th month after the close of your fiscal year.
When the due date for doing any act for tax purposes—filing a return, paying taxes, etc.—falls on a Saturday, Sunday, or legal
holiday,
the due date is delayed until the next business day.
Filing on time.
Your paper return is filed on time if it is mailed in an envelope that is properly addressed, has enough postage,
and is postmarked by the due
date. If you send your return by registered mail, the date of the registration is the postmark date. The registration is evidence
that the return was
delivered. If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt
is the postmark date.
The postmarked certified mail receipt is evidence that the return was delivered.
Private delivery services.
If you use a private delivery service designated by the IRS to send your return, the postmark date generally is the
date the private delivery
service records in its database or marks on the mailing label. The private delivery service can tell you how to get written
proof of this date.
The following are designated private delivery services.
DHL Express (DHL): DHL Same Day Service, DHL Next Day 10:30 am, DHL Next Day 12:00 pm, DHL Next Day 3:00 pm, and DHL 2nd Day
Service.
Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and
FedEx
International First.
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.
Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an
IRS P.O. box address.
Electronically filed returns.
If you use IRS e-file, your return is considered filed on time if the authorized electronic return transmitter postmarks the
transmission by the due date. An authorized electronic return transmitter is a participant in the IRS e-file program that transmits
electronic tax return information directly to the IRS.
The electronic postmark is a record of when the authorized electronic return transmitter received the transmission
of your electronically filed
return on its host system. The date and time in your time zone controls whether your electronically filed return is timely.
Filing late.
If you do not file your return by the due date, you may have to pay a failure-to-file penalty and interest. For more
information, see
Penalties, later. Also see Interest under Amount You Owe.
If you were due a refund but you did not file a return, you generally must file within 3 years from the date the return
was due (including
extensions) to get that refund.
Nonresident alien.
If you are a nonresident alien and earn wages subject to U.S. income tax withholding, your 2005 U.S. income tax return
(Form 1040NR or Form
1040NR-EZ) is due by:
April 17, 2006, if you use a calendar year, or
The 15th day of the 4th month after the end of your fiscal year if you use a fiscal year.
If you do not earn wages subject to U.S. income tax withholding, your return is due by:
June 15, 2006, if you use a calendar year, or
The 15th day of the 6th month after the end of your fiscal year, if you use a fiscal year.
Get Publication 519 for more filing information.
Filing for a decedent.
If you must file a final income tax return for a taxpayer who died during the year (a decedent), the return is due
by the 15th day of the 4th month
after the end of the decedent's normal tax year. In most cases, for a 2005 return, this will be April 17, 2006. See Publication
559.
Extensions of Time To File
You may be able to get an extension of time to file your return. Special rules apply for those who were:
Outside the United States, or
Serving in a combat zone.
Automatic Extension
If you cannot file your 2005 return by the due date, you may be able to get an automatic 6-month extension of time to file.
Example.
If your return is due on April 17, 2006, you will have until October 16, 2006, to file.
If you do not pay the tax due by the regular due date (generally, April 15), you will owe interest. You may also be charged
penalties, discussed
later.
How to get the automatic extension.
You can get the automatic extension by:
Using IRS e-file (electronic filing), or
Filing a paper form.
E-file options.
There are two ways you can use e-file to get an extension of time to file. Complete Form 4868, Application for Automatic Extension of
Time To File U.S. Individual Income Tax Return, to use as a worksheet. If you think you may owe tax when you file your return,
use Part II
of the form to estimate your balance due. If you e-file Form 4868 to the IRS, do not also send a paper Form 4868.
E-file using your personal computer or a tax professional.
You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically.
You will need to provide
certain information from your tax return for 2004. If you wish to make a payment by electronic funds withdrawal, see Electronic payment
options, under How To Pay, later in this chapter.
E-file and pay by credit card.
You can get an extension by paying part or all of your estimate of tax due by using a credit card. You can do this
by phone or over the Internet.
You do not file Form 4868. See Credit card, under How To Pay, later in this chapter.
Filing a paper Form 4868.
You can get an extension of time to file by filing a paper Form 4868. Mail it to the address shown in the form instructions.
If you want to make a payment with the form, make your check or money order payable to the “United States Treasury.” Write your SSN, daytime
phone number, and “2005 Form 4868” on your check or money order.
When to file.
You must request the automatic extension by the due date for your return. You can file your return any time before
the 6-month extension period
ends.
When you file your return.
Enter any payment you made related to the extension of time to file on Form 1040, line 69. If you file Form 1040EZ
or Form 1040A, include that
payment in your total payments on Form 1040EZ, line 9, or Form 1040A, line 43. Also enter “Form 4868” and the amount paid in the space to the
left of line 9 or line 43.
Individuals Outside the United States
You are allowed an automatic 2-month extension (until June 15, 2006, if you use the calendar year) to file your 2005 return
and pay any federal
income tax due if:
You are a U.S. citizen or resident, and
On the due date of your return:
You are living outside the United States and Puerto Rico, and your main place of business or post of duty is outside the United
States and
Puerto Rico, or
You are in military or naval service on duty outside the United States and
Puerto Rico.
However, if you pay the tax due after the regular due date (generally, April 15), interest will be charged from that date
until the date the tax is
paid.
If you served in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file.
See Individuals
Serving in Combat Zone, later, for special rules that apply to you.
Married taxpayers.
If you file a joint return, only one spouse has to qualify for this automatic extension. If you and your spouse file
separate returns, this
automatic extension applies only to the spouse who qualifies.
How to get the extension.
To use this automatic extension, you must attach a statement to your return explaining what situation qualified you
for the extension. (See the
situations listed under (2), earlier.)
Extensions beyond 2 months.
If you cannot file your return within the automatic 2-month extension period, you may be able to get an additional
4-month extension, for a total
of 6 months. File Form 4868 and check the box on line 8.
This additional 4-month extension of time to file is not a further extension of time to pay. You can use a credit
card to pay your estimate of tax
due. See How To Pay, later in this chapter.
No further extension.
An extension of more than 6 months will generally not be granted. However, if you are outside the United States and
meet certain tests, you may be
granted a longer extension. For more information, see Further extensions under When To File and Pay in Publication 54.
Individuals Serving in Combat Zone
The deadline for filing your tax return, paying any tax you may owe, and filing a claim for refund is automatically extended
if you serve in a
combat zone. This applies to members of the Armed Forces, as well as merchant marines serving aboard vessels under the operational
control of the
Department of Defense, Red Cross personnel, accredited correspondents, and civilians under the direction of the Armed Forces
in support of the Armed
Forces.
Combat zone.
For purposes of the automatic extension, the term “combat zone” includes the following areas.
The Persian Gulf area, effective January 17, 1991.
The qualified hazardous duty area of Bosnia and Herzegovina, Croatia, and Macedonia, effective November 21, 1995.
The qualified hazardous duty area of the Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, the Adriatic Sea, and
the Ionian Sea
north of the 39th parallel, effective March 24, 1999.
Afghanistan, effective September 19, 2001.
See Publication 3, Armed Forces' Tax Guide, for information about other tax benefits available to military personnel
serving in a combat zone.
Extension period.
The deadline for filing your return, paying any tax due, and filing a claim for refund is extended for at least 180
days after the later of:
The last day you are in a combat zone or the last day the area qualifies as a combat zone, or
The last day of any continuous qualified hospitalization for injury from service in the combat zone.
In addition to the 180 days, your deadline is also extended by the number of days you had left to take action with
the IRS when you entered the
combat zone. For example, you have 3½ months (January 1-April 15) to file your tax return. Any days left in this period when
you
entered the combat zone (or the entire 3½ months if you entered it before the beginning of the year) are added to the 180
days. See
Extension of Deadline in Publication 3 for more information.
The above rules on the extension for filing your return also apply when you are deployed outside the United States
(away from your permanent duty
station) while participating in a designated contingency operation.
How Do I Prepare My Return?
This section explains how to get ready to fill in your tax return and when to report your income and expenses. It also explains
how to complete
certain sections of the form. You may find Table 1-6 helpful when you prepare your return.
In most cases, based on what you filed last year, the IRS will mail you Form 1040, Form 1040A, or Form 1040EZ with related
instructions. Before you
fill in the form, look at the form instructions to see if you need, or would benefit from filing, a different form this year.
Also see if you need any
additional forms or schedules. You may also want to read Does My Return Have To Be on Paper, earlier.
If you do not receive a tax return package in the mail, or if you need other forms, you can order them or print them from
the Internet. See
How To Get Tax Help in the back of this publication.
Table 1-6. Six Steps for Preparing Your Return
1
—
Get your records together for income and expenses.
2
—
Get the forms, schedules, and publications you need.
3
—
Fill in your return.
4
—
Check your return to make sure it is correct.
5
—
Sign and date your return.
6
—
Attach all required forms and schedules.
Substitute tax forms.
You cannot use your own version of a tax form unless it meets the requirements explained in Publication 1167, General
Rules and Specifications for
Substitute Forms and Schedules.
Form W-2.
If you are an employee, you should receive Form W-2 from your employer. You will need the information from this form
to prepare your return. See
Form W-2 under Credit for Withholding and Estimated Tax in chapter 4.
If you do not receive Form W-2 by January 31, 2006, contact your employer. If you still do not get the form by February
15, the IRS can help you by
requesting the form from your employer. When you request IRS help, be prepared to provide the following information.
Your name, address (including zip code), and phone number.
Your SSN.
Your dates of employment.
Your employer's name, address (including zip code), and phone number.
Form 1099.
If you received certain types of income, you may receive a Form 1099. For example, if you received taxable interest
of $10 or more, the payer
generally must give you a Form 1099-INT. If you have not received it by January 31, 2006, contact the payer. If you still
do not get the form by
February 15, call the IRS for help.
When Do I Report My Income and Expenses?
You must figure your taxable income on the basis of a tax year. A “tax year” is an annual accounting period used for keeping records and
reporting income and expenses. You must account for your income and expenses in a way that clearly shows your taxable income.
The way you do this is
called an accounting method. This section explains which accounting periods and methods you can use.
Accounting Periods
Most individual tax returns cover a calendar year—the 12 months from January 1 through December 31. If you do not use a calendar
year, your
accounting period is a fiscal year. A regular fiscal year is a 12-month period that ends on the last day of any month except
December. A 52-53-week
fiscal year varies from 52 to 53 weeks and always ends on the same day of the week.
You choose your accounting period (tax year) when you file your first income tax return. It cannot be longer than 12 months.
More information.
For more information on accounting periods, including how to change your accounting period, see Publication 538, Accounting
Periods and Methods.
Accounting Methods
Your accounting method is the way you account for your income and expenses. Most taxpayers use either the cash method or an
accrual method. You
choose a method when you file your first income tax return. If you want to change your accounting method after that, you generally
must get IRS
approval.
Cash method.
If you use this method, report all items of income in the year in which you actually or constructively receive them.
Generally, you deduct all
expenses in the year you actually pay them. This is the method most individual taxpayers use.
Constructive receipt.
Generally, you constructively receive income when it is credited to your account or set apart in any way that makes
it available to you. You do not
need to have physical possession of it. For example, interest credited to your bank account on December 31, 2005, is taxable
income to you in 2005 if
you could have withdrawn it in 2005 (even if the amount is not entered in your passbook or withdrawn until 2006).
Garnisheed wages.
If your employer uses your wages to pay your debts, or if your wages are attached or garnisheed, the full amount is
constructively received by you.
You must include these wages in income for the year you would have received them.
Brokerage and other accounts.
Profits from a brokerage account, or similar account, are fully taxable in the year you earn them. This is true even
if:
You do not withdraw the earnings,
The credit balance in the account may be reduced or eliminated by losses in later years, or
Current profits are used to reduce or eliminate a debit balance from previous years.
Debts paid for you.
If another person cancels or pays your debts (but not as a gift or loan), you have constructively received the amount
and generally must include it
in your gross income for the year. See Canceled Debts in chapter 12 for more information.
Payment to third party.
If a third party is paid income from property you own, you have constructively received the income. It is the same
as if you had actually received
the income and paid it to the third party.
Payment to an agent.
Income an agent receives for you is income you constructively received in the year the agent receives it. If you indicate
in a contract that your
income is to be paid to another person, you must include the amount in your gross income when the other person receives it.
Check received or available.
A valid check that was made available to you before the end of the tax year is constructively received by you in that
year. A check that was
“made available to you” includes a check you have already received, but not cashed or deposited. It also includes, for example, your last
paycheck of the year that your employer made available for you to pick up at the office before the end of the year. It is
constructively received by
you in that year whether or not you pick it up before the end of the year or wait to receive it by mail after the end of the
year.
No constructive receipt.
There may be facts to show that you did not constructively receive income.
Example.
Alice Johnson, a teacher, agreed to her school board's condition that, in her absence, she would receive only the difference
between her regular
salary and the salary of a substitute teacher hired by the school board. Therefore, Alice did not constructively receive the
amount by which her
salary was reduced to pay the substitute teacher.
Accrual method.
If you use an accrual method, you generally report income when you earn it, rather than when you receive it. You generally
deduct your expenses
when you incur them, rather than when you pay them.
Income paid in advance.
An advance payment of income is generally included in gross income in the year you receive it. Your method of accounting
does not matter as long as
the income is available to you. An advance payment may include rent or interest you receive in advance and pay for services
you will perform later.
A limited deferral until the next tax year may be allowed for certain advance payments. See Publication 538 for specific
information.
Additional information.
For more information on accounting methods, including how to change your accounting method, get Publication 538.
Social Security Number
You must enter your social security number (SSN) in the space provided on your return. Be sure the SSN on your return is the
same as the SSN on
your social security card. If you are married, enter the SSNs for both you and your spouse, whether you file jointly or separately.
If you are filing a joint return, write the SSNs in the same order as the names. Use this same order in submitting other forms
and documents to the
IRS.
Name change.
If you changed your name because of marriage, divorce, etc., immediately notify your Social Security Administration
(SSA) office so the name on
your tax return is the same as the one the SSA has on its records. This will help prevent delays in issuing your refund and
safeguard your future
social security benefits.
Dependent's social security number.
You must provide the SSN of each dependent you claim, regardless of the dependent's age. This requirement applies
to all dependents (not just your
children) claimed on your tax return.
Exception.If your child was born and died in 2005 and you do not have an SSN for the child, you may attach a
copy of the child's birth certificate instead. If you do, enter “DIED” in column (2) of line 6c (Form 1040 or 1040A).
No social security number.
File Form SS-5, Application for a Social Security Card, with your local SSA office to get an SSN for yourself or your
dependent. It usually takes
about 2 weeks to get an SSN. If you or your dependent is not eligible for an SSN, see Individual taxpayer identification number (ITIN),
later.
If you are a U.S. citizen or resident alien, you must show proof of age, identity, and citizenship or alien status
with your Form SS-5. If you are
12 or older and have never been assigned an SSN, you must appear in person with this proof at an SSA office.
Form SS-5 is available at any SSA office, on the Internet at
www.socialsecurity.gov, or by calling 1-800-772-1213. If
you have any questions about which documents you can use as proof of age, identity, or citizenship, contact your SSA office.
If your dependent does not have an SSN by the time your return is due, you may want to ask for an extension of time
to file, as explained earlier
under When Do I Have To File.
If you do not provide a required SSN or if you provide an incorrect SSN, your tax may be increased and any refund
may be reduced.
Adoption taxpayer identification number (ATIN).
If you are in the process of adopting a child who is a U.S. citizen or resident and cannot get an SSN for the child
until the adoption is final,
you can apply for an ATIN to use instead of an SSN.
File Form W-7A, Application for Taxpayer Identification Number for
Pending U.S. Adoptions, with the IRS to get an ATIN if all of the following are true.
You have a child living with you who was placed in your home for legal adoption.
You cannot get the child's existing SSN even though you have made a reasonable attempt to get it from the birth parents, the
placement
agency, and other persons.
You cannot get an SSN for the child from the SSA because, for example, the adoption is not final.
You cannot get an individual taxpayer identification number (ITIN) (discussed later) for the child.
You are eligible to claim the child as a dependent on your tax return.
After the adoption is final, you must apply for an SSN for the child. You cannot continue using the ATIN.
See Form W-7A for more information.
Nonresident alien spouse.
If your spouse is a nonresident alien and you file a joint or separate return, your spouse must have either an SSN
or an ITIN. If your spouse is
not eligible for an SSN, see the next discussion.
Individual taxpayer identification number (ITIN).
The IRS will issue you an ITIN if you are a nonresident or resident alien and you do not have and are not eligible
to get an SSN. To apply for an
ITIN, file Form W-7 with the IRS. It usually takes about 4 to 6 weeks to get an ITIN. Enter this number on your tax return
wherever your SSN is
requested.
If you are applying for an ITIN in order to file your tax return, attach your completed tax return to your Form W-7. See the
Form W-7 instructions
for how and where to file.
Alien dependent.
If your dependent is a nonresident or resident alien who does not have and is not eligible to get an SSN, file Form
W-7 with the IRS to apply for
an ITIN. Enter this number on your return wherever the dependent's SSN is requested.
An ITIN is for tax use only. It does not entitle you or your dependent to social security benefits or change the employment
or immigration status
of either of you under U.S. law.
Penalty for not providing social security number.
If you do not include your SSN or the SSN of your spouse or dependent as required, you may have to pay a penalty.
See the discussion on
Penalties, later, for more information.
SSN on correspondence.
If you write to the IRS about your tax account, be sure to include your SSN (and the name and SSN of your spouse,
if you filed a joint return) in
your correspondence. Because your SSN is used to identify your account, this helps the IRS respond to your correspondence
promptly.
Presidential Election Campaign Fund
This fund helps pay for Presidential election campaigns. The fund reduces candidates' dependence on large contributions from
individuals and groups
and places candidates on an equal financial footing in the general election. If you want $3 to go to this fund, check the
box. If you are filing a
joint return, your spouse can also have $3 go to the fund. If you check a box, your tax or refund will not change.
Computations
The following information on entering numbers on your tax return may be useful in making the return easier to complete.
Rounding off dollars.
You may round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must
round all amounts. To round, drop
amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50
becomes $3.
If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts
and round off only the total.
Example.
You receive two Forms W-2: one showing wages of $5,000.55 and one showing wages of $18,500.73. On Form 1040, line 7, you would
enter $23,501
($5,000.55 + $18,500.73 = $23,501.28), not $23,502 ($5,001 + $18,501).
Equal amounts.
If you are asked to enter the smaller or larger of two equal amounts, enter that amount.
Example.
Line 1 is $500. Line 3 is $500. Line 5 asks you to enter the smaller of line 1 or 3. Enter $500 on line 5.
Negative amounts.
If you need to enter a negative amount, put the amount in parentheses rather than using a minus sign. To combine positive
and negative amounts, add
all the positive amounts together and then subtract the negative amounts.
Attachments
Depending on the form you file and the items reported on your return, you may have to complete additional schedules and forms
and attach them to
your return.
You may be able to file a paperless return using IRS e-file . There's nothing to sign, attach, or mail, not even your Forms
W-2.
Form W-2.
Form W-2 is a statement from your employer of wages and other compensation paid to you and taxes withheld from your
pay. You should have a Form W-2
from each employer. Be sure to attach a copy of Form W-2 in the place indicated on the front page of your return. Attach it
only to the front page of
your return, not to any attachments. For more information, see Form W-2 in chapter 4.
If you received a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance
Contracts, etc., showing
federal income tax withheld, attach a copy of that form in the place indicated on the front page of your return.
Form 1040EZ.
There are no additional schedules to file with Form 1040EZ.
Form 1040A.
Attach the additional schedules and forms that you had to complete behind the Form 1040A in order by number. If you
are filing Schedule EIC, put it
last. Do not attach items unless required to do so.
Form 1040.
Attach any forms and schedules behind Form 1040 in order of the “Attachment Sequence Number” shown in the upper right corner of the form or
schedule. Then arrange all other statements or attachments in the same order as the forms and schedules they relate to and
attach them last. Do not
attach items unless required to do so.
Third Party Designee
You can authorize the IRS to discuss your return with a friend, family member, or any other person you choose. If you check
the “Yes” box in
the Third party designee area of your 2005 tax return and provide the information required, you are authorizing:
The IRS to call the designee to answer any questions that arise during the processing of your return, and
The designee to:
Give information that is missing from your return to the IRS,
Call the IRS for information about the processing of your return or the status of your refund or payments,
Receive copies of notices or transcripts related to your return, upon request, and
Respond to certain IRS notices about math errors, offsets (see Refunds, later), and return preparation.
The authorization will automatically end no later than the due date (without any extensions) for filing your 2006 tax return.
This is April 16,
2007, for most people.
See your form instructions for more information.
If you want to allow the paid preparer who signed your return to discuss it with the IRS, just enter “Preparer” in the space for the
designee's name.
Signatures
You must sign and date your return. If you file a joint return, both you and your spouse must sign the return, even if only
one of you had income.
If you file a joint return, both spouses are generally liable for the tax, and the entire tax liability may be assessed against
either spouse. See
chapter 2.
If you e-file your return, you can use an electronic signature to sign your return. See Does My Return Have To Be on Paper
,
earlier.
If you are due a refund, it cannot be issued unless you have signed your return.
Enter your occupation in the space provided in the signature section. If you file a joint return, enter both your occupation
and your spouse's
occupation. Entering your daytime phone number may help speed the processing of your return.
When someone can sign for you.
You can appoint an agent to sign your return if you are:
Unable to sign the return because of disease or injury,
Absent from the United States for a continuous period of at least 60 days before the due date for filing your return, or
Given permission to do so by the IRS office in your area.
Power of attorney.
A return signed by an agent in any of these cases must have a power of attorney (POA) attached that authorizes the
agent to sign for you. You can
use a POA that states that the agent is granted authority to sign the return, or you can use Form 2848, Power of Attorney
and Declaration of
Representative. Part I of Form 2848 must state that the agent is granted authority to sign the return.
Unable to sign.
If the taxpayer is mentally incompetent and cannot sign the return, it must be signed by a court-appointed representative
who can act for the
taxpayer.
If the taxpayer is mentally competent but physically unable to sign the return or POA, a valid “signature” is defined under state law. It can
be anything that clearly indicates the taxpayer's intent to sign. For example, the taxpayer's “X” with the signatures of two witnesses might be
considered a valid signature under a state's law.
Spouse unable to sign.
If your spouse is unable to sign for any reason, see Signing a joint return in chapter 2.
Child's return.
If a child has to file a tax return but cannot sign the return, the child's parent, guardian, or another legally responsible
person must sign the
child's name, followed by the words “By (your signature), parent for minor child.”
Paid Preparer
Generally, anyone you pay to prepare, assist in preparing, or review your tax return must sign it and fill in the other blanks
in the paid
preparer's area of your return.
A paid preparer can sign the return manually or use a rubber stamp, mechanical device, or computer software program. The preparer
is personally
responsible for affixing his or her signature to the return.
If the preparer is self-employed (that is, not employed by any person or business to prepare the return), he or she should
check the self-employed
box in the Paid Preparer's Use Only space on the return.
The preparer must give you a copy of your return in addition to the copy filed with the IRS.
If you prepare your own return, leave this area blank. If another person prepares your return and does not charge you, that
person should not sign
your return.
If you have questions about whether a preparer must sign your return, contact any IRS office.
Refunds
When you complete your return, you will determine if you paid more income tax than you owed. If so, you can get a refund of
the amount you overpaid
or, if you file Form 1040 or Form 1040A, you can choose to apply all or part of the overpayment to your next year's (2006)
estimated tax. You cannot
have your overpayment applied to your 2006 estimated tax if you file Form 1040EZ.
If you choose to have a 2005 overpayment applied to your 2006 estimated tax, you cannot change your mind and have any of it
refunded to you after
the due date (without extensions) of your 2005 return.
Follow the form instructions to complete the entries to claim your refund and/or to apply your overpayment to your 2006 estimated
tax.
If your refund for 2005 is large, you may want to decrease the amount of income tax withheld from your pay in 2006. See chapter
4 for more
information.
Instead of getting a paper check, you may be able to have your refund deposited directly into your account at a bank or other
financial
institution. Follow the form instructions to request direct deposit.
If the direct deposit cannot be done, the IRS will send a check instead.
Overpayment less than one dollar.
If your overpayment is less than one dollar, you will not get a refund unless you ask for it in writing.
Cashing your refund check.
Cash your tax refund check soon after you receive it. Checks not cashed within 12 months of the date they are issued
will be canceled and the
proceeds returned to the IRS.
If your check has been canceled, you can apply to the IRS to have it reissued.
Refund more or less than expected.
If you receive a check for a refund you are not entitled to, or for an overpayment that should have been credited
to estimated tax, do not cash the
check. Call the IRS.
If you receive a check for more than the refund you claimed, do not cash the check until you receive a notice explaining
the difference.
If your refund check is for less than you claimed, it should be accompanied by a notice explaining the difference.
Cashing the check does not stop
you from claiming an additional amount of refund.
If you did not receive a notice and you have any questions about the amount of your refund, you should wait 2 weeks.
If you still have not received
a notice, call the IRS.
Offset against debts.
If you are due a refund but have not paid certain amounts you owe, all or part of your refund may be used to pay all
or part of the past-due
amount. This includes past-due federal income tax, other federal debts (such as student loans), state income tax, and child
and spousal support
payments. You will be notified if the refund you claimed has been offset against your debts.
Joint return and injured spouse.
When a joint return is filed and only one spouse owes a past-due amount, the other spouse can be considered an injured
spouse. An injured spouse
can get a refund for his or her share of the overpayment that would otherwise be used to pay the past-due amount.
To be considered an injured spouse, you must:
File a joint return, and
Have reported income (such as wages, interest, etc.), or
Have made and reported tax payments (such as federal income tax withheld from wages or estimated tax payments), or claimed
the earned income
credit or other refundable credit, and
Not be required to pay the past-due amount.
Note: If the injured spouse's permanent home is in a community property state, then the injured spouse must only meet (1) and (4)
above. For more
information, see Publication 555, Community Property.
If you are an injured spouse, you must file Form 8379, Injured Spouse Allocation, to have your portion of the overpayment
refunded to you. Follow
the instructions for the form.
If you have not filed your joint return and you know that your joint refund will be offset, file Form 8379 with your
return. You should receive
your refund within 14 weeks from the date the paper return is filed or within 11 weeks from the date the return is filed electronically.
If you filed your joint return and your joint refund was offset, file Form 8379 by itself. When filed after offset,
it can take up to 8 weeks to
receive your refund. Do not attach the previously filed tax return, but do include copies of all Forms W-2 and W-2G for both
spouses and any Forms
1099 that show income tax withheld.
Generally, you must file Form 8379 no later than 2 years after the date of the Notice of Offset. A separate Form 8379
must be filed for each tax
year to be considered.
An injured spouse claim is different from an innocent spouse relief request. An injured spouse uses Form 8379 to request the
division of the tax
overpayment attributed to each spouse. An innocent spouse uses Form 8857, Request for Innocent Spouse Relief, to request relief
from joint liability
for tax, interest, and penalties on a joint return for items of the other spouse (or former spouse) that were incorrectly
reported on the joint
return. For information on innocent spouses, see Relief from joint liability under Filing a Joint Return in chapter 2.
Amount You Owe
When you complete your return, you will determine if you have paid the full amount of tax that you owe. If you owe additional
tax, you should pay
it with your return.
If the IRS figures your tax for you, you will receive a bill for any tax that is due. You should pay this bill within 30 days
(or by the due date
of your return, if later). See Tax Figured by IRS in chapter 30.
If you do not pay your tax when due, you may have to pay a failure-to-pay penalty. See Penalties , later. For more information
about your
balance due, see Publication 594, The IRS Collection Process.
If the amount you owe for 2005 is large, you may want to increase the amount of income tax withheld from your pay or make
estimated tax payments
for 2006. See chapter 4 for more information.
How To Pay
If you have an amount due on your tax return, you can pay by check, money order, or credit card. If you filed electronically,
you also may be able
to make your payment electronically.
You do not have to pay if the amount you owe is less than $1.
Check or money order.
If you pay by check or money order, make it out to the “United States Treasury.” Show your correct name, address, SSN, daytime phone number,
and the tax year and form number on the front of your check or money order. If you are filing a joint return, enter the SSN
shown first on your tax
return.
For example, if you file Form 1040 for 2005 and you owe additional tax, show your name, address, SSN, daytime phone
number, and “2005 Form
1040” on the front of your check or money order. If you file an amended return (Form 1040X) for 2004 and you owe tax, show your
name, address, SSN,
daytime phone number, and “2004 Form 1040X” on the front of your check or money order.
Enclose your payment with your return, but do not attach it to the form. If you filed Form 1040, please complete Form
1040-V, Payment Voucher, and
enclose it with your payment and return. Form 1040-V will help us process your payment more accurately and efficiently. Follow
the instructions that
come with the form.
Do not mail cash with your return. If you pay cash at an IRS office, keep the receipt as part of your records.
Payment not honored.
If your check or money order is not honored by your bank (or other financial institution) and the IRS does not receive
the funds, you still owe the
tax. In addition, you may be subject to a dishonored check penalty.
Electronic payment options.
Electronic payment options are convenient, safe, and secure methods for paying individual income taxes. There's no
check to write, money order to
buy, or voucher to mail. Payments can be made 24 hours a day, 7 days a week.
Credit card.
You can use your American Express®, Discover®, MasterCard®, or Visa® credit card.
To pay by credit card, call a service provider and follow the recorded instructions. You can also pay by credit card
over the Internet using a
service provider's website.
The service providers charge a convenience fee based on the amount you are paying. Fees may vary between the providers.
You will be told what the
fee is during the transaction and will have the option to continue or end the transaction. You may also obtain the convenience
fee by calling the
service provider's automated customer service telephone number or visiting their respective website.
Do not add the convenience fee to your tax payment.
If you pay by credit card, write the confirmation number you were given at the end of the transaction and the tax
payment amount in the upper left
corner of page 1 of your tax return.
You can e-file and pay in a single step by authorizing a credit card payment. This option is available through some tax software
packages and tax professionals. You can also pay by credit card using the telephone or the Internet.
Electronic funds withdrawal.
You can e-file and pay in a single step by authorizing an electronic funds withdrawal from your checking or savings account. If you
select this payment option, you will need to have your account number, your financial institution's routing transit number,
and account type (checking
or savings). You can schedule the payment for any future date up to and including the return due date (April 17, 2006).
Be sure to check with your financial institution to make sure that an electronic funds withdrawal is allowed and to get the
correct routing and
account numbers.
Electronic Federal Tax Payment System (EFTPS).
EFTPS is a free tax payment system that all individual and business taxpayers can use. You can make payments online
or by phone.
Here are just a few of the benefits of this easy-to-use system.
Convenient and flexible. You can use it to schedule payments in advance. For example, you can schedule estimated tax payments
(Form 1040-ES)
or installment agreement payments weekly, monthly, or quarterly.
Fast and accurate. You can make a tax payment in minutes. Because there are verification steps along the way, you can check
and review your
information before sending it.
Safe and secure. It offers the highest available levels of security. Every transaction receives an immediate confirmation.
For more information or details on enrolling, visit
www.EFTPS.gov or call EFTPS Customer Service at 1-800-316-6541
(individual) or 1-800-555-4477 (business).
Estimated tax payments.
Do not include any 2006 estimated tax payment in the payment for your 2005 income tax return. See chapter 4 for information
on how to pay estimated
tax.
Interest
Interest is charged on tax you do not pay by the due date of your return. Interest is charged even if you get an extension
of time for filing.
If the IRS figures your tax for you, interest cannot start earlier than the 31st day after the IRS sends you a bill. For information,
see Tax
Figured by IRS in chapter 30.
Interest on penalties.
Interest is charged on the failure-to-file penalty, the accuracy-related penalty, and the fraud penalty from the due
date of the return (including
extensions) to the date of payment. Interest on other penalties starts on the date of notice and demand, but is not charged
on penalties paid within
21 calendar days from the date of the notice (or within 10 business days if the notice is for $100,000 or more).
Interest due to IRS error or delay.
All or part of any interest you were charged can be forgiven if the interest is due to an unreasonable error or delay
by an officer or employee of
the IRS in performing a ministerial or managerial act.
A ministerial act is a procedural or mechanical act that occurs during the processing of your case. A managerial act
includes personnel transfers
and extended personnel training. A decision concerning the proper application of federal tax law is not a ministerial or managerial
act.
The interest can be forgiven only if you are not responsible in any important way for the error or delay and the IRS
has notified you in writing of
the deficiency or payment. For more information, get Publication 556, Examination of Returns, Appeal Rights, and Claims for
Refund.
Interest and certain penalties may also be suspended for a limited period if you filed your return by the due date (including
extensions) and the
IRS does not provide you with a notice specifically stating your liability and the basis for it before the close of the 18-month
period beginning on
the later of:
The date the return is filed, or
The due date of the return without regard to extensions.
For more information, get Publication 556.
Installment Agreement
If you cannot pay the full amount due with your return, you can ask to make monthly installment payments for the full or a
partial amount. However,
you will be charged interest and may be charged a late payment penalty on the tax not paid by April 17, 2006, even if your
request to pay in
installments is granted. If your request is granted, you must also pay a fee. To limit the interest and penalty charges, pay
as much of the tax as
possible with your return. But before requesting an installment agreement, you should consider other less costly alternatives,
such as a bank loan.
To ask for an installment agreement, use Form 9465, Installment Agreement Request. You should receive a response to your request
within 30 days.
But if you file your return after March 31, it may take longer for a reply.
In addition to paying by check or money order, you can use a credit card or EFTPS to make installment agreement payments.
See Credit
card and Electronic Federal Tax Payment System (EFTPS), under How To Pay, earlier.
Guaranteed availability of installment agreement.
The IRS must agree to accept the full payment of your tax liability in installments if, as of the date you offer to
enter into the agreement:
Your total taxes (not counting interest, penalties, additions to the tax, or additional amounts) do not exceed $10,000,
In the last 5 years, you (and your spouse if the liability relates to a joint return) have not:
Failed to file any required income tax return,
Failed to pay any tax shown on any such return, or
Entered into an installment agreement for the payment of any income tax,
You show you cannot pay your income tax in full when due,
The tax will be paid in full in 3 years or less, and
You agree to comply with the tax laws while your agreement is in effect.
Gift To Reduce Debt Held by the Public
You can make a contribution (gift) to reduce debt held by the public. If you wish to do so, make a separate check payable
to “Bureau of the
Public Debt.”
Send your check to:
Bureau of the Public Debt
Department G
P.O. Box 2188
Parkersburg, WV 26106-2188.
Or, enclose your separate check in the envelope with your income tax return. Do not add this gift to any tax you
owe.
You can deduct this gift as a charitable contribution on next year's tax return if you itemize your deductions on Schedule
A (Form 1040).
Peel-Off Address Label
After you have completed your return, peel off the label with your name and address from the back of your tax return package
and place it in the
appropriate area of the Form 1040, Form 1040A, or Form 1040EZ you send to the IRS. If you have someone prepare your return,
give that person your
label to use on your tax return.
If you file electronically and you are not eligible or choose not to sign your return using your PIN, use your label on Form
8453 or 8453-OL. (More
information on electronic filing is found earlier in this chapter.)
The label helps the IRS to correctly identify your account. It also saves processing costs and speeds up processing so that
refunds can be issued
sooner.
You must write your SSN in the spaces provided on your tax return.
Correcting the label.
Make necessary name and address changes on the label. If you have an apartment number that is not shown on the label,
please write it in. If you
changed your name, see the discussion under Social Security Number, earlier.
No label.
If you did not receive a tax return package with a label, print or type your name and address in the spaces provided
at the top of Form 1040 or
Form 1040A. If you are married filing a separate return, do not enter your spouse's name in the space at the top. Instead,
enter his or her name in
the space provided on line 3.
If you file Form 1040EZ and you do not have a label, print or type this information in the spaces provided.
P.O. box.
If your post office does not deliver mail to your street address and you have a P.O. box, print your P.O. box number
on the line for your present
home address instead of your street address.
Foreign address.
If your address is outside the United States or its possessions or territories, enter the information on the line
for “City, town or post office,
state, and ZIP code” in the following order:
City,
Province or state, and
Name of foreign country. (Do not abbreviate the name of the country.)
Follow the country's practice for entering the postal code.
Where Do I File?
After you complete your return, you must send it to the IRS. You can mail it or you may be able to file it electronically.
See Does My Return
Have To Be on Paper, earlier.
Mailing your return.
If an addressed envelope came with your tax forms package, you should mail your return in that envelope.
If you do not have an addressed envelope or if you moved during the year, mail your return to the address shown at
the end of this publication for
the area where you now live.
What Happens After I File?
After you send your return to the IRS, you may have some questions. This section discusses concerns you may have about recordkeeping,
your refund,
and what to do if you move.
What Records Should I Keep?
You must keep records so that you can prepare a complete and accurate income tax return. The law does not require any special
form of records.
However, you should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions
or credits you
claim.
If you file a claim for refund, you must be able to prove by your records that you have overpaid your tax.
How long to keep records.
You must keep your records for as long as they are important for the federal tax law.
Keep records that support an item of income or a deduction appearing on a return until the period of limitations for
the return runs out. (A period
of limitations is the period of time after which no legal action can be brought.) For assessment of tax you owe, this generally
is 3 years from the
date you filed the return. For filing a claim for credit or refund, this generally is 3 years from the date you filed the
original return, or 2 years
from the date you paid the tax, whichever is later. Returns filed before the due date are treated as filed on the due date.
If you did not report income that you should have reported on your return, and it is more than 25% of the income shown
on the return, the period of
limitations does not run out until 6 years after you filed the return. If a return is false or fraudulent with intent to evade
tax, or if no return is
filed, an action can generally be brought at any time.
You may need to keep records relating to the basis of property longer than the period of limitations. Keep those records
as long as they are
important in figuring the basis of the original or replacement property. Generally, this means for as long as you own the
property and, after you
dispose of it, for the period of limitations that applies to you. See chapter 13 for information on basis.
Note: If you receive a Form W-2, keep Copy C until you begin receiving social security benefits. This will help protect
your benefits in case there is a question about your work record or earnings in a particular year. Review the information
shown on your annual (for
workers over age 25) Social Security Statement.
Copies of returns.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be
helpful in amending filed
returns or preparing future ones.
If you need a copy of a prior year tax return, you can get it from the IRS. Use Form 4506, Request for Copy of Tax
Return. There is a charge for a
copy of a return, which you must pay with Form 4506. It may take up to 60 days to process your request.
If your main home, principal place of business, or tax records are located in a Presidentially declared disaster area, the
charge will be waived.
Transcript of tax return.
If you just need information from your return, you can order a transcript by calling 1-800-829-1040, or using Form
4506-T, Request for Transcript
of Tax Return. There is no fee for a transcript.
You can request the following items.
Return transcript.
This includes most of the line items of a tax return as filed with the IRS. Return transcripts are available for the
current year and returns
processed during the prior 3 processing years. Most requests will be processed within 10 business days.
Account transcript.
This contains information on the financial status of the account, such as payments made on the account, penalty assessments,
and adjustments made
by you or the IRS after the return was filed. Return information is limited to items such as tax liability and estimated tax
payments. Account
transcripts are available for most returns. Most requests will be processed within 20 business days.
Record of account.
This is a combination of line item information and later adjustments to the account. This information is available
for the current year and 3 prior
tax years. Most requests will be processed within 20 business days.
More information.
For more information on recordkeeping, get Publication 552, Recordkeeping for Individuals.
Interest on Refunds
If you are due a refund, you may get interest on it. The interest rates are adjusted quarterly.
If the refund is made within 45 days after the due date of your return, no interest will be paid. If you file your return
after the due date
(including extensions), no interest will be paid if the refund is made within 45 days after the date you filed. If the refund
is not made within this
45-day period, interest will be paid from the due date of the return or from the date you filed, whichever is later.
Accepting a refund check does not change your right to claim an additional refund and interest. File your claim within the
period of time that
applies. See Amended Returns and Claims for Refund, later. If you do not accept a refund check, no more interest will be paid on the
overpayment included in the check.
Interest on erroneous refund.
All or part of any interest you were charged on an erroneous refund generally will be forgiven. Any interest charged
for the period before demand
for repayment was made will be forgiven unless:
You, or a person related to you, caused the erroneous refund in any way, or
The refund is more than $50,000.
For example, if you claimed a refund of $100 on your return, but the IRS made an error and sent you $1,000, you would
not be charged interest for
the time you held the $900 difference. You must, however, repay the $900 when the IRS asks.
Past-Due Refund
You can check on the status of your 2005 refund if it has been at least 6 weeks from the date you filed your return (3 weeks
if you filed
electronically). Be sure to have a copy of your 2005 tax return available because you will need to know the filing status,
the first SSN shown on the
return, and the exact whole-dollar amount of the refund. To check on your refund, do one of the following.
Go to
www.irs.gov, and click on “Where's My Refund.”
Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
Call 1-800-829-1954 during the hours shown in your form instructions.
Change of Address
If you have moved, file your return using your new address.
If you move after you filed your return, you should give the IRS clear and concise written notification of your change of
address. Send the
notification to the Internal Revenue Service Center serving your old address. You can use Form 8822, Change of Address. If
you are expecting a refund,
also notify the post office serving your old address. This will help in forwarding your check to your new address (unless
you chose direct deposit of
your refund).
Be sure to include your SSN (and the name and SSN of your spouse, if you filed a joint return) in any correspondence with
the IRS.
What If I Made a Mistake?
Errors may delay your refund or result in notices being sent to you. If you discover an error, you can file an amended return
or claim for refund.
Amended Returns and Claims for Refund
You should correct your return if, after you have filed it, you find that:
You did not report some income,
You claimed deductions or credits you should not have claimed,
You did not claim deductions or credits you could have claimed, or
You should have claimed a different filing status. (Once you file a joint return, you cannot choose to file separate returns
for that year
after the due date of the return. However, an executor may be able to make this change for a deceased spouse.)
If you need a copy of your return, see Copies of returns under What Records Should I Keep, earlier in this chapter.
Form 1040X.
Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a return you have already filed. An amended
tax return cannot be filed
electronically under the e-file system.
Completing Form 1040X.
On Form 1040X, write your income, deductions, and credits as you originally reported them on your return, the changes
you are making, and the
corrected amounts. Then figure the tax on the corrected amount of taxable income and the amount you owe or your refund.
If you owe tax, pay the full amount with Form 1040X. The tax owed will not be subtracted from any amount you had credited
to your estimated tax.
If you cannot pay the full amount due with your return, you can ask to make monthly installment payments. See Installment Agreement,
earlier.
If you overpaid tax, you can have all or part of the overpayment refunded to you, or you can apply all or part of
it to your estimated tax. If you
choose to get a refund, it will be sent separately from any refund shown on your original return.
Filing Form 1040X.
After you finish your Form 1040X, check it to be sure that it is complete. Do not forget to show the year of your
original return and explain all
changes you made. Be sure to attach any forms or schedules needed to explain your changes. Mail your Form 1040X to the Internal
Revenue Service Center
serving the area where you now live (as shown in the instructions to the form). However, if you are filing Form 1040X in response
to a notice you
received from the IRS, mail it to the address shown on the notice. Do not use the addresses listed at the end of this publication.
File a separate form for each tax year involved.
Time for filing a claim for refund.
Generally, you must file your claim for a credit or refund within 3 years after the date you filed your original return
or within 2 years after the
date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered
filed on the due date (even
if the due date was a Saturday, Sunday, or legal holiday). These time periods are suspended while you are financially disabled,
discussed later.
If the last day for claiming a credit or refund is a Saturday, Sunday, or legal holiday, you can file the claim on
the next business day.
If you do not file a claim within this period, you may not be entitled to a credit or a refund.
Late-filed return.
If you were due a refund but you did not file a return, you generally must file your return within 3 years from the
date the return was due
(including extensions) to get that refund. Generally, your return must be postmarked no later than 3 years from the date the
return was due (including
extensions). For information on postmarks, see Filing on time, under When Do I Have To File, earlier.
Limit on amount of refund.
If you file your claim within 3 years after the date you filed your return, the credit or refund cannot be more than
the part of the tax paid
within the 3-year period (plus any extension of time for filing your return) immediately before you filed the claim. This
time period is suspended
while you are financially disabled, discussed later.
Tax paid.
Payments, including estimated tax payments, made before the due date (without regard to extensions) of the original
return are considered paid on
the due date. For example, income tax withheld during the year is considered paid on the due date of the return, April 15
for most taxpayers.
Example 1.
You made estimated tax payments of $500 and got an automatic extension of time to August 15, 2003, to file your 2002 income
tax return. When you
filed your return on that date, you paid an additional $200 tax. On August 15, 2006, you filed an amended return and claimed
a refund of $700. Because
you filed your claim within 3 years after you filed your original return, you can get a refund of up to $700, the tax paid
within the 3 years plus the
4-month extension period immediately before you filed the claim.
Example 2.
The situation is the same as in Example 1, except you filed your return on October 27, 2003, 2½ months after the
extension period ended. You paid an additional $200 on that date. On October 27, 2006, you filed an amended return and claimed
a refund of $700.
Although you filed your claim within 3 years from the date you filed your original return, the refund was limited to $200,
the tax paid within the 3
years plus the 4-month extension period immediately before you filed the claim. The estimated tax of $500 paid before that
period cannot be refunded
or credited.
If you file a claim more than 3 years after you file your return, the credit or refund cannot be more than the tax you paid within the 2
years immediately before you file the claim.
Example.
You filed your 2002 tax return on April 15, 2003. You paid taxes of $500. On November 3, 2004, after an examination of your
2002 return, you had to
pay an additional tax of $200. On May 10, 2006, you file a claim for a refund of $300. However, because you filed your claim
more than 3 years after
you filed your return, your refund will be limited to the $200 you paid during the 2 years immediately before you filed your
claim.
Financially disabled.
The time periods for claiming a refund are suspended for the period in which you are financially disabled. For a joint
income tax return, only one
spouse has to be financially disabled for the time period to be suspended. You are financially disabled if you are unable
to manage your financial
affairs because of a medically determinable physical or mental impairment which can be expected to result in death or which
has lasted or can be
expected to last for a continuous period of not less than 12 months. However, you are not treated as financially disabled
during any period your
spouse or any other person is authorized to act on your behalf in financial matters.
To claim that you are financially disabled, you must send in the following written statements with your claim for
refund.
A statement from your qualified physician that includes:
The name and a description of your physical or mental impairment,
The physician's medical opinion that the impairment prevented you from managing your financial affairs,
The physician's medical opinion that the impairment was or can be expected to result in death, or that its duration has lasted,
or can be
expected to last, at least 12 months,
The specific time period (to the best of the physician's knowledge), and
The following certification signed by the physician: “I hereby certify that, to the best of my knowledge and belief, the above
representations are true, correct, and complete.”
A statement made by the person signing the claim for credit or refund that no person, including your spouse, was authorized
to act on your
behalf in financial matters during the period of disability (or the exact dates that a person was authorized to act for you).
Exceptions for special types of refunds.
If you file a claim for one of the items listed below, the dates and limits discussed earlier may not apply. These
items, and where to get more
information, are as follows.
Bad debt. (See Nonbusiness Bad Debts in chapter 14.)
Worthless security. (See Worthless securities in chapter 14.)
Foreign tax paid or accrued. (See Publication 514, Foreign Tax Credit for Individuals.)
Net operating loss carryback. (See Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.)
Carryback of certain business tax credits. (See Form 3800, General Business Credit.)
Claim based on an agreement with the IRS extending the period for assessment of tax.
Processing claims for refund.
Claims are usually processed shortly after they are filed. Your claim may be accepted as filed, disallowed, or subject
to examination. If a claim
is examined, the procedures are the same as in the examination of a tax return.
If your claim is disallowed, you will receive an explanation of why it was disallowed.
Taking your claim to court.
You can sue for a refund in court, but you must first file a timely claim with the IRS. If the IRS disallows your
claim or does not act on your
claim within 6 months after you file it, you can then take your claim to court. For information on the burden of proof in
a court proceeding, see
Publication 556.
The IRS provides a fast method to move your claim to court if:
You are filing a claim for a credit or refund based solely on contested income tax or on estate tax or gift tax issues considered
in your
previously examined returns, and
You want to take your case to court instead of appealing it within the IRS.
When you file your claim with the IRS, you get the fast method by requesting in writing that your claim be immediately rejected.
A notice of claim
disallowance will then be promptly sent to you.
You have 2 years from the date of mailing of the notice of disallowance to file a refund suit in the United States District
Court having
jurisdiction or in the United States Court of Federal Claims.
Interest on refund.
If you receive a refund because of your amended return, interest will be paid on it from the due date of your original
return or the date you filed
your original return, whichever is later, to the date you filed the amended return. However, if the refund is not made within
45 days after you file
the amended return, interest will be paid up to the date the refund is paid.
Reduced refund.
Your refund may be reduced by an additional tax liability that has been assessed against you.
Also, your refund may be reduced by amounts you owe for past-due child support, debts to another federal agency, or
for state tax. If your spouse
owes these debts, see Offset against debts, under Refunds, earlier, for the correct refund procedures to follow.
Effect on state tax liability.
If your return is changed for any reason, it may affect your state income tax liability. This includes changes made
as a result of an examination
of your return by the IRS. Contact your state tax agency for more information.
Penalties
The law provides penalties for failure to file returns or pay taxes as required.
Civil Penalties
If you do not file your return and pay your tax by the due date, you may have to pay a penalty. You may also have to pay a
penalty if you
substantially understate your tax, understate a reportable transaction, file a frivolous return, or fail to supply your SSN
or individual taxpayer
identification number. If you provide fraudulent information on your return, you may have to pay a civil fraud penalty.
Filing late.
If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty.
The penalty is usually 5% for
each month or part of a month that a return is late, but not more than 25%. The penalty is based on the tax not paid by the
due date (without regard
to extensions).
Fraud.
If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is
late, up to a maximum of 75%.
Return over 60 days late.
If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller
of $100 or 100% of the unpaid
tax.
Exception.
You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not
because of willful neglect.
Paying tax late.
You will have to pay a failure-to-pay penalty of ½ of 1% (.50%) of your unpaid taxes for each month, or part of a
month, after the
due date that the tax is not paid. This penalty does not apply during the automatic 6-month extension of time to file period
if you paid at least 90%
of your actual tax liability on or before the due date of your return and pay the balance when you file the return.
The monthly rate of the failure-to-pay penalty is half the usual rate (.25% instead of .50%) if an installment agreement
is in effect for that
month. You must have filed your return by the due date (including extensions) to qualify for this reduced penalty.
If a notice of intent to levy is issued, the rate will increase to 1% at the start of the first month beginning at
least 10 days after the day that
the notice is issued. If a notice and demand for immediate payment is issued, the rate will increase to 1% at the start of
the first month beginning
after the day that the notice and demand is issued.
This penalty cannot be more than 25% of your unpaid tax. You will not have to pay the penalty if you can show that
you had a good reason for not
paying your tax on time.
Combined penalties.
If both the failure-to-file penalty and the failure-to-pay penalty (discussed earlier) apply in any month, the 5%
(or 15%) failure-to-file penalty
is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended
due date, the minimum
penalty is the smaller of $100 or 100% of the unpaid tax.
Accuracy-related penalty.
You may have to pay an accuracy-related penalty if you underpay your tax because:
You show negligence or disregard of the rules or regulations, or
You substantially understate your income tax.
The penalty is equal to 20% of the underpayment. The penalty will not be figured on any part of an underpayment on which the
fraud penalty
(discussed later) is charged.
Negligence or disregard.
The term “negligence” includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care
in preparing a return. Negligence also includes failure to keep adequate books and records. You will not have to pay a negligence
penalty if you have
a reasonable basis for a position you took.
The term “disregard” includes any careless, reckless, or intentional disregard.
Adequate disclosure.
You can avoid the penalty for disregard of rules or regulations if you adequately disclose on your return a position
that has at least a reasonable
basis. See Disclosure statement, later.
This exception will not apply to an item that is attributable to a tax shelter. In addition, it will not apply if
you fail to keep adequate books
and records, or substantiate items properly.
Substantial understatement of income tax.
You understate your tax if the tax shown on your return is less than the correct tax. The understatement is substantial
if it is more than the
larger of 10% of the correct tax or $5,000. However, the amount of the understatement may be reduced to the extent the understatement
is due to:
Substantial authority, or
Adequate disclosure and a reasonable basis.
If an item on your return is attributable to a tax shelter, there is no reduction for an adequate disclosure. However, there
is a reduction for
a position with substantial authority, but only if you reasonably believed that your tax treatment was more likely than not
the proper treatment.
Substantial authority.
Whether there is or was substantial authority for the tax treatment of an item depends on the facts and circumstances.
Some of the items that may
be considered are court opinions, Treasury regulations, revenue rulings, revenue procedures, and notices and announcements
issued by the IRS and
published in the Internal Revenue Bulletin that involve the same or similar circumstances as yours.
Disclosure statement.
To adequately disclose the relevant facts about your tax treatment of an item, use Form 8275, Disclosure Statement.
You must also have a reasonable
basis for treating the item the way you did.
In cases of substantial understatement only, items that meet the requirements of Revenue Procedure 2004-73 (or later
update) are considered
adequately disclosed on your return without filing Form 8275.
Use Form 8275-R, Regulation Disclosure Statement, to disclose items or positions contrary to regulations.
Reasonable cause.
You will not have to pay a penalty if you show a good reason (reasonable cause) for the way you treated an item. You
must also show that you acted
in good faith.
Frivolous return.
You may have to pay a penalty of $500 if you file a frivolous return. A frivolous return is one that does not include
enough information to figure
the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect.
You will have to pay the penalty if you filed this kind of return because of a frivolous position on your part or
a desire to delay or interfere
with the administration of federal income tax laws. This includes altering or striking out the preprinted language above the
space provided for your
signature.
This penalty is added to any other penalty provided by law.
The penalty must be paid in full upon notice and demand from IRS even if you protest the penalty.
Fraud.
If there is any underpayment of tax on your return due to fraud, a penalty of 75% of the underpayment due to fraud
will be added to your tax.
Joint return.
The fraud penalty on a joint return does not apply to a spouse unless some part of the underpayment is due to the
fraud of that spouse.
Failure to supply social security number.
If you do not include your SSN or the SSN of another person where required on a return, statement, or other document,
you will be subject to a
penalty of $50 for each failure. You will also be subject to a penalty of $50 if you do not give your SSN to another person
when it is required on a
return, statement, or other document.
For example, if you have a bank account that earns interest, you must give your SSN to the bank. The number must be
shown on the Form 1099-INT or
other statement the bank sends you. If you do not give the bank your SSN, you will be subject to the $50 penalty. (You also
may be subject to
“backup” withholding of income tax. See chapter 4.)
You will not have to pay the penalty if you are able to show that the failure was due to reasonable cause and not
willful neglect.
Failure to furnish tax shelter registration number.
A person who sells (or otherwise transfers) to you an interest in a tax shelter must give you the tax shelter registration
number or be subject to
a $100 penalty. If you claim any deduction, credit, or other tax benefit because of the tax shelter, you must attach Form
8271, Investor Reporting of
Tax Shelter Registration Number, to your return to report this number. You will have to pay a penalty of $250 for each failure
to report a tax shelter
registration number on your return. The penalty can be excused if you have a reasonable cause for not reporting the number.
Criminal Penalties
You may be subject to criminal prosecution (brought to trial) for actions such as:
Tax evasion,
Willful failure to file a return, supply information, or pay any tax due,
