Page 144 - Virtual Currencies

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Example. Several years ago, you paid you qualify for free tax preparation, or hire a tax Getting answers to your tax ques-
$160,000 to have your home built on a lot that professional to prepare your return. tions. On IRS.gov, you can get
cost $25,000. You paid $20,000 for permanent up-to-date information on current
improvements to the house and claimed a Free options for tax preparation. Go to events and changes in tax law.
$2,000 casualty loss deduction for damage to IRS.gov to see your options for preparing and
the house before changing the property to filing your return online or in your local commun- • IRS.gov/Help: A variety of tools to help you
get answers to some of the most common
rental use last year. Because land isn't depreci- ity, if you qualify, which include the following.
able, you include only the cost of the house • Free File. This program lets you prepare tax questions.
when figuring the basis for depreciation. and file your federal individual income tax • IRS.gov/ITA: The Interactive Tax Assistant,
Your adjusted basis in the house when you return for free using brand-name tax-prep- a tool that will ask you questions and,
changed its use was $178,000 ($160,000 + aration-and-filing software or Free File filla- based on your input, provide answers on a
$20,000 − $2,000). On the same date, your ble forms. However, state tax preparation number of tax law topics.
property had an FMV of $180,000, of which may not be available through Free File. Go • IRS.gov/Forms: Find forms, instructions,
$15,000 was for the land and $165,000 was for to IRS.gov/FreeFile to see if you qualify for and publications. You will find details on
the most recent tax changes and interac-
the house. The basis for figuring depreciation free online federal tax preparation, e-filing,
on the house is its FMV on the date of change and direct deposit or payment options. tive links to help you find answers to your
questions.
($165,000) because it's less than your adjusted • VITA. The Volunteer Income Tax Assis-
basis ($178,000). tance (VITA) program offers free tax help • You may also be able to access tax law in-
formation in your electronic filing software.
to people with low-to-moderate incomes,
Sale of property. If you later sell or dispose of persons with disabilities, and limited-Eng-
property changed to business or rental use, the lish-speaking taxpayers who need help Need someone to prepare your tax return?
basis of the property you use will depend on preparing their own tax returns. Go to There are various types of tax return preparers,
whether you're figuring gain or loss. IRS.gov/VITA, download the free IRS2Go including enrolled agents, certified public ac-
Gain. The basis for figuring a gain is your app, or call 800-906-9887 for information countants (CPAs), accountants, and many oth-
on free tax return preparation.
adjusted basis when you sell the property. • TCE. The Tax Counseling for the Elderly ers who don’t have professional credentials. If
you choose to have someone prepare your tax
Example. Assume the same facts as in the (TCE) program offers free tax help for all return, choose that preparer wisely. A paid tax
previous example except that you sell the prop- taxpayers, particularly those who are 60 preparer is:
years of age and older. TCE volunteers
erty at a gain after being allowed depreciation • Primarily responsible for the overall sub-
deductions of $37,500. Your adjusted basis for specialize in answering questions about stantive accuracy of your return,
pensions and retirement-related issues
figuring gain is $165,500 ($178,000 + $25,000 • Required to sign the return, and
(land) − $37,500). unique to seniors. Go to IRS.gov/TCE, • Required to include their preparer tax iden-
download the free IRS2Go app, or call tification number (PTIN).
Loss. Figure the basis for a loss starting 888-227-7669 for information on free tax
with the smaller of your adjusted basis or the return preparation. Although the tax preparer always signs the
FMV of the property at the time of the change to • MilTax. Members of the U.S. Armed return, you're ultimately responsible for provid-
business or rental use. Then adjust this amount Forces and qualified veterans may use Mil- ing all the information required for the preparer
for the period after the change in the property's Tax, a free tax service offered by the De- to accurately prepare your return. Anyone paid
use, as discussed earlier under Adjusted Basis, partment of Defense through Military One- to prepare tax returns for others should have a
to arrive at a basis for loss. Source. For more information, go to thorough understanding of tax matters. For
MilitaryOneSource (MilitaryOneSource.mil/ more information on how to choose a tax pre-
Example. Assume the same facts as in the MilTax). parer, go to Tips for Choosing a Tax Preparer
previous example, except that you sell the prop- Also, the IRS offers Free Fillable on IRS.gov.
erty at a loss after being allowed depreciation Forms, which can be completed online and
deductions of $37,500. In this case, you would then filed electronically regardless of in- Coronavirus. Go to IRS.gov/Coronavirus for
start with the FMV on the date of the change to come. links to information on the impact of the corona-
rental use ($180,000) because it's less than the virus, as well as tax relief available for individu-
adjusted basis of $203,000 ($178,000 + Using online tools to help prepare your re- als and families, small and large businesses,
$25,000) on that date. Reduce that amount turn. Go to IRS.gov/Tools for the following. and tax-exempt organizations.
($180,000) by the depreciation deductions to • The Earned Income Tax Credit Assistant
arrive at a basis for loss of $142,500 ($180,000 (IRS.gov/EITCAssistant) determines if Employers can register to use Business
− $37,500). you’re eligible for the earned income credit Services Online. The Social Security Adminis-
(EIC). tration (SSA) offers online service at SSA.gov/
How To Get Tax Help • The Online EIN Application (IRS.gov/EIN) employer for fast, free, and secure online W-2
helps you get an employer identification
filing options to CPAs, accountants, enrolled
number (EIN) at no cost. agents, and individuals who process Form W-2,
If you have questions about a tax issue; need • The Tax Withholding Estimator (IRS.gov/ Wage and Tax Statement, and Form W-2c,
help preparing your tax return; or want to down- W4app) makes it easier for you to estimate Corrected Wage and Tax Statement.
load free publications, forms, or instructions, go the federal income tax you want your em-
to IRS.gov to find resources that can help you ployer to withhold from your paycheck. IRS social media. Go to IRS.gov/SocialMedia
right away. This is tax withholding. See how your with- to see the various social media tools the IRS
holding affects your refund, take-home uses to share the latest information on tax
Preparing and filing your tax return. After pay, or tax due. changes, scam alerts, initiatives, products, and
receiving all your wage and earnings state- • The First-Time Homebuyer Credit Account services. At the IRS, privacy and security are
ments (Forms W-2, W-2G, 1099-R, 1099-MISC, Look-up (IRS.gov/HomeBuyer) tool pro- our highest priority. We use these tools to share
1099-NEC, etc.); unemployment compensation vides information on your repayments and public information with you. Don’t post your so-
statements (by mail or in a digital format) or account balance. cial security number (SSN) or other confidential
other government payment statements (Form • The Sales Tax Deduction Calculator information on social media sites. Always pro-
1099-G); and interest, dividend, and retirement (IRS.gov/SalesTax) figures the amount you tect your identity when using any social net-
statements from banks and investment firms can claim if you itemize deductions on working site.
(Forms 1099), you have several options to Schedule A (Form 1040). The following IRS YouTube channels pro-
choose from to prepare and file your tax return. vide short, informative videos on various tax-re-
You can prepare the tax return yourself, see if lated topics in English, Spanish, and ASL.
• Youtube.com/irsvideos.
Publication 551 (December 2022) Page 11