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IRS Form 8825 – Rental Real Estate Income and Expenses of a Partnership or an S Corporation – In the world of real estate investing, partnerships and S corporations often hold rental properties as key assets. Properly reporting income and expenses from these activities is crucial for tax compliance. IRS Form 8825, titled “Rental Real Estate Income and Expenses of a Partnership or an S Corporation,” serves as the essential tool for this purpose. This form helps entities detail their rental operations, calculate net income or losses, and integrate these figures into their overall tax returns. Whether you’re a real estate investor, tax professional, or business owner, understanding Form 8825 can streamline your filing process and help avoid costly errors.

As we approach the 2025 tax season, staying updated on form changes is vital. This guide covers everything from the basics to advanced filing tips, drawing from official IRS resources and expert insights to ensure accuracy.

 

What Is IRS Form 8825 and Its Purpose?

IRS Form 8825 is specifically designed for partnerships and S corporations to report income and deductible expenses from rental real estate activities. It captures details like gross rents, other related income, and various expenses, ultimately calculating the net rental real estate income or loss. This net figure flows to Schedule K of Form 1065 (for partnerships) or Form 1120-S (for S corporations), where it’s distributed to partners or shareholders via Schedule K-1.

The form’s primary goal is to provide a clear breakdown of rental operations, ensuring compliance with passive activity rules and other tax provisions. It’s not for individual taxpayers—sole proprietors or single-member LLCs report rental income on Schedule E of Form 1040 instead. By using Form 8825, entities can accurately reflect how rental properties impact their overall taxable income, potentially qualifying for deductions that reduce tax liability.

Example of IRS Form 8825 (Source: IRS official draft for illustrative purposes).

Key Updates to Form 8825 for the 2025 Tax Year

The IRS has introduced several modifications to Form 8825 for tax years beginning in 2025, based on draft releases. These changes aim to increase transparency, especially for larger entities, without altering what expenses are deductible.

• Separation of Income Types: Gross rents and “other income” (e.g., late fees, application fees, tenant reimbursements, or amenity income like parking or laundry) must now be reported separately on Lines 2a and 2b. This applies to all filers and helps the IRS better categorize revenue streams.
• New Schedule A (Form 8825): Entities required to file Schedule M-3 (typically those with $10 million or more in assets) must use this new schedule to break down “other deductions” on Line 17 into 20 specific categories, such as asset management fees, contract services, and prepayment penalties. Non-M-3 filers can still lump these into Line 17 without the schedule.
• Expanded Property Information Codes: A new Column (c) on Line 1 requires codes (A through I) for transactions like acquisitions, dispositions, or basis adjustments (e.g., Code A for nontaxable contributions under sections 721 or 351). This is mandatory only for M-3 filers.
• Form Layout Enhancements: Page 2 now accommodates four additional properties, allowing up to eight per form without extra pages in some cases.

These updates reflect the IRS’s push for more granular reporting in pass-through entities, particularly those with complex rental portfolios. Always use the December 2025 revision for 2025 filings, and check IRS.gov for final versions.

Who Must File IRS Form 8825?

Partnerships (filing Form 1065) and S corporations (filing Form 1120-S) engaged in rental real estate activities must attach Form 8825 to their returns. This includes entities that:

• Own and rent out properties like apartments, commercial spaces, or vacation homes.
• Receive flow-through income or losses from rental activities in other partnerships, estates, or trusts.

If your entity has no rental income but incurs related expenses (e.g., from a property under renovation), you may still need to file to report losses. However, do not use Form 8825 for trade or business activities, portfolio income, or non-real estate rentals—these go elsewhere on the return.

Passive activity limitations apply, so consult the instructions for Form 1065 or 1120-S. If multiple activities exist under these rules, attach statements to Schedule K and K-1s detailing net income/loss per activity.

What Information Do You Need to Report on Form 8825?

Form 8825 requires a per-property breakdown in columns A through H (up to eight properties per form; use multiples for more). Key sections include:

Property Details (Line 1)

• Physical address.
• Property type code (1-8, e.g., 2 for multi-family residence).
• Other information code (A-I, for M-3 filers).
• Fair rental days and personal use days (per section 280A).

Income (Lines 2a-2c)

• Gross rents (Line 2a).
• Other rental-related income (Line 2b).
• Total income per property (Line 2c).

Expenses (Lines 3-18)

Deductible costs like advertising, insurance, repairs, depreciation, and more. Total expenses per property on Line 18, with net income/loss on Line 19.

Summary and Additional Items (Lines 20-23)

• Totals across all properties.
• Net gains/losses from property dispositions (from Form 4797).
• Flow-through items from other entities.

Report everything accurately, as underreporting can trigger audits.

Step-by-Step Guide: How to Fill Out IRS Form 8825

Filling out Form 8825 involves gathering records like lease agreements, expense receipts, and depreciation schedules. Here’s a detailed walkthrough:

1. Enter Entity Information: At the top, input the partnership or S corporation’s name and EIN.
2. List Properties (Line 1): Detail each property’s address, type code, other info code (if applicable), fair rental days, and personal use days.
3. Report Income (Lines 2a-2c): Enter gross rents on 2a and other income on 2b for each column. Sum to 2c.
4. Detail Expenses (Lines 3-17):
   • Line 3: Advertising costs.
   • Line 4: Auto and travel.
   • Line 5: Cleaning/maintenance.
   • Line 6: Commissions (not including mortgage or sales).
   • Line 7: Insurance (property/casualty).
   • Line 8: Interest (may require Form 8990 for limitations).
   • Line 9: Legal/professional fees.
   • Line 10: Repairs (not capital improvements).
   • Line 11: Taxes (real estate; check deductibility).
   • Line 12: Utilities.
   • Line 13: Wages/salaries.
   • Line 14: Depreciation (attach Form 4562 if needed).
   • Lines 15-16: Reserved.
   • Line 17: Other deductions (use Schedule A for M-3 filers).
5. Calculate Per-Property Totals (Lines 18-19): Sum expenses (18) and subtract from income (19).
6. Complete Summary (Lines 20-23):
   • 20a/b: Total income/expenses across properties.
   • 21: Net from Form 4797.
   • 22a/b: Flow-through items and entity details.
   • 23: Overall net; transfer to Schedule K, Line 2.

If you have more than eight properties, attach additional forms and combine totals on one.

IRS Form 8825 Download and Printable

Download and Print: IRS Form 8825

Common Rental Real Estate Expenses and Reporting Tips

Deductible expenses on Form 8825 include everyday costs of operating rental properties. Here’s a breakdown:

Expense Category	Examples	Reporting Notes
Advertising	Marketing to attract tenants	Line 3; fully deductible if ordinary and necessary.
Insurance	Property, liability coverage	Line 7; exclude title insurance (add to basis).
Repairs vs. Improvements	Fixing leaks (repair) vs. new roof (improvement)	Line 10 for repairs; capitalize improvements and depreciate on Line 14.
Depreciation	Wear and tear on buildings	Line 14; use MACRS rules, attach Form 4562 for new assets.
Interest	Mortgage payments	Line 8; subject to section 163(j) limits—file Form 8990 if applicable.
Other Deductions	Management fees, utilities	Line 17; detail on Schedule A if required.

Tip: Distinguish repairs from improvements to avoid IRS reclassification. Keep detailed records for at least three years.

Special Rules for Partnerships and S Corporations

• Passive Activity Limitations: Rental activities are generally passive; losses may be limited based on participation. Group activities appropriately but report per property on Form 8825.
• Self-Rental and Personal Use: Code self-rentals as 7; track personal days to comply with section 280A.
• Flow-Through Items: Report net from K-1s on Line 22a.
• M-3 Filers: Mandatory use of Schedule A and codes for enhanced scrutiny.

Consult a tax advisor for complex scenarios like basis adjustments or section 1031 exchanges.

Related Forms and Attachments

• Form 4562: For depreciation details.
• Form 4797: Sales of business property.
• Form 8990: Business interest expense limitations.
• Schedule M-3: If assets ≥ $10M, triggers Schedule A.
• Additional Statements: For passive activity breakdowns.

Attach these to your Form 1065 or 1120-S as needed.

Tips for Accurate Filing and Avoiding Common Mistakes

• Gather Documentation Early: Use accounting software to track per-property data.
• Double-Check Calculations: Ensure totals on Lines 20-23 match all pages.
• Avoid Mixing Categories: Separate gross rents from other income; don’t deduct non-allowable items like federal taxes.
• Stay Updated: Monitor IRS.gov for final 2025 forms—drafts are for reference only.
• E-File for Efficiency: Platforms like TaxZerone simplify electronic filing with Form 1120-S.
• Common Pitfalls: Forgetting to attach Form 4562, misclassifying expenses, or ignoring interest limits.

By following these steps, you can minimize audit risks and maximize deductions.

Conclusion: Mastering Form 8825 for Tax Success

IRS Form 8825 is a cornerstone for partnerships and S corporations managing rental real estate. With the 2025 updates emphasizing detailed reporting, proactive preparation is key. Whether you’re handling a single apartment building or a portfolio of commercial properties, accurate completion ensures compliance and optimizes your tax position. For personalized advice, consult a certified tax professional. Stay informed, file on time, and leverage rental deductions to support your real estate ventures.

 

IRS Form 990-EZ – Short Form Return of Organization Exempt from Income Tax – IRS Form 990-EZ is the shortened annual information return that many small to mid-sized tax-exempt organizations file with the Internal Revenue Service (IRS). This form ensures compliance with federal tax-exempt status requirements while providing less detailed reporting than the full Form 990. Understanding Form 990-EZ helps nonprofits maintain transparency, avoid penalties, and preserve their exempt status.

 

What Is IRS Form 990-EZ?

The IRS requires Form 990-EZ, titled Short Form Return of Organization Exempt from Income Tax, from certain tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations under Internal Revenue Code section 6033. It reports financial activities, governance, and compliance to the IRS and the public.

Unlike the full Form 990, Form 990-EZ is streamlined for smaller organizations, typically spanning four pages plus required schedules. The IRS makes filed returns publicly available (with some redactions), promoting accountability for nonprofits.

Who Must File Form 990-EZ?

Most organizations exempt under section 501(a), including 501(c)(3) charities, as well as section 527 political organizations and certain trusts, must file an annual return unless exempt.

Eligibility for Form 990-EZ specifically applies to organizations that:

• Have gross receipts less than $200,000, and
• Have total assets less than $500,000 at the end of the tax year.

Organizations exceeding these thresholds must file the full Form 990. Smaller organizations with gross receipts normally $50,000 or less can file Form 990-N (e-Postcard) instead.

Exceptions include:

• Private foundations (must file Form 990-PF).
• Sponsoring organizations of donor-advised funds.
• Certain controlling organizations or those operating hospital facilities (must file full Form 990 regardless of size).
• Group returns (must use full Form 990).

Organizations eligible for Form 990-N or Form 990-EZ can voluntarily file a more detailed form if preferred.

Key Differences: Form 990 vs. Form 990-EZ

Aspect	Form 990-EZ	Form 990
Length	4 core pages + schedules	12 core pages + more schedules
Eligibility	Gross receipts < $200,000 Total assets < $500,000	Gross receipts ≥ $200,000 or assets ≥ $500,000
Detail Level	Basic revenue/expense summary	Detailed statements, reconciliations, and governance info
Required Schedules	Fewer (e.g., A, B, C, O common)	More extensive schedules
Best For	Small to mid-sized nonprofits	Larger or more complex organizations

Form 990-EZ reduces administrative burden while still requiring key financial and operational disclosures.

Filing Deadline for Form 990-EZ in 2025

The due date is the 15th day of the 5th month after the end of your organization’s tax year.

• For calendar year organizations (January 1 – December 31, 2025): May 15, 2026.
• For fiscal year filers: Calculate 4 months + 15 days after year-end.

If the due date falls on a weekend or holiday, it shifts to the next business day.

You can request an automatic 6-month extension by filing Form 8868 before the original deadline (no reason needed).

Failure to file for three consecutive years results in automatic revocation of tax-exempt status.

IRS Form 990-EZ Download and Printable

Download and Print: IRS Form 990-EZ

How to File Form 990-EZ

Since the Taxpayer First Act (2019), electronic filing is mandatory for Form 990-EZ for tax years ending July 31, 2021, and later. Paper filing is no longer accepted except in rare hardship cases.

Steps to e-file:

1. Gather financial records, board information, and activity descriptions.
2. Use IRS-approved e-file software or an authorized provider.
3. Complete the form, including required schedules (e.g., Schedule A for 501(c)(3) public charity status, Schedule B for contributors).
4. Have an authorized officer sign electronically.
5. Transmit to the IRS and receive acceptance confirmation.

Many nonprofits use third-party platforms for ease, error checks, and schedule support.

Required Schedules and Common Attachments

Common schedules for Form 990-EZ filers include:

• Schedule A: Public charity status and support (required for most 501(c)(3)s).
• Schedule B: Contributors (if contributions exceed thresholds).
• Schedule C: Political/lobbying activities.
• Schedule O: Supplemental narrative explanations.

Ensure all parts (I–V, and VI for 501(c)(3)s) are complete.

Penalties and Best Practices

Late filing can incur penalties starting at $20 per day, escalating for larger organizations. Incomplete returns may be rejected.

Tips:

• Review prior returns for consistency.
• Avoid including Social Security numbers (redacted if needed).
• Use Schedule O for clear explanations.

For the latest 2025 forms and instructions, visit the official IRS pages: About Form 990-EZ and Instructions for Form 990-EZ.

Timely and accurate filing of Form 990-EZ helps your organization stay compliant and focused on its mission. Consult a tax professional for complex situations.

 

IRS Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign Corporations – In an increasingly globalized economy, many U.S. citizens, residents, and entities find themselves involved with foreign corporations. Whether you’re an officer, director, or shareholder, navigating U.S. tax obligations is crucial to avoid hefty penalties. IRS Form 5471, officially titled “Information Return of U.S. Persons With Respect To Certain Foreign Corporations,” plays a pivotal role in this process. This guide breaks down everything you need to know about Form 5471 for tax year 2025, including filing requirements, deadlines, penalties, and recent updates. We’ll draw from official IRS sources and expert insights to ensure accuracy and compliance.

 

What Is IRS Form 5471?

Form 5471 is an information return required by the IRS to report U.S. persons’ interests in certain foreign corporations. Unlike a traditional tax return that calculates owed taxes, this form provides the IRS with detailed data on foreign entities to enforce tax laws under Internal Revenue Code (IRC) sections 6038 and 6046. It’s essential for transparency, helping the IRS track income, earnings, and transactions that might impact U.S. tax liabilities, such as those related to Controlled Foreign Corporations (CFCs).

The form requires attachments like various schedules that detail financials, taxes paid, earnings and profits (E&P), transactions, and more. For 2025, the form has been revised as of December 2025, incorporating updates to reflect new legislation and reporting needs.

Who Must File Form 5471?

Not every U.S. person with international ties needs to file Form 5471. The requirement applies to specific “U.S. persons,” which include U.S. citizens, residents, domestic partnerships, corporations, estates, and trusts. You must file if you fall into one of the following categories of filers:

• Category 1: U.S. shareholders of a Specified Foreign Corporation (SFC) or CFC under certain conditions. Note: Exceptions exist if no U.S. shareholder owns stock attributable to the filer.
• Category 2: U.S. persons who become officers or directors of a foreign corporation where a U.S. person acquires stock meeting a 10% ownership threshold.
• Category 3: U.S. persons acquiring stock that results in 10% ownership or additional stock increasing ownership by 10%.
• Category 4: U.S. persons controlling a foreign corporation for an uninterrupted period of at least 30 days during the tax year.
• Category 5: U.S. shareholders owning at least 10% of a CFC’s voting power or value.

These categories ensure the IRS captures information from those with significant control or ownership. For startups or expats with foreign entities, this form is particularly relevant to report offshore operations.

Filing Requirements and Deadlines for 2025

Filing Form 5471 is tied to your U.S. tax return deadline. Attach it to your Form 1040 (for individuals), Form 1120 (for corporations), or other applicable returns. Key deadlines for tax year 2025 include:

• Individuals: April 15, 2026 (or June 17, 2026, if living abroad).
• Corporations: March 17, 2026.

Extensions for your main tax return automatically extend Form 5471’s deadline. Electronic filing is encouraged for accuracy and speed. If you’re a Category 1 filer, you might be exempt under certain conditions, but always verify with IRS instructions.

Key Schedules and Information Required

Form 5471 isn’t filed alone; it includes multiple schedules based on your situation. Here’s a breakdown:

• Schedule E: Reports taxes paid or accrued by the foreign corporation.
• Schedule G-1: Details cost-sharing arrangements.
• Schedule H: Current earnings and profits.
• Schedule I-1: Income inclusions for U.S. shareholders.
• Schedule J: Accumulated E&P.
• Schedule M: Transactions between the foreign corporation and related parties.
• Schedule O: Organization, reorganization, or stock acquisitions/dispositions.
• Schedule P: Previously taxed E&P (PTEP).
• Schedule Q: Income, deductions, taxes, and assets by income groups.
• Schedule R: Distributions from foreign corporations.

For 2025, a new Schedule H-1 has been introduced to report a CFC’s adjusted net income or loss for Corporate Alternative Minimum Tax (CAMT) purposes. Gather documents like financial statements, ownership records, and transaction logs to complete these.

Penalties for Not Filing or Late Filing Form 5471

Non-compliance can be costly. The IRS imposes a $10,000 penalty per foreign corporation per annual accounting period for failure to file a complete and timely Form 5471. If the failure continues after IRS notification, additional $10,000 penalties apply every 30 days, up to $50,000 per return. There are also potential penalties under section 6707A for failing to report certain transactions.

Recent court rulings have debated the IRS’s authority to assess these penalties, with some decisions affirming assessment rights under Section 6038(b). Penalty relief may be available for reasonable cause, but don’t rely on it—proactive filing is key.

Recent Changes to Form 5471 for Tax Year 2025

The IRS continues to update Form 5471 to align with evolving tax laws. For 2025:

• New Schedule H-1: Replaces the prior Worksheet H-1 for CAMT reporting.
• One Big Beautiful Bill Act (OBBBA) Impacts: Effective for CFC years after December 31, 2025, this modifies CFC ownership rules, transition rules for dividends, and repeals certain deferral elections under Section 898.
• §987 Reporting Revisions: Updates to how currency gain/loss is reported on the form.

These changes stem from broader tax reforms, including the 2025 Tax Act, which introduces significant shifts for international taxation. Consult the latest IRS instructions (Rev. December 2024) for full details.

IRS Form 5471 Download and Printable

Download and Print: IRS Form 5471

How to File Form 5471 Step-by-Step

1. Determine Your Category: Review IRS instructions to confirm if you qualify.
2. Gather Information: Collect foreign corporation details, including EIN (if applicable), financials, and ownership data.
3. Complete the Form and Schedules: Use tax software or consult a professional for accuracy.
4. Attach to Your Tax Return: File electronically via e-file or mail if necessary.
5. Seek Professional Help: For complex situations, work with a tax advisor specializing in international tax.

Tools like Bloomberg Tax Workpapers can streamline preparation.

Conclusion

Mastering IRS Form 5471 is vital for U.S. persons with foreign corporation ties to maintain compliance and avoid penalties. With updates for 2025 emphasizing new schedules and legislative changes, staying informed is more important than ever. If you’re unsure about your obligations, consult a tax professional or visit the IRS website for personalized guidance.

Frequently Asked Questions (FAQs)

What happens if I forget to file Form 5471?

You could face a $10,000 penalty per corporation, with additional fines for continued non-compliance.

Is Form 5471 required for all foreign investments?

No, only for specific ownership or control levels in foreign corporations.

Are there any exemptions for small shareholders?

Yes, thresholds like 10% ownership apply, and some categories have exceptions.

How do recent tax laws affect Form 5471?

The OBBBA and other 2025 reforms introduce changes to CFC rules and new reporting requirements.

For more details, refer to official IRS resources or trusted tax advisors. This guide is for informational purposes and not tax advice.

 

IRS Form 3115 – Application for Change in Accounting Method – In the ever-evolving world of tax compliance, businesses and individuals often need to adjust their accounting practices to better align with IRS regulations, improve financial reporting, or adapt to new business realities. IRS Form 3115, officially titled “Application for Change in Accounting Method,” serves as the key document for requesting such changes. Whether you’re switching from cash to accrual basis, updating depreciation methods, or making inventory adjustments, this form ensures your transition is IRS-approved and properly documented. This SEO-optimized guide covers everything you need to know about Form 3115, including eligibility, filing steps, and the latest 2025 updates, drawing from official IRS sources and recent revenue procedures.

 

What Is IRS Form 3115 and Why Is It Important?

IRS Form 3115 is the formal application taxpayers use to request permission from the IRS to change either their overall method of accounting (e.g., from cash to accrual) or the accounting treatment of specific items (e.g., inventory valuation or depreciation). Accounting methods determine when income and expenses are recognized for tax purposes, directly impacting your taxable income and tax liability.

Changing methods without IRS consent can lead to penalties, audits, or disallowed deductions. Form 3115 provides a structured way to make these changes, often resulting in a Section 481(a) adjustment to prevent income or expense duplication or omission. Common reasons to file include complying with new tax laws, correcting impermissible methods, or optimizing for business growth—such as small businesses qualifying for cash method under inflated gross receipts thresholds (up to $31 million in 2025).

For example, if your business has grown and now exceeds the threshold for cash accounting, you might need to switch to accrual using Form 3115. This form is essential for farmers, manufacturers, retailers, and service providers alike.

Who Needs to File Form 3115?

Any taxpayer—individuals, corporations, partnerships, or estates—must file Form 3115 if they intend to change their accounting method for federal income tax purposes. This includes:

• Businesses Switching Overall Methods: Such as from cash to accrual (or vice versa) under Section 446, especially for those hitting the $31 million gross receipts test in 2025.
• Depreciation or Amortization Changes: Updating methods for assets like buildings, vehicles, or intangibles under Sections 167 or 168.
• Inventory-Related Adjustments: Changing valuation methods, LIFO to FIFO, or complying with uniform capitalization rules under Section 263A.
• Specific Item Treatments: Like advance payments, research expenditures, or bad debts.

Exemptions apply for certain elections that don’t require Form 3115, such as some de minimis rules, but most substantive changes mandate it. Qualified small taxpayers (average annual gross receipts of $31 million or less) often benefit from reduced filing requirements for many changes.

Automatic vs. Non-Automatic Accounting Method Changes

Accounting method changes fall into two categories:

Automatic Changes

These don’t require advance IRS approval—just file the form, and it’s considered granted if eligibility is met. They cover hundreds of scenarios listed in Rev. Proc. 2025-23, each with a Designated Change Number (DCN). Examples include:

• DCN 7: Depreciation changes under Section 168.
• DCN 122: Overall cash to accrual.
• DCN 265: Capitalizing research expenditures under Section 174 (effective for years after 2021).

Eligibility rules include no similar change in the prior five years and not being in the final year of business (with exceptions). Automatic changes often provide audit protection.

Non-Automatic Changes

These require IRS consent via advance ruling and involve a user fee (e.g., $12,600 standard, reduced for small entities). File as early as possible in the change year. Use if the change isn’t listed as automatic.

Step-by-Step: How to File IRS Form 3115

Filing Form 3115 involves careful preparation. Here’s a breakdown:

1. Determine Your Change Type: Review Rev. Proc. 2025-23 for DCNs and eligibility.
2. Complete the Form: Use the December 2022 revision. Key sections include:
   • Part I: For automatic changes (enter DCN).
   • Part II: General info, prior changes, and audit disclosures.
   • Part IV: Section 481(a) adjustment calculation.
   • Schedules A-E: Specific to change type (e.g., Schedule E for depreciation).
3. Gather Documentation: Attach explanations, computations, and supporting authorities.
4. File Copies:
   • Original: Attach to your timely filed tax return (including extensions) for the year of change.
   • Duplicate: Mail to IRS National Office (Ogden, UT for automatic) no earlier than the first day of the change year.
5. Pay User Fee if Non-Automatic: Via Pay.gov.
6. Electronic Filing: Not available; paper only.

For concurrent changes, use one form. Consult a tax professional for complex cases.

IRS Form 3115 Download and Printable

Download and Print: IRS Form 3115

Understanding the Section 481(a) Adjustment

A core component of Form 3115 is the Section 481(a) adjustment, which accounts for differences in income/expenses under old vs. new methods to avoid double-counting.

• Positive Adjustment: Spread over four years (or shorter if de minimis).
• Negative Adjustment: Taken entirely in the change year.
• Cut-Off Basis: Used for some changes (no adjustment for prior years).

Compute it in Part IV and attach a detailed statement.

Deadlines, User Fees, and Where to File

• Automatic Changes: File by the return due date (with extensions). Duplicate no later than that date. No user fee.
• Non-Automatic: File during the change year; user fees apply ($300–$59,500 based on type).
• Late Filings: Possible six-month extension for automatic under certain conditions.

Mail duplicate to: Internal Revenue Service, Attn: CC:PA:LPD:DRU, Room 5336, 1111 Constitution Ave. NW, Washington, DC 20224 (non-automatic) or Ogden for automatic.

2025 Updates: Rev. Proc. 2025-23 and Beyond

The IRS released Rev. Proc. 2025-23 on June 9, 2025, updating the automatic changes list by removing obsolete items and incorporating Section 174 research expenditure changes. Key highlights:

• Effective for Forms 3115 filed on/after June 9, 2025, for years ending on/after October 31, 2024.
• New DCN 272: Allowance charge-off method for regulated financial companies.
• Transition rules for pre-June filings: No refiling needed if duplicate was submitted under prior proc.
• Enhanced guidance for SRE expenditures (DCN 265/271), requiring capitalization over 5/15 years.

Check IRS.gov for post-2025 developments, as legislative proposals could allow immediate expensing for domestic research.

Common Mistakes When Filing Form 3115

Avoid these pitfalls:

• Missing DCN or eligibility checks.
• Incomplete Section 481(a) computations.
• Late duplicate filing.
• Not attaching required schedules or statements.
• Ignoring concurrent change requirements.

Working with a CPA can help ensure accuracy.

Final Thoughts on IRS Form 3115

Navigating IRS Form 3115 can seem daunting, but it’s a powerful tool for tax optimization and compliance. With the 2025 updates in Rev. Proc. 2025-23, more changes qualify as automatic, simplifying the process for many taxpayers. Always use the latest form and instructions from IRS.gov, and consider professional advice for your specific situation. By filing correctly, you can minimize tax burdens and avoid costly errors. For more details, visit the official IRS page on Form 3115.

 

IRS Form 8938 – Statement of Specified Foreign Financial Assets – In an increasingly globalized world, many U.S. taxpayers hold financial assets abroad, whether through investments, retirement accounts, or business interests. To ensure compliance with tax laws and combat tax evasion, the IRS requires certain individuals and entities to report these holdings using IRS Form 8938, also known as the Statement of Specified Foreign Financial Assets. This form is a key component of the Foreign Account Tax Compliance Act (FATCA), which aims to increase transparency in international financial dealings.

If you’re a U.S. citizen, resident alien, or certain domestic entities with foreign assets, understanding Form 8938 is crucial to avoid hefty penalties. In this comprehensive guide, we’ll cover everything you need to know about who needs to file Form 8938, the reporting thresholds, what assets qualify, step-by-step filing instructions, and more. Whether you’re an expat, investor, or business owner, staying informed can help you navigate tax season smoothly for the 2025 tax year.

What Is IRS Form 8938 and Its Purpose?

IRS Form 8938 is an information reporting form used by U.S. taxpayers to disclose specified foreign financial assets that exceed specific value thresholds during the tax year. Introduced under FATCA in 2010, it helps the IRS track offshore assets and ensure that income from these sources is properly reported on U.S. tax returns.

Unlike other forms, Form 8938 doesn’t calculate taxes owed—it’s purely for disclosure. However, failing to file it when required can lead to significant penalties, even if all taxes on the assets have been paid. The form must be attached to your annual tax return, such as Form 1040, and is due by the standard filing deadline (typically April 15, or later with an extension).

For the 2025 tax year, there are no major structural changes to Form 8938 based on current IRS guidance, but taxpayers should always check for updates on the official IRS website. It’s designed to complement other reporting requirements, like the Report of Foreign Bank and Financial Accounts (FBAR), but covers a broader range of assets.

Who Needs to File Form 8938?

Not every U.S. taxpayer with foreign assets must file Form 8938. Filing is required only if you are a “specified person” and the total value of your specified foreign financial assets exceeds the applicable reporting threshold.

Specified persons include:

• U.S. citizens and resident aliens.
• Nonresident aliens who elect to file jointly with a U.S. spouse.
• Certain bona fide residents of U.S. territories (e.g., American Samoa or Puerto Rico) in limited cases.
• Specified domestic entities, such as closely held corporations, partnerships, and trusts where at least 50% ownership is held by specified individuals.

If you meet these criteria and your assets hit the thresholds (detailed below), you must file. Note that even if you’re living abroad, you may still qualify as a specified person under U.S. tax rules.

Reporting Thresholds for Form 8938 in 2025

The Form 8938 filing thresholds depend on your filing status, marital status, and whether you live in the U.S. or abroad. These thresholds are based on the aggregate value of all specified foreign financial assets—either on the last day of the tax year or the highest value at any point during the year (whichever is greater).

Here’s a breakdown in the table below for clarity:

Filing Status	Living in the U.S. (Last Day / Anytime During Year)	Living Abroad (Last Day / Anytime During Year)
Unmarried or Married Filing Separately	$50,000 / $75,000	$200,000 / $300,000
Married Filing Jointly	$100,000 / $150,000	$400,000 / $600,000

These thresholds have remained consistent into 2025, with no adjustments noted in recent IRS updates. For specified domestic entities, the threshold is generally $50,000 on the last day or $75,000 anytime, regardless of location.

To determine if you’ve exceeded the threshold, sum the maximum fair market value of all qualifying assets during the year, converted to U.S. dollars using appropriate exchange rates.

What Are Specified Foreign Financial Assets?

Specified foreign financial assets include a wide range of holdings outside the U.S. that are held for investment purposes. These are divided into two main categories: financial accounts maintained by foreign financial institutions and other foreign assets not held in such accounts.

Examples include:

• Financial Accounts: Bank deposits, custodial accounts, cash-value insurance policies, or annuities issued by foreign institutions.
• Other Assets:
  • Stocks or securities issued by non-U.S. companies.
  • Interests in foreign partnerships, trusts, or estates.
  • Bonds, notes, or other debt instruments from foreign issuers.
  • Derivative contracts like swaps or options with foreign counterparties.
  • Interests in foreign entities, such as corporations or hedge funds.

Exclusions apply to assets used in a trade or business, certain U.S.-based accounts (even if holding foreign securities), and assets already reported on other IRS forms like Form 3520 or 5471. Real estate is generally not reportable unless held through a foreign entity.

For valuation, use the fair market value in U.S. dollars, often based on year-end statements or exchange rates from the U.S. Treasury.

How to File IRS Form 8938: Step-by-Step Guide

Filing Form 8938 involves attaching it to your tax return. Here’s a simplified step-by-step process based on IRS instructions:

1. Gather Information: Collect details on all specified foreign assets, including maximum values, account numbers, and income generated.
2. Complete Identifying Info: Enter your name, TIN, and type of filer (individual or entity).
3. Part I & II: Summaries: Report the number and total value of foreign deposit/custodial accounts and other assets.
4. Part III: Tax Items: Summarize interest, dividends, gains, and other income from these assets.
5. Part IV: Exceptions: Note if assets are reported on other forms to avoid duplication.
6. Parts V & VI: Details: Provide specifics for each account or asset, including descriptions, values, and foreign currency info if applicable.
7. Attach and File: Submit with your Form 1040 or equivalent by the due date, including extensions. Electronic filing is recommended.

If you have multiple assets, use continuation sheets. For joint filers, report the full value but file only one form.

Penalties for Not Filing Form 8938

Non-compliance with Form 8938 filing requirements can be costly. The initial penalty for failure to file is $10,000 per year. If the IRS notifies you and you continue to fail, additional penalties of $10,000 per 30 days can apply, up to a maximum of $50,000.

Accuracy-related penalties (up to 40% of underpaid tax) may also apply if underreporting is willful. In cases of fraud, criminal penalties could be imposed. To mitigate risks, consider the IRS’s streamlined compliance procedures if you’ve missed filings in prior years.

IRS Form 8938 Download and Printable

Download and Print: IRS Form 8938

Key Differences Between Form 8938 and FBAR

Many taxpayers confuse Form 8938 with the FBAR (FinCEN Form 114). While both involve foreign asset reporting, they differ significantly:

• Thresholds: FBAR triggers at $10,000 aggregate in foreign accounts anytime during the year; Form 8938 has higher thresholds.
• Assets Covered: FBAR focuses on financial accounts; Form 8938 includes broader assets like stocks and contracts.
• Filing: FBAR is filed separately with FinCEN by April 15 (auto-extension to October); Form 8938 attaches to your tax return.
• Penalties: FBAR penalties can reach $100,000+ for willful violations; Form 8938 starts at $10,000.

You may need to file both if thresholds are met—filing one doesn’t excuse the other.

Frequently Asked Questions About IRS Form 8938

Here are answers to common queries based on IRS FAQs:

• Do I report foreign real estate on Form 8938? No, unless held through a foreign entity like a corporation.
• What if my assets are in a U.S. brokerage? If the account is U.S.-based, even holding foreign stocks, it’s generally not reportable.
• Can I e-file Form 8938? Yes, through most tax software or IRS e-file systems.
• What about foreign pensions? Report if they qualify as specified assets; value based on your beneficial interest.
• Are there relief programs for late filings? Yes, check IRS streamlined procedures for non-willful violations.

For personalized advice, consult a tax professional, as this guide is for informational purposes only. Always refer to the latest IRS publications for the most current rules.

By understanding and complying with IRS Form 8938 requirements, you can avoid penalties and ensure your foreign assets are properly disclosed. If you suspect you need to file, start gathering your documents early for the 2025 tax season.

 

IRS Form 1116 – Foreign Tax Credit (Individual, Estate, or Trust) – If you’re a U.S. taxpayer with income from overseas, you may be eligible for the foreign tax credit to avoid double taxation. IRS Form 1116, also known as the Foreign Tax Credit (Individual, Estate, or Trust), is the key document for claiming this relief. In this comprehensive guide, we’ll break down everything you need to know about Form 1116, including eligibility, step-by-step filing instructions, limitations, and updates for tax year 2025. Whether you’re an expat, investor, or estate manager, understanding how to use this form can significantly reduce your U.S. tax liability.

 

What Is the Foreign Tax Credit and Why Claim It?

The foreign tax credit (FTC) allows U.S. citizens, resident aliens, estates, and trusts to offset U.S. taxes on foreign-sourced income with taxes already paid to foreign governments. This credit aims to prevent double taxation, where the same income is taxed by both the U.S. and another country. Unlike a deduction, which reduces taxable income, the credit directly lowers your tax bill dollar-for-dollar, making it often more advantageous.

For example, if you earned dividends from a foreign company and paid taxes on them abroad, you can use the FTC to reduce your U.S. tax on that income. The credit applies to qualifying foreign income taxes, war profits taxes, or excess profits taxes, but not to penalties, interest, or non-creditable taxes like those from sanctioned countries.

Who Needs to File IRS Form 1116?

You must file Form 1116 if you’re an individual, estate, or trust claiming the FTC and don’t qualify for the simplified election. Nonresident aliens typically can’t claim it, except in specific cases like Puerto Rico residents or those with U.S.-connected business income.

However, there’s an exception: If your foreign taxes are $300 or less ($600 for married filing jointly), all from passive income, and reported on a qualified payee statement like Form 1099-DIV, you can claim the credit directly on Form 1040 without filing Form 1116. If your taxes exceed these limits or come from other categories, Form 1116 is required.

U.S. expats living abroad, investors in foreign stocks, or those with foreign business income are common filers. Estates and trusts with foreign assets may also need to file.

Eligibility Requirements for the Foreign Tax Credit

To qualify, you must have paid or accrued foreign taxes on foreign-sourced income that is also taxable in the U.S. Eligible taxes include those imposed by foreign countries or U.S. possessions, but exclude:

• Taxes not legally owed.
• Taxes eligible for refunds or subsidies.
• Taxes from boycotted or sanctioned countries (e.g., under section 901(j)).

You can’t claim the credit for taxes on excluded income, such as via the Foreign Earned Income Exclusion (Form 2555). Additionally, for dividends, you must meet holding period requirements to avoid disqualification.

Categories of Foreign Source Income on Form 1116

The IRS requires separate Forms 1116 for each income category to prevent cross-crediting between high- and low-tax sources. Key categories include:

• Passive Category Income: Dividends, interest, royalties, and rents not tied to active business.
• General Category Income: Wages, business profits, and other active income.
• Section 951A Category Income: Global intangible low-taxed income (GILTI) from controlled foreign corporations (CFCs).
• Foreign Branch Category Income: Profits from foreign branches, excluding passive income.
• Certain Income Re-Sourced by Treaty: U.S.-sourced income treated as foreign under tax treaties.
• Section 901(j) Income: From sanctioned countries (credit not allowed, but tracked separately).
• Lump-Sum Distributions: From foreign pensions.

High-taxed passive income may be reclassified to avoid limitations. Look-through rules apply for CFC shareholders.

How to Fill Out Form 1116: Step-by-Step Instructions

Filing Form 1116 involves four parts. You’ll need records of foreign income, taxes paid, and exchange rates. Use a separate form per category.

Part I: Foreign Source Income

• Report gross foreign income by country.
• Deduct related expenses, such as apportioned interest or losses.
• Adjust for capital gains and qualified dividends using worksheets.

Part II: Foreign Taxes Paid or Accrued

• List taxes in foreign currency and convert to USD (use payment date rate or average annual rate).
• Reduce for any non-creditable amounts or section 909 suspensions.

Part III: Figuring the Credit

• Apply adjustments, carryovers, and reductions (e.g., 10% penalty for not filing Form 5471).
• Calculate the limitation: (Foreign source taxable income / Worldwide taxable income) × U.S. tax liability.
• The credit is the lesser of foreign taxes paid or this limit.

Part IV: Summary of Credits

• Aggregate if multiple forms are filed; enter total on Form 1040.

Attach schedules like Schedule B for carryovers or Schedule C for redeterminations. For contested taxes, use Form 7204.

Computing the Foreign Tax Credit: Limitations and Examples

The FTC is limited to your U.S. tax on foreign income to prevent crediting against U.S.-sourced taxes. For instance, if your foreign income is $10,000, worldwide income $50,000, and U.S. tax $10,000, your limit is ($10,000 / $50,000) × $10,000 = $2,000. If you paid $3,000 in foreign taxes, you can only credit $2,000.

Excess taxes can be carried back 1 year or forward 10 years (except for section 951A). Recapture rules apply for prior losses.

Carryback and Carryover Rules

Unused credits carry back to the prior year and forward up to 10 years. Track them on Schedule B. Pre-2018 carryovers have special allocation rules to post-2017 categories.

IRS Form 1116 Download and Printable

Download and Print: IRS Form 1116

Recent Changes to Form 1116 for Tax Year 2025

For 2025, there are no sweeping overhauls to Form 1116, but note these updates:

• Schedule C (revised December 2025) continues to handle foreign tax redeterminations and changes in credits.
• IRS Notice 2025-72 adjusts tax year alignment for foreign corporations, impacting U.S. shareholders of CFCs and potentially GILTI calculations on Form 1116.
• General expat tax adjustments, like increased Foreign Earned Income Exclusion, may interact with FTC claims but don’t directly alter Form 1116.

Always check IRS.gov for the latest forms, as final 2025 instructions may include minor tweaks.

Common Mistakes to Avoid When Filing Form 1116

• Not separating income categories, leading to disallowed credits.
• Incorrect currency conversions or failing to use the proper exchange rate.
• Overlooking reductions for non-filing of related forms (e.g., Form 5471).
• Claiming credits on excluded income or ineligible taxes.
• Forgetting to attach required statements or schedules.

Consult a tax professional for complex situations, like CFCs or treaties.

Foreign Tax Credit vs. Deduction: Which Is Better?

You can elect to deduct foreign taxes on Schedule A instead of crediting them, but the credit is usually preferable as it provides a direct offset. Switching between credit and deduction requires IRS consent in some cases, with time limits (10 years for credit, 3 for deduction).

Final Thoughts on IRS Form 1116

Claiming the foreign tax credit via Form 1116 can save you significant money if you have international income. For 2025, ensure your filings account for any CFC timing changes under Notice 2025-72 and use the updated schedules. Gather all documentation early, and consider software like TurboTax for guidance. If unsure, seek advice from a certified tax expert to maximize your benefits and stay compliant.

This guide is for informational purposes; refer to official IRS resources for personalized tax advice.

 

IRS Form 4684 – Casualties and Thefts – IRS Form 4684, officially titled “Casualties and Thefts,” is the key tax form used to report gains and losses from property damage, destruction, or theft. Whether you’ve experienced a natural disaster, accident, or theft, understanding Form 4684 can help you claim potential deductions on your federal income tax return. This guide covers eligibility, filing requirements, and step-by-step instructions based on the latest IRS rules for tax years through 2025.

 

What Is IRS Form 4684?

Form 4684 allows taxpayers to calculate and report casualty and theft losses or gains. You attach it to your tax return (such as Form 1040 or 1040-SR) to claim deductions for unreimbursed losses. The form has sections for:

• Personal-use property (Section A): Homes, vehicles, household items.
• Business or income-producing property (Section B): Rental properties, business assets.

Key resources include IRS Publication 547 (Casualties, Disasters, and Thefts) and Publication 584 (Casualty, Disaster, and Theft Loss Workbook).

Key Changes to Casualty and Theft Loss Deductions (2018–2025)

The Tax Cuts and Jobs Act of 2017 significantly limited personal casualty and theft loss deductions. For tax years 2018 through 2025:

• Personal-use property losses are deductible only if attributable to a federally declared disaster (as defined by FEMA).
• Non-disaster personal losses (e.g., a car accident or theft not in a disaster area) are generally not deductible.
• Exceptions apply for Ponzi-scheme theft losses or if you have personal casualty gains (which can offset non-disaster losses).

Business or income-producing property losses remain fully deductible without disaster requirements.

For qualified disaster losses (certain federally declared disasters with incident periods generally between late 2019 and early 2025), special rules apply:

• No 10% of adjusted gross income (AGI) threshold.
• Reduced by $500 per casualty (instead of the old $100).
• Can be claimed without itemizing deductions.

Check IRS.gov for current federally declared disasters and FEMA codes.

Who Can File Form 4684?

You may need to file if you have:

• A casualty loss (sudden, unexpected event like fire, storm, or accident).
• A theft loss.
• Property in a federally declared disaster area (for personal losses).

Businesses, individuals, estates, trusts, and partnerships can use the form.

How to Calculate a Casualty or Theft Loss

The basic formula for loss amount (per property) is the lesser of:

• Decrease in fair market value (FMV) before vs. after the event, or
• Your adjusted basis in the property (usually cost plus improvements).

Then subtract:

• Insurance or other reimbursements received or expected.
• Salvage value.

For qualified disasters:

• Reduce each loss by $500.
• No further 10% AGI reduction.

Use Publication 584 to document FMV and basis with photos, appraisals, or receipts.

IRS Form 4684 Download and Printable

Download and Print: IRS Form 4684

Step-by-Step Guide to Filing IRS Form 4684

1. Gather Documentation:
   • Proof of loss (police reports for theft, photos, appraisals).
   • Insurance statements.
   • FEMA disaster declaration number (if applicable—enter at the top of the form).
2. Complete Section A (Personal-Use Property):
   • Use a separate form for each major event if needed.
   • Describe property, cost/basis, FMV before/after, insurance reimbursement.
   • Calculate loss per property (lines 1–12).
   • Total losses and apply rules for disaster vs. non-disaster.
3. Section B (Business/Income-Producing Property):
   • Separate forms for each event.
   • Includes inventory losses.
4. Summary Lines (13–18):
   • Combine totals.
   • Apply $500 reduction for qualified disasters.
   • Report net gain or loss.
5. Reporting on Your Tax Return:
   • Personal losses: Schedule A (if itemizing) or directly if qualified disaster.
   • Gains: Schedule D (capital gains).
   • Business losses: Various schedules depending on entity.
6. Special Elections:
   • Deduct disaster losses in the prior year (amend return with Form 1040-X).
   • Useful for faster refunds.

Download the latest Form 4684 and instructions from IRS.gov/Form4684.

Common Mistakes to Avoid

• Claiming non-disaster personal losses.
• Forgetting to subtract insurance reimbursements.
• Not entering FEMA code for disasters.
• Missing documentation—keep records for audits.

Additional IRS Resources

• IRS Topic No. 515: Casualty, Disaster, and Theft Losses.
• Disaster relief page: IRS.gov/DisasterTaxRelief.
• For Ponzi schemes: Special safe harbor rules in instructions.

Consult a tax professional for complex situations, especially multiple events or business property.

By properly filing IRS Form 4684, you can maximize eligible deductions and recover some financial losses from unfortunate events. Always use the most current forms and check for updates on IRS.gov.

 

IRS Form 8888 – Allocation of Refund – If you’re eagerly awaiting your federal tax refund, why settle for a single lump sum when you can strategically split it across multiple accounts? IRS Form 8888, officially known as the Allocation of Refund, empowers taxpayers to direct deposit their overpayment into up to three separate U.S. financial accounts—or even request a paper check for any remainder. This simple attachment to your Form 1040 (or 1040-SR, 1040-SS, or 1040-NR) can supercharge your financial planning, whether you’re boosting savings, funding retirement, or diversifying investments. In this comprehensive guide, we’ll break down everything about IRS Form 8888 for tax year 2025, including eligibility, step-by-step instructions, and key updates like the end of savings bond purchases.

With the IRS phasing out most paper refund checks starting September 30, 2025—to enhance security, accelerate processing, and reduce costs—direct deposit via Form 8888 is more essential than ever. Expect your refund in as little as 21 days with e-filing. Ready to maximize your refund? Let’s dive in.

 

What Is IRS Form 8888?

IRS Form 8888 is a one-page attachment that allows eligible taxpayers to allocate their federal income tax refund across multiple direct deposit accounts or a combination of deposits and a paper check. Introduced to streamline refund distribution, it eliminates the need for manual transfers between accounts post-refund.

Key Features of Form 8888:

• Split Refunds: Divide your refund into up to three portions for different accounts.
• Account Types: Includes checking, savings, IRAs, HSAs, Archer MSAs, Coverdell ESAs, mutual funds, brokerage firms, credit unions, or TreasuryDirect accounts.
• Minimum Deposit: $1 per account.
• No Fees: The IRS doesn’t charge for direct deposits, but check with your financial institution for any rules.

This form is ideal for families splitting refunds (e.g., one portion for emergencies, another for college savings) or individuals kickstarting retirement contributions.

Who Should File IRS Form 8888?

You should file Form 8888 if:

• You’re due a refund on your 2025 tax return (filed in early 2026).
• You want to direct deposit into two or more accounts, or mix deposits with a paper check.
• Your refund exceeds $1 per allocated account.

Who Should Not File:

• If depositing the entire refund into one account, use the direct deposit line on Form 1040 instead—no Form 8888 needed.
• Filers of Form 8379 (Injured Spouse Allocation) cannot use Form 8888 for multiple accounts or savings bonds.
• Amended returns (Form 1040-X) for tax years before 2021 don’t support Form 8888; for 2021 and later, it can be attached to e-filed amendments.

Joint filers must ensure accounts are in at least one spouse’s name, and financial institutions accept joint refunds into individual accounts.

Recent Changes to IRS Form 8888 for 2025

The 2025 revision (Rev. December 2025) reflects IRS modernization efforts:

• No More Savings Bonds: As of January 1, 2025, you can no longer use Form 8888 to purchase paper U.S. Series I savings bonds. Instead, buy them directly via TreasuryDirect.gov.
• Paper Check Phase-Out: Most refunds now require direct deposit; paper checks are limited to specific cases like rejected deposits.
• Electronic Focus: E-filing with Form 8888 ensures faster processing—up to 21 days versus weeks for paper.

These updates prioritize efficiency and security, aligning with Executive Order mandates for electronic payments. Always verify your financial institution’s direct deposit policies to avoid rejections.

Benefits of Using IRS Form 8888 to Allocate Your Refund

Splitting your refund isn’t just convenient—it’s smart money management. Here’s why taxpayers love it:

Benefit	Description
Faster Access	Direct deposits hit accounts 1-3 weeks quicker than paper checks, especially post-2025 phase-out.
Financial Diversification	Allocate to high-yield savings (e.g., 4-5% APY), IRAs for tax advantages, or HSAs for medical expenses.
Goal-Oriented Saving	Direct funds toward debt payoff, emergencies, or education without temptation to spend.
Family Flexibility	Joint filers can split for individual goals, like one spouse’s Roth IRA and shared vacation fund.
No Extra Cost	Free service from the IRS; avoids bank transfer fees.

In 2024, the average refund was $3,453—imagine growing that across accounts earning interest!

Step-by-Step Guide: How to Fill Out IRS Form 8888

Download the latest Form 8888 PDF from IRS.gov (Rev. December 2025). Use tax software like TurboTax for auto-population, or fill manually. Attach to your return—e-file for speed.

Preparation Tips:

• Gather routing (9 digits) and account numbers from a voided check.
• Establish accounts (e.g., IRA) beforehand; confirm eligibility limits (e.g., IRA contributions).
• Total allocations must match your refund exactly, or the IRS may default to the first account.

Line-by-Line Instructions:

1. Your Name and SSN: Enter as shown on Form 1040. For joint returns, list both spouses’ names and SSNs.
2. Part I: Direct Deposits to Accounts (Lines 1-3 for up to 3 accounts)
   • Line 1a: Amount to first account (min. $1).
   • Line 1b: 9-digit routing number.
   • Line 1c: Account number.
   • Line 1d: Check “Checking” or “Savings.”
   • Repeat for Lines 2 and 3.
3. Part II: Savings Bonds (Discontinued for 2025—Skip or enter $0. Buy via TreasuryDirect.gov instead.)
4. Part III: Check (Line 7): Amount for paper check (if any remainder).
5. Part IV: Total Allocation (Line 8): Sum of Lines 1a, 2a, 3a, 4, 5a (if applicable), 6a, and 7. Must equal your Form 1040 refund line.

Pro Tip: Avoid erasures or white-outs—the IRS will reject and delay your refund. Double-check math; errors send everything to the first account.

IRS Form 8888 Download and Printable

Download and Print: IRS Form 8888

Filing IRS Form 8888: Deadlines and Tips

• When: Attach to your 2025 tax return, due April 15, 2026 (or October 15 with extension).
• How: E-file via IRS Free File, tax software, or mail with paper return.
• Tracking: Use “Where’s My Refund?” on IRS.gov after 24 hours for e-filed returns.
• Common Pitfalls: Mismatched totals or invalid routing numbers cause rejections—verify with your bank.

If filing Form 8888, skip bank products for fees paid from refunds in some software.

Frequently Asked Questions About IRS Form 8888

Can I Use Form 8888 for State Refunds?

No—state refunds follow separate processes. Form 8888 is federal only.

What If My Refund Changes Due to Audit or Offset?

Allocations adjust proportionally; offsets (e.g., debts) apply first to the total refund.

Can Non-Residents File Form 8888?

Yes, if filing Form 1040-NR and accounts are U.S.-based.

How Do I Amend If I Mess Up Form 8888?

File Form 1040-X; reattach corrected Form 8888 for 2021+ years.

Final Thoughts: Allocate Smartly with IRS Form 8888

IRS Form 8888 transforms your tax refund from a one-and-done windfall into a tailored financial boost. By splitting deposits into IRAs, HSAs, or high-interest savings, you’re not just getting money back—you’re building wealth. With 2025’s push toward electronic refunds, now’s the time to e-file and allocate strategically.

Download Form 8888 today at IRS.gov and consult a tax pro for personalized advice. Got questions? Check IRS.gov/Form8888 for the latest. Happy filing—and even happier refunding!

 

IRS Form 982 – Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) – In the complex world of tax obligations, dealing with discharged debt can feel overwhelming. If you’ve experienced debt forgiveness—such as through bankruptcy, insolvency, or mortgage relief—you may need to navigate IRS Form 982. This form helps taxpayers exclude certain canceled debts from gross income while adjusting tax attributes accordingly. Whether you’re handling qualified principal residence indebtedness or other types of debt relief, understanding Form 982 is crucial for accurate tax filing and avoiding unexpected liabilities. In this comprehensive guide, we’ll break down what IRS Form 982 is, when to use it, how to complete it, and key considerations for the Section 1082 basis adjustment.

 

What Is Discharge of Indebtedness?

Discharge of indebtedness occurs when a lender forgives or cancels part or all of a debt you owe, effectively releasing you from the obligation to repay it. This can happen in various scenarios, including loan modifications, foreclosures, repossessions, or direct debt cancellations. Under normal circumstances, the IRS treats this forgiven amount as taxable ordinary income, which you report on your federal tax return. However, specific exclusions under Internal Revenue Code (IRC) Section 108 allow you to avoid including this amount in your gross income if you meet certain criteria, such as bankruptcy or insolvency.

Common examples include:

• Credit card debt settlements.
• Mortgage forgiveness on a primary residence.
• Business loan cancellations.
• Student loan discharges under qualifying programs.

If the canceled debt is $600 or more, the lender typically reports it to the IRS via Form 1099-C, and you’ll receive a copy. Failing to address this properly can lead to underreported income and potential penalties.

Purpose of IRS Form 982

IRS Form 982, titled “Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment),” is specifically designed to report exclusions from gross income under IRC Section 108. When you exclude discharged debt from your income, you must generally reduce certain tax attributes—such as net operating losses (NOLs), tax credits, or basis in property—by the excluded amount. This prevents double benefits from the debt relief.

The form ensures compliance by calculating these reductions dollar-for-dollar (or at 33⅓ cents per dollar for certain credits). As of 2025, there are no significant changes to the form, with the latest review confirming its ongoing applicability for tax years where debt discharge occurs.

When Do You Need to File Form 982?

You should file Form 982 if you’re excluding discharged indebtedness from your gross income under Section 108(a). Attach it to your federal income tax return (e.g., Form 1040) for the year the discharge happens. Key scenarios include:

• Bankruptcy (Title 11 Case): Debt discharged in a bankruptcy proceeding under Chapters 7, 11, 12, or 13.
• Insolvency: If your liabilities exceeded the fair market value (FMV) of your assets immediately before the discharge. Exclusion is limited to the insolvency amount.
• Qualified Farm Indebtedness: For debts related to farming operations, where at least 50% of your gross receipts come from farming.
• Qualified Real Property Business Indebtedness: Debt secured by real property used in your trade or business.
• Qualified Principal Residence Indebtedness: Mortgage debt forgiven on your main home, up to $750,000 ($375,000 if married filing separately), for discharges before 2026 or under pre-2026 arrangements.

Note: Student loan discharges for 2021-2025 may also qualify for exclusion without Form 982 in some cases, but consult IRS Publication 4681 for details.

How to Fill Out IRS Form 982: Step-by-Step

Form 982 is divided into three parts. Use the IRS instructions to determine which lines apply based on your debt type. Here’s a breakdown:

Part I: General Information

• Check the appropriate box (1a-1e) for the exclusion reason.
• Line 2: Enter the total excluded amount (limited by the specific exclusion rules).
• Line 3: Elect to treat inventory real property as depreciable if applicable.

For simple cases like nonbusiness debt or principal residence, you may only need a few lines.

Part II: Reduction of Tax Attributes

This is where you reduce attributes in a specific order unless electing otherwise:

1. NOLs and carryovers (line 6).
2. General business credits (line 7, at 33⅓ cents per dollar).
3. Minimum tax credits (line 8, at 33⅓ cents per dollar).
4. Capital losses (line 9).
5. Basis of property (lines 10a-10b for nondepreciable property or residence).
6. Passive activity losses/credits (lines 11a-11b).
7. Foreign tax credits (line 13).
8. Line 5: Elect to reduce basis of depreciable property first (attach a statement).
9. For qualified principal residence (box 1e), reduce basis in the home on line 10b if you retain ownership.

Reductions cannot go below zero, and any excess exclusion may become taxable.

Part III: Adjustment of Basis of Certain Property

This part addresses basis adjustments under the general rule in Regulations section 1.1082-3(b) for corporate transfers, unless a closing agreement varies it. Section 1082, though repealed, refers to historical basis adjustments now generally covered under Section 1017. It’s rarely used for individuals but applies in specific property exchange scenarios.

Elections (e.g., for line 1d or 5) must be timely, but can be added via amended return within six months.

Section 1082 Basis Adjustment Explained

The “Section 1082 Basis Adjustment” in the form’s title harks back to older tax code provisions for basis reductions in corporate reorganizations. Today, it’s integrated into Section 1017 rules, where excluded debt reduces the basis of property to reflect the economic benefit received. For instance, in insolvency or bankruptcy, basis reductions are proportional across property types. This adjustment ensures that future sales or depreciations account for the untaxed debt relief, potentially leading to recapture as ordinary income later.

IRS Form 982 Download and Printable

Download and Print: IRS Form 982

Common Mistakes to Avoid When Filing Form 982

• Overlooking Limits: Exclusions like insolvency are capped at your insolvency amount—use the Insolvency Worksheet in Publication 4681.
• Incorrect Ordering: Apply exclusions in the proper sequence (e.g., bankruptcy before insolvency).
• Missing Attachments: Always include statements for elections or detailed calculations.
• Forgetting Recourse vs. Nonrecourse Debt: This affects how income and gains are calculated in foreclosures.

Frequently Asked Questions About IRS Form 982

Can I exclude all discharged debt?

No—exclusions are limited by factors like insolvency amount or maximums for principal residence debt.

What if I have multiple exclusions?

Apply them in order: bankruptcy, insolvency, farm, real property, then principal residence.

Do I need professional help?

For complex situations like business debts or large amounts, consulting a tax advisor is recommended to ensure accurate attribute reductions.

Where can I get the form?

Download it from the IRS website at irs.gov/Form982.

Final Thoughts

Navigating IRS Form 982 can turn a potentially taxable event into a manageable tax adjustment. By properly excluding discharged indebtedness and reducing tax attributes, you comply with IRS rules while minimizing your tax burden. Always refer to the latest IRS publications and consider professional guidance for your specific situation. For the most current details, visit the IRS website or review Publication 4681. Remember, timely filing is key to avoiding issues down the line.

 

IRS Form 966 – Corporate Dissolution or Liquidation – When a corporation decides to wind down operations, whether through complete dissolution or partial liquidation, navigating the IRS requirements is crucial to ensure compliance and avoid potential complications. IRS Form 966, officially titled “Corporate Dissolution or Liquidation,” serves as a key notification tool for the Internal Revenue Service. This form alerts the IRS to a corporation’s plan to dissolve or liquidate assets, helping to tie up loose ends in tax reporting. In this comprehensive guide, we’ll cover everything you need to know about IRS Form 966, including who must file it, deadlines, step-by-step filing instructions, common pitfalls, and any relevant updates for 2025. Whether you’re a business owner, tax professional, or advisor handling corporate dissolution, understanding Form 966 can streamline the process and minimize risks.

 

What Is IRS Form 966?

IRS Form 966 is a one-page form required under Section 6043(a) of the Internal Revenue Code. Its primary purpose is to inform the IRS when a corporation adopts a resolution or plan for dissolution or liquidation of its stock—either complete or partial. This filing signals that the corporation is ending its business activities and may be preparing final tax returns. It’s not a tax return itself but a reporting document that helps the IRS track corporate changes and ensure proper tax treatment of distributions, gains, or losses.

For example, during liquidation, a corporation must recognize gains or losses on asset distributions at fair market value, with exceptions for subsidiary liquidations or reorganizations. This form applies to various scenarios, such as closing a C corporation, handling S corporation dissolutions, or managing foreign corporations with U.S. tax obligations. As of 2025, there have been no major revisions to the form, but businesses should always use the latest version from the IRS website to stay compliant.

Who Needs to File IRS Form 966?

Not every business entity is required to file Form 966. Here’s a breakdown of who must submit it:

• Domestic C Corporations: Any C corp adopting a plan for complete or partial liquidation.
• S Corporations: Often required to document compliance, especially when filing final returns.
• Farmer’s Cooperatives: If dissolving or liquidating stock.
• Foreign Corporations: Those filing U.S. tax returns (e.g., Form 1120-F) must file if undergoing dissolution or liquidation.
• LLCs Taxed as Corporations: If dissolving under state law and treated as a corporation for federal tax purposes.
• Corporations in Mergers or Reorganizations: If the process involves asset liquidation.

Exceptions include:

• Tax-exempt organizations (use Form 990 or 990-PF instead).
• Qualified Subchapter S subsidiaries (file Form 8869).
• Disregarded entities like single-member LLCs or sole proprietorships.
• Deemed liquidations, such as Section 338 elections or elections to be treated as a disregarded entity.

U.S. shareholders of foreign corporations may need to report via Form 5471 instead. If you’re unsure about your entity’s status, consulting a tax advisor is recommended to avoid unnecessary filings or oversights.

When to File IRS Form 966?

Timing is critical for Form 966 compliance. The form must be filed within 30 days after the board of directors or shareholders adopt the resolution or plan for dissolution or liquidation. This deadline applies to both complete dissolutions (where the entire corporation is wound up) and partial liquidations (e.g., distributing specific assets).

If the plan is amended or supplemented later, you must file an additional Form 966 within 30 days of the change. In such cases, reference the original filing date on Line 11 and attach the amendments. Missing this window can lead to increased IRS scrutiny, though specific penalties are not always enforced for small entities.

How to Fill Out IRS Form 966: Step-by-Step Instructions

Form 966 is relatively simple, but accuracy is essential. Use the latest revision (October 2016 as of 2025, with no updates noted). Type or print clearly, and gather your corporation’s records beforehand. Here’s a line-by-line guide:

1. Corporation Details: Enter the name, address (including P.O. box if applicable), employer identification number (EIN), and type of tax return filed (e.g., 1120, 1120S).
2. Line 1: Date Incorporated – The original incorporation date.
3. Line 2: Place Incorporated – State or country of incorporation.
4. Line 3: Type of Liquidation – Check “Complete” or “Partial.”
5. Line 4: Date Resolution or Plan Adopted – The adoption date of the dissolution plan.
6. Line 5: Service Center for Preceding Tax Return – Where the last return was filed; enter “e-file” if electronic.
7. Line 6: End of Preceding Tax Year – Month, day, and year.
8. Line 7a: End of Final Tax Year – Month, day, and year of the final year.
9. Line 7b-e: Consolidated Return Details – If the final return is consolidated, provide parent company info and filing center.
10. Line 8: Shares Outstanding – Total common and preferred shares at adoption time.
11. Line 9: Amendment Dates – Any changes to the plan.
12. Line 10: Code Section – E.g., Section 331 for general liquidations or 332 for subsidiaries.
13. Line 11: Previous Form 966 Date – If this is an amendment.

Finally, sign the form under penalties of perjury. An authorized officer (e.g., president or treasurer) or fiduciary must sign.

How to File IRS Form 966

Submit Form 966 to the IRS Service Center where your corporation files its income tax returns. Options include:

• Mail: Use the address for your tax return type (check IRS guidelines for specifics).
• Electronic Filing: If your returns are e-filed, note it on the form.
• For S Corps: Coordinate with final Form 1120S, Schedule K-1, and other forms like 940 or 941.

Always retain copies and related records for at least seven years.

IRS Form 966 Download and Printable

Download and Print: IRS Form 966

Required Attachments for IRS Form 966

Attach a certified copy of the resolution or plan of dissolution/liquidation, including any amendments not previously filed. This could be board minutes, shareholder votes, or state-filed documents. Failure to include this is a common error that can delay processing.

Common Mistakes to Avoid When Filing IRS Form 966

Even with a simple form, errors can occur. Here are frequent pitfalls:

• Missing the 30-day filing deadline.
• Omitting the certified plan copy.
• Entering incorrect dates (e.g., incorporation or adoption).
• Forgetting to report plan amendments.
• Using an outdated form version.
• Not linking to final tax returns, like Form 1120 or 4797 for asset sales.

Double-check all information and consider professional review to sidestep these issues.

Penalties for Not Filing or Late Filing IRS Form 966

While there’s no specific statutory penalty tied directly to late or non-filing of Form 966, the IRS may impose general penalties for non-compliance under Section 6043(a), potentially leading to audits, delays in closing tax accounts, or fines. For small S corps, penalties are often minimal if other returns are properly filed, but larger entities could face increased risks. To avoid issues, file on time and ensure all related tax obligations are met.

Additional Considerations for Corporate Dissolution in 2025

In 2025, no significant changes have been announced for Form 966, but stay alert for IRS updates on business closures. Coordinate with state dissolution requirements, creditor notifications, and asset distributions. For S corps, include a tax account closure statement with your EIN. If handling foreign entities, review Form 5471 obligations. Always consult a tax expert for complex scenarios, such as mergers or subsidiary liquidations.

Final Thoughts on IRS Form 966 and Corporate Liquidation

Filing IRS Form 966 is a straightforward yet essential step in properly dissolving or liquidating a corporation. By adhering to the 30-day deadline, providing accurate details, and attaching necessary documents, you can ensure a smooth wind-down process. For businesses in 2025, leveraging the latest IRS resources and professional advice will help maintain compliance and avoid unnecessary complications. If you’re planning a corporate dissolution, start by downloading Form 966 from the IRS website and reviewing your entity’s specific requirements today.