Taxpayers who sell a home may qualify to exclude from their income all or part of any gain from the sale. Below are some things taxpayers should keep in mind when selling a home:

Ownership and use. To claim the exclusion, the homeowner must meet the ownership and use tests. During a five-year period ending on the date of the sale, the homeowner must have:

• Owned the home for at least two years.
• Lived in the home as their main home for at least two years.

Gain. Taxpayers who sell their main home and have a gain from the sale may usually be able to exclude up to $250,000 from their income or $500,000 on a joint return. Homeowners who can exclude all of the gain do not need to report the sale on their tax return.

Loss. Taxpayers experience a loss when their main home sells for less than what they paid for it. This loss is not deductible.

Reported sale. Taxpayers who cannot exclude the gain from their income must report the sale of their home on a tax return. Taxpayers who choose not to claim the exclusion must report the gain on a tax return. Taxpayers who receive a Form 1099-S, Proceeds from Real Estate Transactions, as part of the real estate transaction must also report the sale on their tax return.

Mortgage debt. Some taxpayers must report forgiven or canceled debt as income on their tax return. This generally includes people who went through a mortgage workout, foreclosure, or other process in which a lender forgave or canceled mortgage debt on their home. Taxpayers who had a written agreement for the forgiveness of the debt in place before January 1, 2017, might be able to exclude the forgiven amount from income.

Possible exceptions. There are exceptions to these rules for persons with a disability, certain members of the military, intelligence community and Peace Corps workers, among others.

Worksheets. Worksheets included in Publication 523, Selling Your Home, can help taxpayers figure the:

• Adjusted basis of the home sold.
• Gain or loss on the sale.
• Excluded gain on the sale.

Multiple homes. Taxpayers who own more than one home can only exclude the gain on the sale of their main home. They must pay taxes on the gain from selling any other home.

Tax credit. Taxpayers who claimed the first-time homebuyer credit to purchase their home have special rules that apply to the sale. Taxpayers can use the First Time Homebuyer Credit Account Look-upto get account information, such as the total amount of their credit or repayment amount.

More Information:

• Tax Topic 701, Sale of Your Home
• Tax Topic 703, Basis of Assets
• Tax Topic 611, Repayment of the First-Time Homebuyer Credit
• IRS Tax Map, Selling Your Home

IRS YouTube Videos:
First Time Homebuyers Credit Account Look-Up Tool – English | Spanish | ASL

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During the summer, taxpayers often rent out their property. They usually think about things such as cleanup and maintenance, but owners also need to be aware of the tax implications of residential and vacation home rentals.

If taxpayers receive money for the use of a house that’s also used as a taxpayer’s personal residence, it generally requires reporting the rental income on a tax return.

•Vacation Home.  This may be a house, an apartment, condominium, mobile home, boat, vacation home or similar property. It’s possible to use more than one unit as a residence during the year.

•Used as a Home.  When the property is used as a home, the rental expense deduction is limited. This means the rental expenses cannot be more than the rent received.

•Personal Use.  Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.

•Divide Expenses. Generally, special rules apply to the rental expenses of a property that’s used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes.

•How to Report. Taxpayers use Schedule E to report rental income and rental expenses. Rental income may also be subject to Net Investment Income Tax.

•Special Rules.  If the home unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible.

More Information:
•Tax Topic 415 , Renting Residential and Vacation Property
•Publication 527, Residential Rental Property (Including Rental of Vacation Homes)

IRS YouTube Videos:
Renting Your Vacation Home – English | Spanish | ASL

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While the federal income tax-filing deadline has come and gone for most people, some taxpayers still haven’t filed or paid their taxes.

Here are some tips for handling common issues after the filing deadline has passed:

• Anyone who didn’t file and owes tax should file a return as soon as possible and pay as much as possible to reduce penalties and interest. There’s no penalty for filing a late return if a refund is due. Penalties and interest only accrue on unfiled returns of taxpayers who don’t pay by the deadline.
• For those who qualify, IRS Free File is still available on IRS.govthrough October 15 to prepare and file returns electronically.
• Filing soon is especially important because the late-filing penalty on unpaid taxes adds up quickly. Alternatively, taxpayers who have a history of filing and paying on time sometimes qualify for penalty relief.
• Taxpayers who owe taxes can view their balance, and pay with IRS Direct Pay, or by debit or credit card. They can also apply online for a payment plan, including an installment agreement. Before accessing their tax account online, users must authenticate their identity through the Secure Access process. Several other electronic payment options are available on IRS.gov/payments.
• The IRS will usually correct any math errors on a return and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules.

Related Tax Tips

• Help Available at IRS.gov for Taxpayers Who Filed an Extension
• Tips for Taxpayers Who Have to Amend a Tax Return

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WASHINGTON —With many businesses facing a tight job market, the Internal Revenue Service reminds employers to check out a valuable tax credit available to them for hiring long-term unemployment recipients and other categories of workers with employment barriers.

During National Small Business Week — April 29 to May 5 — the Internal Revenue Service is highlighting tax benefits and resources designed to help new and existing small businesses.

The Work Opportunity Tax Credit (WOTC) is a long-standing income tax benefit that encourages employers to hire designated categories of workers who face significant barriers to employment. For any employer considering this option, the WOTC may be able to help.

For those who haven’t claimed the WOTC in a while, the IRS noted that legislation enacted in recent years has both expanded and modified the credit. For example, legislation effective Jan. 1, 2016, added a new category for long-term unemployment recipients who had been unemployed for a period of at least 27 weeks and received state or federal unemployment benefits during part or all of that time.

Here’s how it works.

The credit, usually claimed on Form 5884, Work Opportunity Credit, is generally based on wages paid to eligible workers during the first two years of employment. To qualify for the credit, an employer must first request certification by filing IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, with the state workforce agency within 28 days after the eligible worker begins work. Other requirements and further details can be found in the instructions to Form 8850.

There are now 10 categories of WOTC-eligible workers. Besides long-term unemployment recipients, the other categories include certain veterans and recipients of various kinds of public assistance, among others.

The 10 categories are:

• Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients
• Unemployed veterans, including disabled veterans
• Ex-felons
• Designated community residents living in Empowerment Zones or Rural Renewal Counties
• Vocational rehabilitation referrals
• Summer youth employees living in Empowerment Zones
• Food stamp (SNAP) recipients
• Supplemental Security Income (SSI) recipients
• Long-term family assistance recipients
• Qualified long-term unemployment recipients.

Eligible businesses claim the WOTC on their income tax return. The credit is first figured on Form 5884 and then becomes a part of the general business credit claimed on Form 3800, General Business Credit.

Though the credit is not available to tax-exempt organizations for most categories of new hires, a special rule allows them to get the WOTC for hiring qualified veterans. These organizations claim the credit on Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations Hiring Qualified Veterans. Visit the WOTC page on IRS.gov for more information.

The 2018 National Small Business Week is April 29 through May 5. This is the perfect time for small business owners and the self-employed to check out many online products to help them understand their tax responsibilities.

Here are a few of the products in the spotlight for this year’s National Small Business Week:

• Sharing Economy Tax Center.  This web page provides fast answers to tax questions and links and forms about the sharing economy. People who are involved in the sharing economy are those who use online platforms to engage in businesses, such as renting a spare bedroom, providing car rides, and providing other goods and services.
• Self-Employed Individuals Tax Center.  The Self-Employed Individuals Tax Center is a great resource for sole proprietors and others who are in business for themselves. This site has many handy tips and references to tax rules a self-employed person may need to know. Self-employed taxpayers will find information on topics, including how to make quarterly payments and business structures.
• Small Business and Self-Employed Tax Center.  This online information center features links to useful tools, including Small Business Taxes: The Virtual Workshop and common IRS forms with instructions. Taxpayers can find help on everything from how to get an Employer Identification Number online to how to engage with the IRS during an audit. A link to the IRS Tax Calendar for Businesses and Self-Employed also provides at-a-glance key tax dates for businesses.

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WASHINGTON — While the federal income tax-filing deadline has passed for most people, there are some taxpayers still facing tax-related issues. This includes people who still haven’t filed, people who haven’t paid their taxes or those who are waiting for their tax refund.

The IRS offers these tips for handling some typical after-tax-day issues:

Didn’t file by April 18?

There is no penalty for filing a late return after the tax deadline if a refund is due. Penalties and interest only accrue on unfiled returns if taxes are not paid by April 18. The IRS provided taxpayers an additional day to file and pay their taxes following system issues that surfaced early on the April 17 tax deadline. Anyone who did not file and owes tax should file a return as soon as they can and pay as much as possible to reduce penalties and interest. For those who qualify, IRS Free File is still available on IRS.gov through Oct. 15 to prepare and file returns electronically.

Filing soon is especially important because the late-filing penalty on unpaid taxes adds up quickly. Ordinarily, this penalty, also known as the failure-to-file penalty, is usually 5 percent for each month or part of a month that a return is late.

But if a return is filed more than 60 days after the April due date, the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. This means that if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.

In some instances, a taxpayer filing after the deadline may qualify for penalty relief. If there is a good reason for filing late, be sure to attach an explanation to the return.

Alternatively, taxpayers who have a history of filing and paying on time often qualify for penalty relief. A taxpayer will usually qualify for this relief if they haven’t been assessed penalties for the past three years and meet other requirements. For more information, see the first-time penalty abatement page on IRS.gov.

“Where’s My Refund?”

The “Where’s My Refund?” tool is available on IRS.gov, IRS2Go and by phone at 800-829-1954. To use this tool, taxpayers need the primary Social Security number on the return, the filing status (Single, Married Filing Jointly, etc.) and the expected refund amount. The tool updates once daily, usually overnight, so checking more frequently will not yield different results.

Changing withholding?

Because of the far-reaching tax changes taking effect this year, the IRS urges all employees, including those with other sources of income, to perform a paycheck checkup now. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty. The easiest way to do that is to use the newly-revised Withholding Calculator, available on IRS.gov.

Owe taxes or need to make a payment?

Taxpayers who owe taxes can view their balance, pay with IRS Direct Pay, by debit or credit card or apply online for a payment plan, including an installment agreement. Before accessing their tax account online, users must authenticate their identity through the Secure Access process. Several other electronic payment options are available on IRS.gov/payments. They are secure and easy to use. Taxpayers paying electronically receive immediate confirmation when they submit their payment. Also, with Direct Pay and EFTPS, taxpayers can opt in to receive email notifications about their payments.

Need to fix an error on a return?

After filing their return, taxpayers may determine that they made an error or omitted something from their return. Usually an amended return is not necessary if a taxpayer makes a math error or neglects to attach a required form or schedule. Normally the IRS will correct the math error and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules. Taxpayers can use the Interactive Tax Assistant — Should I File an Amended Return?— to help determine if they should file an amended return to correct an error or make other changes to their return.

Form 1040X, Amended U.S. Individual Income Tax Return, must be filed by paper and is available on IRS.gov/forms at any time. Those expecting a refund from their original return, should not file an amended return before the original return has been processed. File an amended tax return to change the filing status or to correct income, deductions or credits shown on the originally-filed tax return. Use “Where’s My Amended Return?” tool to track the status of an amended return. Normally, status updates are available starting three weeks after the amended return is filed. Allow up to 16 weeks for processing.

Need help responding to an IRS notice or letter?

An IRS notice or letter will explain the reason for the contact and give instructions on how to handle the issue. Most questions can be answered by visiting “Understanding Your Notice or IRS Letter” on IRS.gov. Taxpayers can call the phone number provided in the notice if they still have questions. If the issue can’t be resolved with the IRS through normal channels, contact the local Taxpayer Advocate Serviceoffice or call 877-777-4778.

Taxpayer Bill of Rights

Taxpayers have fundamental rights under the law. The Taxpayer Bill of Rights presents these rights in 10 categories. These rights protect taxpayers when they interact with the IRS. Publication 1, Your Rights as a Taxpayer, highlights these rights and the agency’s obligations to protect them.

Watch out for scams

The IRS will never make an initial, unsolicited contact via email, text or social media on filing, payment or refund issues. The IRS initiates most contacts through regular mail delivered by the United States Postal Service. Any email that appears to be from the IRS about a refund or tax problem is probably an attempt by scammers to steal personal or financial information. Forward the e-mail to phishing@irs.gov.

Taxpayers who have questions about the Tax Cuts and Jobs Act have several resources that will help answer questions. The legislation, passed in December 2017, changes many areas of the tax law. Here are some of the resources on IRS.gov that will help individual taxpayers, businesses and the tax community:

• New Tax Reform Web Page. The IRS created the Tax Reform page to highlight what taxpayers need to know about the tax law changes and how they affect taxpayers. This page also links taxpayers and tax professionals to news releases, publications, notices, and legal guidance related to the legislation.
• Updated Withholding Calculator. The IRS updated the Withholding Calculator to reflect the changes to the withholding tables. The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup,” which is even more important this year because of the tax law changes. The calculator helps taxpayers determine if they’re having the right amount of tax withheld from their paychecks.
• Updated Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers who determine they need to make changes to their withholding can refer to the new Form W-4, which reflects the tax law changes. Employees will submit the completed Form W-4 to their employers.
• Frequently Asked Questions. The IRS posted new FAQs to help people understand how to use the Withholding Calculatorand the changes to the Withholding Tables.

More information about the tax law changes will be coming throughout the year. IRS.gov will be updated to reflect changes as they develop.

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WASHINGTON — With the April 17 tax deadline fast approaching, taxpayers can find most answers to their tax questions by taking advantage of the wide variety of easy-to-use online tools available on IRS.gov.

This is the eighth in a series of nine IRS news releases called the Tax Time Guide, designed to help taxpayers navigate common tax issues.

Already this year, visits to IRS.gov have jumped 21 percent over the same time last year. Join the millions of taxpayers who have discovered that the agency’s website offers the fastest way to get last-minute tax help. By taking advantage of the many online tools, taxpayers can quickly check the status of their tax refund, get answers to tax questions or prepare and file their taxes around the clock.

Taxpayers get the same answers on IRS.gov as if they’d called and spoken with an IRS representative, and they can print out the answers to keep for reference and their records. IRS information and many tools are also available in Spanish.

Below are some of the most common tax queries and the tools to find answers:

Where’s my refund?

By using the “Where’s My Refund?” tool available on IRS.gov and on the official IRS mobile app, IRS2Go, taxpayers can easily find the most up-to-date information about their tax refund. Taxpayers can start checking on the status of their return within 24 hours after the IRS acknowledges receipt of a taxpayer’s e-filed return or four weeks after the taxpayer mailed in a paper return. The system is updated daily, so there’s no need to check more often.

Free help preparing a tax return.

Through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) programs, eligible taxpayers can get free, local, one-on-one help to prepare and file their taxes. The several thousand community-based sites are staffed by IRS trained and certified volunteers. Low- and moderate-income taxpayers and those age 60 and above can find the nearest site on IRS.gov’s VITA/TCE Site Locator.

Do it yourself for free.

Taxpayers that prefer to do their own taxes can find free tax preparation help on IRS.gov. The IRS Free File program, available only through IRS.gov, offers 12 brand-name tax preparation software packages for free to the 70 percent of taxpayers who earned $66,000 or less in 2017. The software does all the work of finding deductions, credits and exemptions for which the taxpayer qualifies. Taxpayers who earned more than $66,000 in 2017 and are comfortable preparing their own taxes can use Free File Fillable Forms. This electronic version of paper IRS tax forms is also used to file tax returns online.

Searching for a tax professional?

The searchable directory on IRS.gov helps taxpayers find a tax professional in their area. The list can be sorted by credentials and qualifications. Tax return preparers have differing levels of skills, education and expertise, so taxpayers should choose wisely and keep in mind that the taxpayer is ultimately responsible for the accuracy of their return.

Getting a tax return transcript?

Those who need a copy of their tax return can use the online tool, Get Transcript. It’s free and available on IRS.gov. Taxpayers can view, print or download their tax transcripts for the most current tax year after the IRS has processed the tax return.

Instant answers to tax law questions.

Many tax law questions can be answered quickly when using any of several tools on IRS.gov:

• This includes the Interactive Tax Assistant tax-law resource and the Frequently Asked Questions (FAQs) section.
• Publication 17 is a comprehensive, encyclopedia-like tax reference tool for individuals.
• The IRS Tax Map allows searches by topic or keyword for single-point access to tax law information.

Need to make a payment?

IRS Direct Pay offers taxpayers the fastest and easiest way to pay what they owe. This free online system allows individuals to securely pay their tax bills or make quarterly estimated tax payments directly from checking or savings accounts without fees or pre-registration. See IRS.gov/Payments for information on this and other payment options.

Can’t pay a tax bill?

For taxpayers concerned about a tax bill they can’t pay, the Online Payment Agreement tool can help determine if they qualify for a payment plan with the IRS.

The Offer in Compromise Pre-Qualifier can help determine if a taxpayer qualifies for an Offer in Compromise. An Offer in Compromise is an agreement with the IRS that settles a person’s tax liability for less than the full amount owed.

Questions about an amended return?

The “Where’s My Amended Return?” tool provides the status of an amended tax return, Form 1040X. Taxpayers can check on the current year 1040X and up to three prior years. Allow up to three weeks after filing to check on the initial status, and up to 16 weeks for processing.

Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov 24 hours a day, seven days a week. No appointments required and no waiting on hold.

WASHINGTON — More than 720,000 people get plain-language IRS tax tips sent to their email inbox through a free subscription service available on IRS.gov.

These short and concise tax tips arrive one per business day and cover a wide range of topics to help people with issues pertaining to their taxes. Many tips offer information on money-saving tax credits and deductions that can be easily overlooked and could affect a taxpayer’s refund. IRS tax tips are also available in Spanish, and the IRS also offers an e-subscription service just for Spanish tax tips.

Topics for tax tips include:

• Responding to notices
• Beware of tax scams
• Fastest and safest way to get refunds
• Tax reform topics
• Taxpayer Bill of Rights
• Tax-time errors to avoid
• IRS Free File
• Helpful tips for paying taxes

Taxpayers can sign up for this free service to receive IRS tax tips automatically each day via email in English or in Spanish.

The IRS also has a number of other e-subscriptions to which taxpayers, tax professionals and others may subscribe to receive tax information via email from the IRS.

As people are filing their taxes, the IRS reminds taxpayers to hang onto their tax records. Generally, the IRS recommends keeping copies of tax returns and supporting documents at least three years. Taxpayers should keep some documents — such as those related to real estate sales — for three years after filing the return on which they reported the transaction.

Use a Tax Return to Validate Identity
Taxpayers using a tax filing software product for the first time may need their adjusted gross income amount from their prior year’s tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Those who need a copy of their tax return should check with their software provider or tax preparer first, as prior-year tax returns are available from the IRS for a fee.

Order a Transcript
Taxpayers who cannot get a copy of a prior-year return may order a tax transcript from the IRS. A transcript summarizes return information and includes AGI. They’re free and available for the most current tax year after the IRS has processed the return. People can also get them for the past three years.

The IRS reminds people ordering a transcript to plan ahead, because delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. Taxpayers who order by mail should allow 30 days to receive transcripts and 75 days for tax returns.

There are three ways for taxpayers to order a transcript:

• Online Using Get Transcript. They can use Get TranscriptOnline on IRS.gov to view, print or download a copy of all transcript types. Those who use it must authenticate their identity using the Secure Access process. Taxpayers who are unable to register or prefer not to use Get Transcript Online may use Get Transcript by Mail to order a tax return or account transcript type. Please allow five to 10 calendar days for delivery.
• By phone. The number is 800-908-9946.
• By mail. Taxpayers can complete and send either Form 4506-Tor Form 4506T-EZ to the IRS to get one by mail. They use Form 4506-T to request other tax records: tax account transcript, record of account, wage and income and verification of non-filing. These forms are available on the Forms, Instructions and Publications page on IRS.gov.

Those who need an actual copy of a tax return can get one for the current tax year and as far back as six years. The fee per copy is $50. Taxpayers can complete and mail Form 4506 to request a copy of a tax return and mail the request to the appropriate IRS office listed on the form.

If taxpayers need information to verify payments within the last 18 months or a tax amount owed, they can view their tax account.