Publication 3920 - Introductory Material


Introduction

This publication explains some of the provisions of the Victims of Terrorism Tax Relief Act of 2001. Under this Act, the federal income tax liability of those killed in the following attacks is forgiven for certain tax years.

  • The April 19, 1995, attack on the Alfred P. Murrah Federal Building (Oklahoma City attack).

  • The September 11, 2001, attacks on the World Trade Center, the Pentagon, and United Airlines Flight 93 in Somerset County, Pennsylvania
    (September 11 attacks).

  • Terrorist attacks involving anthrax occurring after September 10, 2001, and before January 1, 2002 (anthrax attacks).

The Act also provides other types of relief. For example, it provides that the following amounts are not included in income.

  • Payments from the September 11th Victim Compensation Fund of 2001.

  • Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack.

  • Certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in a terrorist attack.

  • Death benefits paid by an employer to the survivor of an employee if the benefits are paid because the employee died as a result of a terrorist attack.

  • Debt cancellations made after September 10, 2001, and before January 1, 2002, because an individual died as a result of the September 11 attacks or anthrax attacks.

Worksheet A. Figuring the Tax To Be Forgiven

(For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or
Qualifying Widow(er))

        (A)
First
Eligible Year (1994 or 2000)
(B)
Second
Eligible Year (1995 or 2001)
(C)
Third
Eligible Year (1996 or 2002)
1 Enter the years eligible for tax forgiveness. 1      
2 Enter the total tax from the decedent's income tax return. See Table 1 on page 5 for the line number for years before 2002. 2      
3 Enter the following taxes, if any, shown on the decedent's income tax return. (These taxes are not eligible for forgiveness.)        
  a Self-employment tax. 3a      
  b Social security and Medicare tax on tip income not reported to employer. 3b      
  c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 3c      
  d Tax on excess accumulation in qualified retirement plans. 3d      
  e Household employment taxes. 3e      
  f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 3f      
  g Tax on golden parachute payments. 3g      
4 Add lines 3a through 3g. 4      
5 Tax to be forgiven. Subtract line 4 from line 2. 5      
Note. If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C.
  • Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1.

  • If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. The IRS will determine the amount to be refunded.

Worksheet A. Figuring the Tax To Be Forgiven

(For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or
Qualifying Widow(er))

        (A)
First
Eligible Year (1994 or 2000)
(B)
Second
Eligible Year (1995 or 2001)
(C)
Third
Eligible Year (1996 or 2002)
1 Enter the years eligible for tax forgiveness. 1      
2 Enter the total tax from the decedent's income tax return. See Table 1 on page 5 for the line number for years before 2002. 2      
3 Enter the following taxes, if any, shown on the decedent's income tax return. (These taxes are not eligible for forgiveness.)        
  a Self-employment tax. 3a      
  b Social security and Medicare tax on tip income not reported to employer. 3b      
  c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 3c      
  d Tax on excess accumulation in qualified retirement plans. 3d      
  e Household employment taxes. 3e      
  f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 3f      
  g Tax on golden parachute payments. 3g      
4 Add lines 3a through 3g. 4      
5 Tax to be forgiven. Subtract line 4 from line 2. 5      
Note. If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C.
  • Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1.

  • If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. The IRS will determine the amount to be refunded.

Useful Items - You may want to see:

Publication

  • 547 Casualties, Disasters, and Thefts

  • 559 Survivors, Executors, and Administrators

Form (and Instructions)

  • 706 United States Estate (and Generation- Skipping Transfer) Tax Return

  • 1040 U.S. Individual Income Tax Return

  • 1040NR U.S. Nonresident Alien Income Tax Return

  • 1040X Amended U.S. Individual Income Tax Return

  • 1041 U.S. Income Tax Return for Estates and Trusts

  • 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer

  • 4506 Request for Copy or Transcript of Tax Form


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