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1040ez H&r Block

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1040ez H&r Block

1040ez h&r block 5. 1040ez h&r block   Illustrated Examples Table of Contents Illustrated Example of Form 4563Line 1. 1040ez h&r block Line 2. 1040ez h&r block Lines 3a and 3b. 1040ez h&r block Lines 4a and 4b. 1040ez h&r block Line 5. 1040ez h&r block Line 6. 1040ez h&r block Line 7. 1040ez h&r block Line 9. 1040ez h&r block Line 15. 1040ez h&r block Illustrated Example of Form 5074Part I. 1040ez h&r block Part II. 1040ez h&r block Part III. 1040ez h&r block Illustrated Example of Form 8689Part I. 1040ez h&r block Part II. 1040ez h&r block Part III. 1040ez h&r block Part IV. 1040ez h&r block Use the following examples to help you complete the correct attachment to your Form 1040. 1040ez h&r block The completed form for each example is shown on the pages that follow. 1040ez h&r block Illustrated Example of Form 4563 John Black is a U. 1040ez h&r block S. 1040ez h&r block citizen, single, and under 65. 1040ez h&r block He was a bona fide resident of American Samoa during all of 2013. 1040ez h&r block John must file Form 1040 because his gross income from sources outside the possessions ($10,000 of dividends from U. 1040ez h&r block S. 1040ez h&r block corporations) is more than his adjusted filing requirement for single filers under 65. 1040ez h&r block (See Filing Requirement if Possession Income Is Excluded in chapter 4. 1040ez h&r block ) Because he must file Form 1040 (not illustrated), he fills out Form 4563 to determine the amount of income from American Samoa he can exclude. 1040ez h&r block See Bona Fide Resident of American Samoa in chapter 3. 1040ez h&r block Completing Form 4563. 1040ez h&r block   John enters his name and social security number at the top of the form. 1040ez h&r block Line 1. 1040ez h&r block   On Form 4563 (see later), John enters the date his bona fide residence began in American Samoa, June 2, 2012. 1040ez h&r block Because he is still a bona fide resident, he enters “not ended” in the second blank space. 1040ez h&r block Line 2. 1040ez h&r block   He checks the box labeled “Rented house or apartment” to describe his type of living quarters in American Samoa. 1040ez h&r block Lines 3a and 3b. 1040ez h&r block   He checks “No” on line 3a because no family members lived with him. 1040ez h&r block He leaves line 3b blank. 1040ez h&r block Lines 4a and 4b. 1040ez h&r block   He checks “No” on line 4a because he did not maintain a home outside American Samoa. 1040ez h&r block He leaves line 4b blank. 1040ez h&r block Line 5. 1040ez h&r block   He enters the name and address of his employer, Samoa Products Co. 1040ez h&r block It is a private American Samoa corporation. 1040ez h&r block Line 6. 1040ez h&r block   He enters the dates of his 2-week vacation to New Zealand from November 11 to November 25. 1040ez h&r block That was his only trip outside American Samoa during the year. 1040ez h&r block Line 7. 1040ez h&r block   He enters the $24,000 in wages he received from Samoa Products Co. 1040ez h&r block Line 9. 1040ez h&r block   He received $220 in dividends from an American Samoa corporation, which he enters here. 1040ez h&r block He also received $10,000 of dividends from a U. 1040ez h&r block S. 1040ez h&r block corporation, but he will enter that amount only on his Form 1040 because the U. 1040ez h&r block S. 1040ez h&r block dividends do not qualify for the possession exclusion. 1040ez h&r block Line 15. 1040ez h&r block   John totals the amounts on lines 7 and 9 to get the amount he can exclude from his gross income in 2013. 1040ez h&r block He will not enter his excluded income on Form 1040. 1040ez h&r block However, he will attach his completed Form 4563 to his Form 1040. 1040ez h&r block Illustrated Example of Form 5074 Tracy Grey is a U. 1040ez h&r block S. 1040ez h&r block citizen who is a self-employed fisheries consultant with a tax home in New York. 1040ez h&r block Her only income for 2013 was net self-employment income of $80,000. 1040ez h&r block Of the $80,000, $20,000 was from consulting work in Guam and the rest was earned in the United States. 1040ez h&r block Thinking she would owe tax to Guam on the $20,000, Tracy made estimated tax payments of $1,409 to Guam. 1040ez h&r block She was not a bona fide resident of Guam during 2013. 1040ez h&r block Tracy completes Form 1040 (not illustrated), reporting her worldwide income. 1040ez h&r block Because the adjusted gross income on her Form 1040 was $50,000 or more and at least $5,000 of her gross income is from Guam, Tracy must file Form 5074 with her Form 1040. 1040ez h&r block All amounts reported on Form 5074 are also reported on her Form 1040. 1040ez h&r block See U. 1040ez h&r block S. 1040ez h&r block Citizen or Resident Alien (Other Than a Bona Fide Resident of Guam) in chapter 3. 1040ez h&r block Completing Form 5074. 1040ez h&r block   Tracy enters her name and social security number at the top of the form. 1040ez h&r block Part I. 1040ez h&r block   On Form 5074 (see later), Tracy enters her self-employment income from Guam ($20,000) on line 6. 1040ez h&r block She has no other income from Guam, so the total on line 16 is $20,000. 1040ez h&r block Part II. 1040ez h&r block   Tracy's only adjustment in Part II is the deductible part of the self-employment tax on her net income earned in Guam. 1040ez h&r block She enters $1,413 on line 21 and line 28. 1040ez h&r block Her adjusted gross income on line 29 is $18,587. 1040ez h&r block Part III. 1040ez h&r block   Tracy made estimated tax payments of $1,409. 1040ez h&r block She enters this amount on line 30, and again on line 34 as the total payments. 1040ez h&r block Illustrated Example of Form 8689 Juan and Carla Moreno live and work in the United States. 1040ez h&r block In 2013, they received $14,400 in income from the rental of a condominium they own in the U. 1040ez h&r block S. 1040ez h&r block Virgin Islands (USVI). 1040ez h&r block The rental income was deposited in a bank in the USVI and they received $500 of interest on this income. 1040ez h&r block They were not bona fide residents of the USVI during the entire tax year. 1040ez h&r block The Morenos complete Form 1040 (not illustrated), reporting their income from all sources, including their interest income and the income and expenses from their USVI rental property (reported on Schedule E (Form 1040)). 1040ez h&r block The Morenos take the standard deduction for married filing jointly, both are under 65, and they have no dependents. 1040ez h&r block The Morenos also complete Form 8689 to determine how much of their U. 1040ez h&r block S. 1040ez h&r block tax shown on Form 1040, line 61 (with certain adjustments), must be paid to the U. 1040ez h&r block S. 1040ez h&r block Virgin Islands. 1040ez h&r block See U. 1040ez h&r block S. 1040ez h&r block Citizen or Resident Alien (Other Than a Bona Fide Resident of the USVI) in chapter 3. 1040ez h&r block The Morenos file their Form 1040, attaching Form 8689 and all other schedules, with the Internal Revenue Service. 1040ez h&r block At the same time, they send a copy of their Form 1040 with all attachments, including Form 8689, to the Virgin Islands Bureau of Internal Revenue. 1040ez h&r block The Virgin Islands Bureau of Internal Revenue will process this copy. 1040ez h&r block Completing Form 8689. 1040ez h&r block   Juan and Carla enter their names and Juan's social security number at the top of the form. 1040ez h&r block Part I. 1040ez h&r block   The Morenos enter their income from the USVI in Part I (see later). 1040ez h&r block The interest income is entered on line 2 and the net rental income of $6,200 ($14,400 of rental income minus $8,200 of rental expenses) is entered on line 11. 1040ez h&r block The Morenos' total USVI income of $6,700 is entered on line 16. 1040ez h&r block Part II. 1040ez h&r block   The Morenos have no adjustments to their USVI income, so they enter zero (-0-) on line 28, and $6,700 on line 29. 1040ez h&r block Their USVI adjusted gross income (AGI) is $6,700. 1040ez h&r block Part III. 1040ez h&r block   On line 30, the Morenos enter the amount from Form 1040, line 61 ($4,539). 1040ez h&r block Their Form 1040 does not show any entries required on line 31, so they leave that line blank and enter $4,539 on line 32. 1040ez h&r block   The Morenos enter their worldwide AGI, $54,901 (Form 1040, line 38), on line 33. 1040ez h&r block Next, they find what percentage of their AGI is from USVI sources ($6,700 ÷ $54,901 = 0. 1040ez h&r block 122) and enter that as a decimal on line 34. 1040ez h&r block They then apply that percentage to the U. 1040ez h&r block S. 1040ez h&r block tax entered on line 32 to find the amount of U. 1040ez h&r block S. 1040ez h&r block tax allocated to USVI income ($4,539 x 0. 1040ez h&r block 122 = $554), and enter that amount on line 35. 1040ez h&r block Part IV. 1040ez h&r block   Part IV is used to show payments of income tax to the USVI only. 1040ez h&r block The Morenos had no tax withheld by the U. 1040ez h&r block S. 1040ez h&r block Virgin Islands, but made estimated tax payments to the USVI of $400, which they entered on lines 37 and 39. 1040ez h&r block They include this amount ($400) in the total payments on Form 1040, line 72. 1040ez h&r block On the dotted line next to the entry space for line 72, they enter “Form 8689” and show the amount. 1040ez h&r block The Morenos do not complete Form 1116 because they receive credit on Form 1040, line 72, for the tax paid to the USVI. 1040ez h&r block   The income tax they owe to the USVI ($154) is shown on Form 8689, line 44. 1040ez h&r block They enter this amount on line 45. 1040ez h&r block They also include this additional amount ($154) on the dotted line next to the entry space and in the total on Form 1040, line 72. 1040ez h&r block The Morenos will pay their USVI tax at the same time they file the copy of their U. 1040ez h&r block S. 1040ez h&r block income tax return with the U. 1040ez h&r block S. 1040ez h&r block Virgin Islands. 1040ez h&r block This image is too large to be displayed in the current screen. 1040ez h&r block Please click the link to view the image. 1040ez h&r block Form 4563, page 1 for John Black This image is too large to be displayed in the current screen. 1040ez h&r block Please click the link to view the image. 1040ez h&r block Form 5074, for Tracy Grey This image is too large to be displayed in the current screen. 1040ez h&r block Please click the link to view the image. 1040ez h&r block Form 8689, page 1 for Juan and Carla Moreno Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Maryland Office of the Attorney General

Website: Maryland Office of the Attorney General

Address: Maryland Office of the Attorney General
Consumer Protection Division
200 Saint Paul Pl.
Baltimore, MD 21202

Phone Number: 410-528-8662 (Consumer Mediation) 410-576-6550 (Consumer Information) 410-528-1840 (Medical billing complaints)

Toll-free: 1-888-743-0023 (Switchboard) 1-877-261-8807 (Health plan decision appeals)

TTY: 410-576-6372 (MD)

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Regional Consumer Protection Offices

Maryland Attorney General's Office - Eastern Shore

Website: Maryland Attorney General's Office - Eastern Shore

Address: Maryland Attorney General's Office - Eastern Shore
Consumer Protection Division
201 Baptist St.
Salisbury, MD 21801-4976

Phone Number: 410-713-3620

Toll-free: 1-888-743-0023 (Baltimore office)

TTY: 410-576-6372

Maryland Attorney General's Office - Southern Maryland

Website: Maryland Attorney General's Office - Southern Maryland

Address: Maryland Attorney General's Office - Southern Maryland
15045 Burnt Store Rd.
Hughesville, MD 20637

Phone Number: 301-274-4620

Toll-free: 1-866-366-8343

TTY: 410-576-6372 (Baltimore office)

Maryland Attorney General's Office - Western Maryland

Website: Maryland Attorney General's Office - Western Maryland

Address: Maryland Attorney General's Office - Western Maryland
Consumer Protection Division
44 N. Potomac St., Suite 104
Hagerstown, MD 21740

Phone Number: 301-791-4780

TTY: 410-576-6372 (Baltimore office)

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County Consumer Protection Offices

Howard County Office of Consumer Affairs

Website: Howard County Office of Consumer Affairs

Address: Howard County Office of Consumer Affairs
6751 Columbia Gateway Dr.
Columbia, MD 21046

Phone Number: 410-313-6420

Montgomery County Office of Consumer Protection

Website: Montgomery County Office of Consumer Protection

Address: Montgomery County Office of Consumer Protection
100 Maryland Ave., Suite 330
Rockville, MD 20850

Phone Number: 240-777-3636 240-777-3681 (Anonymous Consumer Tip Line)

TTY: 240-773-3556

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Department of Labor, Licensing and Regulation

Website: Department of Labor, Licensing and Regulation

Address: Department of Labor, Licensing and Regulation
Commissioner of Financial Regulation
500 N. Calvert St., Suite 402
Baltimore, MD 21202

Phone Number: 410-230-6077 (Consumer Services)

Toll-free: 1-888-784-0136 (MD)

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Insurance Administration

Website: Insurance Administration

Address: Insurance Administration
Consumer Division
200 St. Paul Pl.
Suite 2700
Baltimore, MD 21202

Phone Number: 410-468-2000

Toll-free: 1-800-492-6116

TTY: 1-800-735-2258

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Office of the Attorney General

Website: Office of the Attorney General

Address: Office of the Attorney General
Securities Division
200 Saint Paul Pl.
Baltimore, MD 21202-2020

Phone Number: 410-576-6360

Toll-free: 1-888-743-0023 (MD)

TTY: 410-576-6372

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Service Commission

Website: Public Service Commission

Address: Public Service Commission
Six St. Paul St., 16th Floor
Baltimore, MD 21202-6806

Phone Number: 410-767-8028

Toll-free: 1-800-492-0474

TTY: 1-800-201-7165

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The 1040ez H&r Block

1040ez h&r block Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. 1040ez h&r block For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. 1040ez h&r block If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. 1040ez h&r block Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. 1040ez h&r block A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. 1040ez h&r block Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. 1040ez h&r block Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). 1040ez h&r block It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. 1040ez h&r block A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. 1040ez h&r block Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. 1040ez h&r block It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. 1040ez h&r block Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. 1040ez h&r block Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. 1040ez h&r block Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. 1040ez h&r block Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. 1040ez h&r block Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. 1040ez h&r block Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. 1040ez h&r block Listed property placed in service before 1987. 1040ez h&r block   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. 1040ez h&r block Listed property placed in service after 1986. 1040ez h&r block   For information on listed property placed in service after 1986, see Publication 946. 1040ez h&r block Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. 1040ez h&r block You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. 1040ez h&r block The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. 1040ez h&r block However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. 1040ez h&r block Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. 1040ez h&r block Example. 1040ez h&r block Sarah Bradley uses a home computer 50% of the time to manage her investments. 1040ez h&r block She also uses the computer 40% of the time in her part-time consumer research business. 1040ez h&r block Sarah's home computer is listed property because it is not used at a regular business establishment. 1040ez h&r block Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. 1040ez h&r block Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. 1040ez h&r block Her combined rate of business/investment use for determining her depreciation deduction is 90%. 1040ez h&r block Qualified Business Use A qualified business use is any use in your trade or business. 1040ez h&r block However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. 1040ez h&r block See Employees, later. 1040ez h&r block 5% owner. 1040ez h&r block   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. 1040ez h&r block   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. 1040ez h&r block Related person. 1040ez h&r block   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. 1040ez h&r block Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. 1040ez h&r block See Publication 463. 1040ez h&r block Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. 1040ez h&r block Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. 1040ez h&r block Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. 1040ez h&r block Any payment to you for the use of the automobile is treated as a rent payment for 3). 1040ez h&r block Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. 1040ez h&r block Use for the employer's convenience. 1040ez h&r block   Whether the use of listed property is for the employer's convenience must be determined from all the facts. 1040ez h&r block The use is for the employer's convenience if it is for a substantial business reason of the employer. 1040ez h&r block The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. 1040ez h&r block Use required as a condition of employment. 1040ez h&r block   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. 1040ez h&r block The use of property must be required for the employee to perform duties properly. 1040ez h&r block The employer need not explicitly require the employee to use the property. 1040ez h&r block A mere statement by the employer that the use of the property is a condition of employment is not sufficient. 1040ez h&r block Example 1. 1040ez h&r block Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. 1040ez h&r block She owns and uses a motorcycle to deliver packages to downtown offices. 1040ez h&r block We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. 1040ez h&r block The company reimburses delivery persons for their costs. 1040ez h&r block Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. 1040ez h&r block Example 2. 1040ez h&r block Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. 1040ez h&r block He must travel to these sites on a regular basis. 1040ez h&r block Uplift does not furnish an automobile or explicitly require him to use his own automobile. 1040ez h&r block However, it reimburses him for any costs he incurs in traveling to the various sites. 1040ez h&r block The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. 1040ez h&r block Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. 1040ez h&r block You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. 1040ez h&r block For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. 1040ez h&r block For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. 1040ez h&r block Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. 1040ez h&r block First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. 1040ez h&r block Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. 1040ez h&r block It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. 1040ez h&r block Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. 1040ez h&r block Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. 1040ez h&r block See Recapture of excess depreciation, next. 1040ez h&r block Recapture of excess depreciation. 1040ez h&r block   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. 1040ez h&r block Any excess depreciation must also be added to the adjusted basis of your property. 1040ez h&r block Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. 1040ez h&r block This means you figure your depreciation using the percentages fromTable 16 or 17. 1040ez h&r block For information on investment credit recapture, see the instructions for Form 4255. 1040ez h&r block Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. 1040ez h&r block In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. 1040ez h&r block To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. 1040ez h&r block See Car Used 50% or Less for Business in Publication 917. 1040ez h&r block Leased Property The limitations on cost recovery deductions apply to the rental of listed property. 1040ez h&r block The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). 1040ez h&r block SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. 1040ez h&r block Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. 1040ez h&r block A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. 1040ez h&r block This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. 1040ez h&r block Occasional or incidental leasing activity is insufficient. 1040ez h&r block For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. 1040ez h&r block An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. 1040ez h&r block Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. 1040ez h&r block Inclusion amount for property leased before 1987. 1040ez h&r block   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. 1040ez h&r block You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. 1040ez h&r block   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. 1040ez h&r block For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. 1040ez h&r block You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. 1040ez h&r block Special rules. 1040ez h&r block   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. 1040ez h&r block The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. 1040ez h&r block   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. 1040ez h&r block Maximum inclusion amount. 1040ez h&r block   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. 1040ez h&r block What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. 1040ez h&r block How long to keep records. 1040ez h&r block   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). 1040ez h&r block Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. 1040ez h&r block It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. 1040ez h&r block However, your records should back up your receipts in an orderly manner. 1040ez h&r block Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. 1040ez h&r block Written documents of your expenditure or use are generally better evidence than oral statements alone. 1040ez h&r block A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. 1040ez h&r block A daily log is not required. 1040ez h&r block However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. 1040ez h&r block Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. 1040ez h&r block An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. 1040ez h&r block For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. 1040ez h&r block Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. 1040ez h&r block However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. 1040ez h&r block A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. 1040ez h&r block For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. 1040ez h&r block Business Use Supported An adequate record contains enough information on each element of every business or investment use. 1040ez h&r block The amount of detail required to support the use depends on the facts and circumstances. 1040ez h&r block For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. 1040ez h&r block Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. 1040ez h&r block Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. 1040ez h&r block However, repeated uses can be combined as a single item. 1040ez h&r block Each expenditure is recorded as a separate item and not combined with other expenditures. 1040ez h&r block If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. 1040ez h&r block If these expenses are combined, you do not need to support the business purpose of each expense. 1040ez h&r block Instead, you can divide the expenses based on the total business use of the listed property. 1040ez h&r block Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. 1040ez h&r block For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. 1040ez h&r block Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. 1040ez h&r block Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. 1040ez h&r block Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. 1040ez h&r block It must be kept elsewhere and made available as support to the district director on request. 1040ez h&r block Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. 1040ez h&r block If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. 1040ez h&r block If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. 1040ez h&r block If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. 1040ez h&r block Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. 1040ez h&r block Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. 1040ez h&r block Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. 1040ez h&r block If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. 1040ez h&r block Employees. 1040ez h&r block   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. 1040ez h&r block Employees claiming the standard mileage rate may be able to use Form 2106–EZ. 1040ez h&r block Employer who provides vehicles to employees. 1040ez h&r block   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. 1040ez h&r block   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. 1040ez h&r block Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. 1040ez h&r block   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. 1040ez h&r block See the instructions for Form 4562. 1040ez h&r block Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. 1040ez h&r block In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. 1040ez h&r block In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. 1040ez h&r block For more information about deductions after the recovery period for automobiles, see Publication 917. 1040ez h&r block Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. 1040ez h&r block Table 1. 1040ez h&r block 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. 1040ez h&r block Low-Income Housing* Table 6 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