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Efile 2012 Tax Return

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Efile 2012 Tax Return

Efile 2012 tax return 5. Efile 2012 tax return   Additional Rules for Listed Property Table of Contents Introduction Useful Items - You may want to see: What Is Listed Property?Passenger Automobiles Other Property Used for Transportation Computers and Related Peripheral Equipment Can Employees Claim a Deduction? What Is the Business-Use Requirement?How To Allocate Use Qualified Business Use Recapture of Excess Depreciation Lessee's Inclusion Amount Do the Passenger Automobile Limits Apply?Maximum Depreciation Deduction Deductions After the Recovery Period Deductions For Passenger Automobiles Acquired in a Trade-in What Records Must Be Kept?Adequate Records How Is Listed Property Information Reported? Introduction This chapter discusses the deduction limits and other special rules that apply to certain listed property. Efile 2012 tax return Listed property includes cars and other property used for transportation, property used for entertainment, and certain computers. Efile 2012 tax return Deductions for listed property (other than certain leased property) are subject to the following special rules and limits. Efile 2012 tax return Deduction for employees. Efile 2012 tax return If your use of the property is not for your employer's convenience or is not required as a condition of your employment, you cannot deduct depreciation or rent expenses for your use of the property as an employee. Efile 2012 tax return Business-use requirement. Efile 2012 tax return If the property is not used predominantly (more than 50%) for qualified business use, you cannot claim the section 179 deduction or a special depreciation allowance. Efile 2012 tax return In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. Efile 2012 tax return You may also have to recapture (include in income) any excess depreciation claimed in previous years. Efile 2012 tax return A similar inclusion amount applies to certain leased property. Efile 2012 tax return Passenger automobile limits and rules. Efile 2012 tax return Annual limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. Efile 2012 tax return You can continue to deduct depreciation for the unrecovered basis resulting from these limits after the end of the recovery period. Efile 2012 tax return This chapter defines listed property and explains the special rules and depreciation deduction limits that apply, including the special inclusion amount rule for leased property. Efile 2012 tax return It also discusses the recordkeeping rules for listed property and explains how to report information about the property on your tax return. Efile 2012 tax return Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. Efile 2012 tax return What Is Listed Property? Listed property is any of the following. Efile 2012 tax return Passenger automobiles (as defined later). Efile 2012 tax return Any other property used for transportation, unless it is an excepted vehicle. Efile 2012 tax return Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment). Efile 2012 tax return Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. Efile 2012 tax return A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business as discussed in Publication 587. Efile 2012 tax return Improvements to listed property. Efile 2012 tax return   An improvement made to listed property that must be capitalized is treated as a new item of depreciable property. Efile 2012 tax return The recovery period and method of depreciation that apply to the listed property as a whole also apply to the improvement. Efile 2012 tax return For example, if you must depreciate the listed property using the straight line method, you also must depreciate the improvement using the straight line method. Efile 2012 tax return Passenger Automobiles 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 (6,000 pounds or less of gross vehicle weight for trucks and vans). Efile 2012 tax return It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile. Efile 2012 tax return The following vehicles are not considered passenger automobiles for these purposes. Efile 2012 tax return An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business. Efile 2012 tax return A vehicle used directly in the trade or business of transporting persons or property for pay or hire. Efile 2012 tax return A truck or van that is a qualified nonpersonal use vehicle. Efile 2012 tax return Qualified nonpersonal use vehicles. Efile 2012 tax return   Qualified nonpersonal use vehicles are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Efile 2012 tax return They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation , next. Efile 2012 tax return They also include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Efile 2012 tax return For a detailed discussion of passenger automobiles, including leased passenger automobiles, see  Publication 463. Efile 2012 tax return Other Property Used for Transportation Although vehicles used to transport persons or property for pay or hire and vehicles rated at more than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for transportation” and are subject to the special rules for listed property. Efile 2012 tax return Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods. Efile 2012 tax return Excepted vehicles. Efile 2012 tax return   Other property used for transportation does not include the following qualified nonpersonal use vehicles (defined earlier under Passenger Automobiles ). Efile 2012 tax return Clearly marked police and fire vehicles. Efile 2012 tax return Unmarked vehicles used by law enforcement officers if the use is officially authorized. Efile 2012 tax return Ambulances used as such and hearses used as such. Efile 2012 tax return Any vehicle with a loaded gross vehicle weight of over 14,000 pounds that is designed to carry cargo. Efile 2012 tax return Bucket trucks (cherry pickers), cement mixers, dump trucks (including garbage trucks), flatbed trucks, and refrigerated trucks. Efile 2012 tax return Combines, cranes and derricks, and forklifts. Efile 2012 tax return Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat. Efile 2012 tax return Qualified moving vans. Efile 2012 tax return Qualified specialized utility repair trucks. Efile 2012 tax return School buses used in transporting students and employees of schools. Efile 2012 tax return Other buses with a capacity of at least 20 passengers that are used as passenger buses. Efile 2012 tax return Tractors and other special purpose farm vehicles. Efile 2012 tax return Clearly marked police and fire vehicle. Efile 2012 tax return   A clearly marked police or fire vehicle is a vehicle that meets all the following requirements. Efile 2012 tax return It is owned or leased by a governmental unit or an agency or instrumentality of a governmental unit. Efile 2012 tax return It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is on call at all times. Efile 2012 tax return It is prohibited from being used for personal use (other than commuting) outside the limit of the police officer's arrest powers or the fire fighter's obligation to respond to an emergency. Efile 2012 tax return It is clearly marked with painted insignia or words that make it readily apparent that it is a police or fire vehicle. Efile 2012 tax return A marking on a license plate is not a clear marking for these purposes. Efile 2012 tax return Qualified moving van. Efile 2012 tax return   A qualified moving van is any truck or van used by a professional moving company for moving household or business goods if the following requirements are met. Efile 2012 tax return No personal use of the van is allowed other than for travel to and from a move site or for minor personal use, such as a stop for lunch on the way from one move site to another. Efile 2012 tax return Personal use for travel to and from a move site happens no more than five times a month on average. Efile 2012 tax return Personal use is limited to situations in which it is more convenient to the employer, because of the location of the employee's residence in relation to the location of the move site, for the van not to be returned to the employer's business location. Efile 2012 tax return Qualified specialized utility repair truck. Efile 2012 tax return   A truck is a qualified specialized utility repair truck if it is not a van or pickup truck and all the following apply. Efile 2012 tax return The truck was specifically designed for and is used to carry heavy tools, testing equipment, or parts. Efile 2012 tax return Shelves, racks, or other permanent interior construction has been installed to carry and store the tools, equipment, or parts and would make it unlikely that the truck would be used, other than minimally, for personal purposes. Efile 2012 tax return The employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. Efile 2012 tax return Computers and Related Peripheral Equipment A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. Efile 2012 tax return It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Efile 2012 tax return Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Efile 2012 tax return The following are neither computers nor related peripheral equipment. Efile 2012 tax return Any equipment that is an integral part of other property that is not a computer. Efile 2012 tax return Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment. Efile 2012 tax return Equipment of a kind used primarily for the user's amusement or entertainment, such as video games. Efile 2012 tax return Can Employees Claim a Deduction? If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned or rented) in performing services as an employee only if your use is a business use. Efile 2012 tax return The use of your property in performing services as an employee is a business use only if both the following requirements are met. Efile 2012 tax return The use is for your employer's convenience. Efile 2012 tax return The use is required as a condition of your employment. Efile 2012 tax return If these requirements are not met, you cannot deduct depreciation (including the section 179 deduction) or rent expenses for your use of the property as an employee. Efile 2012 tax return Employer's convenience. Efile 2012 tax return   Whether the use of listed property is for your employer's convenience must be determined from all the facts. Efile 2012 tax return The use is for your employer's convenience if it is for a substantial business reason of the employer. Efile 2012 tax return The use of listed property during your regular working hours to carry on your employer's business generally is for the employer's convenience. Efile 2012 tax return Condition of employment. Efile 2012 tax return   Whether the use of listed property is a condition of your employment depends on all the facts and circumstances. Efile 2012 tax return The use of property must be required for you to perform your duties properly. Efile 2012 tax return Your employer does not have to require explicitly that you use the property. Efile 2012 tax return However, a mere statement by the employer that the use of the property is a condition of your employment is not sufficient. Efile 2012 tax return Example 1. Efile 2012 tax return Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services. Efile 2012 tax return She owns and uses a motorcycle to deliver packages to downtown offices. Efile 2012 tax return We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. Efile 2012 tax return Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Efile 2012 tax return Example 2. Efile 2012 tax return Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Efile 2012 tax return He must travel to these sites on a regular basis. Efile 2012 tax return Uplift does not furnish an automobile or explicitly require him to use his own automobile. Efile 2012 tax return However, it pays him for any costs he incurs in traveling to the various sites. Efile 2012 tax return The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Efile 2012 tax return Example 3. Efile 2012 tax return Assume the same facts as in Example 2 except that Uplift furnishes a car to Bill, who chooses to use his own car and receive payment for using it. Efile 2012 tax return The use of his own car is neither for the convenience of Uplift nor required as a condition of employment. Efile 2012 tax return Example 4. Efile 2012 tax return Marilyn Lee is a pilot for Y Company, a small charter airline. Efile 2012 tax return Y requires pilots to obtain 80 hours of flight time annually in addition to flight time spent with the airline. Efile 2012 tax return Pilots usually can obtain these hours by flying with the Air Force Reserve or by flying part-time with another airline. Efile 2012 tax return Marilyn owns her own airplane. Efile 2012 tax return The use of her airplane to obtain the required flight hours is neither for the convenience of the employer nor required as a condition of employment. Efile 2012 tax return Example 5. Efile 2012 tax return David Rule is employed as an engineer with Zip, an engineering contracting firm. Efile 2012 tax return He occasionally takes work home at night rather than work late in the office. Efile 2012 tax return He owns and uses a home computer which is virtually identical to the office model. Efile 2012 tax return His use of the computer is neither for the convenience of his employer nor required as a condition of employment. Efile 2012 tax return What Is the Business-Use Requirement? You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciate listed property using GDS and a declining balance method if the property meets the business-use requirement. Efile 2012 tax return To meet this requirement, listed property must be used predominantly (more than 50% of its total use) for qualified business use. Efile 2012 tax return If this requirement is not met, the following rules apply. Efile 2012 tax return Property not used predominantly for qualified business use during the year it is placed in service does not qualify for the section 179 deduction. Efile 2012 tax return Property not used predominantly for qualified business use during the year it is placed in service does not qualify for a special depreciation allowance. Efile 2012 tax return Any depreciation deduction under MACRS for property not used predominantly for qualified business use during any year must be figured using the straight line method over the ADS recovery period. Efile 2012 tax return This rule applies each year of the recovery period. Efile 2012 tax return Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is no longer used predominantly for qualified business use. Efile 2012 tax return A lessee must add an inclusion amount to income in the first year in which the leased property is not used predominantly for qualified business use. Efile 2012 tax return Being required to use the straight line method for an item of listed property not used predominantly for qualified business use is not the same as electing the straight line method. Efile 2012 tax return 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. Efile 2012 tax return Exception for leased property. Efile 2012 tax return   The business-use requirement generally does not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Efile 2012 tax return   You are considered regularly engaged in the business of leasing listed property only if you enter into contracts for the leasing of listed property with some frequency over a continuous period of time. Efile 2012 tax return This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of your business in its entirety. Efile 2012 tax return Occasional or incidental leasing activity is insufficient. Efile 2012 tax return For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in the business of leasing automobiles. Efile 2012 tax return 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. Efile 2012 tax return How To Allocate Use To determine whether the business-use requirement is met, you must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. Efile 2012 tax return For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Efile 2012 tax return You determine the percentage of qualified business use by dividing the number of miles you drove the vehicle for business purposes during the year by the total number of miles you drove the vehicle for all purposes (including business miles) during the year. Efile 2012 tax return For other listed property, allocate the property's use on the basis of the most appropriate unit of time the property is actually used (rather than merely being available for use). Efile 2012 tax return For example, you can determine the percentage of business use of a computer by dividing the number of hours you used the computer for business purposes during the year by the total number of hours you used the computer for all purposes (including business use) during the year. Efile 2012 tax return Entertainment use. Efile 2012 tax return   Treat the use of listed property for entertainment, recreation, or amusement purposes as a business use only to the extent you can deduct expenses (other than interest and property tax expenses) due to its use as an ordinary and necessary business expense. Efile 2012 tax return Commuting use. Efile 2012 tax return   The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. Efile 2012 tax return For example, a business telephone call made on a car telephone while commuting to work does not change the character of the trip from commuting to business. Efile 2012 tax return This is also true for a business meeting held in a car while commuting to work. Efile 2012 tax return Similarly, a business call made on an otherwise personal trip does not change the character of a trip from personal to business. Efile 2012 tax return The fact that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use. Efile 2012 tax return Use of your automobile by another person. Efile 2012 tax return   If someone else uses your automobile, do not treat that use as business use unless one of the following conditions applies. Efile 2012 tax return That use is directly connected with your business. Efile 2012 tax return You properly report the value of the use as income to the other person and withhold tax on the income where required. Efile 2012 tax return You are paid a fair market rent. Efile 2012 tax return Treat any payment to you for the use of the automobile as a rent payment for purposes of item (3). Efile 2012 tax return Employee deductions. Efile 2012 tax return   If you are an employee, do not treat your use of listed property as business use unless it is for your employer's convenience and is required as a condition of your employment. Efile 2012 tax return See Can Employees Claim a Deduction , earlier. Efile 2012 tax return Qualified Business Use Qualified business use of listed property is any use of the property in your trade or business. Efile 2012 tax return However, it does not include the following uses. Efile 2012 tax return The leasing of property to any 5% owner or related person (to the extent the property is used by a 5% owner or person related to the owner or lessee of the property). Efile 2012 tax return The use of property as pay for the services of a 5% owner or related person. Efile 2012 tax return The use of property as pay for services of any person (other than a 5% owner or related person), unless the value of the use is included in that person's gross income and income tax is withheld on that amount where required. Efile 2012 tax return Property does not stop being used predominantly for qualified business use because of a transfer at death. Efile 2012 tax return Exception for leasing or compensatory use of aircraft. Efile 2012 tax return   Treat the leasing of any aircraft by a 5% owner or related person, or the compensatory use of any aircraft, as a qualified business use if at least 25% of the total use of the aircraft during the year is for a qualified business use. Efile 2012 tax return 5% owner. Efile 2012 tax return   For a business entity that is not a corporation, a 5% owner is any person who owns more than 5% of the capital or profits interest in the business. Efile 2012 tax return   For a corporation, a 5% owner is any person who owns, or is considered to own, either of the following. Efile 2012 tax return More than 5% of the outstanding stock of the corporation. Efile 2012 tax return Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Efile 2012 tax return Related persons. Efile 2012 tax return   For a description of related persons, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 . Efile 2012 tax return For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. Efile 2012 tax return Examples. Efile 2012 tax return   The following examples illustrate whether the use of business property is qualified business use. Efile 2012 tax return Example 1. Efile 2012 tax return John Maple is the sole proprietor of a plumbing contracting business. Efile 2012 tax return John employs his brother, Richard, in the business. Efile 2012 tax return As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. Efile 2012 tax return The company includes the value of the personal use of the automobile in Richard's gross income and properly withholds tax on it. Efile 2012 tax return The use of the automobile is pay for the performance of services by a related person, so it is not a qualified business use. Efile 2012 tax return Example 2. Efile 2012 tax return John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. Efile 2012 tax return He does not include the value of the personal use of the company automobiles as part of their compensation and he does not withhold tax on the value of the use of the automobiles. Efile 2012 tax return This use of company automobiles by employees is not a qualified business use. Efile 2012 tax return Example 3. Efile 2012 tax return James Company Inc. Efile 2012 tax return owns several automobiles that its employees use for business purposes. Efile 2012 tax return The employees also are allowed to take the automobiles home at night. Efile 2012 tax return The fair market value of each employee's use of an automobile for any personal purpose, such as commuting to and from work, is reported as income to the employee and James Company withholds tax on it. Efile 2012 tax return This use of company automobiles by employees, even for personal purposes, is a qualified business use for the company. Efile 2012 tax return Investment Use The use of property to produce income in a nonbusiness activity (investment use) is not a qualified business use. Efile 2012 tax return However, you can treat the investment use as business use to figure the depreciation deduction for the property in a given year. Efile 2012 tax return Example 1. Efile 2012 tax return Sarah Bradley uses a home computer 50% of the time to manage her investments. Efile 2012 tax return She also uses the computer 40% of the time in her part-time consumer research business. Efile 2012 tax return Sarah's home computer is listed property because it is not used at a regular business establishment. Efile 2012 tax return She does not use the computer predominantly for qualified business use. Efile 2012 tax return Therefore, she cannot elect a section 179 deduction or claim a special depreciation allowance for the computer. Efile 2012 tax return She must depreciate it using the straight line method over the ADS recovery period. Efile 2012 tax return Her combined business/investment use for determining her depreciation deduction is 90%. Efile 2012 tax return Example 2. Efile 2012 tax return If Sarah uses her computer 30% of the time to manage her investments and 60% of the time in her consumer research business, it is used predominantly for qualified business use. Efile 2012 tax return She can elect a section 179 deduction and, if she does not deduct all the computer's cost, she can claim a special depreciation allowance and depreciate the computer using the 200% declining balance method over the GDS recovery period. Efile 2012 tax return Her combined business/investment use for determining her depreciation deduction is 90%. Efile 2012 tax return Recapture of Excess Depreciation If you used listed property more than 50% in a qualified business use in the year you placed it in service, you must recapture (include in income) excess depreciation in the first year you use it 50% or less. Efile 2012 tax return You also increase the adjusted basis of your property by the same amount. Efile 2012 tax return Excess depreciation is: The depreciation allowable for the property (including any section 179 deduction and special depreciation allowance claimed) for years before the first year you do not use the property predominantly for qualified business use, minus The depreciation that would have been allowable for those years if you had not used the property predominantly for qualified business use in the year you placed it in service. Efile 2012 tax return To determine the amount in (2) above, you must refigure the depreciation using the straight line method and the ADS recovery period. Efile 2012 tax return Example. Efile 2012 tax return In June 2009, Ellen Rye purchased and placed in service a pickup truck that cost $18,000. Efile 2012 tax return She used it only for qualified business use for 2009 through 2012. Efile 2012 tax return Ellen claimed a section 179 deduction of $10,000 based on the purchase of the truck. Efile 2012 tax return She began depreciating it using the 200% DB method over a 5-year GDS recovery period. Efile 2012 tax return The pickup truck's gross vehicle weight was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the Passenger Automobile Limits Apply. Efile 2012 tax return During 2013, she used the truck 50% for business and 50% for personal purposes. Efile 2012 tax return She includes $4,018 excess depreciation in her gross income for 2013. Efile 2012 tax return The excess depreciation is determined as follows. Efile 2012 tax return Total section 179 deduction ($10,000) and depreciation claimed ($6,618) for 2009 through 2012. Efile 2012 tax return (Depreciation is from Table A-1. Efile 2012 tax return ) $16,618 Minus: Depreciation allowable (Table A-8):     2009 – 10% of $18,000 $1,800   2010 – 20% of $18,000 3,600   2011 – 20% of $18,000 3,600   2012 – 20% of $18,000 3,600 12,600 Excess depreciation $4,018 If Ellen's use of the truck does not change to 50% for business and 50% for personal purposes until 2015, there will be no excess depreciation. Efile 2012 tax return The total depreciation allowable using Table A-8 through 2015 will be $18,000, which equals the total of the section 179 deduction and depreciation she will have claimed. Efile 2012 tax return Where to figure and report recapture. Efile 2012 tax return   Use Form 4797, Part IV, to figure the recapture amount. Efile 2012 tax return Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. Efile 2012 tax return For example, report the recapture amount as other income on Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. Efile 2012 tax return If you took the depreciation deduction on Form 2106, report the recapture amount as other income on Form 1040, line 21. Efile 2012 tax return Lessee's Inclusion Amount If you use leased listed property other than a passenger automobile for business/investment use, you must include an amount in your income in the first year your qualified business-use percentage is 50% or less. Efile 2012 tax return Your qualified business-use percentage is the part of the property's total use that is qualified business use (defined earlier). Efile 2012 tax return For the inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Publication 463. Efile 2012 tax return The inclusion amount is the sum of Amount A and Amount B, described next. Efile 2012 tax return However, see the special rules for the inclusion amount, later, if your lease begins in the last 9 months of your tax year or is for less than one year. Efile 2012 tax return Amount A. Efile 2012 tax return   Amount A is: The fair market value of the property, multiplied by The business/investment use for the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A-19 in Appendix A . Efile 2012 tax return   The fair market value of the property is the value on the first day of the lease term. Efile 2012 tax return If the capitalized cost of an item of listed property is specified in the lease agreement, you must treat that amount as the fair market value. Efile 2012 tax return Amount B. Efile 2012 tax return   Amount B is: The fair market value of the property, multiplied by The average of the business/investment use for all tax years the property was leased that precede the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A–20 in Appendix A . Efile 2012 tax return Maximum inclusion amount. Efile 2012 tax return   The inclusion amount cannot be more than the sum of the deductible amounts of rent for the tax year in which the lessee must include the amount in gross income. Efile 2012 tax return Inclusion amount worksheet. Efile 2012 tax return   The following worksheet is provided to help you figure the inclusion amount for leased listed property. Efile 2012 tax return Inclusion Amount Worksheet for Leased Listed Property 1. Efile 2012 tax return Fair market value   2. Efile 2012 tax return Business/investment use for first year business use is 50% or less   3. Efile 2012 tax return Multiply line 1 by line 2. Efile 2012 tax return   4. Efile 2012 tax return Rate (%) from Table A-19   5. Efile 2012 tax return Multiply line 3 by line 4. Efile 2012 tax return This is Amount A. Efile 2012 tax return   6. Efile 2012 tax return Fair market value   7. Efile 2012 tax return Average business/investment use for years property leased before the first year business use is 50% or less . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return . Efile 2012 tax return   8. Efile 2012 tax return Multiply line 6 by line 7   9. Efile 2012 tax return Rate (%) from Table A-20   10. Efile 2012 tax return Multiply line 8 by line 9. Efile 2012 tax return This is Amount B. Efile 2012 tax return   11. Efile 2012 tax return Add line 5 and line 10. Efile 2012 tax return This is your inclusion amount. Efile 2012 tax return Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. Efile 2012 tax return )         Example. Efile 2012 tax return On February 1, 2011, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. Efile 2012 tax return The lease is for a period of 5 years. Efile 2012 tax return Larry does not use the computer at a regular business establishment, so it is listed property. Efile 2012 tax return His business use of the property (all of which is qualified business use) is 80% in 2011, 60% in 2012, and 40% in 2013. Efile 2012 tax return He must add an inclusion amount to gross income for 2013, the first tax year his qualified business-use percentage is 50% or less. Efile 2012 tax return The computer has a 5-year recovery period under both GDS and ADS. Efile 2012 tax return 2013 is the third tax year of the lease, so the applicable percentage from Table A-19 is −19. Efile 2012 tax return 8%. Efile 2012 tax return The applicable percentage from Table A-20 is 22. Efile 2012 tax return 0%. Efile 2012 tax return Larry's deductible rent for the computer for 2013 is $800. Efile 2012 tax return Larry uses the Inclusion amount worksheet. Efile 2012 tax return to figure the amount he must include in income for 2013. Efile 2012 tax return His inclusion amount is $224, which is the sum of −$238 (Amount A) and $462 (Amount B). Efile 2012 tax return Inclusion Amount Worksheet for Leased Listed Property 1. Efile 2012 tax return Fair market value $3,000   2. Efile 2012 tax return Business/investment use for first year business use is 50% or less 40 % 3. Efile 2012 tax return Multiply line 1 by line 2. Efile 2012 tax return 1,200   4. Efile 2012 tax return Rate (%) from Table A-19 −19. Efile 2012 tax return 8 % 5. Efile 2012 tax return Multiply line 3 by line 4. Efile 2012 tax return This is Amount A. Efile 2012 tax return −238   6. Efile 2012 tax return Fair market value 3,000   7. Efile 2012 tax return Average business/investment use for years property leased before the first year business use is 50% or less 70 % 8. Efile 2012 tax return Multiply line 6 by line 7 2,100   9. Efile 2012 tax return Rate (%) from Table A-20 22. Efile 2012 tax return 0 % 10. Efile 2012 tax return Multiply line 8 by line 9. Efile 2012 tax return This is Amount B. Efile 2012 tax return 462   11. Efile 2012 tax return Add line 5 and line 10. Efile 2012 tax return This is your inclusion amount. Efile 2012 tax return Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. Efile 2012 tax return ) $224           Lease beginning in the last 9 months of your tax year. Efile 2012 tax return    The inclusion amount is subject to a special rule if all the following apply. Efile 2012 tax return The lease term begins within 9 months before the close of your tax year. Efile 2012 tax return You do not use the property predominantly (more than 50%) for qualified business use during that part of the tax year. Efile 2012 tax return The lease term continues into your next tax year. Efile 2012 tax return Under this special rule, add the inclusion amount to income in the next tax year. Efile 2012 tax return Figure the inclusion amount by taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount Worksheet for Leased Listed Property) and the applicable percentage for the tax year the lease term begins. Efile 2012 tax return Skip lines 6 through 9 of the worksheet and enter zero on line 10. Efile 2012 tax return Example 1. Efile 2012 tax return On August 1, 2012, Julie Rule, a calendar year taxpayer, leased and placed in service an item of listed property. Efile 2012 tax return The property is 5-year property with a fair market value of $10,000. Efile 2012 tax return Her property has a recovery period of 5 years under ADS. Efile 2012 tax return The lease is for 5 years. Efile 2012 tax return Her business use of the property was 50% in 2012 and 90% in 2013. Efile 2012 tax return She paid rent of $3,600 for 2012, of which $3,240 is deductible. Efile 2012 tax return She must include $147 in income in 2013. Efile 2012 tax return The $147 is the sum of Amount A and Amount B. Efile 2012 tax return Amount A is $147 ($10,000 × 70% × 2. Efile 2012 tax return 1%), the product of the fair market value, the average business use for 2012 and 2013, and the applicable percentage for year one from Table A-19 . Efile 2012 tax return Amount B is zero. Efile 2012 tax return Lease for less than one year. Efile 2012 tax return   A special rule for the inclusion amount applies if the lease term is less than one year and you do not use the property predominantly (more than 50%) for qualified business use. Efile 2012 tax return The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction. Efile 2012 tax return The numerator of the fraction is the number of days in the lease term and the denominator is 365 (or 366 for leap years). Efile 2012 tax return   The lease term for listed property other than residential rental or nonresidential real property includes options to renew. Efile 2012 tax return If you have 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, treat them as one lease. Efile 2012 tax return Example 2. Efile 2012 tax return On October 1, 2012, John Joyce, a calendar year taxpayer, leased and placed in service an item of listed property that is 3-year property. Efile 2012 tax return This property had a fair market value of $15,000 and a recovery period of 5 years under ADS. Efile 2012 tax return The lease term was 6 months (ending on March 31, 2013), during which he used the property 45% in business. Efile 2012 tax return He must include $71 in income in 2013. Efile 2012 tax return The $71 is the sum of Amount A and Amount B. Efile 2012 tax return Amount A is $71 ($15,000 × 45% × 2. Efile 2012 tax return 1% × 183/365), the product of the fair market value, the average business use for both years, and the applicable percentage for year one from Table A-19 , prorated for the length of the lease. Efile 2012 tax return Amount B is zero. Efile 2012 tax return Where to report inclusion amount. Efile 2012 tax return   Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on which you took the deduction for your rental costs. Efile 2012 tax return For example, report the inclusion amount as other income on Schedule C (Form 1040) if you took the deduction on Schedule C. Efile 2012 tax return If you took the deduction for rental costs on Form 2106, report the inclusion amount as other income on Form 1040, line 21. Efile 2012 tax return Do the Passenger Automobile Limits Apply? The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim for a passenger automobile (defined earlier) each year is limited. Efile 2012 tax return This section describes the maximum depreciation deduction amounts for 2013 and explains how to deduct, after the recovery period, the unrecovered basis of your property that results from applying the passenger automobile limit. Efile 2012 tax return Exception for leased cars. Efile 2012 tax return   The passenger automobile limits generally do not apply to passenger automobiles leased or held for leasing by anyone regularly engaged in the business of leasing passenger automobiles. Efile 2012 tax return For information on when you are considered regularly engaged in the business of leasing listed property, including passenger automobiles, see Exception for leased property , earlier, under What Is the Business-Use Requirement . Efile 2012 tax return Maximum Depreciation Deduction The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. Efile 2012 tax return They are based on the date you placed the automobile in service. Efile 2012 tax return Passenger Automobiles The maximum deduction amounts for most passenger automobiles are shown in the following table. Efile 2012 tax return Maximum Depreciation Deduction for Passenger Automobiles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,1601 $5,100 $3,050 $1,875 2012 11,1601 5,100 3,050 1,875 2011 11,0602 4,900 2,950 1,775 2010 11,0602  4,900 2,950 1,775 2009 10,9603 4,800 2,850 1,775 2008 10,9603  4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6104 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7105 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6606 4,900 2,950 1,775 1If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. Efile 2012 tax return 2If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,060. Efile 2012 tax return 3If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $2,960. Efile 2012 tax return 4If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $2,960. Efile 2012 tax return 5If you acquired the vehicle before 5/06/03, the maximum deduction is $7,660. Efile 2012 tax return If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. Efile 2012 tax return 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. Efile 2012 tax return If your business/investment use of the automobile is less than 100%, you must reduce the maximum deduction amount by multiplying the maximum amount by the percentage of business/investment use determined on an annual basis during the tax year. Efile 2012 tax return If you have a short tax year, you must reduce the maximum deduction amount by multiplying the maximum amount by a fraction. Efile 2012 tax return The numerator of the fraction is the number of months and partial months in the short tax year and the denominator is 12. Efile 2012 tax return Example. Efile 2012 tax return On April 15, 2013, Virginia Hart bought and placed in service a new car for $14,500. Efile 2012 tax return She used the car only in her business. Efile 2012 tax return She files her tax return based on the calendar year. Efile 2012 tax return She does not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. Efile 2012 tax return Under MACRS, a car is 5-year property. Efile 2012 tax return Since she placed her car in service on April 15 and used it only for business, she uses the percentages in Table A-1 to figure her MACRS depreciation on the car. Efile 2012 tax return Virginia multiplies the $14,500 unadjusted basis of her car by 0. Efile 2012 tax return 20 to get her MACRS depreciation of $2,900 for 2013. Efile 2012 tax return This $2,900 is below the maximum depreciation deduction of $3,160 for passenger automobiles placed in service in 2013. Efile 2012 tax return She can deduct the full $2,900. Efile 2012 tax return Electric Vehicles The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. Efile 2012 tax return The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table. Efile 2012 tax return Owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts later for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans later, for electric vehicles classified as trucks and vans. Efile 2012 tax return Maximum Depreciation Deduction For Electric Vehicles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2006 $8,980 $14,400 $8,650 $5,225 2005 8,880 14,200 8,450 5,125 2004 31,8301 14,300 8,550 5,125 5/06/2003– 12/31/2003 32,0302 14,600 8,750 5,225 1/01/2003– 5/05/2003 22,8803 14,600 8,750 5,225 1If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $8,880. Efile 2012 tax return 2If you acquired the vehicle before 5/06/03, the maximum deduction is $22,880. Efile 2012 tax return If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. Efile 2012 tax return 3 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. Efile 2012 tax return Trucks and Vans The maximum depreciation deductions for trucks and vans placed in service after 2002 are higher than those for other passenger automobiles. Efile 2012 tax return The maximum deduction amounts for trucks and vans are shown in the following table. Efile 2012 tax return Maximum Depreciation Deduction For Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 11,3601 5,300 3,150 1,875 2011 11,2602 5,200 3,150 1,875 2010 11,1603 5,100 3,050 1,875 2009 11,0604 4,900 2,950 1,775 2008 11,1605 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2006 3,260 5,200 3,150 1,875 2005 3,260 5,200 3,150 1,875 2004 10,9106 5,300 3,150 1,875 5/06/2003– 12/31/2003 11,0107 5,400 3,250 1,975 1/01/2003– 5/05/2003 7,9608 5,400 3,250 1,975 1 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,360. Efile 2012 tax return 2 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,260. Efile 2012 tax return 3 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. Efile 2012 tax return 4 If you elect not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,060. Efile 2012 tax return 5If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,160. Efile 2012 tax return 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, or the maximum deduction is $3,260. Efile 2012 tax return 7 If you acquired the vehicle before 5/06/03, the maximum deduction is $7,960. Efile 2012 tax return If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. Efile 2012 tax return 8 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. Efile 2012 tax return Depreciation Worksheet for Passenger Automobiles You can use the following worksheet to figure your depreciation deduction using the percentage tables. Efile 2012 tax return Then use the information from this worksheet to prepare Form 4562. Efile 2012 tax return Depreciation Worksheet for Passenger Automobiles   Part I   1. Efile 2012 tax return MACRS system (GDS or ADS)     2. Efile 2012 tax return Property class     3. Efile 2012 tax return Date placed in service     4. Efile 2012 tax return Recovery period     5. Efile 2012 tax return Method and convention     6. Efile 2012 tax return Depreciation rate (from tables)     7. Efile 2012 tax return Maximum depreciation deduction for this year from the appropriate table       8. Efile 2012 tax return Business/investment-use percentage       9. Efile 2012 tax return Multiply line 7 by line 8. Efile 2012 tax return This is your adjusted maximum depreciation deduction       10. Efile 2012 tax return Section 179 deduction claimed this year (not more than line 9). Efile 2012 tax return Enter -0- if this is not the year you placed the car in service. Efile 2012 tax return         Note. Efile 2012 tax return  1) If line 10 is equal to line 9, stop here. Efile 2012 tax return Your combined section 179 and depreciation deduction (including your special depreciation allowance) is limited to the amount on line 9. Efile 2012 tax return  2) If line 10 is less than line 9, complete Part II. Efile 2012 tax return   Part II   11. Efile 2012 tax return Subtract line 10 from line 9. Efile 2012 tax return This is the limit on the amount you can deduct for depreciation (including any special depreciation allowance )       12. Efile 2012 tax return Cost or other basis (reduced by any alternative motor vehicle credit 1or credit for electric vehicles 2)       13. Efile 2012 tax return Multiply line 12 by line 8. Efile 2012 tax return This is your business/investment cost       14. Efile 2012 tax return Section 179 deduction claimed in the year you placed the car in service       15. Efile 2012 tax return Subtract line 14 from line 13. Efile 2012 tax return This is your tentative basis for depreciation       16. Efile 2012 tax return Multiply line 15 by . Efile 2012 tax return 50 if the 50% special depreciation allowance applies. Efile 2012 tax return This is your special depreciation allowance. Efile 2012 tax return Enter -0- if this is not the year you placed the car in service, the car is not qualified property, or you elected not to claim a special depreciation allowance       Note 1) If line 16 is equal to line 11, stop here. Efile 2012 tax return Your depreciation deduction (including your special depreciation allowance) is limited to the amount on line 11. Efile 2012 tax return  2) If line 16 is less than line 11, complete Part III. Efile 2012 tax return   Part III   17. Efile 2012 tax return Subtract line 16 from 11. Efile 2012 tax return This is the limit on the amount you can deduct for MACRS depreciation       18. Efile 2012 tax return Subtract line 16 from line 15. Efile 2012 tax return This is your basis for depreciation. Efile 2012 tax return       19. Efile 2012 tax return Multiply line 18 by line 6. Efile 2012 tax return This is your tentative MACRS depreciation deduction. Efile 2012 tax return       20. Efile 2012 tax return Enter the lesser of line 17 or line 19. Efile 2012 tax return This is your MACRS depreciation deduction. Efile 2012 tax return     1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for your car. Efile 2012 tax return 2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount. Efile 2012 tax return             Deductions After the Recovery Period If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. Efile 2012 tax return If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. Efile 2012 tax return You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. Efile 2012 tax return The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. Efile 2012 tax return See Maximum Depreciation Deduction , earlier. Efile 2012 tax return Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied. Efile 2012 tax return You cannot claim a depreciation deduction for listed property other than passenger automobiles after the recovery period ends. Efile 2012 tax return There is no unrecovered basis at the end of the recovery period because you are considered to have used this property 100% for business and investment purposes during all of the recovery period. Efile 2012 tax return Example. Efile 2012 tax return In May 2007, you bought and placed in service a car costing $31,500. Efile 2012 tax return The car was 5-year property under GDS (MACRS). Efile 2012 tax return You did not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. Efile 2012 tax return You used the car exclusively for business during the recovery period (2007 through 2012). Efile 2012 tax return You figured your depreciation as shown below. Efile 2012 tax return Year Percentage Amount Limit   Allowed 2007 20. Efile 2012 tax return 0% $6,300 $2,960   $2,960 2008 32. Efile 2012 tax return 0 10,080 4,800   4,800 2009 19. Efile 2012 tax return 2 6,048 2,850   2,850 2010 11. Efile 2012 tax return 52 3,629 1,675   1,675 2011 11. Efile 2012 tax return 52 3,629 1,675   1,675 2012 5. Efile 2012 tax return 76 1,814 1,675   1,675 Total   $15,635 At the end of 2012, you had an unrecovered basis of $15,865 ($31,500 − $15,635). Efile 2012 tax return If in 2013 and later years you continue to use the car 100% for business, you can deduct each year the lesser of $1,675 or your remaining unrecovered basis. Efile 2012 tax return If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. Efile 2012 tax return However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the business use had been 100%. Efile 2012 tax return For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $9,519 ($15,865 × 60%), but you still would have to reduce your basis by $15,865 to determine your unrecovered basis. Efile 2012 tax return Deductions For Passenger Automobiles Acquired in a Trade-in If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in did not occur. Efile 2012 tax return Depreciate the part of the new automobile's basis that exceeds its carryover basis (excess basis) as if it were newly placed in service property. Efile 2012 tax return This excess basis is the additional cash paid for the new automobile in the trade-in. Efile 2012 tax return The depreciation figured for the two components of the basis (carryover basis and excess basis) is subject to a single passenger automobile limit. Efile 2012 tax return Special rules apply in determining the passenger automobile limits. Efile 2012 tax return These rules and examples are discussed in section 1. Efile 2012 tax return 168(i)-6(d)(3) of the regulations. Efile 2012 tax return Instead of figuring depreciation for the carryover basis and the excess basis separately, you can elect to treat the old automobile as disposed of and both of the basis components for the new automobile as if placed in service at the time of the trade-in. Efile 2012 tax return For more information, including how to make this election, see Election out under Property Acquired in a Like-kind Exchange or Involuntary Conversion in chapter 4 and sections 1. Efile 2012 tax return 168(i)-6(i) and 1. Efile 2012 tax return 168(i)-6(j) of the regulations. Efile 2012 tax return What Records Must Be Kept? You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove your business/investment use with adequate records or with sufficient evidence to support your own statements. Efile 2012 tax return For listed property, you must keep records for as long as any recapture can still occur. Efile 2012 tax return Recapture can occur in any tax year of the recovery period. Efile 2012 tax return 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. Efile 2012 tax return You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. Efile 2012 tax return However, your records should back up your receipts in an orderly manner. Efile 2012 tax return Elements of expenditure or use. Efile 2012 tax return   Your records or other documentary evidence must support all the following. Efile 2012 tax return 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. Efile 2012 tax return 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. Efile 2012 tax return The date of the expenditure or use. Efile 2012 tax return The business or investment purpose for the expenditure or use. Efile 2012 tax return   Written documents of your expenditure or use are generally better evidence than oral statements alone. Efile 2012 tax return You do not have to keep a daily log. Efile 2012 tax return 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 of the expenditure or use and backed up by other documents is preferable to a statement you prepare later. Efile 2012 tax return Timeliness. Efile 2012 tax return   You must record the elements of an expenditure or use at the time you have full knowledge of the elements. Efile 2012 tax return 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 generally is considered a timely record if, in the regular course of business: The statement is given by an employee to the employer, or The statement is given by an independent contractor to the client or customer. Efile 2012 tax return   For example, a log maintained on a weekly basis, that accounts for use during the week, will be considered a record made at or near the time of use. Efile 2012 tax return Business purpose supported. Efile 2012 tax return   Generally, an adequate record of business purpose must be in the form of a written statement. Efile 2012 tax return However, the amount of detail necessary to establish a business purpose depends on the facts and circumstances of each case. Efile 2012 tax return A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Efile 2012 tax return 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. Efile 2012 tax return Business use supported. Efile 2012 tax return   An adequate record contains enough information on each element of every business or investment use. Efile 2012 tax return The amount of detail required to support the use depends on the facts and circumstances. Efile 2012 tax return For example, a taxpayer who uses a truck for both business and personal purposes and whose only business use of the 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. Efile 2012 tax return   Although you generally must prepare an adequate written record, you can prepare a record of the business use of listed property in a computer memory device that uses a logging program. Efile 2012 tax return Separate or combined expenditures or uses. Efile 2012 tax return   Each use by you normally is considered a separate use. Efile 2012 tax return However, you can combine repeated uses as a single item. Efile 2012 tax return   Record each expenditure as a separate item. Efile 2012 tax return Do not combine it with other expenditures. Efile 2012 tax return If you choose, however, you can combine amounts you spent for the use of listed property during a tax year, such as for gasoline or automobile repairs. Efile 2012 tax return If you combine these expenses, you do not need to support the business purpose of each expense. Efile 2012 tax return Instead, you can divide the expenses based on the total business use of the listed property. Efile 2012 tax return   You can account for uses that can be considered part of a single use, such as a round trip or uninterrupted business use, by a single record. Efile 2012 tax return For example, you can account for the use of a truck to make deliveries at several locations that begin and end at the business premises and can include a stop at the business in between deliveries by a single record of miles driven. Efile 2012 tax return You can account for the use of a passenger automobile by a salesperson for a business trip away from home over a period of time by a single record of miles traveled. Efile 2012 tax return Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Efile 2012 tax return Confidential information. Efile 2012 tax return   If any of the information on the elements of an expenditure or use is confidential, you do not need to include it in the account book or similar record if you record it at or near the time of the expenditure or use. Efile 2012 tax return You must keep it elsewhere and make it available as support to the IRS director for your area on request. Efile 2012 tax return Substantial compliance. Efile 2012 tax return   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 satisfaction of the IRS director for your area, you can establish this element by any evidence the IRS director for your area deems adequate. Efile 2012 tax return   If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied with the adequate records requirement for an element of an expenditure or use, you must establish the element as follows. Efile 2012 tax return By your own oral or written statement containing detailed information as to the element. Efile 2012 tax return By other evidence sufficient to establish the element. Efile 2012 tax return   If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct evidence, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Efile 2012 tax return If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Efile 2012 tax return Sampling. Efile 2012 tax return   You can maintain an adequate record for part of a tax year and use that record to support your business and investment use of listed property for the entire tax year if it can be shown by other evidence that the periods for which you maintain an adequate record are representative of the use throughout the year. Efile 2012 tax return Example 1. Efile 2012 tax return Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. Efile 2012 tax return She uses her automobile for local business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and deliver items to clients. Efile 2012 tax return There is no other business use of the automobile, but she and family members also use it for personal purposes. Efile 2012 tax return She maintains adequate records for the first 3 months of the year showing that 75% of the automobile use was for business. Efile 2012 tax return Subcontractor invoices and paid bills show that her business continued at approximately the same rate for the rest of the year. Efile 2012 tax return If there is no change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. Efile 2012 tax return Example 2. Efile 2012 tax return Assume the same facts as in Example 1, except that Denise maintains adequate records during the first week of every month showing that 75% of her use of the automobile is for business. Efile 2012 tax return Her business invoices show that her business continued at the same rate during the later weeks of each month so that her weekly records are representative of the automobile's business use throughout the month. Efile 2012 tax return The determination that her business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. Efile 2012 tax return Example 3. Efile 2012 tax return Bill Baker, a sole proprietor and calendar year taxpayer, is a salesman in a large metropolitan area for a company that manufactures household products. Efile 2012 tax return For the first 3 weeks of each month, he occasionally uses his own automobile for business travel within the metropolitan area. Efile 2012 tax return During these weeks, his business use of the automobile does not follow a consistent pattern. Efile 2012 tax return During the fourth week of each month, he delivers all business orders taken during the previous month. Efile 2012 tax return The business use of his automobile, as supported by adequate records, is 70% of its total use during that fourth week. Efile 2012 tax return The determination based on the record maintained during the fourth week of the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient supporting evidence because his use during that week is not representative of use during other periods. Efile 2012 tax return Loss of records. Efile 2012 tax return   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. Efile 2012 tax return How Is Listed Property Information Reported? You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you claim either of the following deductions. Efile 2012 tax return Any deduction for a vehicle. Efile 2012 tax return A depreciation deduction for any other listed property. Efile 2012 tax return If you claim any deduction for a vehicle, you also must provide the information requested in Section B. Efile 2012 tax return If you provide the vehicle for your employee's use, the employee must give you this information. Efile 2012 tax return If you provide any vehicle for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle. Efile 2012 tax return Vehicles used by your employees. Efile 2012 tax return   You do not have to complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements. Efile 2012 tax return You maintain a written policy statement that prohibits one of the following uses of the vehicles. Efile 2012 tax return All personal use including commuting. Efile 2012 tax return Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more owners. Efile 2012 tax return You treat all use of the vehicles by your employees as personal use. Efile 2012 tax return You provide more than five vehicles for use by your employees, and you keep in your records the information on their use given to you by the employees. Efile 2012 tax return For demonstrator automobiles provided to full-time salespersons, you maintain a written policy statement that limits the total mileage outside the salesperson's normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store personal possessions. Efile 2012 tax return Exceptions. Efile 2012 tax return   If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file Form 4562, report information about listed property on that form and not on Form 4562. Efile 2012 tax return Also, if you file Schedule C (Form 1040) and are claiming the standard mileage rate or actual vehicle expenses (except depreciation) and you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C and not on Form 4562. Efile 2012 tax return Prev  Up  Next   Home   More Online Publications
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The Individual Shared Responsibility Provision

Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. Many people already have qualifying health insurance coverage (called minimum essential coverage) and do not need to do anything more than maintain that coverage.

The individual shared responsibility provision requires you and each member of your family to either:

  • Have minimum essential coverage, or
  • Have an exemption from the responsibility to have minimum essential coverage, or
  • Make a shared responsibility payment when you file your 2014 federal income tax return in 2015.  

You will report minimum essential coverage, report exemptions, or make any individual shared responsibility payment when you file your 2014 federal income tax return in 2015.

Minimum Essential Coverage

 

If you and your family need to acquire minimum essential coverage, you may have several options.  They include:

  • Health insurance coverage provided by your employer,
  • Health insurance purchased through the Health Insurance Marketplace in the area where you live, where you may qualify for financial assistance,
  • Coverage provided under a government-sponsored program for which you are eligible (including Medicare, Medicaid, and health care programs for veterans),
  • Health insurance purchased directly from an insurance company, and
  • Other health insurance coverage that is recognized by the Department of Health & Human Services as minimum essential coverage.

U.S. citizens who are residents of a foreign country for an entire year, and residents of U.S. territories, are deemed to have minimum essential coverage. See questions 11 and 12 of our Questions and Answers for more information.  

For purposes of the individual shared responsibility payment, you are considered to have minimum essential coverage for the entire month as long as you have minimum essential coverage for at least one day during that month. For example, if you start a new job on June 26 and are covered under your employer’s health coverage starting on that day, you’re treated as having coverage for the entire month of June. Similarly, if you’re eligible for an exemption for any one day of a month, you’re treated as exempt for the entire month.

For more information about minimum essential coverage, check this minimum essential coverage chart and see questions 14-20 of our Questions and Answers.  

You can learn more at HealthCare.gov about which health insurance options are available to you, how to purchase health insurance coverage, and how to get financial assistance with the cost of insurance. If you purchase health insurance through the Marketplace and you meet certain requirements, you may be eligible for a premium tax credit to help pay your premiums. Learn more about the premium tax credit. The deadline for the initial open enrollment period is March 31, 2014. You may also qualify for a special enrollment period (e.g., you move to a different state). See HealthCare.gov to learn about special enrollment periods.

Exemptions

 

You may be exempt from the requirement to maintain minimum essential coverage and thus will not have to make a shared responsibility payment when you file your 2014 federal income tax return in 2015, if you meet certain criteria.

You may be exempt if you:

  • Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
  • Have a gap in coverage for less than three consecutive months, or
  • Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage, or belonging to a group explicitly exempt from the requirement.

Because of the Affordable Care Act, more Americans have access to coverage that is affordable. However, if there is no coverage available to you and your family that costs less than eight percent of your household income, you can qualify for an exemption.  

An exemption applies to individuals who purchase their insurance through the Marketplace during the initial enrollment period for 2014, which runs through March 31, 2014. This hardship exemption will apply from January 1, 2014, until the start of your health care coverage, which if you enroll between March 16 and March 31 would generally be May 1. (See this HHS Question and Answer  for more information.) Another hardship exemption may apply if you have been notified that your health insurance policy will not be renewed and you consider the other plans available to you unaffordable. (See this HHS guidance and Questions and Answers  for more information.)

How you get an exemption depends upon the type of exemption for which you are eligible. You can obtain some exemptions only from the Marketplace, others only from the IRS, and yet others from either the Marketplace or the IRS. 

Learn more about exemptions in this chart and in questions 21-24 of our Questions and Answers. Also, see Healthcare.gov for more information on hardship exemptions.

Reporting Coverage or Exemptions

 

The individual shared responsibility provision goes into effect in 2014. You won’t need to report minimum essential coverage or exemptions or make any individual shared responsibility payment until you file your 2014 federal income tax return in 2015. Information will be made available later about how to report your coverage or exemption (or make a payment) on your 2014 income tax return.

Making a Payment

 

If you or any of your dependents don’t have minimum essential coverage and don’t have an exemption, you will need to make an individual shared responsibility payment on your tax return. It is important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won't be protected from the kind of very high medical bills that can sometimes lead to bankruptcy.

If you must make an individual shared responsibility payment, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependent(s) don’t have either coverage or an exemption.

For 2014, the annual payment amount is:

  • The greater of:
    • 1 percent of your household income that is above the tax return filing threshold for your filing status, or
    • Your family's flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285,
  • But capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014.

Check out these basic examples of the payment calculation and the federal tax filing requirement thresholds. For more detailed examples, see the individual shared responsibility provision final regulations.

The percentages and flat dollar amounts increase over the first three years. In 2015, the income percentage increases to 2 percent of household income and the flat dollar amount increases to $325 per adult ($162.50 per child under 18). In 2016, these figures increase to 2.5 percent of household income and $695 per adult ($347.50 per child under 18). After 2016, these figures increase with inflation. 

Information will be made available later about how you will account for the payment on your 2014 federal income tax return filed in 2015.

More Information

 

More detailed information about the individual shared responsibility provision is available in our Questions and Answers. The Department of the Treasury and the IRS have issued the following legal guidance related to the individual shared responsibility provision, including detailed examples of the payment calculation:

  • Final regulations on the individual shared responsibility provision.
  • Notice 2013-42, which provides transition relief from the individual shared responsibility provision for employees and their families who are eligible to enroll in employer-sponsored health plans with a plan year other than a calendar year if the plan year begins in 2013 and ends in 2014.
  • Proposed regulations on minimum essential coverage and other rules regarding the shared responsibility provision.
  • Notice 2014-10, which provides transition relief for individuals enrolled in coverage under certain limited-benefit Medicaid and TRICARE programs that are not minimum essential coverage.

Additional information on exemptions and minimum essential coverage is available in final regulations issued by the Department of Health & Human Services.

Page Last Reviewed or Updated: 25-Mar-2014

The Efile 2012 Tax Return

Efile 2012 tax return 1. Efile 2012 tax return   Filing Information Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Filing RequirementsWhen To File and Pay Foreign Currency Does My Return Have To Be On Paper? Where To File Nonresident Alien Spouse Treated as a ResidentSocial Security Number (SSN) How To Make the Choice Suspending the Choice Ending the Choice Estimated Tax Other Forms You May Have To File Topics - This chapter discusses: Whether you have to file a return, When to file your return and pay any tax due, How to treat foreign currency, How to file electronically, Where to file your return, When you can treat your nonresident alien spouse as a resident, and When you may have to make estimated tax payments. Efile 2012 tax return Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide 501 Exemptions, Standard Deduction, and Filing Information 505 Tax Withholding and Estimated Tax 519 U. Efile 2012 tax return S. Efile 2012 tax return Tax Guide for Aliens 970 Tax Benefits for Education Form (and Instructions) 1040-ES Estimated Tax for Individuals 1040X Amended U. Efile 2012 tax return S. Efile 2012 tax return Individual Income Tax Return 2350 Application for Extension of Time To File U. Efile 2012 tax return S. Efile 2012 tax return Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion 4868 Application for Automatic Extension of Time To File U. Efile 2012 tax return S. Efile 2012 tax return Individual Income Tax Return 8822 Change of Address See chapter 7 for information about getting these publications and forms. Efile 2012 tax return Filing Requirements If you are a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. Efile 2012 tax return Your income, filing status, and age generally determine whether you must file an income tax return. Efile 2012 tax return Generally, you must file a return for 2013 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table. Efile 2012 tax return Filing Status*   Amount Single $10,000 65 or older $11,500 Head of household $12,850 65 or older $14,350 Qualifying widow(er) $16,100 65 or older $17,300 Married filing jointly $20,000 Not living with spouse at end of year $3,900 One spouse 65 or older $21,200 Both spouses 65 or older $22,400 Married filing separately $3,900 *If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return. Efile 2012 tax return Gross income. Efile 2012 tax return   This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. Efile 2012 tax return   For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount. Efile 2012 tax return If you are self-employed, your gross income includes the amount on Part I, line 7 of Schedule C (Form 1040), Profit or Loss From Business, or line 1 of Schedule C-EZ (Form 1040), Net Profit From Business. Efile 2012 tax return Self-employed individuals. Efile 2012 tax return   If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. Efile 2012 tax return Net earnings from self-employment are defined in Publication 334, Tax Guide for Small Business. Efile 2012 tax return 65 or older. Efile 2012 tax return   You are considered to be age 65 on the day before your 65th birthday. Efile 2012 tax return For example, if your 65th birthday is on January 1, 2014, you are considered 65 for 2013. Efile 2012 tax return Residents of U. Efile 2012 tax return S. Efile 2012 tax return possessions. Efile 2012 tax return   If you are (or were) a bona fide resident of a U. Efile 2012 tax return S. Efile 2012 tax return possession, you may be required to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U. Efile 2012 tax return S. Efile 2012 tax return Possession. Efile 2012 tax return See the instructions for the form for more information. Efile 2012 tax return When To File and Pay If you file on a calendar year basis, the due date for filing your return is April 15 of the following year. Efile 2012 tax return If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. Efile 2012 tax return In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return. Efile 2012 tax return When the due date for doing any act for tax purposes—filing a return, paying taxes, etc. Efile 2012 tax return — falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Efile 2012 tax return A tax return delivered by the U. Efile 2012 tax return S. Efile 2012 tax return mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. Efile 2012 tax return See your Form 1040 or Form 1040A instructions for a list of designated delivery services. Efile 2012 tax return Foreign wire transfers. Efile 2012 tax return   If you have a U. Efile 2012 tax return S. Efile 2012 tax return bank account, you can use: EFTPS (Electronic Federal Tax Payment System), or Federal Tax Application (same-day wire transfer). Efile 2012 tax return If you do not have a U. Efile 2012 tax return S. Efile 2012 tax return bank account, ask if your financial institution has a U. Efile 2012 tax return S. Efile 2012 tax return affiliate that can help you make same-day wire transfers. Efile 2012 tax return   For more information, visit www. Efile 2012 tax return eftps. Efile 2012 tax return gov. Efile 2012 tax return Extensions You can get an extension of time to file your return. Efile 2012 tax return In some circumstances, you also can get an extension of time to file and pay any tax due. Efile 2012 tax return However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid. Efile 2012 tax return This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet tests. Efile 2012 tax return If you served in a combat zone or qualified hazardous duty area, see Publication 3 for a discussion of extensions of deadlines. Efile 2012 tax return Automatic 2-month extension. Efile 2012 tax return   You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien, and on the regular due date of your return: You are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or You are in military or naval service on duty outside the United States and Puerto Rico. Efile 2012 tax return   If you use a calendar year, the regular due date of your return is April 15. Efile 2012 tax return Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. Efile 2012 tax return Married taxpayers. Efile 2012 tax return   If you file a joint return, either you or your spouse can qualify for the automatic extension. Efile 2012 tax return If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it. Efile 2012 tax return How to get the extension. Efile 2012 tax return   To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension. Efile 2012 tax return Automatic 6-month extension. Efile 2012 tax return   If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). Efile 2012 tax return To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). Efile 2012 tax return For more information about filing electronically, see E-file options , later. Efile 2012 tax return   The form must show your properly estimated tax liability based on the information available to you. Efile 2012 tax return    You may not be eligible. Efile 2012 tax return You cannot use the automatic 6-month extension of time to file if: You want the IRS to figure your tax, or You are under a court order to file by the regular due date. Efile 2012 tax return E-file options. Efile 2012 tax return    You can use e-file to get an extension of time to file. Efile 2012 tax return You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card. Efile 2012 tax return   First, complete Form 4868 to use as a worksheet. Efile 2012 tax return If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. Efile 2012 tax return    Then, do one of the following. Efile 2012 tax return E-file Form 4868. Efile 2012 tax return You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. Efile 2012 tax return You will need to provide certain information from your tax return for 2012. Efile 2012 tax return If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. Efile 2012 tax return If you e-file Form 4868, do not also send a paper Form 4868. Efile 2012 tax return E-file and pay by credit or debit card. Efile 2012 tax return You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. Efile 2012 tax return You can do this by phone or over the Internet. Efile 2012 tax return If you do this, you do not file Form 4868. Efile 2012 tax return For more information, see the instructions for your tax return. Efile 2012 tax return When to file. Efile 2012 tax return   Generally, you must request the 6-month extension by the regular due date of your return. Efile 2012 tax return Previous 2-month extension. Efile 2012 tax return   If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 4 months to file your return, for a total of 6 months. Efile 2012 tax return The 2-month period and the 6-month period start at the same time. Efile 2012 tax return You have to request the additional 4 months by the new due date allowed by the 2-month extension. Efile 2012 tax return   The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. Efile 2012 tax return You must make an accurate estimate of your tax based on the information available to you. Efile 2012 tax return If you find you cannot pay the full amount due with Form 4868, you can still get the extension. Efile 2012 tax return You will owe interest on the unpaid amount from the original due date of the return. Efile 2012 tax return   You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Efile 2012 tax return Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. Efile 2012 tax return In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar year taxpayers). Efile 2012 tax return Additional extension of time for taxpayers out of the country. Efile 2012 tax return   In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). Efile 2012 tax return   To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Efile 2012 tax return Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You will not receive any notification from the Internal Revenue Service unless your request is denied. Efile 2012 tax return   The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350, discussed next. Efile 2012 tax return Extension of time to meet tests. Efile 2012 tax return   You generally cannot get an extension of more than 6 months. Efile 2012 tax return However, if you are outside the United States and meet certain requirements, you may be able to get a longer extension. Efile 2012 tax return   You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. Efile 2012 tax return The tests, the exclusions, and the deduction are explained in chapter 4. Efile 2012 tax return   You should request an extension if all three of the following apply. Efile 2012 tax return You are a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien. Efile 2012 tax return You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due. Efile 2012 tax return Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies. Efile 2012 tax return   If you are granted an extension, it generally will be to 30 days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either the bona fide residence test or the physical presence test. Efile 2012 tax return However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension until after the end of the second year. Efile 2012 tax return How to get an extension. Efile 2012 tax return   To obtain an extension, file Form 2350 either by giving it to a local IRS representative or other IRS employee or by mailing it to the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045   You must file Form 2350 by the due date for filing your return. Efile 2012 tax return Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15. Efile 2012 tax return What if tests are not met. Efile 2012 tax return   If you obtain an extension and unforeseen events make it impossible for you to meet either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted). Efile 2012 tax return    You should make any request for an extension early, so that if it is denied you still can file your return on time. Efile 2012 tax return Otherwise, if you file late and additional tax is due, you may be subject to a penalty. Efile 2012 tax return Return filed before test is met. Efile 2012 tax return   If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U. Efile 2012 tax return S. Efile 2012 tax return and foreign sources and pay the tax on that income. Efile 2012 tax return If you later meet either of the tests, you can claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on Form 1040X. Efile 2012 tax return Foreign Currency You must express the amounts you report on your U. Efile 2012 tax return S. Efile 2012 tax return tax return in U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return How you do this depends on your functional currency. Efile 2012 tax return Your functional currency generally is the U. Efile 2012 tax return S. Efile 2012 tax return dollar unless you are required to use the currency of a foreign country. Efile 2012 tax return You must make all federal income tax determinations in your functional currency. Efile 2012 tax return The U. Efile 2012 tax return S. Efile 2012 tax return dollar is the functional currency for all taxpayers except some qualified business units (QBUs). Efile 2012 tax return A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records. Efile 2012 tax return Even if you have a QBU, your functional currency is the dollar if any of the following apply. Efile 2012 tax return You conduct the business in U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return The principal place of business is located in the United States. Efile 2012 tax return You choose to or are required to use the U. Efile 2012 tax return S. Efile 2012 tax return dollar as your functional currency. Efile 2012 tax return The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted. Efile 2012 tax return Make all income tax determinations in your functional currency. Efile 2012 tax return If your functional currency is the U. Efile 2012 tax return S. Efile 2012 tax return dollar, you must immediately translate into U. Efile 2012 tax return S. Efile 2012 tax return dollars all items of income, expense, etc. Efile 2012 tax return (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Efile 2012 tax return Use the exchange rate prevailing when you receive, pay, or accrue the item. Efile 2012 tax return If there is more than one exchange rate, use the one that most properly reflects your income. Efile 2012 tax return You can generally get exchange rates from banks and U. Efile 2012 tax return S. Efile 2012 tax return Embassies. Efile 2012 tax return If your functional currency is not the U. Efile 2012 tax return S. Efile 2012 tax return dollar, make all income tax determinations in your functional currency. Efile 2012 tax return At the end of the year, translate the results, such as income or loss, into U. Efile 2012 tax return S. Efile 2012 tax return dollars to report on your income tax return. Efile 2012 tax return Blocked Income You generally must report your foreign income in terms of U. Efile 2012 tax return S. Efile 2012 tax return dollars and, with one exception (see Fulbright Grant, later), you must pay taxes due on it in U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return If, because of restrictions in a foreign country, your income is not readily convertible into U. Efile 2012 tax return S. Efile 2012 tax return dollars or into other money or property that is readily convertible into U. Efile 2012 tax return S. Efile 2012 tax return dollars, your income is “blocked” or “deferrable” income. Efile 2012 tax return You can report this income in one of two ways: Report the income and pay your federal income tax with U. Efile 2012 tax return S. Efile 2012 tax return dollars that you have in the United States or in some other country, or Postpone the reporting of the income until it becomes unblocked. Efile 2012 tax return If you choose to postpone the reporting of the income, you must file an information return with your tax return. Efile 2012 tax return For this information return, you should use another Form 1040 labeled “Report of Deferrable Foreign Income, pursuant to Rev. Efile 2012 tax return Rul. Efile 2012 tax return 74-351. Efile 2012 tax return ” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. Efile 2012 tax return You also must state that you waive any right to claim that the deferrable income was includible in your income for any earlier year. Efile 2012 tax return You must report your income on your information return using the foreign currency in which you received that income. Efile 2012 tax return If you have blocked income from more than one foreign country, include a separate information return for each country. Efile 2012 tax return Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U. Efile 2012 tax return S. Efile 2012 tax return dollars or into other money or property that is convertible into U. Efile 2012 tax return S. Efile 2012 tax return currency. Efile 2012 tax return Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable. Efile 2012 tax return If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. Efile 2012 tax return If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked. Efile 2012 tax return If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. Efile 2012 tax return To apply for permission, file Form 3115, Application for Change in Accounting Method. Efile 2012 tax return You also must request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. Efile 2012 tax return See the instructions for Form 3115 for information on changing your accounting method. Efile 2012 tax return Fulbright Grant All income must be reported in U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return In most cases, the tax also must be paid in U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U. Efile 2012 tax return S. Efile 2012 tax return tax that is based on the blocked income. Efile 2012 tax return Paying U. Efile 2012 tax return S. Efile 2012 tax return tax in foreign currency. Efile 2012 tax return   To qualify for this method of payment, you must prepare a statement that shows the following information. Efile 2012 tax return You were a Fulbright grantee and were paid in nonconvertible foreign currency. Efile 2012 tax return The total grant you received during the year and the amount you received in nonconvertible foreign currency. Efile 2012 tax return At least 70% of the grant was paid in nonconvertible foreign currency. Efile 2012 tax return The statement must be certified by the U. Efile 2012 tax return S. Efile 2012 tax return educational foundation or commission paying the grant or other person having control of grant payments to you. Efile 2012 tax return   You should prepare at least two copies of this statement. Efile 2012 tax return Attach one copy to your Form 1040 and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency. Efile 2012 tax return Figuring actual tax. Efile 2012 tax return   When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. Efile 2012 tax return If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula. Efile 2012 tax return   Adjusted gross income that is blocked income × Total U. Efile 2012 tax return S. Efile 2012 tax return tax = Tax on blocked income     Total adjusted  gross income     You must attach all of the following to the return. Efile 2012 tax return A copy of the certified statement discussed earlier. Efile 2012 tax return A detailed statement showing the allocation of tax attributable to amounts received in foreign currency and the rates of exchange used in determining your tax liability in U. Efile 2012 tax return S. Efile 2012 tax return dollars. Efile 2012 tax return The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency. Efile 2012 tax return Figuring estimated tax on nonconvertible foreign currency. Efile 2012 tax return   If you are liable for estimated tax (discussed later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula. Efile 2012 tax return   Adjusted gross income that is blocked income × Total estimated U. Efile 2012 tax return S. Efile 2012 tax return tax = Estimated tax on blocked income     Total adjusted  gross income     If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income. Efile 2012 tax return Deposit of foreign currency with disbursing officer. Efile 2012 tax return   Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located. Efile 2012 tax return Estimated tax installments. Efile 2012 tax return   You can either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. Efile 2012 tax return See Estimated Tax , later. Efile 2012 tax return Deposit receipt. Efile 2012 tax return   Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. Efile 2012 tax return The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U. Efile 2012 tax return S. Efile 2012 tax return dollars) should be attached to your Form 1040 or payment voucher from Form 1040-ES. Efile 2012 tax return Keep the copy for your records. Efile 2012 tax return Does My Return Have To Be On Paper? IRS e-file (electronic filing) is the fastest, easiest, and most convenient way to file your income tax return electronically. Efile 2012 tax return IRS e-file offers accurate, safe, and fast alternatives to filing on paper. Efile 2012 tax return IRS computers quickly and automatically check for errors or other missing information. Efile 2012 tax return Even returns with a foreign address can be e-filed! How to e-file. Efile 2012 tax return   There are three ways you can e-file. Efile 2012 tax return Use your personal computer. Efile 2012 tax return Use a volunteer. Efile 2012 tax return Many programs offering free tax help can e-file your return. Efile 2012 tax return Use a tax professional. Efile 2012 tax return Most tax professionals can e-file your return. Efile 2012 tax return These methods are explained in detail in the instructions for your tax return. Efile 2012 tax return Where To File If any of the following situations apply to you, do not file your return with the service center listed for your home state. Efile 2012 tax return You claim the foreign earned income exclusion. Efile 2012 tax return You claim the foreign housing exclusion or deduction. Efile 2012 tax return You live in a foreign country. Efile 2012 tax return Instead, use one of the following special addresses. Efile 2012 tax return If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 USA If you are enclosing a check or money order, file your return with: Internal Revenue Service Center P. Efile 2012 tax return O. Efile 2012 tax return Box 1303 Charlotte, NC 28201-1303 USA If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the appropriate address listed above. Efile 2012 tax return However, you should not file with the addresses listed above if you are a bona fide resident of the U. Efile 2012 tax return S. Efile 2012 tax return Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year. Efile 2012 tax return Resident of U. Efile 2012 tax return S. Efile 2012 tax return Virgin Islands (USVI). Efile 2012 tax return   If you are a bona fide resident of the USVI during your entire tax year, you generally are not required to file a U. Efile 2012 tax return S. Efile 2012 tax return return. Efile 2012 tax return However, you must file a return with the USVI. Efile 2012 tax return    Send your return to the:     Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay Suite 225 St. Efile 2012 tax return Thomas, Virgin Islands 00802 Non-USVI resident with USVI income. Efile 2012 tax return   If you are a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. Efile 2012 tax return File the original return with the United States and file a signed copy of the U. Efile 2012 tax return S. Efile 2012 tax return return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue. Efile 2012 tax return   You must complete Form 8689, Allocation of Individual Income Tax to the U. Efile 2012 tax return S. Efile 2012 tax return Virgin Islands, and attach a copy to both your U. Efile 2012 tax return S. Efile 2012 tax return return and your USVI return. Efile 2012 tax return You should file your U. Efile 2012 tax return S. Efile 2012 tax return return with the address listed under Where To File. Efile 2012 tax return   See Publication 570, Tax Guide for Individuals With Income From U. Efile 2012 tax return S. Efile 2012 tax return Possessions, for information about filing Virgin Islands returns. Efile 2012 tax return Resident of Guam. Efile 2012 tax return   If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam. Efile 2012 tax return    Send your return to the:     Department of Revenue and Taxation Government of Guam P. Efile 2012 tax return O. Efile 2012 tax return Box 23607 GMF, GU 96921   However, if you have income from sources within Guam and you are a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien, but not a bona fide resident of Guam during the entire tax year, you should file a return with the United States. Efile 2012 tax return Send your return to the address listed under Where To File. Efile 2012 tax return   See Publication 570 for information about filing Guam returns. Efile 2012 tax return Resident of the Commonwealth of the Northern Mariana Islands. Efile 2012 tax return   If you are a bona fide resident of the Commonwealth of the Northern Mariana Islands (CNMI) during your entire tax year, you should file a return with the Northern Mariana Islands. Efile 2012 tax return    Send your return to the:      Division of Revenue and Taxation Commonwealth of the Northern Mariana Islands P. Efile 2012 tax return O. Efile 2012 tax return Box 5234, CHRB Saipan, MP 96950   However, if you have income from sources within the CNMI and you are a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien, but not a bona fide resident of the CNMI during the entire tax year, you should file a return with the United States. Efile 2012 tax return Send your return to the address listed under Where To File. Efile 2012 tax return   See Publication 570 for information about filing Northern Mariana Islands returns. Efile 2012 tax return Nonresident Alien Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. Efile 2012 tax return S. Efile 2012 tax return citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U. Efile 2012 tax return S. Efile 2012 tax return resident. Efile 2012 tax return This includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year. Efile 2012 tax return If you make this choice, the following two rules apply. Efile 2012 tax return You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect. Efile 2012 tax return You must file a joint income tax return for the year you make the choice. Efile 2012 tax return This means that neither of you can claim under any tax treaty not to be a U. Efile 2012 tax return S. Efile 2012 tax return resident for a tax year for which the choice is in effect. Efile 2012 tax return You can file joint or separate returns in years after the year in which you make the choice. Efile 2012 tax return Example 1. Efile 2012 tax return Pat Smith, a U. Efile 2012 tax return S. Efile 2012 tax return citizen, is married to Norman, a nonresident alien. Efile 2012 tax return Pat and Norman make the choice to treat Norman as a resident alien by attaching a statement to their joint return. Efile 2012 tax return Pat and Norman must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. Efile 2012 tax return Although Pat and Norman must file a joint return for the year they make the choice, they can file either joint or separate returns for later years. Efile 2012 tax return Example 2. Efile 2012 tax return When Bob and Sharon Williams got married, both were nonresident aliens. Efile 2012 tax return In June of last year, Bob became a resident alien and remained a resident for the rest of the year. Efile 2012 tax return Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return for last year. Efile 2012 tax return Bob and Sharon must report their worldwide income for last year and all later years unless the choice is ended or suspended. Efile 2012 tax return Bob and Sharon must file a joint return for last year, but they can file either joint or separate returns for later years. Efile 2012 tax return If you do not choose to treat your nonresident alien spouse as a U. Efile 2012 tax return S. Efile 2012 tax return resident, you may be able to use head of household filing status. Efile 2012 tax return To use this status, you must pay more than half the cost of maintaining a household for certain dependents or relatives other than your nonresident alien spouse. Efile 2012 tax return For more information, see Publication 501. Efile 2012 tax return Social Security Number (SSN) If you choose to treat your nonresident alien spouse as a U. Efile 2012 tax return S. Efile 2012 tax return resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN). Efile 2012 tax return To get an SSN for a nonresident alien spouse, apply at an office of the U. Efile 2012 tax return S. Efile 2012 tax return Social Security Administration (SSA) or U. Efile 2012 tax return S. Efile 2012 tax return consulate. Efile 2012 tax return You must complete Form SS-5, Application for a Social Security Card, available at www. Efile 2012 tax return socialsecurity. Efile 2012 tax return gov or by calling 1-800-772-1213. Efile 2012 tax return You must also provide original or certified copies of documents to verify that spouse's age, identity, and citizenship. Efile 2012 tax return If the nonresident alien spouse is not eligible to get an SSN, he or she can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS to apply for an ITIN. Efile 2012 tax return How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. Efile 2012 tax return It should contain the following: A declaration that one spouse was a nonresident alien and the other spouse a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien on the last day of your tax year and that you choose to be treated as U. Efile 2012 tax return S. Efile 2012 tax return residents for the entire tax year, and The name, address, and social security number (or individual taxpayer identification number) of each spouse. Efile 2012 tax return (If one spouse died, include the name and address of the person making the choice for the deceased spouse. Efile 2012 tax return ) You generally make this choice when you file your joint return. Efile 2012 tax return However, you also can make the choice by filing a joint amended return on Form 1040X. Efile 2012 tax return Attach Form 1040, 1040A, or 1040EZ and print “Amended” across the top of the amended return. Efile 2012 tax return If you make the choice with an amended return, you and your spouse also must amend any returns that you may have filed after the year for which you made the choice. Efile 2012 tax return You generally must file the amended joint return within 3 years from the date you filed your original U. Efile 2012 tax return S. Efile 2012 tax return income tax return or 2 years from the date you paid your income tax for that year, whichever is later. Efile 2012 tax return Table 1–1. Efile 2012 tax return Ending the Choice To Treat Nonresident Alien Spouse as a Resident Revocation   Either spouse can revoke the choice for any tax year. Efile 2012 tax return   • The revocation must be made by the due date for filing the tax return for that tax year. Efile 2012 tax return   • The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. Efile 2012 tax return The statement revoking the choice must include the following:     • The name, address, and social security number (or taxpayer identification number) of each spouse. Efile 2012 tax return     • The name and address of any person who is revoking the choice for a deceased spouse. Efile 2012 tax return     • A list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. Efile 2012 tax return   • If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where the last joint return was filed. Efile 2012 tax return Death   The death of either spouse ends the choice, beginning with the first tax year following the year in which the spouse died. Efile 2012 tax return   • If the surviving spouse is a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. Efile 2012 tax return   • If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. Efile 2012 tax return Divorce or  Legal separation   A divorce or legal separation ends the choice as of the beginning of the tax year in which the legal separation occurs. Efile 2012 tax return Inadequate records   The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. Efile 2012 tax return Suspending the Choice The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident alien at any time during the later tax year. Efile 2012 tax return Example. Efile 2012 tax return Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. Efile 2012 tax return They chose to treat Judy as a resident alien and filed a joint 2010 income tax return. Efile 2012 tax return On January 10, 2012, Dick became a nonresident alien. Efile 2012 tax return Judy had remained a nonresident alien. Efile 2012 tax return Because Dick was a resident alien during part of 2012, Dick and Judy can file joint or separate returns for that year. Efile 2012 tax return Neither Dick nor Judy was a resident alien at any time during 2013 and their choice is suspended for that year. Efile 2012 tax return For 2013, both are treated as nonresident aliens. Efile 2012 tax return If Dick becomes a resident alien again in 2014, their choice is no longer suspended and both are treated as resident aliens. Efile 2012 tax return Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier) or ended in one of the ways shown in Table 1-1. Efile 2012 tax return If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax year. Efile 2012 tax return Estimated Tax The requirements for determining who must pay estimated tax are the same for a U. Efile 2012 tax return S. Efile 2012 tax return citizen or resident abroad as for a taxpayer in the United States. Efile 2012 tax return For current instructions on making estimated tax payments, see Form 1040-ES. Efile 2012 tax return If you had a tax liability for 2013, you may have to pay estimated tax for 2014. Efile 2012 tax return Generally, you must make estimated tax payments for 2014 if you expect to owe at least $1,000 in tax for 2014 after subtracting your withholding and credits and you expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your 2014 tax return, or 100% of the tax shown on your 2013 tax return. Efile 2012 tax return (The return must cover all 12 months. Efile 2012 tax return ) If less than two-thirds of your gross income for 2013 and 2014 is from farming or fishing and your adjusted gross income for 2013 is more than $150,000 ($75,000 if you are married and file separately), substitute 110% for 100% in (2). Efile 2012 tax return See Publication 505 for more information. Efile 2012 tax return The first installment of estimated tax is due on April 15, 2014. Efile 2012 tax return Foreign earned income exclusion. Efile 2012 tax return   When figuring your estimated gross income, subtract amounts you expect to exclude under the foreign earned income exclusion and the foreign housing exclusion. Efile 2012 tax return In addition, you can reduce your income by your estimated foreign housing deduction. Efile 2012 tax return However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. Efile 2012 tax return If the actual amount of the exclusion or deduction is less than you estimate, you may have to pay a penalty for underpayment of estimated tax. Efile 2012 tax return   For more information about figuring your estimated tax, see Publication 505. Efile 2012 tax return Other Forms You May Have To File FinCEN Form 114 (replaces Form TD F 90-22. Efile 2012 tax return 1). Efile 2012 tax return   Beginning October 1, 2013, Form 114, Report of Foreign Bank and Financial Accounts (FBAR), must be filed instead of Form TD F 90-22. Efile 2012 tax return 1. Efile 2012 tax return Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). Efile 2012 tax return See the filing instructions at www. Efile 2012 tax return bsaefiling. Efile 2012 tax return fincen. Efile 2012 tax return treas. Efile 2012 tax return gov/main. Efile 2012 tax return html. Efile 2012 tax return   You must file Form 114 if you had any financial interest in, or signature or other authority over a bank, securities, or other financial account in a foreign country. Efile 2012 tax return You do not need to file the report if the assets are with a U. Efile 2012 tax return S. Efile 2012 tax return military banking facility operated by a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year. Efile 2012 tax return   More information about the filing of Form 114 can be found in the instructions for the form. Efile 2012 tax return FinCEN Form 105. Efile 2012 tax return   You must file Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or cause to be physically transported, mailed, or shipped into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. Efile 2012 tax return Certain recipients of currency or monetary instruments also must file Form 105. Efile 2012 tax return   More information about the filing of Form 105 can be found in the instructions on the back of the form. Efile 2012 tax return Form 8938. Efile 2012 tax return   You must file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold ”). Efile 2012 tax return The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Efile 2012 tax return Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U. Efile 2012 tax return S. Efile 2012 tax return person. Efile 2012 tax return   You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset. Efile 2012 tax return   More information about the filing of Form 8938 can be found in the separate instructions for Form 8938. Efile 2012 tax return Prev  Up  Next   Home   More Online Publications