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Federal Tax Forms 1040ez

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Federal Tax Forms 1040ez

Federal tax forms 1040ez 3. Federal tax forms 1040ez   Ordinary or Capital Gain or Loss for Business Property Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. Federal tax forms 1040ez Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sales Gifts Transfers at Death Like-Kind Exchanges and Involuntary Conversions Multiple Properties Introduction When you dispose of business property, your taxable gain or loss is usually a section 1231 gain or loss. Federal tax forms 1040ez Its treatment as ordinary or capital is determined under rules for section 1231 transactions. Federal tax forms 1040ez When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Federal tax forms 1040ez Any remaining gain is a section 1231 gain. Federal tax forms 1040ez Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Useful Items - You may want to see: Publication 534 Depreciating Property Placed in Service Before 1987 537 Installment Sales 547 Casualties, Disasters and Thefts 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) 4797 Sales of Business Property See chapter 5 for information about getting publications and forms. Federal tax forms 1040ez Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (discussed below). Federal tax forms 1040ez Their treatment as ordinary or capital depends on whether you have a net gain or a net loss from all your section 1231 transactions. Federal tax forms 1040ez If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). Federal tax forms 1040ez Do not take that gain into account as section 1231 gain. Federal tax forms 1040ez Section 1231 transactions. Federal tax forms 1040ez   The following transactions result in gain or loss subject to section 1231 treatment. Federal tax forms 1040ez Sales or exchanges of real property or depreciable personal property. Federal tax forms 1040ez This property must be used in a trade or business and held longer than 1 year. Federal tax forms 1040ez Generally, property held for the production of rents or royalties is considered to be used in a trade or business. Federal tax forms 1040ez Depreciable personal property includes amortizable section 197 intangibles (described in chapter 2 under Other Dispositions). Federal tax forms 1040ez Sales or exchanges of leaseholds. Federal tax forms 1040ez The leasehold must be used in a trade or business and held longer than 1 year. Federal tax forms 1040ez Sales or exchanges of cattle and horses. Federal tax forms 1040ez The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 2 years or longer. Federal tax forms 1040ez Sales or exchanges of other livestock. Federal tax forms 1040ez This livestock does not include poultry. Federal tax forms 1040ez It must be held for draft, breeding, dairy, or sporting purposes and held for 1 year or longer. Federal tax forms 1040ez Sales or exchanges of unharvested crops. Federal tax forms 1040ez The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person and the land must be held longer than 1 year. Federal tax forms 1040ez You cannot keep any right or option to directly or indirectly reacquire the land (other than a right customarily incident to a mortgage or other security transaction). Federal tax forms 1040ez Growing crops sold with a lease on the land, though sold to the same person in the same transaction, are not included. Federal tax forms 1040ez Cutting of timber or disposal of timber, coal, or iron ore. Federal tax forms 1040ez The cutting or disposal must be treated as a sale, as described in chapter 2 under Timber and Coal and Iron Ore. Federal tax forms 1040ez Condemnations. Federal tax forms 1040ez The condemned property must have been held longer than 1 year. Federal tax forms 1040ez It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. Federal tax forms 1040ez It cannot be property held for personal use. Federal tax forms 1040ez Casualties and thefts. Federal tax forms 1040ez The casualty or theft must have affected business property, property held for the production of rents and royalties, or investment property (such as notes and bonds). Federal tax forms 1040ez You must have held the property longer than 1 year. Federal tax forms 1040ez However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. Federal tax forms 1040ez For more information on casualties and thefts, see Publication 547. Federal tax forms 1040ez Property for sale to customers. Federal tax forms 1040ez   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. Federal tax forms 1040ez If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. Federal tax forms 1040ez Example. Federal tax forms 1040ez You manufacture and sell steel cable, which you deliver on returnable reels that are depreciable property. Federal tax forms 1040ez Customers make deposits on the reels, which you refund if the reels are returned within a year. Federal tax forms 1040ez If they are not returned, you keep each deposit as the agreed-upon sales price. Federal tax forms 1040ez Most reels are returned within the 1-year period. Federal tax forms 1040ez You keep adequate records showing depreciation and other charges to the capitalized cost of the reels. Federal tax forms 1040ez Under these conditions, the reels are not property held for sale to customers in the ordinary course of your business. Federal tax forms 1040ez Any gain or loss resulting from their not being returned may be capital or ordinary, depending on your section 1231 transactions. Federal tax forms 1040ez Copyrights. Federal tax forms 1040ez    The sale of a copyright, a literary, musical, or artistic composition, or similar property is not a section 1231 transaction if your personal efforts created the property, or if you acquired the property in a way that entitled you to the basis of the previous owner whose personal efforts created it (for example, if you receive the property as a gift). Federal tax forms 1040ez The sale of such property results in ordinary income and generally is reported in Part II of Form 4797. Federal tax forms 1040ez Treatment as ordinary or capital. Federal tax forms 1040ez   To determine the treatment of section 1231 gains and losses, combine all your section 1231 gains and losses for the year. Federal tax forms 1040ez If you have a net section 1231 loss, it is ordinary loss. Federal tax forms 1040ez If you have a net section 1231 gain, it is ordinary income up to the amount of your nonrecaptured section 1231 losses from previous years. Federal tax forms 1040ez The rest, if any, is long-term capital gain. Federal tax forms 1040ez Nonrecaptured section 1231 losses. Federal tax forms 1040ez   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain. Federal tax forms 1040ez Therefore, if in any of your five preceding tax years you had section 1231 losses, a net gain for the current year from the sale of section 1231 assets is ordinary gain to the extent of your prior losses. Federal tax forms 1040ez These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. Federal tax forms 1040ez Example. Federal tax forms 1040ez In 2013, Ben has a $2,000 net section 1231 gain. Federal tax forms 1040ez To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. Federal tax forms 1040ez From 2008 through 2012 he had the following section 1231 gains and losses. Federal tax forms 1040ez Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800 Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. Federal tax forms 1040ez 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income. Federal tax forms 1040ez To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. Federal tax forms 1040ez This includes the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis. Federal tax forms 1040ez On property you acquired in a nontaxable exchange or as a gift, your records also must indicate the following information. Federal tax forms 1040ez Whether the adjusted basis was figured using depreciation or amortization you claimed on other property. Federal tax forms 1040ez Whether the adjusted basis was figured using depreciation or amortization another person claimed. Federal tax forms 1040ez Corporate distributions. Federal tax forms 1040ez   For information on property distributed by corporations, see Distributions to Shareholders in Publication 542, Corporations. Federal tax forms 1040ez General asset accounts. Federal tax forms 1040ez   Different rules apply to dispositions of property you depreciated using a general asset account. Federal tax forms 1040ez For information on these rules, see Publication 946. Federal tax forms 1040ez Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property. Federal tax forms 1040ez See Gain Treated as Ordinary Income, later. Federal tax forms 1040ez Any gain recognized that is more than the part that is ordinary income from depreciation is a section 1231 gain. Federal tax forms 1040ez See Treatment as ordinary or capital under Section 1231 Gains and Losses, earlier. Federal tax forms 1040ez Section 1245 property defined. Federal tax forms 1040ez   Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. Federal tax forms 1040ez Personal property (either tangible or intangible). Federal tax forms 1040ez Other tangible property (except buildings and their structural components) used as any of the following. Federal tax forms 1040ez See Buildings and structural components below. Federal tax forms 1040ez An integral part of manufacturing, production, or extraction, or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services. Federal tax forms 1040ez A research facility in any of the activities in (a). Federal tax forms 1040ez A facility in any of the activities in (a) for the bulk storage of fungible commodities (discussed on the next page). Federal tax forms 1040ez That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. Federal tax forms 1040ez Amortization of certified pollution control facilities. Federal tax forms 1040ez The section 179 expense deduction. Federal tax forms 1040ez Deduction for clean-fuel vehicles and certain refueling property. Federal tax forms 1040ez Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations. Federal tax forms 1040ez Deduction for certain qualified refinery property. Federal tax forms 1040ez Deduction for qualified energy efficient commercial building property. Federal tax forms 1040ez Amortization of railroad grading and tunnel bores, if in effect before the repeal by the Revenue Reconciliation Act of 1990. Federal tax forms 1040ez (Repealed by Public Law 99-514, Tax Reform Act of 1986, section 242(a). Federal tax forms 1040ez ) Certain expenditures for child care facilities if in effect before repeal by Public Law 101-58, Omnibus Budget Reconciliation Act of 1990, section 11801(a)(13) (except with regards to deductions made prior to November 5, 1990). Federal tax forms 1040ez Expenditures to remove architectural and transportation barriers to the handicapped and elderly. Federal tax forms 1040ez Deduction for qualified tertiary injectant expenses. Federal tax forms 1040ez Certain reforestation expenditures. Federal tax forms 1040ez Deduction for election to expense qualified advanced mine safety equipment property. Federal tax forms 1040ez Single purpose agricultural (livestock) or horticultural structures. Federal tax forms 1040ez Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. Federal tax forms 1040ez Any railroad grading or tunnel bore. Federal tax forms 1040ez Buildings and structural components. Federal tax forms 1040ez   Section 1245 property does not include buildings and structural components. Federal tax forms 1040ez The term building includes a house, barn, warehouse, or garage. Federal tax forms 1040ez The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. Federal tax forms 1040ez   Do not treat a structure that is essentially machinery or equipment as a building or structural component. Federal tax forms 1040ez Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. Federal tax forms 1040ez   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. Federal tax forms 1040ez Structures such as oil and gas storage tanks, grain storage bins, silos, fractionating towers, blast furnaces, basic oxygen furnaces, coke ovens, brick kilns, and coal tipples are not treated as buildings, but as section 1245 property. Federal tax forms 1040ez Facility for bulk storage of fungible commodities. Federal tax forms 1040ez   This term includes oil or gas storage tanks and grain storage bins. Federal tax forms 1040ez Bulk storage means the storage of a commodity in a large mass before it is used. Federal tax forms 1040ez For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. Federal tax forms 1040ez To be fungible, a commodity must be such that one part may be used in place of another. Federal tax forms 1040ez   Stored materials that vary in composition, size, and weight are not fungible. Federal tax forms 1040ez Materials are not fungible if one part cannot be used in place of another part and the materials cannot be estimated and replaced by simple reference to weight, measure, and number. Federal tax forms 1040ez For example, the storage of different grades and forms of aluminum scrap is not storage of fungible commodities. Federal tax forms 1040ez Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. Federal tax forms 1040ez The depreciation and amortization allowed or allowable on the property. Federal tax forms 1040ez The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). Federal tax forms 1040ez A limit on this amount for gain on like-kind exchanges and involuntary conversions is explained later. Federal tax forms 1040ez For any other disposition of section 1245 property, ordinary income is the lesser of (1) earlier or the amount by which its fair market value is more than its adjusted basis. Federal tax forms 1040ez See Gifts and Transfers at Death, later. Federal tax forms 1040ez Use Part III of Form 4797 to figure the ordinary income part of the gain. Federal tax forms 1040ez Depreciation taken on other property or taken by other taxpayers. Federal tax forms 1040ez   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. Federal tax forms 1040ez Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. Federal tax forms 1040ez Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift). Federal tax forms 1040ez Depreciation and amortization. Federal tax forms 1040ez   Depreciation and amortization that must be recaptured as ordinary income include (but are not limited to) the following items. Federal tax forms 1040ez Ordinary depreciation deductions. Federal tax forms 1040ez Any special depreciation allowance you claimed. Federal tax forms 1040ez Amortization deductions for all the following costs. Federal tax forms 1040ez Acquiring a lease. Federal tax forms 1040ez Lessee improvements. Federal tax forms 1040ez Certified pollution control facilities. Federal tax forms 1040ez Certain reforestation expenses. Federal tax forms 1040ez Section 197 intangibles. Federal tax forms 1040ez Childcare facility expenses made before 1982, if in effect before the repeal of IRC 188. Federal tax forms 1040ez Franchises, trademarks, and trade names acquired before August 11, 1993. Federal tax forms 1040ez The section 179 deduction. Federal tax forms 1040ez Deductions for all the following costs. Federal tax forms 1040ez Removing barriers to the disabled and the elderly. Federal tax forms 1040ez Tertiary injectant expenses. Federal tax forms 1040ez Depreciable clean-fuel vehicles and refueling property (minus the amount of any recaptured deduction). Federal tax forms 1040ez Environmental cleanup costs. Federal tax forms 1040ez Certain reforestation expenses. Federal tax forms 1040ez Qualified disaster expenses. Federal tax forms 1040ez Any basis reduction for the investment credit (minus any basis increase for credit recapture). Federal tax forms 1040ez Any basis reduction for the qualified electric vehicle credit (minus any basis increase for credit recapture). Federal tax forms 1040ez Example. Federal tax forms 1040ez You file your returns on a calendar year basis. Federal tax forms 1040ez In February 2011, you bought and placed in service for 100% use in your business a light-duty truck (5-year property) that cost $10,000. Federal tax forms 1040ez You used the half-year convention and your MACRS deductions for the truck were $2,000 in 2011 and $3,200 in 2012. Federal tax forms 1040ez You did not take the section 179 deduction. Federal tax forms 1040ez You sold the truck in May 2013 for $7,000. Federal tax forms 1040ez The MACRS deduction in 2013, the year of sale, is $960 (½ of $1,920). Federal tax forms 1040ez Figure the gain treated as ordinary income as follows. Federal tax forms 1040ez 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $2,000 + $3,200 + $960) 6,160   4) Adjusted basis (subtract line 3 from line 2) $3,840 5) Gain realized (subtract line 4 from line 1) $3,160 6) Gain treated as ordinary income (lesser of line 3 or line 5) $3,160 Depreciation on other tangible property. Federal tax forms 1040ez   You must take into account depreciation during periods when the property was not used as an integral part of an activity or did not constitute a research or storage facility, as described earlier under Section 1245 property. Federal tax forms 1040ez   For example, if depreciation deductions taken on certain storage facilities amounted to $10,000, of which $6,000 is from the periods before their use in a prescribed business activity, you must use the entire $10,000 in determining ordinary income from depreciation. Federal tax forms 1040ez Depreciation allowed or allowable. Federal tax forms 1040ez   The greater of the depreciation allowed or allowable is generally the amount to use in figuring the part of gain to report as ordinary income. Federal tax forms 1040ez However, if in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. Federal tax forms 1040ez If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. Federal tax forms 1040ez   This treatment applies only when figuring what part of gain is treated as ordinary income under the rules for section 1245 depreciation recapture. Federal tax forms 1040ez Multiple asset accounts. Federal tax forms 1040ez   In figuring ordinary income from depreciation, you can treat any number of units of section 1245 property in a single depreciation account as one item if the total ordinary income from depreciation figured by using this method is not less than it would be if depreciation on each unit were figured separately. Federal tax forms 1040ez Example. Federal tax forms 1040ez In one transaction you sold 50 machines, 25 trucks, and certain other property that is not section 1245 property. Federal tax forms 1040ez All of the depreciation was recorded in a single depreciation account. Federal tax forms 1040ez After dividing the total received among the various assets sold, you figured that each unit of section 1245 property was sold at a gain. Federal tax forms 1040ez You can figure the ordinary income from depreciation as if the 50 machines and 25 trucks were one item. Federal tax forms 1040ez However, if five of the trucks had been sold at a loss, only the 50 machines and 20 of the trucks could be treated as one item in determining the ordinary income from depreciation. Federal tax forms 1040ez Normal retirement. Federal tax forms 1040ez   The normal retirement of section 1245 property in multiple asset accounts does not require recognition of gain as ordinary income from depreciation if your method of accounting for asset retirements does not require recognition of that gain. Federal tax forms 1040ez Section 1250 Property Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property. Federal tax forms 1040ez To determine the additional depreciation on section 1250 property, see Additional Depreciation, below. Federal tax forms 1040ez Section 1250 property defined. Federal tax forms 1040ez   This includes all real property that is subject to an allowance for depreciation and that is not and never has been section 1245 property. Federal tax forms 1040ez It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. Federal tax forms 1040ez A fee simple interest in land is not included because it is not depreciable. Federal tax forms 1040ez   If your section 1250 property becomes section 1245 property because you change its use, you can never again treat it as section 1250 property. Federal tax forms 1040ez Additional Depreciation If you hold section 1250 property longer than 1 year, the additional depreciation is the actual depreciation adjustments that are more than the depreciation figured using the straight line method. Federal tax forms 1040ez For a list of items treated as depreciation adjustments, see Depreciation and amortization under Gain Treated as Ordinary Income, earlier. Federal tax forms 1040ez For the treatment of unrecaptured section 1250 gain, see Capital Gains Tax Rate, later. Federal tax forms 1040ez If you hold section 1250 property for 1 year or less, all the depreciation is additional depreciation. Federal tax forms 1040ez You will not have additional depreciation if any of the following conditions apply to the property disposed of. Federal tax forms 1040ez You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method; you held the property longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. Federal tax forms 1040ez In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction for property placed in service before January 1, 2010. Federal tax forms 1040ez The property was residential low-income rental property you held for 162/3 years or longer. Federal tax forms 1040ez For low-income rental housing on which the special 60-month depreciation for rehabilitation expenses was allowed, the 162/3 years start when the rehabilitated property is placed in service. Federal tax forms 1040ez You chose the alternate ACRS method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. Federal tax forms 1040ez The property was residential rental property or nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made); you held it longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. Federal tax forms 1040ez These properties are depreciated using the straight line method. Federal tax forms 1040ez In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction. Federal tax forms 1040ez Depreciation taken by other taxpayers or on other property. Federal tax forms 1040ez   Additional depreciation includes all depreciation adjustments to the basis of section 1250 property whether allowed to you or another person (as carryover basis property). Federal tax forms 1040ez Example. Federal tax forms 1040ez Larry Johnson gives his son section 1250 property on which he took $2,000 in depreciation deductions, of which $500 is additional depreciation. Federal tax forms 1040ez Immediately after the gift, the son's adjusted basis in the property is the same as his father's and reflects the $500 additional depreciation. Federal tax forms 1040ez On January 1 of the next year, after taking depreciation deductions of $1,000 on the property, of which $200 is additional depreciation, the son sells the property. Federal tax forms 1040ez At the time of sale, the additional depreciation is $700 ($500 allowed the father plus $200 allowed the son). Federal tax forms 1040ez Depreciation allowed or allowable. Federal tax forms 1040ez   The greater of depreciation allowed or allowable (to any person who held the property if the depreciation was used in figuring its adjusted basis in your hands) generally is the amount to use in figuring the part of the gain to be reported as ordinary income. Federal tax forms 1040ez If you can show that the deduction allowed for any tax year was less than the amount allowable, the lesser figure will be the depreciation adjustment for figuring additional depreciation. Federal tax forms 1040ez Retired or demolished property. Federal tax forms 1040ez   The adjustments reflected in adjusted basis generally do not include deductions for depreciation on retired or demolished parts of section 1250 property unless these deductions are reflected in the basis of replacement property that is section 1250 property. Federal tax forms 1040ez Example. Federal tax forms 1040ez A wing of your building is totally destroyed by fire. Federal tax forms 1040ez The depreciation adjustments figured in the adjusted basis of the building after the wing is destroyed do not include any deductions for depreciation on the destroyed wing unless it is replaced and the adjustments for depreciation on it are reflected in the basis of the replacement property. Federal tax forms 1040ez Figuring straight line depreciation. Federal tax forms 1040ez   The useful life and salvage value you would have used to figure straight line depreciation are the same as those used under the depreciation method you actually used. Federal tax forms 1040ez If you did not use a useful life under the depreciation method actually used (such as with the units-of-production method) or if you did not take salvage value into account (such as with the declining balance method), the useful life or salvage value for figuring what would have been the straight line depreciation is the useful life and salvage value you would have used under the straight line method. Federal tax forms 1040ez   Salvage value and useful life are not used for the ACRS method of depreciation. Federal tax forms 1040ez Figure straight line depreciation for ACRS real property by using its 15-, 18-, or 19-year recovery period as the property's useful life. Federal tax forms 1040ez   The straight line method is applied without any basis reduction for the investment credit. Federal tax forms 1040ez Property held by lessee. Federal tax forms 1040ez   If a lessee makes a leasehold improvement, the lease period for figuring what would have been the straight line depreciation adjustments includes all renewal periods. Federal tax forms 1040ez This inclusion of the renewal periods cannot extend the lease period taken into account to a period that is longer than the remaining useful life of the improvement. Federal tax forms 1040ez The same rule applies to the cost of acquiring a lease. Federal tax forms 1040ez   The term renewal period means any period for which the lease may be renewed, extended, or continued under an option exercisable by the lessee. Federal tax forms 1040ez However, the inclusion of renewal periods cannot extend the lease by more than two-thirds of the period that was the basis on which the actual depreciation adjustments were allowed. Federal tax forms 1040ez Applicable Percentage The applicable percentage used to figure the ordinary income because of additional depreciation depends on whether the real property you disposed of is nonresidential real property, residential rental property, or low-income housing. Federal tax forms 1040ez The percentages for these types of real property are as follows. Federal tax forms 1040ez Nonresidential real property. Federal tax forms 1040ez   For real property that is not residential rental property, the applicable percentage for periods after 1969 is 100%. Federal tax forms 1040ez For periods before 1970, the percentage is zero and no ordinary income because of additional depreciation before 1970 will result from its disposition. Federal tax forms 1040ez Residential rental property. Federal tax forms 1040ez   For residential rental property (80% or more of the gross income is from dwelling units) other than low-income housing, the applicable percentage for periods after 1975 is 100%. Federal tax forms 1040ez The percentage for periods before 1976 is zero. Federal tax forms 1040ez Therefore, no ordinary income because of additional depreciation before 1976 will result from a disposition of residential rental property. Federal tax forms 1040ez Low-income housing. Federal tax forms 1040ez    Low-income housing includes all the following types of residential rental property. Federal tax forms 1040ez Federally assisted housing projects if the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. Federal tax forms 1040ez Low-income rental housing for which a depreciation deduction for rehabilitation expenses was allowed. Federal tax forms 1040ez Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under provisions of state or local laws that authorize similar subsidies for low-income families. Federal tax forms 1040ez Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. Federal tax forms 1040ez   The applicable percentage for low-income housing is 100% minus 1% for each full month the property was held over 100 full months. Federal tax forms 1040ez If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition. Federal tax forms 1040ez Foreclosure. Federal tax forms 1040ez   If low-income housing is disposed of because of foreclosure or similar proceedings, the monthly applicable percentage reduction is figured as if you disposed of the property on the starting date of the proceedings. Federal tax forms 1040ez Example. Federal tax forms 1040ez On June 1, 2001, you acquired low-income housing property. Federal tax forms 1040ez On April 3, 2012 (130 months after the property was acquired), foreclosure proceedings were started on the property and on December 3, 2013 (150 months after the property was acquired), the property was disposed of as a result of the foreclosure proceedings. Federal tax forms 1040ez The property qualifies for a reduced applicable percentage because it was held more than 100 full months. Federal tax forms 1040ez The applicable percentage reduction is 30% (130 months minus 100 months) rather than 50% (150 months minus 100 months) because it does not apply after April 3, 2012, the starting date of the foreclosure proceedings. Federal tax forms 1040ez Therefore, 70% of the additional depreciation is treated as ordinary income. Federal tax forms 1040ez Holding period. Federal tax forms 1040ez   The holding period used to figure the applicable percentage for low-income housing generally starts on the day after you acquired it. Federal tax forms 1040ez For example, if you bought low-income housing on January 1, 1997, the holding period starts on January 2, 1997. Federal tax forms 1040ez If you sold it on January 2, 2013, the holding period is exactly 192 full months. Federal tax forms 1040ez The applicable percentage for additional depreciation is 8%, or 100% minus 1% for each full month the property was held over 100 full months. Federal tax forms 1040ez Holding period for constructed, reconstructed, or erected property. Federal tax forms 1040ez   The holding period used to figure the applicable percentage for low-income housing you constructed, reconstructed, or erected starts on the first day of the month it is placed in service in a trade or business, in an activity for the production of income, or in a personal activity. Federal tax forms 1040ez Property acquired by gift or received in a tax-free transfer. Federal tax forms 1040ez   For low-income housing you acquired by gift or in a tax-free transfer the basis of which is figured by reference to the basis in the hands of the transferor, the holding period for the applicable percentage includes the holding period of the transferor. Federal tax forms 1040ez   If the adjusted basis of the property in your hands just after acquiring it is more than its adjusted basis to the transferor just before transferring it, the holding period of the difference is figured as if it were a separate improvement. Federal tax forms 1040ez See Low-Income Housing With Two or More Elements, next. Federal tax forms 1040ez Low-Income Housing With Two or More Elements If you dispose of low-income housing property that has two or more separate elements, the applicable percentage used to figure ordinary income because of additional depreciation may be different for each element. Federal tax forms 1040ez The gain to be reported as ordinary income is the sum of the ordinary income figured for each element. Federal tax forms 1040ez The following are the types of separate elements. Federal tax forms 1040ez A separate improvement (defined below). Federal tax forms 1040ez The basic section 1250 property plus improvements not qualifying as separate improvements. Federal tax forms 1040ez The units placed in service at different times before all the section 1250 property is finished. Federal tax forms 1040ez For example, this happens when a taxpayer builds an apartment building of 100 units and places 30 units in service (available for renting) on January 4, 2011, 50 on July 18, 2011, and the remaining 20 on January 18, 2012. Federal tax forms 1040ez As a result, the apartment house consists of three separate elements. Federal tax forms 1040ez The 36-month test for separate improvements. Federal tax forms 1040ez   A separate improvement is any improvement (qualifying under The 1-year test, below) added to the capital account of the property, but only if the total of the improvements during the 36-month period ending on the last day of any tax year is more than the greatest of the following amounts. Federal tax forms 1040ez Twenty-five percent of the adjusted basis of the property at the start of the first day of the 36-month period, or the first day of the holding period of the property, whichever is later. Federal tax forms 1040ez Ten percent of the unadjusted basis (adjusted basis plus depreciation and amortization adjustments) of the property at the start of the period determined in (1). Federal tax forms 1040ez $5,000. Federal tax forms 1040ez The 1-year test. Federal tax forms 1040ez   An addition to the capital account for any tax year (including a short tax year) is treated as an improvement only if the sum of all additions for the year is more than the greater of $2,000 or 1% of the unadjusted basis of the property. Federal tax forms 1040ez The unadjusted basis is figured as of the start of that tax year or the holding period of the property, whichever is later. Federal tax forms 1040ez In applying the 36-month test, improvements in any one of the 3 years are omitted entirely if the total improvements in that year do not qualify under the 1-year test. Federal tax forms 1040ez Example. Federal tax forms 1040ez The unadjusted basis of a calendar year taxpayer's property was $300,000 on January 1 of this year. Federal tax forms 1040ez During the year, the taxpayer made improvements A, B, and C, which cost $1,000, $600, and $700, respectively. Federal tax forms 1040ez The sum of the improvements, $2,300, is less than 1% of the unadjusted basis ($3,000), so the improvements do not satisfy the 1-year test and are not treated as improvements for the 36-month test. Federal tax forms 1040ez However, if improvement C had cost $1,500, the sum of these improvements would have been $3,100. Federal tax forms 1040ez Then, it would be necessary to apply the 36-month test to figure if the improvements must be treated as separate improvements. Federal tax forms 1040ez Addition to the capital account. Federal tax forms 1040ez   Any addition to the capital account made after the initial acquisition or completion of the property by you or any person who held the property during a period included in your holding period is to be considered when figuring the total amount of separate improvements. Federal tax forms 1040ez   The addition to the capital account of depreciable real property is the gross addition not reduced by amounts attributable to replaced property. Federal tax forms 1040ez For example, if a roof with an adjusted basis of $20,000 is replaced by a new roof costing $50,000, the improvement is the gross addition to the account, $50,000, and not the net addition of $30,000. Federal tax forms 1040ez The $20,000 adjusted basis of the old roof is no longer reflected in the basis of the property. Federal tax forms 1040ez The status of an addition to the capital account is not affected by whether it is treated as a separate property for determining depreciation deductions. Federal tax forms 1040ez   Whether an expense is treated as an addition to the capital account may depend on the final disposition of the entire property. Federal tax forms 1040ez If the expense item property and the basic property are sold in two separate transactions, the entire section 1250 property is treated as consisting of two distinct properties. Federal tax forms 1040ez Unadjusted basis. Federal tax forms 1040ez   In figuring the unadjusted basis as of a certain date, include the actual cost of all previous additions to the capital account plus those that did not qualify as separate improvements. Federal tax forms 1040ez However, the cost of components retired before that date is not included in the unadjusted basis. Federal tax forms 1040ez Holding period. Federal tax forms 1040ez   Use the following guidelines for figuring the applicable percentage for property with two or more elements. Federal tax forms 1040ez The holding period of a separate element placed in service before the entire section 1250 property is finished starts on the first day of the month that the separate element is placed in service. Federal tax forms 1040ez The holding period for each separate improvement qualifying as a separate element starts on the day after the improvement is acquired or, for improvements constructed, reconstructed, or erected, the first day of the month that the improvement is placed in service. Federal tax forms 1040ez The holding period for each improvement not qualifying as a separate element takes the holding period of the basic property. Federal tax forms 1040ez   If an improvement by itself does not meet the 1-year test (greater of $2,000 or 1% of the unadjusted basis), but it does qualify as a separate improvement that is a separate element (when grouped with other improvements made during the tax year), determine the start of its holding period as follows. Federal tax forms 1040ez Use the first day of a calendar month that is closest to the middle of the tax year. Federal tax forms 1040ez If there are two first days of a month that are equally close to the middle of the year, use the earlier date. Federal tax forms 1040ez Figuring ordinary income attributable to each separate element. Federal tax forms 1040ez   Figure ordinary income attributable to each separate element as follows. Federal tax forms 1040ez   Step 1. Federal tax forms 1040ez Divide the element's additional depreciation after 1975 by the sum of all the elements' additional depreciation after 1975 to determine the percentage used in Step 2. Federal tax forms 1040ez   Step 2. Federal tax forms 1040ez Multiply the percentage figured in Step 1 by the lesser of the additional depreciation after 1975 for the entire property or the gain from disposition of the entire property (the difference between the fair market value or amount realized and the adjusted basis). Federal tax forms 1040ez   Step 3. Federal tax forms 1040ez Multiply the result in Step 2 by the applicable percentage for the element. Federal tax forms 1040ez Example. Federal tax forms 1040ez You sold at a gain of $25,000 low-income housing property subject to the ordinary income rules of section 1250. Federal tax forms 1040ez The property consisted of four elements (W, X, Y, and Z). Federal tax forms 1040ez Step 1. Federal tax forms 1040ez The additional depreciation for each element is: W-$12,000; X-None; Y-$6,000; and Z-$6,000. Federal tax forms 1040ez The sum of the additional depreciation for all the elements is $24,000. Federal tax forms 1040ez Step 2. Federal tax forms 1040ez The depreciation deducted on element X was $4,000 less than it would have been under the straight line method. Federal tax forms 1040ez Additional depreciation on the property as a whole is $20,000 ($24,000 − $4,000). Federal tax forms 1040ez $20,000 is lower than the $25,000 gain on the sale, so $20,000 is used in Step 2. Federal tax forms 1040ez Step 3. Federal tax forms 1040ez The applicable percentages to be used in Step 3 for the elements are: W-68%; X-85%; Y-92%; and Z-100%. Federal tax forms 1040ez From these facts, the sum of the ordinary income for each element is figured as follows. Federal tax forms 1040ez   Step 1 Step 2 Step 3 Ordinary Income W . Federal tax forms 1040ez 50 $10,000 68% $ 6,800 X -0- -0- 85% -0- Y . Federal tax forms 1040ez 25 5,000 92% 4,600 Z . Federal tax forms 1040ez 25 5,000 100% 5,000 Sum of ordinary income of separate elements $16,400 Gain Treated as Ordinary Income To find what part of the gain from the disposition of section 1250 property is treated as ordinary income, follow these steps. Federal tax forms 1040ez In a sale, exchange, or involuntary conversion of the property, figure the amount realized that is more than the adjusted basis of the property. Federal tax forms 1040ez In any other disposition of the property, figure the fair market value that is more than the adjusted basis. Federal tax forms 1040ez Figure the additional depreciation for the periods after 1975. Federal tax forms 1040ez Multiply the lesser of (1) or (2) by the applicable percentage, discussed earlier under Applicable Percentage. Federal tax forms 1040ez Stop here if this is residential rental property or if (2) is equal to or more than (1). Federal tax forms 1040ez This is the gain treated as ordinary income because of additional depreciation. Federal tax forms 1040ez Subtract (2) from (1). Federal tax forms 1040ez Figure the additional depreciation for periods after 1969 but before 1976. Federal tax forms 1040ez Add the lesser of (4) or (5) to the result in (3). Federal tax forms 1040ez This is the gain treated as ordinary income because of additional depreciation. Federal tax forms 1040ez A limit on the amount treated as ordinary income for gain on like-kind exchanges and involuntary conversions is explained later. Federal tax forms 1040ez Use Form 4797, Part III, to figure the ordinary income part of the gain. Federal tax forms 1040ez Corporations. Federal tax forms 1040ez   Corporations, other than S corporations, must recognize an additional amount as ordinary income on the sale or other disposition of section 1250 property. Federal tax forms 1040ez The additional amount treated as ordinary income is 20% of the excess of the amount that would have been ordinary income if the property were section 1245 property over the amount treated as ordinary income under section 1250. Federal tax forms 1040ez Report this additional ordinary income on Form 4797, Part III, line 26 (f). Federal tax forms 1040ez Installment Sales If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. Federal tax forms 1040ez This applies even if no payments are received in that year. Federal tax forms 1040ez If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. Federal tax forms 1040ez For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. Federal tax forms 1040ez If you dispose of more than one asset in a single transaction, you must figure the gain on each asset separately so that it may be properly reported. Federal tax forms 1040ez To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Federal tax forms 1040ez Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. Federal tax forms 1040ez For a detailed discussion of installment sales, see Publication 537. Federal tax forms 1040ez Gifts If you make a gift of depreciable personal property or real property, you do not have to report income on the transaction. Federal tax forms 1040ez However, if the person who receives it (donee) sells or otherwise disposes of the property in a disposition subject to recapture, the donee must take into account the depreciation you deducted in figuring the gain to be reported as ordinary income. Federal tax forms 1040ez For low-income housing, the donee must take into account the donor's holding period to figure the applicable percentage. Federal tax forms 1040ez See Applicable Percentage and its discussion Holding period under Section 1250 Property, earlier. Federal tax forms 1040ez Part gift and part sale or exchange. Federal tax forms 1040ez   If you transfer depreciable personal property or real property for less than its fair market value in a transaction considered to be partly a gift and partly a sale or exchange and you have a gain because the amount realized is more than your adjusted basis, you must report ordinary income (up to the amount of gain) to recapture depreciation. Federal tax forms 1040ez If the depreciation (additional depreciation, if section 1250 property) is more than the gain, the balance is carried over to the transferee to be taken into account on any later disposition of the property. Federal tax forms 1040ez However, see Bargain sale to charity, later. Federal tax forms 1040ez Example. Federal tax forms 1040ez You transferred depreciable personal property to your son for $20,000. Federal tax forms 1040ez When transferred, the property had an adjusted basis to you of $10,000 and a fair market value of $40,000. Federal tax forms 1040ez You took depreciation of $30,000. Federal tax forms 1040ez You are considered to have made a gift of $20,000, the difference between the $40,000 fair market value and the $20,000 sale price to your son. Federal tax forms 1040ez You have a taxable gain on the transfer of $10,000 ($20,000 sale price minus $10,000 adjusted basis) that must be reported as ordinary income from depreciation. Federal tax forms 1040ez You report $10,000 of your $30,000 depreciation as ordinary income on the transfer of the property, so the remaining $20,000 depreciation is carried over to your son for him to take into account on any later disposition of the property. Federal tax forms 1040ez Gift to charitable organization. Federal tax forms 1040ez   If you give property to a charitable organization, you figure your deduction for your charitable contribution by reducing the fair market value of the property by the ordinary income and short-term capital gain that would have resulted had you sold the property at its fair market value at the time of the contribution. Federal tax forms 1040ez Thus, your deduction for depreciable real or personal property given to a charitable organization does not include the potential ordinary gain from depreciation. Federal tax forms 1040ez   You also may have to reduce the fair market value of the contributed property by the long-term capital gain (including any section 1231 gain) that would have resulted had the property been sold. Federal tax forms 1040ez For more information, see Giving Property That Has Increased in Value in Publication 526. Federal tax forms 1040ez Bargain sale to charity. Federal tax forms 1040ez   If you transfer section 1245 or section 1250 property to a charitable organization for less than its fair market value and a deduction for the contribution part of the transfer is allowable, your ordinary income from depreciation is figured under different rules. Federal tax forms 1040ez First, figure the ordinary income as if you had sold the property at its fair market value. Federal tax forms 1040ez Then, allocate that amount between the sale and the contribution parts of the transfer in the same proportion that you allocated your adjusted basis in the property to figure your gain. Federal tax forms 1040ez See Bargain Sale under Gain or Loss From Sales and Exchanges in chapter 1. Federal tax forms 1040ez Report as ordinary income the lesser of the ordinary income allocated to the sale or your gain from the sale. Federal tax forms 1040ez Example. Federal tax forms 1040ez You sold section 1245 property in a bargain sale to a charitable organization and are allowed a deduction for your contribution. Federal tax forms 1040ez Your gain on the sale was $1,200, figured by allocating 20% of your adjusted basis in the property to the part sold. Federal tax forms 1040ez If you had sold the property at its fair market value, your ordinary income would have been $5,000. Federal tax forms 1040ez Your ordinary income is $1,000 ($5,000 × 20%) and your section 1231 gain is $200 ($1,200 – $1,000). Federal tax forms 1040ez Transfers at Death When a taxpayer dies, no gain is reported on depreciable personal property or real property transferred to his or her estate or beneficiary. Federal tax forms 1040ez For information on the tax liability of a decedent, see Publication 559, Survivors, Executors, and Administrators. Federal tax forms 1040ez However, if the decedent disposed of the property while alive and, because of his or her method of accounting or for any other reason, the gain from the disposition is reportable by the estate or beneficiary, it must be reported in the same way the decedent would have had to report it if he or she were still alive. Federal tax forms 1040ez Ordinary income due to depreciation must be reported on a transfer from an executor, administrator, or trustee to an heir, beneficiary, or other individual if the transfer is a sale or exchange on which gain is realized. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez Janet Smith owned depreciable property that, upon her death, was inherited by her son. Federal tax forms 1040ez No ordinary income from depreciation is reportable on the transfer, even though the value used for estate tax purposes is more than the adjusted basis of the property to Janet when she died. Federal tax forms 1040ez However, if she sold the property before her death and realized a gain and if, because of her method of accounting, the proceeds from the sale are income in respect of a decedent reportable by her son, he must report ordinary income from depreciation. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez The trustee of a trust created by a will transfers depreciable property to a beneficiary in satisfaction of a specific bequest of $10,000. Federal tax forms 1040ez If the property had a value of $9,000 at the date used for estate tax valuation purposes, the $1,000 increase in value to the date of distribution is a gain realized by the trust. Federal tax forms 1040ez Ordinary income from depreciation must be reported by the trust on the transfer. Federal tax forms 1040ez Like-Kind Exchanges and Involuntary Conversions A like-kind exchange of your depreciable property or an involuntary conversion of the property into similar or related property will not result in your having to report ordinary income from depreciation unless money or property other than like-kind, similar, or related property is also received in the transaction. Federal tax forms 1040ez For information on like-kind exchanges and involuntary conversions, see chapter 1. Federal tax forms 1040ez Depreciable personal property. Federal tax forms 1040ez   If you have a gain from either a like-kind exchange or an involuntary conversion of your depreciable personal property, the amount to be reported as ordinary income from depreciation is the amount figured under the rules explained earlier (see Section 1245 Property), limited to the sum of the following amounts. Federal tax forms 1040ez The gain that must be included in income under the rules for like-kind exchanges or involuntary conversions. Federal tax forms 1040ez The fair market value of the like-kind, similar, or related property other than depreciable personal property acquired in the transaction. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez You bought a new machine for $4,300 cash plus your old machine for which you were allowed a $1,360 trade-in. Federal tax forms 1040ez The old machine cost you $5,000 two years ago. Federal tax forms 1040ez You took depreciation deductions of $3,950. Federal tax forms 1040ez Even though you deducted depreciation of $3,950, the $310 gain ($1,360 trade-in allowance minus $1,050 adjusted basis) is not reported because it is postponed under the rules for like-kind exchanges and you received only depreciable personal property in the exchange. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez You bought office machinery for $1,500 two years ago and deducted $780 depreciation. Federal tax forms 1040ez This year a fire destroyed the machinery and you received $1,200 from your fire insurance, realizing a gain of $480 ($1,200 − $720 adjusted basis). Federal tax forms 1040ez You choose to postpone reporting gain, but replacement machinery cost you only $1,000. Federal tax forms 1040ez Your taxable gain under the rules for involuntary conversions is limited to the remaining $200 insurance payment. Federal tax forms 1040ez All your replacement property is depreciable personal property, so your ordinary income from depreciation is limited to $200. Federal tax forms 1040ez Example 3. Federal tax forms 1040ez A fire destroyed office machinery you bought for $116,000. Federal tax forms 1040ez The depreciation deductions were $91,640 and the machinery had an adjusted basis of $24,360. Federal tax forms 1040ez You received a $117,000 insurance payment, realizing a gain of $92,640. Federal tax forms 1040ez You immediately spent $105,000 of the insurance payment for replacement machinery and $9,000 for stock that qualifies as replacement property and you choose to postpone reporting the gain. Federal tax forms 1040ez $114,000 of the $117,000 insurance payment was used to buy replacement property, so the gain that must be included in income under the rules for involuntary conversions is the part not spent, or $3,000. Federal tax forms 1040ez The part of the insurance payment ($9,000) used to buy the nondepreciable property (the stock) also must be included in figuring the gain from depreciation. Federal tax forms 1040ez The amount you must report as ordinary income on the transaction is $12,000, figured as follows. Federal tax forms 1040ez 1) Gain realized on the transaction ($92,640) limited to depreciation ($91,640) $91,640 2) Gain includible in income (amount not spent) 3,000     Plus: fair market value of property other than depreciable personal property (the stock) 9,000 12,000 Amount reportable as ordinary income (lesser of (1) or (2)) $12,000   If, instead of buying $9,000 in stock, you bought $9,000 worth of depreciable personal property similar or related in use to the destroyed property, you would only report $3,000 as ordinary income. Federal tax forms 1040ez Depreciable real property. Federal tax forms 1040ez   If you have a gain from either a like-kind exchange or involuntary conversion of your depreciable real property, ordinary income from additional depreciation is figured under the rules explained earlier (see Section 1250 Property), limited to the greater of the following amounts. Federal tax forms 1040ez The gain that must be reported under the rules for like-kind exchanges or involuntary conversions plus the fair market value of stock bought as replacement property in acquiring control of a corporation. Federal tax forms 1040ez The gain you would have had to report as ordinary income from additional depreciation had the transaction been a cash sale minus the cost (or fair market value in an exchange) of the depreciable real property acquired. Federal tax forms 1040ez   The ordinary income not reported for the year of the disposition is carried over to the depreciable real property acquired in the like-kind exchange or involuntary conversion as additional depreciation from the property disposed of. Federal tax forms 1040ez Further, to figure the applicable percentage of additional depreciation to be treated as ordinary income, the holding period starts over for the new property. Federal tax forms 1040ez Example. Federal tax forms 1040ez The state paid you $116,000 when it condemned your depreciable real property for public use. Federal tax forms 1040ez You bought other real property similar in use to the property condemned for $110,000 ($15,000 for depreciable real property and $95,000 for land). Federal tax forms 1040ez You also bought stock for $5,000 to get control of a corporation owning property similar in use to the property condemned. Federal tax forms 1040ez You choose to postpone reporting the gain. Federal tax forms 1040ez If the transaction had been a sale for cash only, under the rules described earlier, $20,000 would have been reportable as ordinary income because of additional depreciation. Federal tax forms 1040ez The ordinary income to be reported is $6,000, which is the greater of the following amounts. Federal tax forms 1040ez The gain that must be reported under the rules for involuntary conversions, $1,000 ($116,000 − $115,000) plus the fair market value of stock bought as qualified replacement property, $5,000, for a total of $6,000. Federal tax forms 1040ez The gain you would have had to report as ordinary income from additional depreciation ($20,000) had this transaction been a cash sale minus the cost of the depreciable real property bought ($15,000), or $5,000. Federal tax forms 1040ez   The ordinary income not reported, $14,000 ($20,000 − $6,000), is carried over to the depreciable real property you bought as additional depreciation. Federal tax forms 1040ez Basis of property acquired. Federal tax forms 1040ez   If the ordinary income you have to report because of additional depreciation is limited, the total basis of the property you acquired is its fair market value (its cost, if bought to replace property involuntarily converted into money) minus the gain postponed. Federal tax forms 1040ez   If you acquired more than one item of property, allocate the total basis among the properties in proportion to their fair market value (their cost, in an involuntary conversion into money). Federal tax forms 1040ez However, if you acquired both depreciable real property and other property, allocate the total basis as follows. Federal tax forms 1040ez Subtract the ordinary income because of additional depreciation that you do not have to report from the fair market value (or cost) of the depreciable real property acquired. Federal tax forms 1040ez Add the fair market value (or cost) of the other property acquired to the result in (1). Federal tax forms 1040ez Divide the result in (1) by the result in (2). Federal tax forms 1040ez Multiply the total basis by the result in (3). Federal tax forms 1040ez This is the basis of the depreciable real property acquired. Federal tax forms 1040ez If you acquired more than one item of depreciable real property, allocate this basis amount among the properties in proportion to their fair market value (or cost). Federal tax forms 1040ez Subtract the result in (4) from the total basis. Federal tax forms 1040ez This is the basis of the other property acquired. Federal tax forms 1040ez If you acquired more than one item of other property, allocate this basis amount among the properties in proportion to their fair market value (or cost). Federal tax forms 1040ez Example 1. Federal tax forms 1040ez In 1988, low-income housing property that you acquired and placed in service in 1983 was destroyed by fire and you received a $90,000 insurance payment. Federal tax forms 1040ez The property's adjusted basis was $38,400, with additional depreciation of $14,932. Federal tax forms 1040ez On December 1, 1988, you used the insurance payment to acquire and place in service replacement low-income housing property. Federal tax forms 1040ez Your realized gain from the involuntary conversion was $51,600 ($90,000 − $38,400). Federal tax forms 1040ez You chose to postpone reporting the gain under the involuntary conversion rules. Federal tax forms 1040ez Under the rules for depreciation recapture on real property, the ordinary gain was $14,932, but you did not have to report any of it because of the limit for involuntary conversions. Federal tax forms 1040ez The basis of the replacement low-income housing property was its $90,000 cost minus the $51,600 gain you postponed, or $38,400. Federal tax forms 1040ez The $14,932 ordinary gain you did not report is treated as additional depreciation on the replacement property. Federal tax forms 1040ez If you sold the property in 2013, your holding period for figuring the applicable percentage of additional depreciation to report as ordinary income will have begun December 2, 1988, the day after you acquired the property. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez John Adams received a $90,000 fire insurance payment for depreciable real property (office building) with an adjusted basis of $30,000. Federal tax forms 1040ez He uses the whole payment to buy property similar in use, spending $42,000 for depreciable real property and $48,000 for land. Federal tax forms 1040ez He chooses to postpone reporting the $60,000 gain realized on the involuntary conversion. Federal tax forms 1040ez Of this gain, $10,000 is ordinary income from additional depreciation but is not reported because of the limit for involuntary conversions of depreciable real property. Federal tax forms 1040ez The basis of the property bought is $30,000 ($90,000 − $60,000), allocated as follows. Federal tax forms 1040ez The $42,000 cost of depreciable real property minus $10,000 ordinary income not reported is $32,000. Federal tax forms 1040ez The $48,000 cost of other property (land) plus the $32,000 figured in (1) is $80,000. Federal tax forms 1040ez The $32,000 figured in (1) divided by the $80,000 figured in (2) is 0. Federal tax forms 1040ez 4. Federal tax forms 1040ez The basis of the depreciable real property is $12,000. Federal tax forms 1040ez This is the $30,000 total basis multiplied by the 0. Federal tax forms 1040ez 4 figured in (3). Federal tax forms 1040ez The basis of the other property (land) is $18,000. Federal tax forms 1040ez This is the $30,000 total basis minus the $12,000 figured in (4). Federal tax forms 1040ez The ordinary income that is not reported ($10,000) is carried over as additional depreciation to the depreciable real property that was bought and may be taxed as ordinary income on a later disposition. Federal tax forms 1040ez Multiple Properties If you dispose of depreciable property and other property in one transaction and realize a gain, you must allocate the amount realized between the two types of property in proportion to their respective fair market values to figure the part of your gain to be reported as ordinary income from depreciation. Federal tax forms 1040ez Different rules may apply to the allocation of the amount realized on the sale of a business that includes a group of assets. Federal tax forms 1040ez See chapter 2. Federal tax forms 1040ez In general, if a buyer and seller have adverse interests as to the allocation of the amount realized between the depreciable property and other property, any arm's length agreement between them will establish the allocation. Federal tax forms 1040ez In the absence of an agreement, the allocation should be made by taking into account the appropriate facts and circumstances. Federal tax forms 1040ez These include, but are not limited to, a comparison between the depreciable property and all the other property being disposed of in the transaction. Federal tax forms 1040ez The comparison should take into account all the following facts and circumstances. Federal tax forms 1040ez The original cost and reproduction cost of construction, erection, or production. Federal tax forms 1040ez The remaining economic useful life. Federal tax forms 1040ez The state of obsolescence. Federal tax forms 1040ez The anticipated expenditures required to maintain, renovate, or modernize the properties. Federal tax forms 1040ez Like-kind exchanges and involuntary conversions. Federal tax forms 1040ez   If you dispose of and acquire depreciable personal property and other property (other than depreciable real property) in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. Federal tax forms 1040ez The amount allocated to the depreciable personal property disposed of is treated as consisting of, first, the fair market value of the depreciable personal property acquired and, second (to the extent of any remaining balance), the fair market value of the other property acquired. Federal tax forms 1040ez The amount allocated to the other property disposed of is treated as consisting of the fair market value of all property acquired that has not already been taken into account. Federal tax forms 1040ez   If you dispose of and acquire depreciable real property and other property in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. Federal tax forms 1040ez The amount allocated to each of the three types of property (depreciable real property, depreciable personal property, or other property) disposed of is treated as consisting of, first, the fair market value of that type of property acquired and, second (to the extent of any remaining balance), any excess fair market value of the other types of property acquired. Federal tax forms 1040ez If the excess fair market value is more than the remaining balance of the amount realized and is from both of the other two types of property, you can apply the unallocated amount in any manner you choose. Federal tax forms 1040ez Example. Federal tax forms 1040ez A fire destroyed your property with a total fair market value of $50,000. Federal tax forms 1040ez It consisted of machinery worth $30,000 and nondepreciable property worth $20,000. Federal tax forms 1040ez You received an insurance payment of $40,000 and immediately used it with $10,000 of your own funds (for a total of $50,000) to buy machinery with a fair market value of $15,000 and nondepreciable property with a fair market value of $35,000. Federal tax forms 1040ez The adjusted basis of the destroyed machinery was $5,000 and your depreciation on it was $35,000. Federal tax forms 1040ez You choose to postpone reporting your gain from the involuntary conversion. Federal tax forms 1040ez You must report $9,000 as ordinary income from depreciation arising from this transaction, figured as follows. Federal tax forms 1040ez The $40,000 insurance payment must be allocated between the machinery and the other property destroyed in proportion to the fair market value of each. Federal tax forms 1040ez The amount allocated to the machinery is 30,000/50,000 × $40,000, or $24,000. Federal tax forms 1040ez The amount allocated to the other property is 20,000/50,000 × $40,000, or $16,000. Federal tax forms 1040ez Your gain on the involuntary conversion of the machinery is $24,000 minus $5,000 adjusted basis, or $19,000. Federal tax forms 1040ez The $24,000 allocated to the machinery disposed of is treated as consisting of the $15,000 fair market value of the replacement machinery bought and $9,000 of the fair market value of other property bought in the transaction. Federal tax forms 1040ez All $16,000 allocated to the other property disposed of is treated as consisting of the fair market value of the other property that was bought. Federal tax forms 1040ez Your potential ordinary income from depreciation is $19,000, the gain on the machinery, because it is less than the $35,000 depreciation. Federal tax forms 1040ez However, the amount you must report as ordinary income is limited to the $9,000 included in the amount realized for the machinery that represents the fair market value of property other than the depreciable property you bought. Federal tax forms 1040ez Prev  Up  Next   Home   More Online Publications
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The Federal Tax Forms 1040ez

Federal tax forms 1040ez Publication 503 - Main Content Table of Contents Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. Federal tax forms 1040ez Employment Taxes for Household Employers How To Get Tax HelpLow Income Taxpayer Clinics Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests. Federal tax forms 1040ez The care must be for one or more qualifying persons who are identified on Form 2441. Federal tax forms 1040ez (See Qualifying Person Test. Federal tax forms 1040ez ) You (and your spouse if filing jointly) must have earned income during the year. Federal tax forms 1040ez (However, see Rule for student-spouse or spouse not able to care for self under Earned Income Test, later. Federal tax forms 1040ez ) You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. Federal tax forms 1040ez (See Work-Related Expense Test, later. Federal tax forms 1040ez ) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. Federal tax forms 1040ez If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. Federal tax forms 1040ez You cannot make payments to: Your spouse, or The parent of your qualifying person if your qualifying person is your child and under age 13. Federal tax forms 1040ez See Payments to Relatives or Dependents under Work-Related Expense Test, later. Federal tax forms 1040ez Your filing status may be single, head of household, or qualifying widow(er) with dependent child. Federal tax forms 1040ez If you are married, you must file a joint return, unless an exception applies to you. Federal tax forms 1040ez See Joint Return Test, later. Federal tax forms 1040ez You must identify the care provider on your tax return. Federal tax forms 1040ez (See Provider Identification Test, later. Federal tax forms 1040ez ) If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). Federal tax forms 1040ez (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. Federal tax forms 1040ez See Reduced Dollar Limit under How To Figure the Credit, later. Federal tax forms 1040ez ) These tests are presented in Figure A and are also explained in detail in this publication. Federal tax forms 1040ez Qualifying Person Test Your child and dependent care expenses must be for the care of one or more qualifying persons. Federal tax forms 1040ez A qualifying person is: Your qualifying child who is your dependent and who was under age 13 when the care was provided (but see Child of divorced or separated parents or parents living apart , later), Your spouse who was not physically or mentally able to care for himself or herself and lived with you for more than half the year, or A person who was not physically or mentally able to care for himself or herself, lived with you for more than half the year, and either: Was your dependent, or Would have been your dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Federal tax forms 1040ez Dependent defined. Federal tax forms 1040ez   A dependent is a person, other than you or your spouse, for whom you can claim an exemption. Federal tax forms 1040ez To be your dependent, a person must be your qualifying child (or your qualifying relative). Federal tax forms 1040ez Qualifying child. Federal tax forms 1040ez   To be your qualifying child, a child must live with you for more than half the year and meet other requirements. Federal tax forms 1040ez More information. Federal tax forms 1040ez   For more information about who is a dependent or a qualifying child, see Publication 501. Federal tax forms 1040ez Physically or mentally not able to care for oneself. Federal tax forms 1040ez   Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves. Federal tax forms 1040ez Also, persons who must have constant attention to prevent them from injuring themselves or others are considered not able to care for themselves. Federal tax forms 1040ez Person qualifying for part of year. Federal tax forms 1040ez   You determine a person's qualifying status each day. Federal tax forms 1040ez For example, if the person for whom you pay child and dependent care expenses no longer qualifies on September 16, count only those expenses through September 15. Federal tax forms 1040ez Also see Yearly limit under Dollar Limit, later. Federal tax forms 1040ez Birth or death of otherwise qualifying person. Federal tax forms 1040ez   In determining whether a person is a qualifying person, a person who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the person's home more than half the time he or she was alive in 2013. Federal tax forms 1040ez Taxpayer identification number. Federal tax forms 1040ez   You must include on your return the name and taxpayer identification number (generally the social security number) of the qualifying person(s). Federal tax forms 1040ez If the correct information is not shown, the credit may be reduced or disallowed. Federal tax forms 1040ez Individual taxpayer identification number (ITIN) for aliens. Federal tax forms 1040ez   If your qualifying person is a nonresident or resident alien who does not have and cannot get a social security number (SSN), use that person's ITIN. Federal tax forms 1040ez The ITIN is entered wherever an SSN is requested on a tax return. Federal tax forms 1040ez If the alien does not have an ITIN, he or she must apply for one. Federal tax forms 1040ez See Form W-7, Application for IRS Individual Taxpayer Identification Number, for details. Federal tax forms 1040ez   An ITIN is for tax use only. Federal tax forms 1040ez It does not entitle the holder to social security benefits or change the holder's employment or immigration status under U. Federal tax forms 1040ez S. Federal tax forms 1040ez law. Federal tax forms 1040ez Adoption taxpayer identification number (ATIN). Federal tax forms 1040ez   If your qualifying person is a child who was placed in your home for adoption and for whom you do not have an SSN, you must get an ATIN for the child. Federal tax forms 1040ez File Form W-7A, Application for Taxpayer Identification Number for Pending U. Federal tax forms 1040ez S. Federal tax forms 1040ez Adoptions. Federal tax forms 1040ez Child of divorced or separated parents or parents living apart. Federal tax forms 1040ez   Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if: The child was under age 13 or was not physically or mentally able to care for himself or herself, The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year, The child was in the custody of one or both parents for more than half the year, and You were the child's custodial parent. Federal tax forms 1040ez   The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. Federal tax forms 1040ez If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. Federal tax forms 1040ez For details and an exception for a parent who works at night, see Publication 501. Federal tax forms 1040ez   The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. Federal tax forms 1040ez Please click here for the text description of the image. Federal tax forms 1040ez Figure a. Federal tax forms 1040ez Can you claim the credit Earned Income Test To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Federal tax forms 1040ez Earned income. Federal tax forms 1040ez   Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. Federal tax forms 1040ez A net loss from self-employment reduces earned income. Federal tax forms 1040ez Earned income also includes strike benefits and any disability pay you report as wages. Federal tax forms 1040ez   Generally, only taxable compensation is included. Federal tax forms 1040ez However, you can elect to include nontaxable combat pay in earned income. Federal tax forms 1040ez If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Federal tax forms 1040ez (In other words, if one of you makes the election, the other one can also make it but does not have to. Federal tax forms 1040ez ) Including this income will give you a larger credit only if your (or your spouse's) other earned income is less than the amount entered on line 3 of Form 2441. Federal tax forms 1040ez You should figure your credit both ways and make the election if it gives you a greater tax benefit. Federal tax forms 1040ez    You can choose to include your nontaxable combat pay in earned income when figuring your credit for child and dependent care expenses, even if you choose not to include it in earned income for the earned income credit or the exclusion or deduction for dependent care benefits. Federal tax forms 1040ez Members of certain religious faiths opposed to social security. Federal tax forms 1040ez   This section is for persons who are members of certain religious faiths that are opposed to participation in Social Security Act programs and have an IRS-approved form that exempts certain income from social security and Medicare taxes. Federal tax forms 1040ez These forms are: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, and Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, for use by members of recognized religious groups. Federal tax forms 1040ez   Each form is discussed here in terms of what is or is not earned income for purposes of the child and dependent care credit. Federal tax forms 1040ez For information on the use of these forms, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. Federal tax forms 1040ez Form 4361. Federal tax forms 1040ez   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee are earned income. Federal tax forms 1040ez This includes wages, salaries, tips, and other taxable employee compensation. Federal tax forms 1040ez   However, amounts you received for ministerial duties, but not as an employee, do not count as earned income. Federal tax forms 1040ez Examples include fees for performing marriages and honoraria for delivering speeches. Federal tax forms 1040ez   Any amount you received for work that is not related to your ministerial duties is earned income. Federal tax forms 1040ez Form 4029. Federal tax forms 1040ez   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation are earned income. Federal tax forms 1040ez   However, amounts you received as a self-employed individual do not count as earned income. Federal tax forms 1040ez What is not earned income?   Earned income does not include: Pensions and annuities, Social security and railroad retirement benefits, Workers' compensation, Interest and dividends, Unemployment compensation, Scholarships or fellowship grants, except for those reported on Form W-2 and paid to you for teaching or other services, Nontaxable workfare payments, Child support payments received, Income of a nonresident alien that is not effectively connected with a U. Federal tax forms 1040ez S. Federal tax forms 1040ez trade or business, or Any amount received for work while an inmate in a penal institution. Federal tax forms 1040ez Rule for student-spouse or spouse not able to care for self. Federal tax forms 1040ez   Your spouse is treated as having earned income for any month that he or she is: A full-time student, or Physically or mentally not able to care for himself or herself. Federal tax forms 1040ez (Your spouse also must live with you for more than half the year. Federal tax forms 1040ez )   If you are filing a joint return, this rule also applies to you. Federal tax forms 1040ez You can be treated as having earned income for any month you are a full-time student or not able to care for yourself. Federal tax forms 1040ez   Figure the earned income of the nonworking spouse, described under (1) or (2) above, as shown under Earned Income Limit under How To Figure the Credit, later. Federal tax forms 1040ez   This rule applies to only one spouse for any one month. Federal tax forms 1040ez If, in the same month, both you and your spouse do not work and are either full-time students or not physically or mentally able to care for yourselves, only one of you can be treated as having earned income in that month. Federal tax forms 1040ez Full-time student. Federal tax forms 1040ez    You are a full-time student if you are enrolled at a school for the number of hours or classes that the school considers full time. Federal tax forms 1040ez You must have been a full-time student for some part of each of 5 calendar months during the year. Federal tax forms 1040ez (The months need not be consecutive. Federal tax forms 1040ez ) School. Federal tax forms 1040ez   The term “school” includes high schools, colleges, universities, and technical, trade, and mechanical schools. Federal tax forms 1040ez A school does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Federal tax forms 1040ez Work-Related Expense Test Child and dependent care expenses must be work-related to qualify for the credit. Federal tax forms 1040ez Expenses are considered work-related only if both of the following are true. Federal tax forms 1040ez They allow you (and your spouse if filing jointly) to work or look for work. Federal tax forms 1040ez They are for a qualifying person's care. Federal tax forms 1040ez Working or Looking for Work To be work-related, your expenses must allow you to work or look for work. Federal tax forms 1040ez If you are married, generally both you and your spouse must work or look for work. Federal tax forms 1040ez One spouse is treated as working during any month he or she is a full-time student or is not physically or mentally able to care for himself or herself. Federal tax forms 1040ez Your work can be for others or in your own business or partnership. Federal tax forms 1040ez It can be either full time or part time. Federal tax forms 1040ez Work also includes actively looking for work. Federal tax forms 1040ez However, if you do not find a job and have no earned income for the year, you cannot take this credit. Federal tax forms 1040ez See Earned Income Test, earlier. Federal tax forms 1040ez An expense is not considered work-related merely because you had it while you were working. Federal tax forms 1040ez The purpose of the expense must be to allow you to work. Federal tax forms 1040ez Whether your expenses allow you to work or look for work depends on the facts. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez The cost of a babysitter while you and your spouse go out to eat is not normally a work-related expense. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez You work during the day. Federal tax forms 1040ez Your spouse works at night and sleeps during the day. Federal tax forms 1040ez You pay for care of your 5-year-old child during the hours when you are working and your spouse is sleeping. Federal tax forms 1040ez Your expenses are considered work-related. Federal tax forms 1040ez Volunteer work. Federal tax forms 1040ez   For this purpose, you are not considered to be working if you do unpaid volunteer work or volunteer work for a nominal salary. Federal tax forms 1040ez Work for part of year. Federal tax forms 1040ez   If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. Federal tax forms 1040ez For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. Federal tax forms 1040ez However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (2½ months × $250). Federal tax forms 1040ez Temporary absence from work. Federal tax forms 1040ez   You do not have to figure your expenses for each day during a short, temporary absence from work, such as for vacation or a minor illness, if you have to pay for care anyway. Federal tax forms 1040ez Instead, you can figure your credit including the expenses you paid for the period of absence. Federal tax forms 1040ez   An absence of 2 weeks or less is a short, temporary absence. Federal tax forms 1040ez An absence of more than 2 weeks may be considered a short, temporary absence, depending on the circumstances. Federal tax forms 1040ez Example. Federal tax forms 1040ez You pay a nanny to care for your 2-year-old son and 4-year-old daughter so you can work. Federal tax forms 1040ez You become ill and miss 4 months of work but receive sick pay. Federal tax forms 1040ez You continue to pay the nanny to care for the children while you are ill. Federal tax forms 1040ez Your absence is not a short, temporary absence, and your expenses are not considered work-related. Federal tax forms 1040ez Part-time work. Federal tax forms 1040ez   If you work part-time, you generally must figure your expenses for each day. Federal tax forms 1040ez However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Federal tax forms 1040ez Any day when you work at least 1 hour is a day of work. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez You work 3 days a week. Federal tax forms 1040ez While you work, your 6-year-old child attends a dependent care center, which complies with all state and local regulations. Federal tax forms 1040ez You can pay the center $150 for any 3 days a week or $250 for 5 days a week. Federal tax forms 1040ez Your child attends the center 5 days a week. Federal tax forms 1040ez Your work-related expenses are limited to $150 a week. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez The facts are the same as in Example 1 except the center does not offer a 3-day option. Federal tax forms 1040ez The entire $250 weekly fee may be a work-related expense. Federal tax forms 1040ez Care of a Qualifying Person To be work-related, your expenses must be to provide care for a qualifying person. Federal tax forms 1040ez You do not have to choose the least expensive way of providing the care. Federal tax forms 1040ez The cost of a paid care provider may be an expense for the care of a qualifying person even if another care provider is available at no cost. Federal tax forms 1040ez Expenses are for the care of a qualifying person only if their main purpose is the person's well-being and protection. Federal tax forms 1040ez Expenses for household services qualify if part of the services is for the care of qualifying persons. Federal tax forms 1040ez See Household Services, later. Federal tax forms 1040ez Expenses not for care. Federal tax forms 1040ez   Expenses for care do not include amounts you pay for food, lodging, clothing, education, and entertainment. Federal tax forms 1040ez However, you can include small amounts paid for these items if they are incidental to and cannot be separated from the cost of caring for the qualifying person. Federal tax forms 1040ez Otherwise, see the discussion of Expenses partly work-related, later. Federal tax forms 1040ez   Child support payments are not for care and do not qualify for the credit. Federal tax forms 1040ez Education. Federal tax forms 1040ez   Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Federal tax forms 1040ez   Expenses to attend kindergarten or a higher grade are not expenses for care. Federal tax forms 1040ez Do not use these expenses to figure your credit. Federal tax forms 1040ez   However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Federal tax forms 1040ez   Summer school and tutoring programs are not for care. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez You take your 3-year-old child to a nursery school that provides lunch and a few educational activities as part of its preschool childcare service. Federal tax forms 1040ez The lunch and educational activities are incidental to the childcare, and their cost cannot be separated from the cost of care. Federal tax forms 1040ez You can count the total cost when you figure the credit. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez You place your 10-year-old child in a boarding school so you can work full time. Federal tax forms 1040ez Only the part of the boarding school expense that is for the care of your child is a work-related expense. Federal tax forms 1040ez You can count that part of the expense in figuring your credit if it can be separated from the cost of education. Federal tax forms 1040ez You cannot count any part of the amount you pay the school for your child's education. Federal tax forms 1040ez Care outside your home. Federal tax forms 1040ez   You can count the cost of care provided outside your home if the care is for your dependent under age 13 or any other qualifying person who regularly spends at least 8 hours each day in your home. Federal tax forms 1040ez Dependent care center. Federal tax forms 1040ez   You can count care provided outside your home by a dependent care center only if the center complies with all state and local regulations that apply to these centers. Federal tax forms 1040ez   A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment, or grant for providing services for any of those persons, even if the center is not run for profit. Federal tax forms 1040ez Camp. Federal tax forms 1040ez   The cost of sending your child to an overnight camp is not considered a work-related expense. Federal tax forms 1040ez    The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer. Federal tax forms 1040ez Transportation. Federal tax forms 1040ez   If a care provider takes a qualifying person to or from a place where care is provided, that transportation is for the care of the qualifying person. Federal tax forms 1040ez This includes transportation by bus, subway, taxi, or private car. Federal tax forms 1040ez However, transportation not provided by a care provider is not for the care of a qualifying person. Federal tax forms 1040ez Also, if you pay the transportation cost for the care provider to come to your home, that expense is not for care of a qualifying person. Federal tax forms 1040ez Fees and deposits. Federal tax forms 1040ez   Fees you paid to an agency to get the services of a care provider, deposits you paid to an agency or preschool, application fees, and other indirect expenses are work-related expenses if you have to pay them to get care, even though they are not directly for care. Federal tax forms 1040ez However, a forfeited deposit is not for the care of a qualifying person if care is not provided. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez You paid a fee to an agency to get the services of the nanny who cares for your 2-year-old daughter while you work. Federal tax forms 1040ez The fee you paid is a work-related expense. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez You placed a deposit with a preschool to reserve a place for your 3-year-old child. Federal tax forms 1040ez You later sent your child to a different preschool and forfeited the deposit. Federal tax forms 1040ez The forfeited deposit is not for care and so is not a work-related expense. Federal tax forms 1040ez Household Services Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Federal tax forms 1040ez Definition. Federal tax forms 1040ez   Household services are ordinary and usual services done in and around your home that are necessary to run your home. Federal tax forms 1040ez They include the services of a housekeeper, maid, or cook. Federal tax forms 1040ez However, they do not include the services of a chauffeur, bartender, or gardener. Federal tax forms 1040ez Housekeeper. Federal tax forms 1040ez   In this publication, the term housekeeper refers to any household employee whose services include the care of a qualifying person. Federal tax forms 1040ez Expenses partly work-related. Federal tax forms 1040ez   If part of an expense is work-related (for either household services or the care of a qualifying person) and part is for other purposes, you have to divide the expense. Federal tax forms 1040ez To figure your credit, count only the part that is work-related. Federal tax forms 1040ez However, you do not have to divide the expense if only a small part is for other purposes. Federal tax forms 1040ez Example. Federal tax forms 1040ez You pay a housekeeper to care for your 9-year-old and 15-year-old children so you can work. Federal tax forms 1040ez The housekeeper spends most of the time doing normal household work and spends 30 minutes a day driving you to and from work. Federal tax forms 1040ez You do not have to divide the expenses. Federal tax forms 1040ez You can treat the entire expense of the housekeeper as work-related because the time spent driving is minimal. Federal tax forms 1040ez Nor do you have to divide the expenses between the two children, even though the expenses are partly for the 15-year-old child who is not a qualifying person, because the expense is also partly for the care of your 9-year-old child, who is a qualifying person. Federal tax forms 1040ez However, the dollar limit (discussed later) is based on one qualifying person, not two. Federal tax forms 1040ez Meals and lodging provided for housekeeper. Federal tax forms 1040ez   If you have expenses for meals that your housekeeper eats in your home because of his or her employment, count these as work-related expenses. Federal tax forms 1040ez If you have extra expenses for providing lodging in your home to the housekeeper, count these as work-related expenses also. Federal tax forms 1040ez Example. Federal tax forms 1040ez To provide lodging to the housekeeper, you move to an apartment with an extra bedroom. Federal tax forms 1040ez You can count the extra rent and utility expenses for the housekeeper's bedroom as work-related. Federal tax forms 1040ez However, if your housekeeper moves into an existing bedroom in your home, you can count only the extra utility expenses as work-related. Federal tax forms 1040ez Taxes paid on wages. Federal tax forms 1040ez   The taxes you pay on wages for qualifying child and dependent care services are work-related expenses. Federal tax forms 1040ez For more information on a household employer's tax responsibilities, see Employment Taxes for Household Employers, later. Federal tax forms 1040ez Payments to Relatives or Dependents You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. Federal tax forms 1040ez However, do not count any amounts you pay to: A dependent for whom you (or your spouse if filing jointly) can claim an exemption, Your child who was under age 19 at the end of the year, even if he or she is not your dependent, A person who was your spouse any time during the year, or The parent of your qualifying person if your qualifying person is your child and under age 13. Federal tax forms 1040ez Joint Return Test Generally, married couples must file a joint return to take the credit. Federal tax forms 1040ez However, if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. Federal tax forms 1040ez Legally separated. Federal tax forms 1040ez   You are not considered married if you are legally separated from your spouse under a decree of divorce or separate maintenance. Federal tax forms 1040ez You may be eligible to take the credit on your return using head of household filing status. Federal tax forms 1040ez Married and living apart. Federal tax forms 1040ez   You are not considered married and are eligible to take the credit if all the following apply. Federal tax forms 1040ez You file a return apart from your spouse. Federal tax forms 1040ez Your home is the home of a qualifying person for more than half the year. Federal tax forms 1040ez You pay more than half the cost of keeping up your home for the year. Federal tax forms 1040ez Your spouse does not live in your home for the last 6 months of the year. Federal tax forms 1040ez Costs of keeping up a home. Federal tax forms 1040ez   The costs of keeping up a home normally include property taxes, mortgage interest, rent, utility charges, home repairs, insurance on the home, and food eaten at home. Federal tax forms 1040ez   The costs of keeping up a home do not include payments for clothing, education, medical treatment, vacations, life insurance, transportation, or mortgage principal. Federal tax forms 1040ez   They also do not include the purchase, permanent improvement, or replacement of property. Federal tax forms 1040ez For example, you cannot include the cost of replacing a water heater. Federal tax forms 1040ez However, you can include the cost of repairing a water heater. Federal tax forms 1040ez Death of spouse. Federal tax forms 1040ez   If your spouse died during the year and you do not remarry before the end of the year, you generally must file a joint return to take the credit. Federal tax forms 1040ez If you do remarry before the end of the year, the credit can be claimed on your deceased spouse's own return. Federal tax forms 1040ez Provider Identification Test You must identify all persons or organizations that provide care for your child or dependent. Federal tax forms 1040ez Use Form 2441, Part I, to show the information. Federal tax forms 1040ez If you do not have any care providers and you are filing Form 2441 only to report taxable income in Part III, enter “none” in line 1, column (a). Federal tax forms 1040ez Information needed. Federal tax forms 1040ez   To identify the care provider, you must give the provider's: Name, Address, and Taxpayer identification number. Federal tax forms 1040ez    If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. Federal tax forms 1040ez If the care provider is an organization, then it is the employer identification number (EIN). Federal tax forms 1040ez   You do not have to show the taxpayer identification number if the care provider is a tax-exempt organization (such as a church or school). Federal tax forms 1040ez In this case, enter “Tax-Exempt” in the space where Form 2441 asks for the number. Federal tax forms 1040ez   If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information. Federal tax forms 1040ez Getting the information. Federal tax forms 1040ez    You can use Form W-10, Dependent Care Provider's Identification and Certification, to request the required information from the care provider. Federal tax forms 1040ez If you do not use Form W-10, you can get the information from one of the other sources listed in the instructions for Form W-10, including: A copy of the provider's social security card, A copy of the provider's completed Form W-4, Employee's Withholding Allowance Certificate, if he or she is your household employee, A copy of the statement furnished by your employer if the provider is your employer's dependent care plan, or A letter or invoice from the provider if it shows the necessary information. Federal tax forms 1040ez    You should keep this information with your tax records. Federal tax forms 1040ez Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service. Federal tax forms 1040ez Due diligence. Federal tax forms 1040ez   If the care provider information you give is incorrect or incomplete, your credit may not be allowed. Federal tax forms 1040ez However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit. Federal tax forms 1040ez   You can show due diligence by getting and keeping the provider's completed Form W-10 or one of the other sources of information just listed. Federal tax forms 1040ez Care providers can be penalized if they do not provide this information to you or if they provide incorrect information. Federal tax forms 1040ez Provider refusal. Federal tax forms 1040ez    If the provider refuses to give you the identifying information, you should report on Form 2441 whatever information you have (such as the name and address). Federal tax forms 1040ez Enter “See Attached Statement” in the columns calling for the information you do not have. Federal tax forms 1040ez Then attach a statement explaining that you requested the information from the care provider, but the provider did not give you the information. Federal tax forms 1040ez Be sure to write your name and social security number on this statement. Federal tax forms 1040ez The statement will show that you used due diligence in trying to furnish the necessary information. Federal tax forms 1040ez U. Federal tax forms 1040ez S. Federal tax forms 1040ez citizens and resident aliens living abroad. Federal tax forms 1040ez   If you are living abroad, your care provider may not have, and may not be required to get, a U. Federal tax forms 1040ez S. Federal tax forms 1040ez taxpayer identification number (for example, an SSN or an EIN). Federal tax forms 1040ez If so, enter “LAFCP” (Living Abroad Foreign Care Provider) in the space for the care provider's taxpayer identification number. Federal tax forms 1040ez How To Figure the Credit Your credit is a percentage of your work-related expenses. Federal tax forms 1040ez Your expenses are subject to the earned income limit and the dollar limit. Federal tax forms 1040ez The percentage is based on your adjusted gross income. Federal tax forms 1040ez Figuring Total Work-Related Expenses To figure the credit for 2013 work-related expenses, count only those you paid by December 31, 2013. Federal tax forms 1040ez Expenses prepaid in an earlier year. Federal tax forms 1040ez   If you pay for services before they are provided, you can count the prepaid expenses only in the year the care is received. Federal tax forms 1040ez Claim the expenses for the later year as if they were actually paid in that later year. Federal tax forms 1040ez Expenses not paid until the following year. Federal tax forms 1040ez   Do not count 2012 expenses that you paid in 2013 as work-related expenses for 2013. Federal tax forms 1040ez You may be able to claim an additional credit for them on your 2013 return, but you must figure it separately. Federal tax forms 1040ez See Payments for prior year's expenses under Amount of Credit, later. Federal tax forms 1040ez If you had expenses in 2013 that you did not pay until 2014, you cannot count them when figuring your 2013 credit. Federal tax forms 1040ez You may be able to claim a credit for them on your 2014 return. Federal tax forms 1040ez Expenses reimbursed. Federal tax forms 1040ez   If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses. Federal tax forms 1040ez Example. Federal tax forms 1040ez You paid work-related expenses of $3,000. Federal tax forms 1040ez You are reimbursed $2,000 by a state social services agency. Federal tax forms 1040ez You can use only $1,000 to figure your credit. Federal tax forms 1040ez Medical expenses. Federal tax forms 1040ez   Some expenses for the care of qualifying persons who are not able to care for themselves may qualify as work-related expenses and also as medical expenses. Federal tax forms 1040ez You can use them either way, but you cannot use the same expenses to claim both a credit and a medical expense deduction. Federal tax forms 1040ez   If you use these expenses to figure the credit and they are more than the earned income limit or the dollar limit, discussed later, you can add the excess to your medical expenses. Federal tax forms 1040ez However, if you use your total expenses to figure your medical expense deduction, you cannot use any part of them to figure your credit. Federal tax forms 1040ez For information on medical expenses, see Publication 502, Medical and Dental Expenses. Federal tax forms 1040ez    Amounts excluded from your income under your employer's dependent care benefits plan cannot be used to claim a medical expense deduction. Federal tax forms 1040ez Dependent Care Benefits If you receive dependent care benefits, your dollar limit for purposes of the credit may be reduced. Federal tax forms 1040ez See Reduced Dollar Limit, later. Federal tax forms 1040ez But, even if you cannot take the credit, you may be able to take an exclusion or deduction for the dependent care benefits. Federal tax forms 1040ez Dependent care benefits. Federal tax forms 1040ez    Dependent care benefits include: Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work, The fair market value of care in a daycare facility provided or sponsored by your employer, and Pre-tax contributions you made under a dependent care flexible spending arrangement. Federal tax forms 1040ez Your salary may have been reduced to pay for these benefits. Federal tax forms 1040ez If you received benefits as an employee, they should be shown in box 10 of your Form W-2, Wage and Tax Statement. Federal tax forms 1040ez See Statement for employee, later. Federal tax forms 1040ez Benefits you received as a partner should be shown in box 13 of your Schedule K-1 (Form 1065) with code O. Federal tax forms 1040ez   Enter the amount of these benefits on Form 2441, Part III, line 12. Federal tax forms 1040ez Exclusion or deduction. Federal tax forms 1040ez   If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Federal tax forms 1040ez Your employer can tell you whether your benefit plan qualifies. Federal tax forms 1040ez To claim the exclusion, you must complete Part III of Form 2441. Federal tax forms 1040ez You cannot use Form 1040EZ. Federal tax forms 1040ez   If you are self-employed and receive benefits from a qualified dependent care benefit plan, you are treated as both employer and employee. Federal tax forms 1040ez Therefore, you would not get an exclusion from wages. Federal tax forms 1040ez Instead, you would get a deduction on Form 1040, Schedule C, line 14; Schedule E, line 19 or 28; or Schedule F, line 15. Federal tax forms 1040ez To claim the deduction, you must use Form 2441. Federal tax forms 1040ez   The amount you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse's earned income, or $5,000 ($2,500 if married filing separately). Federal tax forms 1040ez   The definition of earned income for the exclusion or deduction is the same as the definition used when figuring the credit except that earned income for the exclusion or deduction does not include any dependent care benefits you receive. Federal tax forms 1040ez    You can choose to include your nontaxable combat pay in earned income when figuring your exclusion or deduction, even if you choose not to include it in earned income for the earned income credit or the credit for child and dependent care expenses. Federal tax forms 1040ez Statement for employee. Federal tax forms 1040ez   Your employer must give you a Form W-2 (or similar statement), showing in box 10 the total amount of dependent care benefits provided to you during the year under a qualified plan. Federal tax forms 1040ez Your employer will also include any dependent care benefits over $5,000 in your wages shown on your Form W-2 in box 1. Federal tax forms 1040ez Effect of exclusion on credit. Federal tax forms 1040ez   If you exclude dependent care benefits from your income, the amount of the excluded benefits: Is not included in your work-related expenses, and Reduces the dollar limit, discussed later. Federal tax forms 1040ez Earned Income Limit The amount of work-related expenses you use to figure your credit cannot be more than: Your earned income for the year, if you are single at the end of the year, or The smaller of your or your spouse's earned income for the year if you are married at the end of the year. Federal tax forms 1040ez Earned income for the purpose of figuring the credit is defined under Earned Income Test, earlier. Federal tax forms 1040ez For purposes of item (2), use your spouse's earned income for the entire year, even if you were married for only part of the year. Federal tax forms 1040ez Example. Federal tax forms 1040ez You remarried on December 3. Federal tax forms 1040ez Your earned income for the year was $18,000. Federal tax forms 1040ez Your new spouse's earned income for the year was $2,000. Federal tax forms 1040ez You paid work-related expenses of $3,000 for the care of your 5-year-old child and qualified to claim the credit. Federal tax forms 1040ez The amount of expenses you use to figure your credit cannot be more than $2,000 (the smaller of your earned income or that of your spouse). Federal tax forms 1040ez Separated spouse. Federal tax forms 1040ez   If you are legally separated or married and living apart from your spouse (as described under Joint Return Test, earlier), you are not considered married for purposes of the earned income limit. Federal tax forms 1040ez Use only your income in figuring the earned income limit. Federal tax forms 1040ez Surviving spouse. Federal tax forms 1040ez   If your spouse died during the year and you file a joint return as a surviving spouse, you may, but are not required to, take into account the earned income of your spouse who died during the year. Federal tax forms 1040ez Community property laws. Federal tax forms 1040ez   Disregard community property laws when you figure earned income for this credit. Federal tax forms 1040ez Self-employment earnings. Federal tax forms 1040ez   If you are self-employed, include your net earnings in earned income. Federal tax forms 1040ez For purposes of the child and dependent care credit, net earnings from self-employment generally means the amount from Schedule SE (either Section A or Section B), line 3, minus any deduction for self-employment tax on Form 1040 or Form 1040NR, line 27. Federal tax forms 1040ez Include your self-employment earnings in earned income, even if they are less than $400 and you did not file Schedule SE. Federal tax forms 1040ez Clergy or church employee. Federal tax forms 1040ez   If you are a member of the clergy or a church employee, see the Instructions for Form 2441 for details. Federal tax forms 1040ez Statutory employee. Federal tax forms 1040ez   If you filed Schedule C (Form 1040) or C-EZ (Form 1040) to report income as a statutory employee, also include as earned income the amount from line 1 of that Schedule C (Form 1040) or C-EZ (Form 1040). Federal tax forms 1040ez Net loss. Federal tax forms 1040ez   You must reduce your earned income by any net loss from self-employment. Federal tax forms 1040ez Optional method if earnings are low or a net loss. Federal tax forms 1040ez   If your net earnings from self-employment are low or you have a net loss, you may be able to figure your net earnings by using an optional method instead of the regular method. Federal tax forms 1040ez Get Publication 334, Tax Guide for Small Business, for details. Federal tax forms 1040ez If you use an optional method to figure net earnings for self-employment tax purposes, include those net earnings in your earned income for this credit. Federal tax forms 1040ez In this case, subtract any deduction you claimed on Form 1040 or Form 1040NR, line 27, from the total of the amounts on Schedule SE, Section B, lines 3 and 4b, to figure your net earnings. Federal tax forms 1040ez You or your spouse is a student or not able to care for self. Federal tax forms 1040ez   Your spouse who is either a full-time student or not able to care for himself or herself is treated as having earned income. Federal tax forms 1040ez His or her earned income for each month is considered to be at least $250 if there is one qualifying person in your home, or at least $500 if there are two or more. Federal tax forms 1040ez Spouse works. Federal tax forms 1040ez   If your spouse works during that month, use the higher of $250 (or $500) or his or her actual earned income for that month. Federal tax forms 1040ez Spouse qualifies for part of month. Federal tax forms 1040ez   If your spouse is a full-time student or not able to care for himself or herself for only part of a month, the full $250 (or $500) still applies for that month. Federal tax forms 1040ez You are a student or not able to care for self. Federal tax forms 1040ez   These rules also apply if you are a student or not able to care for yourself and are filing a joint return. Federal tax forms 1040ez For each month or part of a month you are a student or not able to care for yourself, your earned income is considered to be at least $250 (or $500). Federal tax forms 1040ez If you also work during that month, use the higher of $250 (or $500) or your actual earned income for that month. Federal tax forms 1040ez Both spouses qualify. Federal tax forms 1040ez   If, in the same month, both you and your spouse are either full-time students or not able to care for yourselves, only one spouse can be considered to have this earned income of $250 (or $500) for that month. Federal tax forms 1040ez Example. Federal tax forms 1040ez Jim works and keeps up a home for himself and his wife Sharon. Federal tax forms 1040ez Because of an accident, Sharon is not able to care for herself for 11 months during the tax year. Federal tax forms 1040ez During the 11 months, Jim pays $3,300 of work-related expenses for Sharon's care. Federal tax forms 1040ez These expenses also qualify as medical expenses. Federal tax forms 1040ez Their adjusted gross income is $29,000 and the entire amount is Jim's earned income. Federal tax forms 1040ez Jim and Sharon's earned income limit is the smallest of the following amounts. Federal tax forms 1040ez   Jim and Sharon's Earned Income Limit   1) Work-related expenses Jim paid $   3,300   2) Jim's earned income $   29,000   3) Income considered earned by Sharon (11 × $250) $    2,750   Jim and Sharon can use $2,750 to figure the credit and treat the balance of $550 ($3,300 − $2,750) as a medical expense. Federal tax forms 1040ez However, if they use the $3,300 first as a medical expense, they cannot use any part of that amount to figure the credit. Federal tax forms 1040ez Dollar Limit There is a dollar limit on the amount of your work-related expenses you can use to figure the credit. Federal tax forms 1040ez This limit is $3,000 for one qualifying person, or $6,000 for two or more qualifying persons. Federal tax forms 1040ez If you paid work-related expenses for the care of two or more qualifying persons, the applicable dollar limit is $6,000. Federal tax forms 1040ez This limit does not need to be divided equally among them. Federal tax forms 1040ez For example, if your work-related expenses for the care of one qualifying person are $3,200 and your work-related expenses for another qualifying person are $2,800, you can use the total, $6,000, when figuring the credit. Federal tax forms 1040ez Yearly limit. Federal tax forms 1040ez   The dollar limit is a yearly limit. Federal tax forms 1040ez The amount of the dollar limit remains the same no matter how long, during the year, you have a qualifying person in your household. Federal tax forms 1040ez Use the $3,000 limit if you paid work-related expenses for the care of one qualifying person at any time during the year. Federal tax forms 1040ez Use $6,000 if you paid work-related expenses for the care of more than one qualifying person at any time during the year. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez You pay $500 a month for after-school care for your son. Federal tax forms 1040ez He turned 13 on May 1 and is no longer a qualifying person. Federal tax forms 1040ez You can use the $2,000 of expenses for his care January through April to figure your credit because it is not more than the $3,000 yearly limit. Federal tax forms 1040ez Example 2. Federal tax forms 1040ez In July of this year, to permit your spouse to begin a new job, you enrolled your 3-year-old daughter in a nursery school that provides preschool childcare. Federal tax forms 1040ez You paid $300 per month for the childcare. Federal tax forms 1040ez You can use the full $1,800 you paid ($300 × 6 months) as qualified expenses because it is not more than the $3,000 yearly limit. Federal tax forms 1040ez Reduced Dollar Limit If you received dependent care benefits that you exclude or deduct from your income, you must subtract that amount from the dollar limit that applies to you. Federal tax forms 1040ez Your reduced dollar limit is figured on Form 2441, Part III. Federal tax forms 1040ez See Dependent Care Benefits, earlier, for information on excluding or deducting these benefits. Federal tax forms 1040ez Example 1. Federal tax forms 1040ez George is a widower with one child and earns $24,000 a year. Federal tax forms 1040ez He pays work-related expenses of $2,900 for the care of his 4-year-old child and qualifies to claim the credit for child and dependent care expenses. Federal tax forms 1040ez His employer pays an additional $1,000 under a qualified dependent care benefit plan. Federal tax forms 1040ez This $1,000 is excluded from George's income. Federal tax forms 1040ez Although the dollar limit for his work-related expenses is $3,000 (one qualifying person), George figures his credit on only $2,000 of the $2,900 work-related expenses he paid. Federal tax forms 1040ez This is because his dollar limit is reduced as shown next. Federal tax forms 1040ez   George's Reduced Dollar Limit 1) Maximum allowable expenses for one qualifying person $3,000 2) Minus: Dependent care benefits George excludes from income −1,000 3) Reduced dollar limit on expenses George can use for the credit $2,000 Example 2. Federal tax forms 1040ez Randall is married and both he and his wife are employed. Federal tax forms 1040ez Each has earned income in excess of $6,000. Federal tax forms 1040ez They have two children, Anne and Andy, ages 2 and 4, who attend a daycare facility licensed and regulated by the state. Federal tax forms 1040ez Randall's work-related expenses are $6,000 for the year. Federal tax forms 1040ez Randall's employer has a dependent care assistance program as part of its cafeteria plan, which allows employees to make pre-tax contributions to a dependent care flexible spending arrangement. Federal tax forms 1040ez Randall has elected to take the maximum $5,000 exclusion from his salary to cover dependent care expenses through this program. Federal tax forms 1040ez Although the dollar limit for his work-related expenses is $6,000 (two or more qualifying persons), Randall figures his credit on only $1,000 of the $6,000 work-related expense paid. Federal tax forms 1040ez This is because his dollar limit is reduced as shown next. Federal tax forms 1040ez   Randall's Reduced Dollar Limit 1) Maximum allowable expenses for two qualifying persons $6,000 2) Minus: Dependent care benefits selected from employer's cafeteria plan and  excluded from Randall's income −5,000 3) Reduced dollar limit on work-related expenses Randall can use for the credit $1,000 Amount of Credit To determine the amount of your credit, multiply your work-related expenses (after applying the earned income and dollar limits) by a percentage. Federal tax forms 1040ez This percentage depends on your adjusted gross income shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Federal tax forms 1040ez The following table shows the percentage to use based on adjusted gross income. Federal tax forms 1040ez   IF your adjusted gross income is: THEN the       Over:       But not over:   percentage is:       $0   —   $15,000   35%       15,000   —   17,000   34%       17,000   —   19,000   33%       19,000   —   21,000   32%       21,000   —   23,000   31%       23,000   —   25,000   30%       25,000   —   27,000   29%       27,000   —   29,000   28%       29,000   —   31,000   27%       31,000   —   33,000   26%       33,000   —   35,000   25%       35,000   —   37,000   24%       37,000   —   39,000   23%       39,000   —   41,000   22%       41,000   —   43,000   21%       43,000   —   No limit   20%   To qualify for the credit, you must have one or more qualifying persons. Federal tax forms 1040ez You should show the expenses for each person on Form 2441, line 2, column (c). Federal tax forms 1040ez However, it is possible a qualifying person could have no expenses and a second qualifying person could have expenses exceeding $3,000. Federal tax forms 1040ez You should list -0- for the one person and the actual amount for the second person. Federal tax forms 1040ez The $6,000 limit that applies to two or more qualifying persons would still be used to compute your credit unless you already excluded or deducted, in Part III of Form 2441, certain dependent care benefits paid to you (or on your behalf) by your employer. Federal tax forms 1040ez Example. Federal tax forms 1040ez Roger and Megan Paris have two qualifying children. Federal tax forms 1040ez They received $1,000 of dependent care benefits from Megan's employer during 2013, but they incurred a total of $19,500 of child and dependent care expenses. Federal tax forms 1040ez They complete Part III of Form 2441 to exclude the $1,000 from their taxable income (offsetting $1,000 of their expenses). Federal tax forms 1040ez Roger and Megan continue to line 27 to figure their credit using the remaining $18,500 of expenses. Federal tax forms 1040ez Line 30 tells them to complete line 2 without including any dependent care benefits. Federal tax forms 1040ez They complete line 2 of Form 2441, listing both Susan and James, as shown in the Line 2 example above. Federal tax forms 1040ez Line 2 Example (a) Qualifying person's name (b) Qualifying person's social security number (c) Qualified expenses you incurred and paid in 2013 for the person listed in column (a) First Last Susan Paris 123-00-6789 -0- James Paris 987-00-4321 18,500. Federal tax forms 1040ez 00 All of Susan's expenses were covered by the $1,000 of employer-provided dependent care benefits. Federal tax forms 1040ez However, their son James has special needs and they paid $18,500 for his care. Federal tax forms 1040ez Line 3 imposes a $5,000 limit for two or more children ($6,000 limit, minus $1,000 already excluded from income = $5,000) and Roger and Megan continue to complete the form. Federal tax forms 1040ez Even though line 2 indicates one of the Paris children did not have any dependent care expenses, it does not change the fact that they had two qualifying children for the purposes of Form 2441. Federal tax forms 1040ez Payments for prior year's expenses. Federal tax forms 1040ez   If you had work-related expenses in 2012 that you paid in 2013, you may be able to increase the credit on your 2013 return. Federal tax forms 1040ez Attach a statement to your form showing how you figured the additional amount from 2012. Federal tax forms 1040ez Then enter “CPYE” (Credit for Prior Year Expenses) and the amount of the credit on the dotted line next to line 9 on Form 2441. Federal tax forms 1040ez Also enter the name and taxpayer identification number of the person for whom you paid the prior year's expenses. Federal tax forms 1040ez Then add this credit to the amount on line 9, and replace the amount on line 9 with the total. Federal tax forms 1040ez See Worksheet A. Federal tax forms 1040ez Example. Federal tax forms 1040ez In 2012, Sam and Kate had childcare expenses of $2,600 for their 12-year-old child. Federal tax forms 1040ez Of the $2,600, they paid $2,000 in 2012 and $600 in 2013. Federal tax forms 1040ez Their adjusted gross income for 2012 was $30,000. Federal tax forms 1040ez Sam's earned income of $14,000 was less than Kate's earned income. Federal tax forms 1040ez A credit for their 2012 expenses paid in 2013 is not allowed in 2012. Federal tax forms 1040ez It is allowed for the 2013 tax year, but they must use their adjusted gross income for 2012 to compute the amount. Federal tax forms 1040ez The filled-in Worksheet A they used to figure this credit is shown later. Federal tax forms 1040ez Sam and Kate add the $162 from line 13 of this worksheet to their 2013 credit and enter the total on their Form 2441, line 9. Federal tax forms 1040ez They enter “CPYE $162” and their child's name and SSN in the space to the left of line 9. Federal tax forms 1040ez Worksheet A. Federal tax forms 1040ez Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Federal tax forms 1040ez 1. Federal tax forms 1040ez   Enter your 2012 qualified expenses paid in 2012 1. Federal tax forms 1040ez     2. Federal tax forms 1040ez   Enter your 2012 qualified expenses paid in 2013 2. Federal tax forms 1040ez     3. Federal tax forms 1040ez   Add the amounts on lines 1 and 2 3. Federal tax forms 1040ez     4. Federal tax forms 1040ez   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Federal tax forms 1040ez     5. Federal tax forms 1040ez   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Federal tax forms 1040ez     6. Federal tax forms 1040ez   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Federal tax forms 1040ez     7. Federal tax forms 1040ez   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Federal tax forms 1040ez     8. Federal tax forms 1040ez   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Federal tax forms 1040ez     9. Federal tax forms 1040ez   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Federal tax forms 1040ez     10. Federal tax forms 1040ez   Subtract the amount on line 9 from the amount on line 8 and enter the result. Federal tax forms 1040ez If zero or less, stop here. Federal tax forms 1040ez You cannot increase your 2013 credit by any previous year's expenses 10. Federal tax forms 1040ez     11. Federal tax forms 1040ez   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Federal tax forms 1040ez     12. Federal tax forms 1040ez   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Federal tax forms 1040ez             IF your 2012 adjusted gross income is:   THEN the decimal                 Over:   But not over:     amount is:                 $0 — $15,000     . Federal tax forms 1040ez 35                 15,000 — 17,000     . Federal tax forms 1040ez 34                 17,000 — 19,000     . Federal tax forms 1040ez 33                 19,000 — 21,000     . Federal tax forms 1040ez 32                 21,000 — 23,000     . Federal tax forms 1040ez 31                 23,000 — 25,000     . Federal tax forms 1040ez 30                 25,000 — 27,000     . Federal tax forms 1040ez 29                 27,000 — 29,000     . Federal tax forms 1040ez 28                 29,000 — 31,000     . Federal tax forms 1040ez 27                 31,000 — 33,000     . Federal tax forms 1040ez 26                 33,000 — 35,000     . Federal tax forms 1040ez 25                 35,000 — 37,000     . Federal tax forms 1040ez 24                 37,000 — 39,000     . Federal tax forms 1040ez 23                 39,000 — 41,000     . Federal tax forms 1040ez 22                 41,000 — 43,000     . Federal tax forms 1040ez 21                 43,000 — No limit     . Federal tax forms 1040ez 20           13. Federal tax forms 1040ez   Multiply line 10 by line 12. Federal tax forms 1040ez Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Federal tax forms 1040ez Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses           Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Federal tax forms 1040ez       Worksheet A. Federal tax forms 1040ez Filled-in Worksheet for 2012 Expenses Paid in 2013 Use this worksheet to figure the credit you may claim for 2012 expenses paid in 2013. Federal tax forms 1040ez 1. Federal tax forms 1040ez   Enter your 2012 qualified expenses paid in 2012 1. Federal tax forms 1040ez   $2,000 2. Federal tax forms 1040ez   Enter your 2012 qualified expenses paid in 2013 2. Federal tax forms 1040ez   600 3. Federal tax forms 1040ez   Add the amounts on lines 1 and 2 3. Federal tax forms 1040ez   2,600 4. Federal tax forms 1040ez   Enter $3,000 if care was for one qualifying person ($6,000 if for two or more) 4. Federal tax forms 1040ez   3,000 5. Federal tax forms 1040ez   Enter any dependent care benefits received for 2012 and excluded from your income (from your 2012 Form 2441, line 25) 5. Federal tax forms 1040ez   0 6. Federal tax forms 1040ez   Subtract the amount on line 5 from the amount on line 4 and enter the result 6. Federal tax forms 1040ez   3,000 7. Federal tax forms 1040ez   Compare your earned income for 2012 and your spouse's earned income for 2012 and enter the smaller amount 7. Federal tax forms 1040ez   14,000 8. Federal tax forms 1040ez   Compare the amounts on lines 3, 6, and 7 and enter the smallest amount 8. Federal tax forms 1040ez   2,600 9. Federal tax forms 1040ez   Enter the amount on which you figured the credit for 2012 (from your 2012 Form 2441, line 6) 9. Federal tax forms 1040ez   2,000 10. Federal tax forms 1040ez   Subtract the amount on line 9 from the amount on line 8 and enter the result. Federal tax forms 1040ez If zero or less, stop here. Federal tax forms 1040ez You cannot increase your 2013 credit by any previous year's expenses 10. Federal tax forms 1040ez   600 11. Federal tax forms 1040ez   Enter your 2012 adjusted gross income (from your 2012 Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37) 11. Federal tax forms 1040ez   30,000 12. Federal tax forms 1040ez   Find your 2012 adjusted gross income in the table below and enter the corresponding decimal amount here 12. Federal tax forms 1040ez   . Federal tax forms 1040ez 27         IF your 2012 adjusted gross income is:   THEN the decimal                 Over   But not over     amount is:                 $0 — $15,000     . Federal tax forms 1040ez 35                 15,000 — 17,000     . Federal tax forms 1040ez 34                 17,000 — 19,000     . Federal tax forms 1040ez 33                 19,000 — 21,000     . Federal tax forms 1040ez 32                 21,000 — 23,000     . Federal tax forms 1040ez 31                 23,000 — 25,000     . Federal tax forms 1040ez 30                 25,000 — 27,000     . Federal tax forms 1040ez 29                 27,000 — 29,000     . Federal tax forms 1040ez 28                 29,000 — 31,000     . Federal tax forms 1040ez 27                 31,000 — 33,000     . Federal tax forms 1040ez 26                 33,000 — 35,000     . Federal tax forms 1040ez 25                 35,000 — 37,000     . Federal tax forms 1040ez 24                 37,000 — 39,000     . Federal tax forms 1040ez 23                 39,000 — 41,000     . Federal tax forms 1040ez 22                 41,000 — 43,000     . Federal tax forms 1040ez 21                 43,000 — No limit     . Federal tax forms 1040ez 20           13. Federal tax forms 1040ez   Multiply line 10 by line 12. Federal tax forms 1040ez Add this amount to your 2013 credit and enter the total on your 2013 Form 2441, line 9. Federal tax forms 1040ez Enter the following on the dotted line next to line 9 of Form 2441: “CPYE” The amount of this credit for a prior year's expenses             Also, attach a statement to your tax return showing the name and taxpayer identification number of the person for whom you paid the prior year's expenses and how you figured the credit 13. Federal tax forms 1040ez   $162   How To Claim the Credit To claim the credit, you can file Form 1040, Form 1040A, or Form 1040NR. Federal tax forms 1040ez You cannot claim the credit on Form 1040EZ or Form 1040NR-EZ. Federal tax forms 1040ez Form 1040, Form 1040A, or Form 1040NR. Federal tax forms 1040ez    You must complete Form 2441 and attach it to your Form 1040, Form 1040A, or Form 1040NR. Federal tax forms 1040ez Enter the credit on your Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46. Federal tax forms 1040ez Limit on credit. Federal tax forms 1040ez    The amount of credit you can claim is limited to your tax. Federal tax forms 1040ez For more information, see the Instructions for Form 2441. Federal tax forms 1040ez Tax credit not refundable. Federal tax forms 1040ez   You cannot get a refund for any part of the credit that is more than this limit. Federal tax forms 1040ez Recordkeeping. Federal tax forms 1040ez You should keep records of your work-related expenses. Federal tax forms 1040ez Also, if your dependent or spouse is not able to care for himself or herself, your records should show both the nature and length of the disability. Federal tax forms 1040ez Other records you should keep to support your claim for the credit are described under Provider Identification Test, earlier. Federal tax forms 1040ez Employment Taxes for Household Employers If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. Federal tax forms 1040ez If you are a household employer, you will need an employer identification number (EIN) and you may have to pay employment taxes. Federal tax forms 1040ez If the individuals who work in your home are self-employed, you are not liable for any of the taxes discussed in this section. Federal tax forms 1040ez Self-employed persons who are in business for themselves are not household employees. Federal tax forms 1040ez Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Federal tax forms 1040ez If you use a placement agency that exercises control over what work is done and how it will be done by a babysitter or companion who works in your home, the worker is not your employee. Federal tax forms 1040ez This control could include providing rules of conduct and appearance and requiring regular reports. Federal tax forms 1040ez In this case, you do not have to pay employment taxes. Federal tax forms 1040ez But, if an agency merely gives you a list of sitters and you hire one from that list, and pay the sitter directly, the sitter may be your employee. Federal tax forms 1040ez If you have a household employee, you may be subject to: Social security and Medicare taxes, Federal unemployment tax, and Federal income tax withholding. Federal tax forms 1040ez Social security and Medicare taxes are generally withheld from the employee's pay and matched by the employer. Federal tax forms 1040ez Federal unemployment (FUTA) tax is paid by the employer only and provides for payments of unemployment compensation to workers who have lost their jobs. Federal tax forms 1040ez Federal income tax is withheld from the employee's total pay if the employee asks you to do so and you agree. Federal tax forms 1040ez For more information on a household employer's tax responsibilities, see Publication 926 and Schedule H (Form 1040) and its instructions. Federal tax forms 1040ez State employment tax. Federal tax forms 1040ez   You may also have to pay state unemployment tax. Federal tax forms 1040ez Contact your state unemployment tax office for information. Federal tax forms 1040ez You should also find out whether you need to pay or collect other state employment taxes or carry worker's compensation insurance. Federal tax forms 1040ez For a list of state unemployment tax agencies, visit the U. Federal tax forms 1040ez S. Federal tax forms 1040ez Department of Labor's website. Federal tax forms 1040ez To find that website, use the link in Publication 926 or search online. Federal tax forms 1040ez How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Federal tax forms 1040ez Free help with your tax return. Federal tax forms 1040ez   You can get free help preparing your return nationwide from IRS-certified volunteers. Federal tax forms 1040ez The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Federal tax forms 1040ez The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Federal tax forms 1040ez Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Federal tax forms 1040ez In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Federal tax forms 1040ez To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Federal tax forms 1040ez gov, download the IRS2Go app, or call 1-800-906-9887. Federal tax forms 1040ez   As part of the TCE program, AARP offers the Tax-Aide counseling program. Federal tax forms 1040ez To find the nearest AARP Tax-Aide site, visit AARP's website at www. Federal tax forms 1040ez aarp. Federal tax forms 1040ez org/money/taxaide or call 1-888-227-7669. Federal tax forms 1040ez For more information on these programs, go to IRS. Federal tax forms 1040ez gov and enter “VITA” in the search box. Federal tax forms 1040ez Internet. Federal tax forms 1040ez    IRS. Federal tax forms 1040ez gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Federal tax forms 1040ez Download the free IRS2Go app from the iTunes app store or from Google Play. Federal tax forms 1040ez Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Federal tax forms 1040ez Check the status of your 2013 refund with the Where's My Refund? application on IRS. Federal tax forms 1040ez gov or download the IRS2Go app and select the Refund Status option. Federal tax forms 1040ez The IRS issues more than 9 out of 10 refunds in less than 21 days. Federal tax forms 1040ez Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Federal tax forms 1040ez You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Federal tax forms 1040ez The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Federal tax forms 1040ez Use the Interactive Tax Assistant (ITA) to research your tax questions. Federal tax forms 1040ez No need to wait on the phone or stand in line. Federal tax forms 1040ez The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Federal tax forms 1040ez When you reach the response screen, you can print the entire interview and the final response for your records. Federal tax forms 1040ez New subject areas are added on a regular basis. Federal tax forms 1040ez  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Federal tax forms 1040ez gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Federal tax forms 1040ez You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Federal tax forms 1040ez The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Federal tax forms 1040ez When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Federal tax forms 1040ez Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Federal tax forms 1040ez You can also ask the IRS to mail a return or an account transcript to you. Federal tax forms 1040ez Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Federal tax forms 1040ez gov or by calling 1-800-908-9946. Federal tax forms 1040ez Tax return and tax account transcripts are generally available for the current year and the past three years. Federal tax forms 1040ez Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Federal tax forms 1040ez Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Federal tax forms 1040ez If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Federal tax forms 1040ez Check the status of your amended return using Where's My Amended Return? Go to IRS. Federal tax forms 1040ez gov and enter Where's My Amended Return? in the search box. Federal tax forms 1040ez You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Federal tax forms 1040ez It can take up to 3 weeks from the date you mailed it to show up in our system. Federal tax forms 1040ez Make a payment using one of several safe and convenient electronic payment options available on IRS. Federal tax forms 1040ez gov. Federal tax forms 1040ez Select the Payment tab on the front page of IRS. Federal tax forms 1040ez gov for more information. Federal tax forms 1040ez Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Federal tax forms 1040ez Figure your income tax withholding with the IRS Withholding Calculator on IRS. Federal tax forms 1040ez gov. Federal tax forms 1040ez Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Federal tax forms 1040ez Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Federal tax forms 1040ez gov. Federal tax forms 1040ez Request an Electronic Filing PIN by going to IRS. Federal tax forms 1040ez gov and entering Electronic Filing PIN in the search box. Federal tax forms 1040ez Download forms, instructions and publications, including accessible versions for people with disabilities. Federal tax forms 1040ez Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Federal tax forms 1040ez gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Federal tax forms 1040ez An employee can answer questions about your tax account or help you set up a payment plan. Federal tax forms 1040ez Before you visit, check the Office Locator on IRS. Federal tax forms 1040ez gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Federal tax forms 1040ez If you have a special need, such as a disability, you can request an appointment. Federal tax forms 1040ez Call the local number listed in the Office Locator, or look in the phone book under Unit