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Federal Tax Forms 2012

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Federal Tax Forms 2012

Federal tax forms 2012 Index A Adoption Taxpayer identification number, Adoption taxpayer identification number (ATIN). Federal tax forms 2012 Aliens, Individual taxpayer identification number (ITIN) for aliens. Federal tax forms 2012 Alternative minimum tax (AMT), Limit on credit. Federal tax forms 2012 Amount of credit, Amount of Credit, Payments for prior year's expenses. Federal tax forms 2012 Limit on, Limit on credit. Federal tax forms 2012 Assistance (see Tax help) C Calculation of credit, How To Figure the Credit, Payments for prior year's expenses. Federal tax forms 2012 Camp, overnight, Camp. Federal tax forms 2012 Care Dependent care benefits, Dependent care benefits. Federal tax forms 2012 , Dependent care benefits. Federal tax forms 2012 Employer-provided benefits, Dependent Care Benefits Outside home, Care outside your home. Federal tax forms 2012 Provider identification, Provider Identification Test Qualifying person, Care of a Qualifying Person Children Divorced or separated parents, Child of divorced or separated parents or parents living apart. Federal tax forms 2012 Physically or mentally disabled, Qualifying Person Test Under age 13, Qualifying Person Test Work-related expense payments to relatives, Payments to Relatives or Dependents Church employee, Clergy or church employee. Federal tax forms 2012 Claiming of credit, How To Claim the Credit Tests to claim credit, Tests To Claim the Credit Clergy, Clergy or church employee. Federal tax forms 2012 Community property, Community property laws. Federal tax forms 2012 D Death of spouse, Death of spouse. Federal tax forms 2012 Dependent care benefits, Dependent care benefits. Federal tax forms 2012 , Dependent Care Benefits Dependent care centers, Dependent care center. Federal tax forms 2012 Dependent defined, Dependent defined. Federal tax forms 2012 Dependents (see Qualifying person test) Deposits, Fees and deposits. Federal tax forms 2012 Disabilities, persons with Dependents, Qualifying Person Test Physically or mentally not able to care for self, Physically or mentally not able to care for oneself. Federal tax forms 2012 Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 , Working or Looking for Work, You or your spouse is a student or not able to care for self. Federal tax forms 2012 Divorced parents, Child of divorced or separated parents or parents living apart. Federal tax forms 2012 Dollar limit, Dollar Limit, Yearly limit. Federal tax forms 2012 Reduced dollar limit, Tests To Claim the Credit, Reduced Dollar Limit Domestic help, Housekeeper. Federal tax forms 2012 Due diligence, Due diligence. Federal tax forms 2012 E Earned income Dependent care benefits, Exclusion or deduction. Federal tax forms 2012 For figuring credit, Earned Income Test Limit on, Earned Income Limit Net loss, Net loss. Federal tax forms 2012 Nonworking spouse, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 Self-employment earnings, Self-employment earnings. Federal tax forms 2012 Statutory employees, Statutory employee. Federal tax forms 2012 What is not, What is not earned income? Earned income test, Earned Income Test, Full-time student. Federal tax forms 2012 Determination, Tests To Claim the Credit Education expenses, Education. Federal tax forms 2012 Employer-provided dependent care benefits, Dependent care benefits. Federal tax forms 2012 , Dependent Care Benefits Employment taxes, Reminders, Taxes paid on wages. Federal tax forms 2012 , How To Claim the Credit Exclusion from income Employer-provided dependent care benefits, Dependent care benefits. Federal tax forms 2012 , Exclusion or deduction. Federal tax forms 2012 Expenses, How To Figure the Credit (see also Work-related expenses) 2012 expenses paid in 2013 (Worksheet A), Worksheet A. Federal tax forms 2012 Worksheet for 2012 Expenses Paid in 2013 Education, Education. Federal tax forms 2012 Medical, Medical expenses. Federal tax forms 2012 Not for care, Expenses not for care. Federal tax forms 2012 Prepaid, Expenses prepaid in an earlier year. Federal tax forms 2012 Reimbursed, Expenses reimbursed. Federal tax forms 2012 F Fees, Fees and deposits. Federal tax forms 2012 Figures, Tests To Claim the Credit Figuring credit, How To Figure the Credit, Payments for prior year's expenses. Federal tax forms 2012 Earned income, Earned income. Federal tax forms 2012 Filing status Joint return test, Joint Return Test Tests to claim credit, Tests To Claim the Credit Form 1040 Claiming the credit, Tests To Claim the Credit, Form 1040, Form 1040A, or Form 1040NR. Federal tax forms 2012 Form 1040A Claiming the credit, Tests To Claim the Credit Form 2441, Form 1040, Form 1040A, or Form 1040NR. Federal tax forms 2012 Form 4029, Members of certain religious faiths opposed to social security. Federal tax forms 2012 , Form 4029. Federal tax forms 2012 Form 4361, Members of certain religious faiths opposed to social security. Federal tax forms 2012 , Form 4361. Federal tax forms 2012 Form W-10, Getting the information. Federal tax forms 2012 Form W-2 Dependent care benefits, Statement for employee. Federal tax forms 2012 Form W-7, Individual taxpayer identification number (ITIN) for aliens. Federal tax forms 2012 Free tax services, Free help with your tax return. Federal tax forms 2012 H Help (see Tax help) Household services, Care of a Qualifying Person, Household Services, Meals and lodging provided for housekeeper. Federal tax forms 2012 Employment taxes, How To Claim the Credit Housekeepers, Housekeeper. Federal tax forms 2012 I Identification of provider, Provider Identification Test, Provider refusal. Federal tax forms 2012 Individual taxpayer identification numbers (ITINs) For aliens, Individual taxpayer identification number (ITIN) for aliens. Federal tax forms 2012 Inmate, What is not earned income? J Joint return test, Joint Return Test, Costs of keeping up a home. Federal tax forms 2012 Tests to claim credit, Tests To Claim the Credit L Limits Amount of credit, Limit on credit. Federal tax forms 2012 Dollar, Dollar Limit Earned income, Earned Income Limit Reduced dollar, Tests To Claim the Credit, Reduced Dollar Limit Looking for work, Working or Looking for Work Losses, Net loss. Federal tax forms 2012 M Married and living apart, Married and living apart. Federal tax forms 2012 Meals and lodging for housekeeper, Meals and lodging provided for housekeeper. Federal tax forms 2012 Medical expenses, Medical expenses. Federal tax forms 2012 Minister, Clergy or church employee. Federal tax forms 2012 Missing children, photographs of, Reminders N Nonrefundability of credit, Tax credit not refundable. Federal tax forms 2012 Not able to care for self Qualifying person test, Physically or mentally not able to care for oneself. Federal tax forms 2012 Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 , Working or Looking for Work, You or your spouse is a student or not able to care for self. Federal tax forms 2012 O Outside of home care, Care outside your home. Federal tax forms 2012 P Part of year Persons qualifying for, Person qualifying for part of year. Federal tax forms 2012 Work or looking for work, Work for part of year. Federal tax forms 2012 Part-time work, Part-time work. Federal tax forms 2012 Prepaid expenses, Expenses prepaid in an earlier year. Federal tax forms 2012 Prisoner, What is not earned income? Provider identification test, Tests To Claim the Credit, Provider Identification Test, Provider refusal. Federal tax forms 2012 Publications (see Tax help) Q Qualifying child, Qualifying child. Federal tax forms 2012 Qualifying person Care for, Care of a Qualifying Person Expenses not for care, Expenses not for care. Federal tax forms 2012 Qualifying person test, Qualifying Person Test, Child of divorced or separated parents or parents living apart. Federal tax forms 2012 Tests to claim credit, Tests To Claim the Credit R Recordkeeping requirements, How To Claim the Credit Reduced dollar limit, Reduced Dollar Limit Tests to claim credit, Tests To Claim the Credit Refusal by provider to give information, Provider refusal. Federal tax forms 2012 Reimbursed expenses, Expenses reimbursed. Federal tax forms 2012 Relatives, payments to, Tests To Claim the Credit, Payments to Relatives or Dependents Religious faiths opposed to social security programs, Members of certain religious faiths opposed to social security. Federal tax forms 2012 S School expenses, Education. Federal tax forms 2012 Self-employed persons, Self-employment earnings. Federal tax forms 2012 Separated parents, Child of divorced or separated parents or parents living apart. Federal tax forms 2012 , Legally separated. Federal tax forms 2012 Separated spouse, Separated spouse. Federal tax forms 2012 Sick days, Temporary absence from work. Federal tax forms 2012 Social Security, Employment Taxes for Household Employers (see also Employment taxes) Religious faiths opposed to, Members of certain religious faiths opposed to social security. Federal tax forms 2012 Social security numbers, Information needed. Federal tax forms 2012 Spouse Both spouses qualifying, Both spouses qualify. Federal tax forms 2012 Death of, Death of spouse. Federal tax forms 2012 Nonworking, earned income, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 Not able to care for self, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 , Working or Looking for Work, You or your spouse is a student or not able to care for self. Federal tax forms 2012 Qualifying person, Qualifying Person Test Separated, Separated spouse. Federal tax forms 2012 Student, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 , You or your spouse is a student or not able to care for self. Federal tax forms 2012 Surviving, Surviving spouse. Federal tax forms 2012 Working, Spouse works. Federal tax forms 2012 Students Full-time, Full-time student. Federal tax forms 2012 Spouse, Rule for student-spouse or spouse not able to care for self. Federal tax forms 2012 , You or your spouse is a student or not able to care for self. Federal tax forms 2012 T Tax help, How To Get Tax Help Taxes on wages (see Employment taxes) Taxpayer identification number (TINs), Reminders, Taxpayer identification number. Federal tax forms 2012 Adoption, Adoption taxpayer identification number (ATIN). Federal tax forms 2012 Aliens, Individual taxpayer identification number (ITIN) for aliens. Federal tax forms 2012 Providers, Information needed. Federal tax forms 2012 Temporary absence, Temporary absence from work. Federal tax forms 2012 Tests to claim credit, Tests To Claim the Credit, Exclusion or deduction. Federal tax forms 2012 Determination, Tests To Claim the Credit Earned income, Earned Income Test Qualifying persons, Qualifying Person Test Work-related expenses, Work-Related Expense Test Transportation, Transportation. Federal tax forms 2012 TTY/TDD information, How To Get Tax Help U Unearned income, What is not earned income? V Vacation, Temporary absence from work. Federal tax forms 2012 Volunteer work, Volunteer work. Federal tax forms 2012 W Wages, taxes on (see Employment taxes) Withholding Federal income tax, Employment Taxes for Household Employers Work-related expense test, Work-Related Expense Test, Payments to Relatives or Dependents Partly work-related expenses, Expenses partly work-related. Federal tax forms 2012 Tests to claim credit, Tests To Claim the Credit Work-related expenses Earned income limit, Earned Income Limit Figuring of credit, Figuring Total Work-Related Expenses Medical, Medical expenses. Federal tax forms 2012 Paid following year, Expenses not paid until the following year. Federal tax forms 2012 , Payments for prior year's expenses. Federal tax forms 2012 , Worksheet A. Federal tax forms 2012 Worksheet for 2012 Expenses Paid in 2013 Partly work-related expenses, Expenses partly work-related. Federal tax forms 2012 Prepaid, Expenses prepaid in an earlier year. Federal tax forms 2012 Recordkeeping, How To Claim the Credit Reimbursed, Expenses reimbursed. Federal tax forms 2012 Worksheets 2012 expenses paid in 2013 (Worksheet A), Worksheet A. Federal tax forms 2012 Worksheet for 2012 Expenses Paid in 2013 Prev  Up     Home   More Online Publications
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Limits of Free File Fillable Forms

Free File Fillable Forms is a good tool for many taxpayers, especially those who like to do their own taxes and want to take advantage of a free offer. Depending on the forms you must file and the information you need to provide, you may not be able to use Free File Fillable Forms to complete, and e-file your return. Below we list circumstances that will prevent you from filing your return electronically using Fillable Forms. If these apply to you, you can still use Fillable Forms, but you won't be able to e-file.  

  • You need to use one of the few forms and/or schedules that is not supported by e-file.
  • Free File Fillable Forms does not accept miscellaneous pdf attachments and you are required to attach a statement to your return. 
  • You cannot use Free File Fillable Forms to prepare and e-file your state income tax return. If your income is $58,000 or less, you may want to use Free File.
  • The program supports the use of only one six-digit Identity Protection Personal Identification Number (IP PIN). On Married filing jointly returns, the person who has been issued the IP PIN must be listed as the first (or Primary) taxpayer on the return. You will not be able to use Free File Fillable Forms to e-file your return if you and your spouse are filing jointly and you each have a unique six-digit Identity Protection Personal Identification Number (IP PIN). There is no place to enter a second IP PIN.
  • You will not be able to e-file if you have more than 30W-2s or W2-Gs.

Below is the list of unsupported forms in numerical order, a few unsupported schedules, and a couple of other issues you should know about before you start.   

Forms

  • Form 4562, Depreciation and Amortization (Including Information on Listed Property): Form 4562 is not available from the “Add/View Forms” menu. This form is an attachment to Schedule C and Schedule E. The form is selected from the “Add” button directly from Schedule C and Schedule E. If you need to associate more than one Form 4562 to a Schedule C or Schedule E, you must create another Schedule C or Schedule E to associate with the additional Form 4562. The asset shown on Form 4562 must be listed on its “parent” Schedule C or Schedule E.
  • Form 6198, At Risk Limitations: Form 6198 is not available from the “Add/View Forms” menu.  You can add this form only from Schedule C. You may only associate one Form 6198 to a Schedule C. If you need to associate more than one Form 6198 to a Schedule C, create another Schedule C’s for the same business. Associate one form 6198 to one Schedule C and the other form 6198 to the second Schedule C (properly allocating all other income and expense items).
  • Form 8283, Noncash Charitable Contributions with 1098C: Contributions of Motor Vehicles, Boats and Airplanes: Taxpayers are required to submit Form 1098C with Form 8283 if they donate a vehicle valued at $500 or more. Form 1098C is not supported; therefore, the taxpayer must mail in the return with the Form 1098C attached. The program restricts the user to attaching no more than four (4) 8283 Forms.
  • Form 8829, Expense for Business Use of Home: This form is not available from the “Add/View Forms” menu. You can only attach Form 8829 by first opening the associated Schedule C. You may only associate one Form 8829 to a Schedule C. If you need to associate more than one Form 8829 to a Schedule C, create another  Schedule C’s for the same business – associate one form 8829 to one Schedule C and the other form 8829 to the second Schedule C (properly allocating all other income and expense items).
  • Form 8889, Health Savings Accounts (HSAs):  If the Death of Account Beneficiary provision applies to you and you are not required to complete Part I, you will not be able to e-file your return with form 8889. You may complete your return, using Form 8889 and mail in your return.
  • Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit: This form will only support one qualifying vehicle. If you are trying to claim more than one qualifying vehicle, you will not be able to use this form and e-file your return.
  • Form 8938, Statement of Foreign Financial Assets: Taxpayers may only attach one of these forms to their return.
  • Form 8949, Sales and Other Dispositions of Capital Assets: This form does not support text (e.g., “VARIOUS” or “INHERITED”) in columns used for dates (numbers).
  • Temporary Limitation for Form 8959, Additional Medicare Tax: If you are attaching this form and Form 8960, you will not be able to successfully e-file your return until after March 27.
  • Temporary Limitation for Form 8960, Net Investment Income Tax Individuals, Estates and Trusts: If you are attaching this form and Form 8959, you will not be able to successfully e-file your return until after March 27.

Schedules

  • Schedule 8812, Child Tax Credit (Special Circumstances): For each child that meets the Special Circumstances described in the instructions, you must only select the “No” box, for the applicable lines A – D, in Part 1. Do not select both boxes, per the instructions for the schedule. Presently, Schedule 8812 will not accept more than four (4) qualifying children and you are not able to add more than one (1) Schedule 8812 to a return. If you have more than four (4) qualifying children to add to Schedule 8812, you will not be able to e-file the return.
  • Schedule C, Profit or Loss from Business: The form does not support the Simplified Method for calculating expenses for business use of your home. You must use Form 8829 to calculate the expense.
  • Schedule D, Capital Gains and Losses: Does not support text (e.g., “EXPIRED” or “WORTHLESS”) in columns used for dates (numbers)
  • Schedule E, Supplemental Income and Loss: The program does not support multiple copies of page 2 of Schedule E. Taxpayers who need to list more entities than Parts II, III and IV allow will not be able to use this program to complete their tax return.
  • W-2 and W2-G: The program will not allow the user to add more than thirty (30) W-2s or thirty (30) W2-Gs.

Additional Issues

  • Tax Literals: We use "tax literals" to describe information that taxpayers sometimes enter in small grey boxes located to the left of the input field on tax forms. The program only supports one tax literal on any single line for forms 1040, 1040A and 1040EZ. Generally, a tax literal will consist of two grey boxes, the first box is for the description (text) and the second is for the related amount. Where lines have one tax literal box, only the description can be entered in the field. If your return requires multiple literals on a single line (either multiple text only fields or multiple text and amount fields) or if you have a literal that is required on a form other than forms 1040, 1040A and 1040EZ, you may not be able to e-file using this program. Additionally, if you need to enter a tax literal, you must type in the tax literal exactly as written in the instructions. Incorrect capitalization and/or spelling of tax literals will result in a rejected return.
  • International (Foreign) Filers: Taxpayers who need to file a Foreign Employer Compensation Record (FEC) will not be able to e-file their return using Fillable Forms. Additionally, taxpayers with a foreign address, a spouse or a child who needs to be identified on the return, and a spouse or dependent without a SSN or an ITIN may not be able to e-file using Fillable Forms.
    • Foreign phone numbers are not supported on 1040 forms or on Step 2 Section 5- Payment. 
    • Direct Debits for payments on a balance due:  International filers that have a U.S. bank should use that bank to debit funds from their account. If there is no U.S. bank account, international filers should contact their foreign bank and find out if the bank has a U.S. affiliate. If there is a U.S. affiliate bank, international taxpayers should use the affiliate bank's (domestic) RTN in any payment request submitted to IRS.
    • Direct deposit of refund into foreign bank: You cannot direct deposit a refund into a foreign bank account. Direct deposit is only available for bank accounts located in the United States.

 

Page Last Reviewed or Updated: 25-Mar-2014

The Federal Tax Forms 2012

Federal tax forms 2012 Listed Property Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Listed Property DefinedPassenger Automobile Defined Dwelling Unit Other Property Used for Transportation Computers and Related Peripheral Equipment Predominant Use TestMeeting the Predominant Use Test Qualified Business Use Method of Allocating Use Applying the Predominant Use Test Deductions After Recovery Period Leased PropertyLessor Lessee What Records Must Be KeptAdequate Records Reporting Information on Form 4562 Deductions in Later Years Appendix Topics - This chapter discusses: Listed property defined The predominant use test What records must be kept Useful Items - You may want to see: Publication 463 Travel, Entertainment, and Gift Expenses 587 Business Use of Your Home (Including Use by Day-Care Providers) 917 Business Use of a Car 946 How To Depreciate Property Form (and Instructions) 2106–EZ Unreimbursed Employee Business Expenses 2106 Employee Business Expenses 4255 Recapture of Investment Credit 4562 Depreciation and Amortization This chapter discusses some special rules and recordkeeping requirements for listed property. Federal tax forms 2012 For complete coverage of the rules, including the rules concerning passenger automobiles, see Publication 946. Federal tax forms 2012 If listed property is not used predominantly (more than 50%) in a qualified business use as discussed inPredominant Use Test, later, the section 179 deduction is not allowable and the property must be depreciated using the straight line method. Federal tax forms 2012 Listed Property Defined Listed property is any of the following: Any passenger automobile (defined later), Any other property used for transportation, Any property of a type generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment), Any computer and related peripheral equipment, defined later, unless it is used only at a regular business establishment and owned or leased by the person operating the establishment. Federal tax forms 2012 A regular business establishment includes a portion of a dwelling unit (defined later), if, and only if, that portion is used both regularly and exclusively for business as discussed in Publication 587. Federal tax forms 2012 Any cellular telephone (or similar telecommunication equipment) placed in service or leased in a tax year beginning after 1989. Federal tax forms 2012 Passenger Automobile Defined A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (at 6,000 pounds or less of gross vehicle weight for trucks and vans). Federal tax forms 2012 It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile. Federal tax forms 2012 A passenger automobile does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business, and A vehicle used directly in the trade or business of transporting persons or property for compensation or hire. Federal tax forms 2012 Dwelling Unit A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Federal tax forms 2012 It does not include a unit in a hotel, motel, inn, or other establishment where more than half the units are used on a transient basis. Federal tax forms 2012 Other Property Used for Transportation Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles for transporting persons or goods. Federal tax forms 2012 Listed property does not include: Any vehicle which, by reason of its design, is not likely to be used more than a minimal amount for personal purposes, such as clearly marked police and fire vehicles, ambulances, or hearses used for those purposes, Any vehicle that is designed to carry cargo and that has a loaded gross vehicle weight over 14,000 pounds, bucket trucks (cherry pickers), cement mixers, combines, cranes and derricks, delivery trucks with seating only for the driver (or only for the driver plus a folding jump seat), dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks, Any passenger bus used for that purpose with a capacity of at least 20 passengers and school buses, Any tractor or other special purpose farm vehicle, and unmarked vehicles used by law enforcement officers if the use is officially authorized, and Any vehicle, such as a taxicab, if substantially all its use is in the trade or business of providing services to transport persons or property for compensation or hire by unrelated persons. Federal tax forms 2012 Computers and Related Peripheral Equipment A computer is a programmable electronically activated device that: Is capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention, and Consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. Federal tax forms 2012 Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. Federal tax forms 2012 Computer or peripheral equipment does not include: Any equipment which is an integral part of property which is not a computer, Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment, and Equipment of a kind, used primarily for the user's amusement or entertainment, such as video games. Federal tax forms 2012 Predominant Use Test If “listed property,” defined earlier, placed in service after June 18, 1984, is not used predominantly (more than 50%) in a qualified business use during any tax year: The section 179 deduction on the property is not allowable, and You must depreciate the property using the straight line method. Federal tax forms 2012 Listed property placed in service before 1987. Federal tax forms 2012   For listed property placed in service before 1987, depreciate the property over the following period: Class of Property Listed Property Recovery Period 3-year property 5 years 5-year property 12 years 10-year property 25 years 18-year real property 40 years 19-year real property 40 years If you must use the above recovery periods for listed property not used predominantly in a trade or business, use the percentages from Table 16 titled Listed Property Not Used Predominantly (Other Than 18- or 19-year Real Property), and Table 17 for 18- or 19-year real property, near the end of this publication in the Appendix. Federal tax forms 2012 Listed property placed in service after 1986. Federal tax forms 2012   For information on listed property placed in service after 1986, see Publication 946. Federal tax forms 2012 Meeting the Predominant Use Test Listed property meets the predominant use test for any tax year if its business use is more than 50% of its total use. Federal tax forms 2012 You must allocate the use of any item of listed property used for more than one purpose during the tax year among its various uses. Federal tax forms 2012 The percentage of investment use of listed property cannot be used as part of the percentage of qualified business use to meet the predominant use test. Federal tax forms 2012 However, the combined total of business and investment use is taken into account to figure your depreciation deduction for the property. Federal tax forms 2012 Note: Property does not stop being predominantly used in a qualified business use because of a transfer at death. Federal tax forms 2012 Example. Federal tax forms 2012 Sarah Bradley uses a home computer 50% of the time to manage her investments. Federal tax forms 2012 She also uses the computer 40% of the time in her part-time consumer research business. Federal tax forms 2012 Sarah's home computer is listed property because it is not used at a regular business establishment. Federal tax forms 2012 Because her business use of the computer does not exceed 50%, the computer is not predominantly used in a qualified business use for the tax year. Federal tax forms 2012 Because she does not meet the predominant use test, she cannot elect a section 179 deduction for this property. Federal tax forms 2012 Her combined rate of business/investment use for determining her depreciation deduction is 90%. Federal tax forms 2012 Qualified Business Use A qualified business use is any use in your trade or business. Federal tax forms 2012 However, it does not include: The use of property held merely to produce income (investment use), The leasing of property to any 5% owner or related person (to the point that the property is used by a 5% owner or person related to the owner or lessee of the property), The use of property as compensation for the performance of services by a 5% owner or related person, or The use of property as compensation for the performance of services by any person (other than a5% owner or related person) unless the value of the use is included in that person's gross income for the use of the property and income tax is withheld on that amount where required. Federal tax forms 2012 See Employees, later. Federal tax forms 2012 5% owner. Federal tax forms 2012   A 5% owner of a business, other than a corporation, is any person who owns more than 5% of the capital or profits interest in the business. Federal tax forms 2012   A 5% owner of a corporation is any person who owns, or is considered to own: More than 5% of the outstanding stock of the corporation, or Stock possessing more than 5% of the total combined voting power of all stock in the corporation. Federal tax forms 2012 Related person. Federal tax forms 2012   A related person is anyone related to a taxpayer as discussed under Related persons, in chapter 2 under Nonqualifying Property in Publication 946. Federal tax forms 2012 Entertainment Use The use of listed property for entertainment, recreation, or amusement purposes is treated as a qualified business use only to the extent that expenses (other than interest and property tax expenses) for its use are deductible as ordinary and necessary business expenses. Federal tax forms 2012 See Publication 463. Federal tax forms 2012 Leasing or Compensatory Use of Aircraft If at least 25% of the total use of any aircraft during the tax year is for a qualified business use, the leasing or compensatory use of the aircraft by a 5% owner or related person is treated as a qualified business use. Federal tax forms 2012 Commuting The use of a vehicle for commuting is not business use, regardless of whether work is performed during the trip. Federal tax forms 2012 Use of Your Passenger Automobile by Another Person If someone else uses your automobile, that use is not business use unless: That use is directly connected with your business, The value of the use is property reported by you as income to the other person and tax is withheld on the income where required, or The value of the use results in a payment of fair market rent. Federal tax forms 2012 Any payment to you for the use of the automobile is treated as a rent payment for 3). Federal tax forms 2012 Employees Any use by an employee of his or her own listed property (or listed property rented by an employee) in performing services as an employee is not business use unless: The use is for the employer's convenience, and The use is required as a condition of employment. Federal tax forms 2012 Use for the employer's convenience. Federal tax forms 2012   Whether the use of listed property is for the employer's convenience must be determined from all the facts. Federal tax forms 2012 The use is for the employer's convenience if it is for a substantial business reason of the employer. Federal tax forms 2012 The use of listed property during the employee's regular working hours to carry on the employer's business is generally for the employer's convenience. Federal tax forms 2012 Use required as a condition of employment. Federal tax forms 2012   Whether the use of listed property is a condition of employment depends on all the facts and circumstances. Federal tax forms 2012 The use of property must be required for the employee to perform duties properly. Federal tax forms 2012 The employer need not explicitly require the employee to use the property. Federal tax forms 2012 A mere statement by the employer that the use of the property is a condition of employment is not sufficient. Federal tax forms 2012 Example 1. Federal tax forms 2012 Virginia Sycamore is employed as a courier with We Deliver which provides local courier services. Federal tax forms 2012 She owns and uses a motorcycle to deliver packages to downtown offices. Federal tax forms 2012 We Deliver explicitly requires all delivery persons to own a small car or motorcycle for use in their employment. Federal tax forms 2012 The company reimburses delivery persons for their costs. Federal tax forms 2012 Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. Federal tax forms 2012 Example 2. Federal tax forms 2012 Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. Federal tax forms 2012 He must travel to these sites on a regular basis. Federal tax forms 2012 Uplift does not furnish an automobile or explicitly require him to use his own automobile. Federal tax forms 2012 However, it reimburses him for any costs he incurs in traveling to the various sites. Federal tax forms 2012 The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. Federal tax forms 2012 Method of Allocating Use For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. Federal tax forms 2012 You determine the percentage of qualified business use by dividing the number of miles the vehicle is driven for business purposes during the year by the total number of miles the vehicle is driven for all purposes (including business miles) during the year. Federal tax forms 2012 For other items of listed property, allocate the property's use on the basis of the most appropriate unit of time. Federal tax forms 2012 For example, you can determine the percentage of business use of a computer by dividing the number of hours the computer is used for business purposes during the year by the total number of hours the computer is used for all purposes (including business hours) during the year. Federal tax forms 2012 Applying the Predominant Use Test You must apply the predominant use test for an item of listed property each year of the recovery period. Federal tax forms 2012 First Recovery Year If any item of listed property is not used predominantly in a qualified business use in the year it is placed in service: The property is not eligible for a section 179 deduction, and The depreciation deduction must be figured using the straight line method. Federal tax forms 2012 Note: The required use of the straight line method for an item of listed property that does not meet the predominant use test is not the same as electing the straight line method. Federal tax forms 2012 It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. Federal tax forms 2012 Years After the First Recovery Year If you use listed property predominantly (more than 50%) in a qualified business use in the tax year you place it in service, but not in a subsequent tax year during the recovery period, the following rules apply: Figure depreciation using the straight line method. Federal tax forms 2012 Do this for each year, beginning with the year you no longer use the property predominantly in a qualified business use, and Figure any excess depreciation on the property and add it to: Your gross income, and The adjusted basis of your property. Federal tax forms 2012 See Recapture of excess depreciation, next. Federal tax forms 2012 Recapture of excess depreciation. Federal tax forms 2012   You must include any excess depreciation in your gross income for the first tax year the property is not predominantly used in a qualified business use. Federal tax forms 2012 Any excess depreciation must also be added to the adjusted basis of your property. Federal tax forms 2012 Excess depreciation is the excess (if any) of: The amount of depreciation allowable for the property (including any section 179 deduction claimed) for tax years before the first tax year the property was not predominantly used in a qualified business use, over The amount of depreciation that would have been allowable for those years if the property were not used predominantly in a qualified business use for the year it was placed in service. Federal tax forms 2012 This means you figure your depreciation using the percentages fromTable 16 or 17. Federal tax forms 2012 For information on investment credit recapture, see the instructions for Form 4255. Federal tax forms 2012 Deductions After Recovery Period When listed property (other than passenger automobiles) is used for business, investment, and personal purposes, no deduction is ever allowable for the personal use. Federal tax forms 2012 In tax years after the recovery period, you must determine if there is any unrecovered basis remaining before you compute the depreciation deduction for that tax year. Federal tax forms 2012 To make this determination, figure the depreciation for earlier tax years as if your property were used 100% for business or investment purposes, beginning with the first tax year in which some or all use is for business or investment. Federal tax forms 2012 See Car Used 50% or Less for Business in Publication 917. Federal tax forms 2012 Leased Property The limitations on cost recovery deductions apply to the rental of listed property. Federal tax forms 2012 The following discussion covers the rules that apply to the lessor (the owner of the property) and the lessee (the person who rents the property from the owner). Federal tax forms 2012 SeeLeasing a Car in Publication 917 for a discussion of leased passenger automobiles. Federal tax forms 2012 Lessor The limitations on cost recovery generally do not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. Federal tax forms 2012 A person is considered regularly engaged in the business of leasing listed property only if contracts for leasing of listed property are entered into with some frequency over a continuous period of time. Federal tax forms 2012 This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of the person's business in its entirety. Federal tax forms 2012 Occasional or incidental leasing activity is insufficient. Federal tax forms 2012 For example, a person leasing only one passenger automobile during a tax year is not regularly engaged in the business of leasing automobiles. Federal tax forms 2012 An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. Federal tax forms 2012 Lessee A lessee of listed property (other than passenger automobiles), must include an amount in gross income called the inclusion amount for the first tax year the property is not used predominantly in a qualified business use. Federal tax forms 2012 Inclusion amount for property leased before 1987. Federal tax forms 2012   You determine the inclusion amount for property leased after June 18, 1984 and before 1987 by multiplying the fair market value of the property by both the average business/investment use percentage and the applicable percentage. Federal tax forms 2012 You can find the applicable percentages for listed property that is 5- or 10-year recovery property in Tables 19 or 20 in Appendix A of Publication 946. Federal tax forms 2012   The lease term for listed property other than 18- or 19-year real property, and residential rental or nonresidential real property, includes options to renew. Federal tax forms 2012 For 18- or 19-year real property and residential rental or nonresidential real property that is listed property, the period of the lease does not include any option to renew at fair market value, determined at the time of renewal. Federal tax forms 2012 You treat two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property as one lease. Federal tax forms 2012 Special rules. Federal tax forms 2012   The lessee adds the inclusion amount to gross income in the next tax year if: The lease term begins within 9 months before the close of the lessee's tax year, The lessee does not use the property predominantly in a qualified business use during that portion of the tax year, and The lease term continues into the lessee's next tax year. Federal tax forms 2012 The lessee determines the inclusion amount by taking into account the average of the business/investment use for both tax years and the applicable percentage for the tax year the lease term begins. Federal tax forms 2012   If the lease term is less than one year, the amount included in gross income is the amount that bears the same ratio to the additional inclusion amount as the number of days in the lease term bears to 365. Federal tax forms 2012 Maximum inclusion amount. Federal tax forms 2012   The inclusion amount cannot be more than the sum of the deductible amounts of rent allocable to the lessee's tax year in which the amount must be included in gross income. Federal tax forms 2012 What Records Must Be Kept You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business/investment use with adequate records or sufficient evidence to support your own statements. Federal tax forms 2012 How long to keep records. Federal tax forms 2012   For listed property, records must be kept for as long as any excess depreciation can be recaptured (included in income). Federal tax forms 2012 Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. Federal tax forms 2012 It is not necessary to record information in an account book, diary, or similar record if the information is already shown on the receipt. Federal tax forms 2012 However, your records should back up your receipts in an orderly manner. Federal tax forms 2012 Elements of Expenditure or Use The records or other documentary evidence must support: The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses, The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year, The date of the expenditure or use, and The business or investment purpose for the expenditure or use. Federal tax forms 2012 Written documents of your expenditure or use are generally better evidence than oral statements alone. Federal tax forms 2012 A written record prepared at or near the time of the expenditure or use has greater value as proof of the expenditure or use. Federal tax forms 2012 A daily log is not required. Federal tax forms 2012 However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time and backed up by other documents is preferable to a statement prepared later. Federal tax forms 2012 Timeliness The elements of an expenditure or use must be recorded at the time you have full knowledge of the elements. Federal tax forms 2012 An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use is generally considered a timely record if in the regular course of business: The statement is submitted by an employee to the employer, or The statement is submitted by an independent contractor to the client or customer. Federal tax forms 2012 For example, a log maintained on a weekly basis, which accounts for use during the week, will be considered a record made at or near the time of use. Federal tax forms 2012 Business Purpose Supported An adequate record of business purpose must generally be in the form of a written statement. Federal tax forms 2012 However, the amount of backup necessary to establish a business purpose depends on the facts and circumstances of each case. Federal tax forms 2012 A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. Federal tax forms 2012 For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. Federal tax forms 2012 Business Use Supported An adequate record contains enough information on each element of every business or investment use. Federal tax forms 2012 The amount of detail required to support the use depends on the facts and circumstances. Federal tax forms 2012 For example, a taxpayer whose only business use of a truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. Federal tax forms 2012 Although an adequate record generally must be written, a record of the business use of listed property, such as a computer or automobile, can be prepared in a computer memory device using a logging program. Federal tax forms 2012 Separate or Combined Expenditures or Uses Each use by you is normally considered a separate use. Federal tax forms 2012 However, repeated uses can be combined as a single item. Federal tax forms 2012 Each expenditure is recorded as a separate item and not combined with other expenditures. Federal tax forms 2012 If you choose, however, amounts spent for the use of listed property during a tax year, such as for gasoline or automobile repairs, can be combined. Federal tax forms 2012 If these expenses are combined, you do not need to support the business purpose of each expense. Federal tax forms 2012 Instead, you can divide the expenses based on the total business use of the listed property. Federal tax forms 2012 Uses which can be considered part of a single use, such as a round trip or uninterrupted business use, can be accounted for by a single record. Federal tax forms 2012 For example, use of a truck to make deliveries at several locations which begin and end at the business premises and can include a stop at the business in between deliveries can be accounted for by a single record of miles driven. Federal tax forms 2012 Use of a passenger automobile by a salesperson for a business trip away from home over a period of time can be accounted for by a single record of miles traveled. Federal tax forms 2012 Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. Federal tax forms 2012 Confidential Information If any of the information on the elements of an expenditure or use is confidential, it does not need to be in the account book or similar record if it is recorded at or near the time of the expenditure or use. Federal tax forms 2012 It must be kept elsewhere and made available as support to the district director on request. Federal tax forms 2012 Substantial Compliance If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the district director's satisfaction, you can establish this element by any evidence the district director deems adequate. Federal tax forms 2012 If you fail to establish that you have substantially complied with the adequate records requirement for an element of an expenditure or use to the district director's satisfaction, you must establish the element: By your own oral or written statement containing detailed information as to the element, and By other evidence sufficient to establish the element. Federal tax forms 2012 If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. Federal tax forms 2012 If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. Federal tax forms 2012 Sampling You can maintain an adequate record for portions of a tax year and use that record to support your business and investment use for the entire tax year if it can be shown by other evidence that the periods for which an adequate record is maintained are representative of use throughout the year. Federal tax forms 2012 Loss of Records When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. Federal tax forms 2012 Reporting Information on Form 4562 If you claim a deduction for any listed property, you must provide the requested information on page 2, Section B of Form 4562. Federal tax forms 2012 If you claim a deduction for any vehicle, you must answer certain questions onpage 2 of Form 4562 to provide information about the vehicle use. Federal tax forms 2012 Employees. Federal tax forms 2012   Employees claiming the standard mileage rate or actual expenses (including depreciation) must use Form 2106 instead of Part V of Form 4562. Federal tax forms 2012 Employees claiming the standard mileage rate may be able to use Form 2106–EZ. Federal tax forms 2012 Employer who provides vehicles to employees. Federal tax forms 2012   An employer who provides vehicles to employees must obtain enough information from those employees to provide the requested information onForm 4562. Federal tax forms 2012   An employer who provides more than five vehicles to employees need not include any information on his or her tax return. Federal tax forms 2012 Instead, the employer must obtain the information from his or her employees and indicate on his or her return that the information was obtained and is being retained. Federal tax forms 2012   You do not need to provide the information requested on page 2 of Form 4562 if, as an employer: You can satisfy the requirements of a written policy statement for vehicles either not used for personal purposes, or not used for personal purposes other than commuting, or You treat all vehicle use by employees as personal use. Federal tax forms 2012 See the instructions for Form 4562. Federal tax forms 2012 Deductions in Later Years When listed property is used for business, investment, and personal purposes, no deduction is allowable for its personal use either in the current year or any later tax year. Federal tax forms 2012 In later years, you must determine if there is any remaining unadjusted or unrecovered basis before you compute the depreciation deduction for that tax year. Federal tax forms 2012 In making this determination, figure the depreciation deductions for earlier tax years as if the listed property were used 100% for business or investment purposes in those years, beginning with the first tax year in which some or all of the property use is for business or investment. Federal tax forms 2012 For more information about deductions after the recovery period for automobiles, see Publication 917. Federal tax forms 2012 Appendix The following tables are for use in figuring depreciation deductions under the ACRS system. Federal tax forms 2012 Table 1. Federal tax forms 2012 15-Year Real Property* (Other Than Low-Inclome Housing) Table 3. Federal tax forms 2012 Low-Income Housing* Table 6 - Table 9 Table 6 - Table 9 Table 10 - Table 13 Table 14 - Table 17 Prev  Up  Next   Home   More Online Publications