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Filing 2012 Taxes Online

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Filing 2012 Taxes Online

Filing 2012 taxes online 4. Filing 2012 taxes online   Transportation Table of Contents Parking fees. Filing 2012 taxes online Advertising display on car. Filing 2012 taxes online Car pools. Filing 2012 taxes online Hauling tools or instruments. Filing 2012 taxes online Union members' trips from a union hall. Filing 2012 taxes online Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. Filing 2012 taxes online These expenses include the cost of transportation by air, rail, bus, taxi, etc. Filing 2012 taxes online , and the cost of driving and maintaining your car. Filing 2012 taxes online Transportation expenses include the ordinary and necessary costs of all of the following. Filing 2012 taxes online Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. Filing 2012 taxes online Tax home is defined in chapter 1. Filing 2012 taxes online Visiting clients or customers. Filing 2012 taxes online Going to a business meeting away from your regular workplace. Filing 2012 taxes online Getting from your home to a temporary workplace when you have one or more regular places of work. Filing 2012 taxes online These temporary workplaces can be either within the area of your tax home or outside that area. Filing 2012 taxes online Transportation expenses do not include expenses you have while traveling away from home overnight. Filing 2012 taxes online Those expenses are travel expenses discussed in chapter 1 . Filing 2012 taxes online However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. Filing 2012 taxes online See Car Expenses , later. Filing 2012 taxes online Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Filing 2012 taxes online However, there may be exceptions to this general rule. Filing 2012 taxes online You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Filing 2012 taxes online Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. Filing 2012 taxes online Illustration of transportation expenses. Filing 2012 taxes online    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. Filing 2012 taxes online You may want to refer to it when deciding whether you can deduct your transportation expenses. Filing 2012 taxes online Temporary work location. Filing 2012 taxes online   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. Filing 2012 taxes online   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. Filing 2012 taxes online   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. Filing 2012 taxes online   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. Filing 2012 taxes online It will not be treated as temporary after the date you determine it will last more than 1 year. Filing 2012 taxes online   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. Filing 2012 taxes online You may have deductible travel expenses as discussed in chapter 1 . Filing 2012 taxes online No regular place of work. Filing 2012 taxes online   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Filing 2012 taxes online   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Filing 2012 taxes online   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Filing 2012 taxes online These are nondeductible commuting expenses. Filing 2012 taxes online Two places of work. Filing 2012 taxes online   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. Filing 2012 taxes online However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. Filing 2012 taxes online   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Filing 2012 taxes online You cannot deduct them. Filing 2012 taxes online Armed Forces reservists. Filing 2012 taxes online   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. Filing 2012 taxes online You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . Filing 2012 taxes online   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. Filing 2012 taxes online In this case, your transportation generally is a nondeductible commuting expense. Filing 2012 taxes online However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. Filing 2012 taxes online   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. Filing 2012 taxes online   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Filing 2012 taxes online These expenses are discussed in chapter 1 . Filing 2012 taxes online   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. Filing 2012 taxes online For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. Filing 2012 taxes online Commuting expenses. Filing 2012 taxes online   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. Filing 2012 taxes online These costs are personal commuting expenses. Filing 2012 taxes online You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Filing 2012 taxes online You cannot deduct commuting expenses even if you work during the commuting trip. Filing 2012 taxes online Example. Filing 2012 taxes online You sometimes use your cell phone to make business calls while commuting to and from work. Filing 2012 taxes online Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Filing 2012 taxes online These activities do not change the trip from personal to business. Filing 2012 taxes online You cannot deduct your commuting expenses. Filing 2012 taxes online Parking fees. Filing 2012 taxes online    Fees you pay to park your car at your place of business are nondeductible commuting expenses. Filing 2012 taxes online You can, however, deduct business-related parking fees when visiting a customer or client. Filing 2012 taxes online Advertising display on car. Filing 2012 taxes online   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Filing 2012 taxes online If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Filing 2012 taxes online Car pools. Filing 2012 taxes online   You cannot deduct the cost of using your car in a nonprofit car pool. Filing 2012 taxes online Do not include payments you receive from the passengers in your income. Filing 2012 taxes online These payments are considered reimbursements of your expenses. Filing 2012 taxes online However, if you operate a car pool for a profit, you must include payments from passengers in your income. Filing 2012 taxes online You can then deduct your car expenses (using the rules in this publication). Filing 2012 taxes online Hauling tools or instruments. Filing 2012 taxes online   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Filing 2012 taxes online However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). Filing 2012 taxes online Union members' trips from a union hall. Filing 2012 taxes online   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. Filing 2012 taxes online Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Filing 2012 taxes online Office in the home. Filing 2012 taxes online   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. Filing 2012 taxes online (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Filing 2012 taxes online ) Examples of deductible transportation. Filing 2012 taxes online   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Filing 2012 taxes online Example 1. Filing 2012 taxes online You regularly work in an office in the city where you live. Filing 2012 taxes online Your employer sends you to a 1-week training session at a different office in the same city. Filing 2012 taxes online You travel directly from your home to the training location and return each day. Filing 2012 taxes online You can deduct the cost of your daily round-trip transportation between your home and the training location. Filing 2012 taxes online Example 2. Filing 2012 taxes online Your principal place of business is in your home. Filing 2012 taxes online You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Filing 2012 taxes online Example 3. Filing 2012 taxes online You have no regular office, and you do not have an office in your home. Filing 2012 taxes online In this case, the location of your first business contact inside the metropolitan area is considered your office. Filing 2012 taxes online Transportation expenses between your home and this first contact are nondeductible commuting expenses. Filing 2012 taxes online Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Filing 2012 taxes online While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. Filing 2012 taxes online Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. Filing 2012 taxes online You generally can use one of the two following methods to figure your deductible expenses. Filing 2012 taxes online Standard mileage rate. Filing 2012 taxes online Actual car expenses. Filing 2012 taxes online If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. Filing 2012 taxes online See Leasing a Car , later. Filing 2012 taxes online In this publication, “car” includes a van, pickup, or panel truck. Filing 2012 taxes online For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. Filing 2012 taxes online Rural mail carriers. Filing 2012 taxes online   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. Filing 2012 taxes online Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. Filing 2012 taxes online   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). Filing 2012 taxes online You must complete Form 2106 and attach it to your Form 1040, U. Filing 2012 taxes online S. Filing 2012 taxes online Individual Income Tax Return. Filing 2012 taxes online   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Filing 2012 taxes online It is given as an equipment maintenance allowance (EMA) to employees of the U. Filing 2012 taxes online S. Filing 2012 taxes online Postal Service. Filing 2012 taxes online It is at the rate contained in the 1991 collective bargaining agreement. Filing 2012 taxes online Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Filing 2012 taxes online See your employer for information on your reimbursement. Filing 2012 taxes online    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Filing 2012 taxes online Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. Filing 2012 taxes online For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Filing 2012 taxes online If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. Filing 2012 taxes online You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. Filing 2012 taxes online See Choosing the standard mileage rate and Standard mileage rate not allowed, later. Filing 2012 taxes online You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. Filing 2012 taxes online See chapter 6 for more information on reimbursements . Filing 2012 taxes online Choosing the standard mileage rate. Filing 2012 taxes online   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Filing 2012 taxes online Then, in later years, you can choose to use either the standard mileage rate or actual expenses. Filing 2012 taxes online   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Filing 2012 taxes online For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. Filing 2012 taxes online   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Filing 2012 taxes online You cannot revoke the choice. Filing 2012 taxes online However, in later years, you can switch from the standard mileage rate to the actual expenses method. Filing 2012 taxes online If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. Filing 2012 taxes online Example. Filing 2012 taxes online Larry is an employee who occasionally uses his own car for business purposes. Filing 2012 taxes online He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. Filing 2012 taxes online Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. Filing 2012 taxes online   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. Filing 2012 taxes online Standard mileage rate not allowed. Filing 2012 taxes online   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. Filing 2012 taxes online (See Rural mail carriers , earlier. Filing 2012 taxes online ) Note. Filing 2012 taxes online You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. Filing 2012 taxes online Five or more cars. Filing 2012 taxes online   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. Filing 2012 taxes online However, you may be able to deduct your actual expenses for operating each of the cars in your business. Filing 2012 taxes online See Actual Car Expenses , later, for information on how to figure your deduction. Filing 2012 taxes online   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. Filing 2012 taxes online   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. Filing 2012 taxes online Example 1. Filing 2012 taxes online Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. Filing 2012 taxes online She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. Filing 2012 taxes online Example 2. Filing 2012 taxes online Tony and his employees use his four pickup trucks in his landscaping business. Filing 2012 taxes online During the year, he traded in two of his old trucks for two newer ones. Filing 2012 taxes online Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. Filing 2012 taxes online Example 3. Filing 2012 taxes online Chris owns a repair shop and an insurance business. Filing 2012 taxes online He and his employees use his two pickup trucks and van for the repair shop. Filing 2012 taxes online Chris alternates using his two cars for the insurance business. Filing 2012 taxes online No one else uses the cars for business purposes. Filing 2012 taxes online Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. Filing 2012 taxes online Example 4. Filing 2012 taxes online Maureen owns a car and four vans that are used in her housecleaning business. Filing 2012 taxes online Her employees use the vans, and she uses the car to travel to various customers. Filing 2012 taxes online Maureen cannot use the standard mileage rate for the car or the vans. Filing 2012 taxes online This is because all five vehicles are used in Maureen's business at the same time. Filing 2012 taxes online She must use actual expenses for all vehicles. Filing 2012 taxes online Interest. Filing 2012 taxes online   If you are an employee, you cannot deduct any interest paid on a car loan. Filing 2012 taxes online This applies even if you use the car 100% for business as an employee. Filing 2012 taxes online   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. Filing 2012 taxes online For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). Filing 2012 taxes online You cannot deduct the part of the interest expense that represents your personal use of the car. Filing 2012 taxes online    If you use a home equity loan to purchase your car, you may be able to deduct the interest. Filing 2012 taxes online See Publication 936, Home Mortgage Interest Deduction, for more information. Filing 2012 taxes online Personal property taxes. Filing 2012 taxes online   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. Filing 2012 taxes online You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. Filing 2012 taxes online   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). Filing 2012 taxes online If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). Filing 2012 taxes online Parking fees and tolls. Filing 2012 taxes online   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Filing 2012 taxes online (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Filing 2012 taxes online ) Sale, trade-in, or other disposition. Filing 2012 taxes online   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. Filing 2012 taxes online See Disposition of a Car , later. Filing 2012 taxes online Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. Filing 2012 taxes online If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. Filing 2012 taxes online Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. Filing 2012 taxes online Continue to keep records, as explained later in chapter 5 . Filing 2012 taxes online Business and personal use. Filing 2012 taxes online   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. Filing 2012 taxes online You can divide your expense based on the miles driven for each purpose. Filing 2012 taxes online Example. Filing 2012 taxes online You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. Filing 2012 taxes online You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. Filing 2012 taxes online Employer-provided vehicle. Filing 2012 taxes online   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. Filing 2012 taxes online You cannot use the standard mileage rate. Filing 2012 taxes online See Vehicle Provided by Your Employer in chapter 6. Filing 2012 taxes online Interest on car loans. Filing 2012 taxes online   If you are an employee, you cannot deduct any interest paid on a car loan. Filing 2012 taxes online This interest is treated as personal interest and is not deductible. Filing 2012 taxes online If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. Filing 2012 taxes online Taxes paid on your car. Filing 2012 taxes online   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Filing 2012 taxes online Enter the amount paid on line 7 of Schedule A (Form 1040). Filing 2012 taxes online Sales taxes. Filing 2012 taxes online   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. Filing 2012 taxes online Fines and collateral. Filing 2012 taxes online   You cannot deduct fines you pay or collateral you forfeit for traffic violations. Filing 2012 taxes online Casualty and theft losses. Filing 2012 taxes online   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. Filing 2012 taxes online See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. Filing 2012 taxes online Depreciation and section 179 deductions. Filing 2012 taxes online   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Filing 2012 taxes online Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. Filing 2012 taxes online However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Filing 2012 taxes online Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. Filing 2012 taxes online The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. Filing 2012 taxes online   Generally, there are limits on these deductions. Filing 2012 taxes online Special rules apply if you use your car 50% or less in your work or business. Filing 2012 taxes online   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. Filing 2012 taxes online   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. Filing 2012 taxes online Car defined. Filing 2012 taxes online   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Filing 2012 taxes online Its unloaded gross vehicle weight must not be more than 6,000 pounds. Filing 2012 taxes online A car includes any part, component, or other item physically attached to it or usually included in the purchase price. Filing 2012 taxes online   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. Filing 2012 taxes online Qualified nonpersonal use vehicles. Filing 2012 taxes online   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Filing 2012 taxes online They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Filing 2012 taxes online Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. Filing 2012 taxes online More information. Filing 2012 taxes online   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. Filing 2012 taxes online Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. Filing 2012 taxes online If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. Filing 2012 taxes online There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. Filing 2012 taxes online See Depreciation Limits, later. Filing 2012 taxes online You can claim the section 179 deduction only in the year you place the car in service. Filing 2012 taxes online For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. Filing 2012 taxes online Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. Filing 2012 taxes online A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. Filing 2012 taxes online Example. Filing 2012 taxes online In 2012, you bought a new car and used it for personal purposes. Filing 2012 taxes online In 2013, you began to use it for business. Filing 2012 taxes online Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. Filing 2012 taxes online However, you can claim a depreciation deduction for the business use of the car starting in 2013. Filing 2012 taxes online See Depreciation Deduction , later. Filing 2012 taxes online More than 50% business use requirement. Filing 2012 taxes online   You must use the property more than 50% for business to claim any section 179 deduction. Filing 2012 taxes online If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Filing 2012 taxes online The result is the cost of the property that can qualify for the section 179 deduction. Filing 2012 taxes online Example. Filing 2012 taxes online Peter purchased a car in April 2013 for $24,500 and used it 60% for business. Filing 2012 taxes online Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). Filing 2012 taxes online But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. Filing 2012 taxes online Limits. Filing 2012 taxes online   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. Filing 2012 taxes online Limit on the amount of the section 179 deduction. Filing 2012 taxes online   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. Filing 2012 taxes online   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. Filing 2012 taxes online If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Filing 2012 taxes online   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. Filing 2012 taxes online   If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Filing 2012 taxes online   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. Filing 2012 taxes online You must allocate the dollar limit (after any reduction) between you. Filing 2012 taxes online   For more information on the above section 179 deduction limits, see Publication 946. Filing 2012 taxes online Limit for sport utility and certain other vehicles. Filing 2012 taxes online   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. Filing 2012 taxes online This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. Filing 2012 taxes online However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Filing 2012 taxes online    Limit on total section 179, special depreciation allowance, and depreciation deduction. Filing 2012 taxes online   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. Filing 2012 taxes online The limit is reduced if your business use of the car is less than 100%. Filing 2012 taxes online See Depreciation Limits , later, for more information. Filing 2012 taxes online Example. Filing 2012 taxes online In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. Filing 2012 taxes online However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). Filing 2012 taxes online Cost of car. Filing 2012 taxes online   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. Filing 2012 taxes online For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. Filing 2012 taxes online Your cost includes only the cash you paid. Filing 2012 taxes online Basis of car for depreciation. Filing 2012 taxes online   The amount of the section 179 deduction reduces your basis in your car. Filing 2012 taxes online If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. Filing 2012 taxes online The resulting amount is the basis in your car you use to figure your depreciation deduction. Filing 2012 taxes online When to choose. Filing 2012 taxes online   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. Filing 2012 taxes online How to choose. Filing 2012 taxes online    Employees use Form 2106 to make this choice and report the section 179 deduction. Filing 2012 taxes online All others use Form 4562. Filing 2012 taxes online   File the appropriate form with either of the following. Filing 2012 taxes online Your original tax return filed for the year the property was placed in service (whether or not you file it timely). Filing 2012 taxes online An amended return filed within the time prescribed by law. Filing 2012 taxes online An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Filing 2012 taxes online The amended return must also include any resulting adjustments to taxable income. Filing 2012 taxes online    You must keep records that show the specific identification of each piece of qualifying section 179 property. Filing 2012 taxes online These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Filing 2012 taxes online Revoking an election. Filing 2012 taxes online   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. Filing 2012 taxes online Recapture of section 179 deduction. Filing 2012 taxes online   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. Filing 2012 taxes online If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. Filing 2012 taxes online Any section 179 deduction claimed on the car is included in calculating the excess depreciation. Filing 2012 taxes online For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. Filing 2012 taxes online Dispositions. Filing 2012 taxes online   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. Filing 2012 taxes online You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). Filing 2012 taxes online For information on the disposition of a car, see Disposition of a Car , later. Filing 2012 taxes online Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. Filing 2012 taxes online The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). Filing 2012 taxes online The special depreciation allowance applies only for the first year the car is placed in service. Filing 2012 taxes online To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). Filing 2012 taxes online Combined depreciation. Filing 2012 taxes online   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). Filing 2012 taxes online For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Filing 2012 taxes online See Depreciation Limits , later in this chapter. Filing 2012 taxes online Qualified car. Filing 2012 taxes online   To be a qualified car (including trucks and vans), the car must meet all of the following tests. Filing 2012 taxes online You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. Filing 2012 taxes online Election not to claim the special depreciation allowance. Filing 2012 taxes online   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. Filing 2012 taxes online If you make this election, it applies to all 5-year property placed in service during the year. Filing 2012 taxes online   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. Filing 2012 taxes online    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. Filing 2012 taxes online Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. Filing 2012 taxes online This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. Filing 2012 taxes online You generally need to know the following things about the car you intend to depreciate. Filing 2012 taxes online Your basis in the car. Filing 2012 taxes online The date you place the car in service. Filing 2012 taxes online The method of depreciation and recovery period you will use. Filing 2012 taxes online Basis. Filing 2012 taxes online   Your basis in a car for figuring depreciation is generally its cost. Filing 2012 taxes online This includes any amount you borrow or pay in cash, other property, or services. Filing 2012 taxes online   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). Filing 2012 taxes online However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). Filing 2012 taxes online For one of these situations see Exception under Methods of depreciation, later. Filing 2012 taxes online   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. Filing 2012 taxes online Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . Filing 2012 taxes online Placed in service. Filing 2012 taxes online   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. Filing 2012 taxes online Depreciation begins when the car is placed in service for use in your work or business or for the production of income. Filing 2012 taxes online   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. Filing 2012 taxes online Car placed in service and disposed of in the same year. Filing 2012 taxes online   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. Filing 2012 taxes online Methods of depreciation. Filing 2012 taxes online   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). Filing 2012 taxes online MACRS is discussed later in this chapter. Filing 2012 taxes online Exception. Filing 2012 taxes online   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. Filing 2012 taxes online You must use straight line depreciation over the estimated remaining useful life of the car. Filing 2012 taxes online   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. Filing 2012 taxes online The rate per mile varies depending on the year(s) you used the standard mileage rate. Filing 2012 taxes online For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. Filing 2012 taxes online   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . Filing 2012 taxes online You must use your adjusted basis in your car to figure your depreciation deduction. Filing 2012 taxes online For additional information on the straight line method of depreciation, see Publication 946. Filing 2012 taxes online More-than-50%-use test. Filing 2012 taxes online   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. Filing 2012 taxes online You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. Filing 2012 taxes online   If your business use is 50% or less, you must use the straight line method to depreciate your car. Filing 2012 taxes online This is explained later under Car Used 50% or Less for Business . Filing 2012 taxes online Qualified business use. Filing 2012 taxes online   A qualified business use is any use in your trade or business. Filing 2012 taxes online It does not include use for the production of income (investment use). Filing 2012 taxes online However, you do combine your business and investment use to compute your depreciation deduction for the tax year. Filing 2012 taxes online Use of your car by another person. Filing 2012 taxes online   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. Filing 2012 taxes online It is directly connected with your business. Filing 2012 taxes online It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). Filing 2012 taxes online It results in a payment of fair market rent. Filing 2012 taxes online This includes any payment to you for the use of your car. Filing 2012 taxes online Business use changes. Filing 2012 taxes online   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. Filing 2012 taxes online See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. Filing 2012 taxes online    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. Filing 2012 taxes online Use for more than one purpose. Filing 2012 taxes online   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. Filing 2012 taxes online You do this on the basis of mileage. Filing 2012 taxes online Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. Filing 2012 taxes online Change from personal to business use. Filing 2012 taxes online   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. Filing 2012 taxes online In this case, you figure the percentage of business use for the year as follows. Filing 2012 taxes online Determine the percentage of business use for the period following the change. Filing 2012 taxes online Do this by dividing business miles by total miles driven during that period. Filing 2012 taxes online Multiply the percentage in (1) by a fraction. Filing 2012 taxes online The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. Filing 2012 taxes online Example. Filing 2012 taxes online You use a car only for personal purposes during the first 6 months of the year. Filing 2012 taxes online During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. Filing 2012 taxes online This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Filing 2012 taxes online Your business use for the year is 40% (80% × 6/12). Filing 2012 taxes online Limits. Filing 2012 taxes online   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. Filing 2012 taxes online The maximum amount you can claim depends on the year in which you placed your car in service. Filing 2012 taxes online You have to reduce the maximum amount if you did not use the car exclusively for business. Filing 2012 taxes online See Depreciation Limits , later. Filing 2012 taxes online Unadjusted basis. Filing 2012 taxes online   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . Filing 2012 taxes online Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. Filing 2012 taxes online   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. Filing 2012 taxes online Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Filing 2012 taxes online Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Filing 2012 taxes online Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. Filing 2012 taxes online 1, 2006), and alternative motor vehicle credit. Filing 2012 taxes online   See Form 8910 for information on the alternative motor vehicle credit. Filing 2012 taxes online If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. Filing 2012 taxes online See Car Used 50% or Less for Business, later, for more information. Filing 2012 taxes online If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. Filing 2012 taxes online Improvements. Filing 2012 taxes online   A major improvement to a car is treated as a new item of 5-year recovery property. Filing 2012 taxes online It is treated as placed in service in the year the improvement is made. Filing 2012 taxes online It does not matter how old the car is when the improvement is added. Filing 2012 taxes online Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. Filing 2012 taxes online However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Filing 2012 taxes online Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. Filing 2012 taxes online See Depreciation Limits , later. Filing 2012 taxes online Car trade-in. Filing 2012 taxes online   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. Filing 2012 taxes online You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Filing 2012 taxes online If you make this election, you treat the old car as disposed of at the time of the trade-in. Filing 2012 taxes online The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. Filing 2012 taxes online You then figure your depreciation deduction for the new car beginning with the date you placed it in service. Filing 2012 taxes online You make this election by completing Form 2106, Part II, Section D. Filing 2012 taxes online This method is explained later, beginning at Effect of trade-in on basis . Filing 2012 taxes online If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. Filing 2012 taxes online You must apply two depreciation limits (see Depreciation Limits , later). Filing 2012 taxes online The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. Filing 2012 taxes online The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. Filing 2012 taxes online You must use Form 4562 to compute your depreciation deduction. Filing 2012 taxes online You cannot use Form 2106, Part II, Section D. Filing 2012 taxes online This method is explained in Publication 946. Filing 2012 taxes online   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). Filing 2012 taxes online Otherwise, you must use the method described in (2). Filing 2012 taxes online Effect of trade-in on basis. Filing 2012 taxes online   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Filing 2012 taxes online For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. Filing 2012 taxes online 168(i)-6(d)(3). Filing 2012 taxes online Traded car used only for business. Filing 2012 taxes online   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. Filing 2012 taxes online Example. Filing 2012 taxes online Paul trades in a car that has an adjusted basis of $5,000 for a new car. Filing 2012 taxes online In addition, he pays cash of $20,000 for the new car. Filing 2012 taxes online His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). Filing 2012 taxes online Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. Filing 2012 taxes online Traded car used partly in business. Filing 2012 taxes online   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. Filing 2012 taxes online This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. Filing 2012 taxes online (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. Filing 2012 taxes online See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. Filing 2012 taxes online )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. Filing 2012 taxes online Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. Filing 2012 taxes online For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. Filing 2012 taxes online Modified Accelerated Cost Recovery System (MACRS). Filing 2012 taxes online   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Filing 2012 taxes online   The maximum amount you can deduct is limited, depending on the year you placed your car in service. Filing 2012 taxes online See Depreciation Limits , later. Filing 2012 taxes online Recovery period. Filing 2012 taxes online   Under MACRS, cars are classified as 5-year property. Filing 2012 taxes online You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. Filing 2012 taxes online This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. Filing 2012 taxes online Depreciation deduction for certain Indian reservation property. Filing 2012 taxes online   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. Filing 2012 taxes online The recovery that applies for a business-use car is 3 years instead of 5 years. Filing 2012 taxes online However, the depreciation limits, discussed later, will still apply. Filing 2012 taxes online   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. Filing 2012 taxes online Depreciation methods. Filing 2012 taxes online   You can use one of the following methods to depreciate your car. Filing 2012 taxes online The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Filing 2012 taxes online The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. Filing 2012 taxes online The straight line method (SL) over a 5-year recovery period. Filing 2012 taxes online    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. Filing 2012 taxes online This is because the chart has the switch to the straight line method built into its rates. Filing 2012 taxes online   Before choosing a method, you may wish to consider the following facts. Filing 2012 taxes online Using the straight line method provides equal yearly deductions throughout the recovery period. Filing 2012 taxes online Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. Filing 2012 taxes online MACRS depreciation chart. Filing 2012 taxes online   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Filing 2012 taxes online Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. Filing 2012 taxes online A similar chart appears in the Instructions for Form 2106. Filing 2012 taxes online    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. Filing 2012 taxes online   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. Filing 2012 taxes online You file your return on a fiscal year basis. Filing 2012 taxes online You file your return for a short tax year (less than 12 months). Filing 2012 taxes online During the year, all of the following conditions apply. Filing 2012 taxes online You placed some property in service from January through September. Filing 2012 taxes online You placed some property in service from October through December. Filing 2012 taxes online Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. Filing 2012 taxes online   You placed qualified property in service on an Indian reservation. Filing 2012 taxes online Depreciation in future years. Filing 2012 taxes online   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. Filing 2012 taxes online However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. Filing 2012 taxes online In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. Filing 2012 taxes online See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Filing 2012 taxes online    In future years, do not use the chart in this edition of the publication. Filing 2012 taxes online Instead, use the chart in the publication or the form instructions for those future years. Filing 2012 taxes online Disposition of car during recovery period. Filing 2012 taxes online   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. Filing 2012 taxes online See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. Filing 2012 taxes online How to use the 2013 chart. Filing 2012 taxes online   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. Filing 2012 taxes online Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. Filing 2012 taxes online If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. Filing 2012 taxes online    Your deduction cannot be more than the maximum depreciation limit for cars. Filing 2012 taxes online See Depreciation Limits, later. Filing 2012 taxes online Example. Filing 2012 taxes online Phil bought a used truck in February 2012 to use exclusively in his landscape business. Filing 2012 taxes online He paid $9,200 for the truck with no trade-in. Filing 2012 taxes online Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. Filing 2012 taxes online Phil used the MACRS depreciation chart in 2012 to find his percentage. Filing 2012 taxes online The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. Filing 2012 taxes online He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. Filing 2012 taxes online In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. Filing 2012 taxes online His records show that the business use of his truck was 90% in 2013. Filing 2012 taxes online Phil used Table 4-1 to find his percentage. Filing 2012 taxes online Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. Filing 2012 taxes online He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. Filing 2012 taxes online Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. Filing 2012 taxes online The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. Filing 2012 taxes online The maximum amount you can deduct each year depends on the year you place the car in service. Filing 2012 taxes online These limits are shown in the following tables. Filing 2012 taxes online   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 10,9603 4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Filing 2012 taxes online 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Filing 2012 taxes online 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Filing 2012 taxes online 4$7,660 if you acquired the car before 5/6/2003. Filing 2012 taxes online $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. Filing 2012 taxes online 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. Filing 2012 taxes online Trucks and vans. Filing 2012 taxes online   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. Filing 2012 taxes online A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. Filing 2012 taxes online For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. Filing 2012 taxes online Maximum Depreciation Deduction for Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 $11,3601 $5,300 $3,150 $1,875 2011 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. Filing 2012 taxes online 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. Filing 2012 taxes online Car used less than full year. Filing 2012 taxes online   The depreciation limits are not reduced if you use a car for less than a full year. Filing 2012 taxes online This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. Filing 2012 taxes online However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. Filing 2012 taxes online See Reduction for personal use , next. Filing 2012 taxes online Reduction for personal use. Filing 2012 taxes online   The depreciation limits are reduced based on your percentage of personal use. Filing 2012 taxes online If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. Filing 2012 taxes online Section 179 deduction. Filing 2012 taxes online   The section 179 deduction is treated as a depreciation deduction. Filing 2012 taxes online If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. Filing 2012 taxes online Example. Filing 2012 taxes online On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. Filing 2012 taxes online He used it 80% for his business, and he chooses to take a section 179 deduction for the car. Filing 2012 taxes online The car is not qualified property for purposes of the special depreciation allowance. Filing 2012 taxes online Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. Filing 2012 taxes online This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). Filing 2012 taxes online Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). Filing 2012 taxes online He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. Filing 2012 taxes online Jack has reached his maximum depreciation deduction for 2013. Filing 2012 taxes online For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. Filing 2012 taxes online Deductions in years after the recovery period. Filing 2012 taxes online   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. Filing 2012 taxes online If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. Filing 2012 taxes online Unrecovered basis. Filing 2012 taxes online   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. Filing 2012 taxes online The recovery period. Filing 2012 taxes online   For 5-year property, your recovery period is 6 calendar years. Filing 2012 taxes online A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. Filing 2012 taxes online   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. Filing 2012 taxes online You determine your unrecovered basis in the 7th year after you placed the car in service. Filing 2012 taxes online How to treat unrecovered basis. Filing 2012 taxes online   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. Filing 2012 taxes online The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. Filing 2012 taxes online For example, no deduction is allowed for a year you use your car 100% for personal purposes. Filing 2012 taxes online Example. Filing 2012 taxes online In April 2007, Bob bought and placed in service a car he used exclusively in his business. Filing 2012 taxes online The car cost $31,500. Filing 2012 taxes online Bob did not claim a section 179 deduction or the special depreciation allowance for the car. Filing 2012 taxes online He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). Filing 2012 taxes online For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. Filing 2012 taxes online Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. Filing 2012 taxes online      MACRS     Deprec. Filing 2012 taxes online Year % Amount Limit Allowed 2007 20. Filing 2012 taxes online 00 $6,300 $3,060 $ 3,060 2008 32. Filing 2012 taxes online 00 10,080 4,900 4,900 2009 19. Filing 2012 taxes online 20 6,048 2,850 2,850 2010 11. Filing 2012 taxes online 52 3,629 1,775 1,775 2011 11. Filing 2012 taxes online 52 3,629 1,775 1,775 2012 5. Filing 2012 taxes online 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. Filing 2012 taxes online   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). Filing 2012 taxes online If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. Filing 2012 taxes online   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. Filing 2012 taxes online However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. Filing 2012 taxes online For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. Filing 2012 taxes online Table 4-1. Filing 2012 taxes online 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Filing 2012 taxes online ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. Filing 2012 taxes online   First, using the left column, find the date you first placed the car in service in 2013. Filing 2012 taxes online Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. Filing 2012 taxes online For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. Filing 2012 taxes online Refer back to the MACRS Depreciation Chart for the year you placed the car in service. Filing 2012 taxes online (See Car Used 50% or Less for Business . Filing 2012 taxes online )  Multiply the unadjusted basis of your car by your business use percentage. Filing 2012 taxes online Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. Filing 2012 taxes online (Also see Depreciation Limits . Filing 2012 taxes online )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. Filing 2012 taxes online 1—Sept. Filing 2012 taxes online 30 percentage instead of the Oct. Filing 2012 taxes online 1—Dec. Filing 2012 taxes online 31 percentage for your car. Filing 2012 taxes online               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. Filing 2012 taxes online If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. Filing 2012 taxes online 1—Sept. Filing 2012 taxes online 30 for figuring depreciation for your car. Filing 2012 taxes online See Which Convention Applies? in chapter 4 of Publication 946 for more details. Filing 2012 taxes online               Example. Filing 2012 taxes online You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. Filing 2012 taxes online You
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The Filing 2012 Taxes Online

Filing 2012 taxes online Index A Abandonment, Abandonment Accounting method Accrual, Accrual Method Cash, Cash Method Change in, Changes in Methods of Accounting Crop, Crop method. Filing 2012 taxes online Farm inventory, Farm Inventory Accounting periods, Introduction Accrual method of accounting, Accrual Method Additional Medicare Tax withholding, What's New for 2013, Additional Medicare Tax. Filing 2012 taxes online Adjusted basis for installment sale, Adjusted basis for installment sale purposes. Filing 2012 taxes online Adjusted basis of assets, Adjusted Basis Agricultural activity codes, Schedule F, Reminders Agricultural program payments, Agricultural Program Payments Agricultural structure, defined, Agricultural structure. Filing 2012 taxes online Alternative Depreciation System (ADS), Required use of ADS. Filing 2012 taxes online , ADS election. Filing 2012 taxes online Amortization Going into business, Business Start-Up Costs Reforestation expenses, Reforestation Costs Section 197 intangibles, Section 197 Intangibles Assessments By conservation district, Assessment by Conservation District Depreciable property, Assessment for Depreciable Property Assistance (see Tax help) Automobiles, depreciation, Limits for passenger automobiles. Filing 2012 taxes online B Bankruptcy, Bankruptcy. Filing 2012 taxes online Barter income, Barter income. Filing 2012 taxes online Basis Adjusted, Adjusted basis. Filing 2012 taxes online Installment sale, Adjusted basis for installment sale purposes. Filing 2012 taxes online Involuntary conversion, Basis for depreciation. Filing 2012 taxes online Like-kind exchange, Basis for depreciation. Filing 2012 taxes online Partner's basis, Property Distributed From a Partnership or Corporation Replacement property, Basis of replacement property. Filing 2012 taxes online Shareholder's basis, Property Distributed From a Partnership or Corporation Basis of assets Adjusted basis, Adjusted Basis Allocating to several assets, Allocating the Basis Changed to business use, Property changed from personal to business or rental use. Filing 2012 taxes online Constructing assets, Constructing assets. Filing 2012 taxes online Cost, Cost Basis Decreases, Decreases to Basis Depreciation, What Is the Basis for Depreciation? Exchanges Like-kind, Like-Kind Exchanges Nontaxable, Nontaxable Exchanges Partially nontaxable, Partially Nontaxable Exchanges Taxable, Taxable Exchanges Gifts, Property Received as a Gift Increases, Increases to Basis Real property, Real Property Received for services, Property received for services. Filing 2012 taxes online Uniform capitalization rules, Uniform Capitalization Rules Below-market loans, Below-market loans. Filing 2012 taxes online Books and records, Importance of Records Breeding fees, Breeding Fees Business income limit, section 179 expense deduction, Business Income Limit Business use of home, Business Use of Your Home C Canceled debt, Cancellation of Debt Capital assets, Capital Assets Capital expenses, Capital Expenses Car expenses, Truck and Car Expenses Cash method of accounting, Cash Method Casualties and thefts Adjustments to basis, Adjustments to basis. Filing 2012 taxes online Casualty, defined, Casualty. Filing 2012 taxes online Disaster area losses, Disaster Area Losses Leased property, Leased property. Filing 2012 taxes online Livestock, Livestock or produce bought for resale. Filing 2012 taxes online , Raised draft, breeding, dairy, or sporting animals. Filing 2012 taxes online Reimbursement, Insurance and other reimbursements. Filing 2012 taxes online Reporting gains and losses, Reporting Gains and Losses Theft, defined, Theft. Filing 2012 taxes online Change in accounting method, Changes in Methods of Accounting Chickens, purchased, Chickens, seeds, and young plants. Filing 2012 taxes online Christmas trees, Christmas tree cultivation. Filing 2012 taxes online , Christmas trees. Filing 2012 taxes online Club dues, Club dues and membership fees. Filing 2012 taxes online Comments on publication, Comments and suggestions. Filing 2012 taxes online Commodity Futures, Hedging (Commodity Futures) Wages, Noncash wages. Filing 2012 taxes online Commodity Credit Corporation (CCC) Loans, Commodity Credit Corporation (CCC) Loans Market gain, Market Gain Community property, Community property. Filing 2012 taxes online , Community property. Filing 2012 taxes online Computer, software, Computer software. Filing 2012 taxes online Condemnation, Casualties, Thefts, and Condemnations, Condemnation Conservation Cost-sharing exclusion, Conservation Expenses District assessments, Assessment by Conservation District Expenses, Conservation Expenses Plans, Conservation plan. Filing 2012 taxes online Conservation Reserve Program, Conservation Reserve Program (CRP) payments. Filing 2012 taxes online Conservation Reserve Program (CRP), Conservation Reserve Program (CRP) Constructing assets, Constructing assets. Filing 2012 taxes online Constructive receipt of income, Constructive receipt. Filing 2012 taxes online Contamination, Soil or other environmental contamination. Filing 2012 taxes online Contract price, Contract price. Filing 2012 taxes online Converted wetland, Converted Wetland and Highly Erodible Cropland Cooperatives, income from, Income From Cooperatives Cost-sharing exclusion, Cost-Sharing Exclusion (Improvements) Counter-cyclical payments, Direct payments and counter-cyclical payments. Filing 2012 taxes online , Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Credits Employment, Employment Credits Fuel tax, Fuel tax credit and refund. Filing 2012 taxes online , How To Claim a Credit or Refund, Claiming a Credit Social security and Medicare, Earning credits in 2013. Filing 2012 taxes online Social security coverage, How to become insured under social security. Filing 2012 taxes online State unemployment tax, Tax rate and credit. Filing 2012 taxes online Crew leaders, Crew Leaders Crop Destroyed, Standing crop destroyed by casualty. Filing 2012 taxes online Insurance proceeds, Crop Insurance and Crop Disaster Payments Method of accounting, Crop method. Filing 2012 taxes online Shares, Rents (Including Crop Shares) Unharvested, Cost of raising unharvested crops. Filing 2012 taxes online , Section 1231 transactions. Filing 2012 taxes online , Gain or loss. Filing 2012 taxes online Cropland, highly erodible, Converted Wetland and Highly Erodible Cropland D Damage Casualties and thefts, Casualties and Thefts Crop insurance, Crop Insurance and Crop Disaster Payments Tree seedlings, Tree Seedlings Debt Bad, Nonbusiness bad debt. Filing 2012 taxes online Canceled, Cancellation of Debt, Canceled debt excluded from income. Filing 2012 taxes online , Cancellation of debt. Filing 2012 taxes online , Canceled debt. Filing 2012 taxes online Nonrecourse, Amount realized on a nonrecourse debt. Filing 2012 taxes online Qualified farm, Qualified Farm Debt Qualified principal residence, Qualified Principal Residence Debt Recourse, Amount realized on a recourse debt. Filing 2012 taxes online Depletion, Depletion Depreciation, Claiming the Special Depreciation Allowance ADS election, ADS election. Filing 2012 taxes online Conservation assets, Depreciable conservation assets. Filing 2012 taxes online Deduction, Overview of Depreciation Incorrect amount deducted, How Do You Correct Depreciation Deductions? Limit for automobiles, Limits for passenger automobiles. Filing 2012 taxes online Listed property, Additional Rules for Listed Property Raised livestock, Livestock. Filing 2012 taxes online Recapture, When Do You Recapture MACRS Depreciation?, Depreciation Recapture, Section 1250 Property When to file, Do You Have To File Form 4562? Depreciation allowable, Basis adjustment for depreciation allowed or allowable. Filing 2012 taxes online Depreciation allowed, Basis adjustment for depreciation allowed or allowable. Filing 2012 taxes online Direct payments, Direct payments and counter-cyclical payments. Filing 2012 taxes online , Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Disaster area losses, Disaster Area Losses Disaster payments, Crop Insurance and Crop Disaster Payments Disaster relief grants, Federal disaster relief grants. Filing 2012 taxes online Disaster relief payments, Qualified disaster relief payments. Filing 2012 taxes online Dispositions, Sale or other disposal of land during 9-year period. Filing 2012 taxes online , Gain on sale of farmland. Filing 2012 taxes online , Introduction Domestic production activities deduction, Domestic Production Activities Deduction Dyed diesel fuel, Dyed Diesel Fuel and Dyed Kerosene Dyed kerosene, Dyed Diesel Fuel and Dyed Kerosene E e-file, Reminders Easement, Easements and rights-of-way. Filing 2012 taxes online , Easements. Filing 2012 taxes online Election ADS depreciation, Electing ADS. Filing 2012 taxes online , ADS election. Filing 2012 taxes online Amortization Business start-up costs, Business Start-Up Costs Reforestation costs, Reforestation Costs Crop method, Election to use crop method. Filing 2012 taxes online Cutting of timber, Election to treat cutting as a sale or exchange. Filing 2012 taxes online Deducting conservation expenses, When to Deduct or Capitalize Not excluding cost-sharing payments, Electing not to exclude payments. Filing 2012 taxes online Out of installment method, Electing out of the installment method. Filing 2012 taxes online Postponing casualty gain, Postponing Gain Postponing reporting crop insurance proceeds, Election to postpone reporting until the following year. Filing 2012 taxes online Section 179 expense deduction, How Do You Elect the Deduction? Electronic filing, Reminders Embryo transplants, Transplanted embryo. Filing 2012 taxes online Employer identification number, Reminders, Employer identification number (EIN). Filing 2012 taxes online Endangered species recovery expenses, Endangered species recovery expenses. Filing 2012 taxes online Environmental contamination, Soil or other environmental contamination. Filing 2012 taxes online Estimated tax Farm gross income, Gross Income From Farming Gross income, Gross Income Penalties, Estimated Tax Penalty for 2013 Exchanges Basis Like-kind, Like-Kind Exchanges Nontaxable, Nontaxable Exchanges Partially nontaxable, Partially Nontaxable Exchanges Taxable, Taxable Exchanges Like-kind, Like-Kind Exchanges Nontaxable, Like-Kind Exchanges Excise taxes Credit, Claiming a Credit Diesel fuel, Dyed Diesel Fuel and Dyed Kerosene Farming purposes, Fuels Used in Farming Home use of fuels, Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines Off-highway uses, Fuels Used in Off-Highway Business Use Refund, Claiming a Refund F Fair market value defined, Fair market value (FMV). Filing 2012 taxes online , Fair market value (FMV). Filing 2012 taxes online Family member Business expenses, Special rule for related persons. Filing 2012 taxes online Installment sale, Sale to a related person. Filing 2012 taxes online Like-kind exchange, Like-kind exchanges between related persons. Filing 2012 taxes online Loss on sale or exchange of property, Losses from sales or exchanges between related persons. Filing 2012 taxes online Personal-use property, Personal-use property. Filing 2012 taxes online Social security coverage, Family Employees Farm Business expenses, Farm Business Expenses Business, defined, Business of Farming Defined, Farm defined. Filing 2012 taxes online , Farm. Filing 2012 taxes online Income averaging, Income Averaging for Farmers Rental, Farm rental. Filing 2012 taxes online Sale of, Sale of a Farm Farmer, Farmer. Filing 2012 taxes online Federal unemployment tax (FUTA), Federal Unemployment (FUTA) Tax Fertilizer, Fertilizer and Lime, Fertilizer and Lime Foreclosure, Foreclosure or Repossession Forestation costs, Forestation and reforestation costs. Filing 2012 taxes online Form 1099-A, Form 1099-A. Filing 2012 taxes online , Forms 1099-A and 1099-C. Filing 2012 taxes online 1099-C, Cancellation of Debt, Form 1099-C. Filing 2012 taxes online , Forms 1099-A and 1099-C. Filing 2012 taxes online 1099-G, Market Gain, Payment to More Than One Person 1099-MISC, Reminders, Nonemployee compensation. Filing 2012 taxes online 1099-PATR, Form 1099-PATR. Filing 2012 taxes online 1128, Introduction 2210-F, Estimated Tax Penalty for 2013 3115, Changes in Methods of Accounting 4136, Claiming a Credit 4562, Do You Have To File Form 4562? 4797, Form 4797. Filing 2012 taxes online , Recapture. Filing 2012 taxes online , Reporting the exchange. Filing 2012 taxes online 4835, Rents (Including Crop Shares) 5213, Using the presumption later. Filing 2012 taxes online 6252, Form 6252. Filing 2012 taxes online 8822, Reminders 8824, Reporting the exchange. Filing 2012 taxes online 8849, Claiming a Refund 8886, Reminders 940, Form 940. Filing 2012 taxes online 943, Form 943. Filing 2012 taxes online 982, Form 982 I-9, Form I-9. Filing 2012 taxes online SS-4, Reminders, Employer identification number (EIN). Filing 2012 taxes online SS-5, Obtaining a social security number. Filing 2012 taxes online T (Timber), Form T (Timber). Filing 2012 taxes online W-2, Form W-2. Filing 2012 taxes online W-4, Reminders, New hire reporting. Filing 2012 taxes online , Form W-4. Filing 2012 taxes online W-4V, Commodity Credit Corporation (CCC) Loans, Crop Insurance and Crop Disaster Payments W-7, Obtaining an individual taxpayer identification number. Filing 2012 taxes online Free tax services, How To Get Tax Help, Free help with your tax return. Filing 2012 taxes online Fuel tax credit or refund, Fuel tax credit and refund. Filing 2012 taxes online , How To Claim a Credit or Refund G Gains and losses Basis of assets, Cost Basis Capital assets, defined, Capital Assets Casualty, How To Figure a Loss, Figuring a Gain Installment sales, Installment Sales Livestock, Livestock Long- or short-term, Long and Short Term Ordinary or capital, Ordinary or Capital Gain or Loss Sale of farm, Sale of a Farm Section 1231, Section 1231 Gains and Losses Theft, How To Figure a Loss, Figuring a Gain Timber, Timber General asset accounts, How Do You Use General Asset Accounts? Gifts, Crop shares you give to others (gift). Filing 2012 taxes online , Cost related to gifts. Filing 2012 taxes online , Property Received as a Gift, Gift. Filing 2012 taxes online Going into business, Business Start-Up Costs Grants, disaster relief, Federal disaster relief grants. Filing 2012 taxes online Gross profit percentage, Gross profit percentage. Filing 2012 taxes online Gross profit, defined, Gross profit. Filing 2012 taxes online Guarantee, Debt not payable on demand. Filing 2012 taxes online H Health insurance deduction, Self-employed health insurance deduction. Filing 2012 taxes online Hedging, Hedging (Commodity Futures) Help (see Tax help) Highway use tax, Highway use tax. Filing 2012 taxes online Holding period, Holding period. Filing 2012 taxes online Horticultural structure, Horticultural structure. Filing 2012 taxes online I Illegal irrigation subsidy, Illegal federal irrigation subsidy. Filing 2012 taxes online Important dates, Important Dates for 2014 Improvements, Cost-Sharing Exclusion (Improvements) Income Accounting for, Accounting Methods Accrual method of accounting, Income Canceled debt excluded, Cancellation of Debt From farming, Farm Income, Gross income from farming. Filing 2012 taxes online , Gross Income From Farming Gross, Gross Income Not-for-profit farming, Not-for-Profit Farming Pasture, Pasture income and rental. Filing 2012 taxes online Schedule F, Farm Income Withholding of tax, Federal Income Tax Withholding Income averaging (see Farm: Income averaging) Incorrect amount of depreciation deducted, How Do You Correct Depreciation Deductions? Individual taxpayer identification number (ITIN), Obtaining an individual taxpayer identification number. Filing 2012 taxes online Inherited property, Inherited Property Insolvency, Insolvency. Filing 2012 taxes online Installment sales, Form 6252. Filing 2012 taxes online Electing out, Electing out of the installment method. Filing 2012 taxes online Farm, sale of, Installment Sale of a Farm Figuring income, Figuring Installment Sale Income Reporting income, Form 6252. Filing 2012 taxes online Unstated interest, Unstated interest. Filing 2012 taxes online Insurance, Insurance, Self-employed health insurance deduction. Filing 2012 taxes online Intangible property, Section 197 Intangibles Interest Expense, Interest Income, Interest income. Filing 2012 taxes online Unstated, Unstated interest. Filing 2012 taxes online Inventory Items included, Farm Inventory Methods of valuation, Inventory valuation methods. Filing 2012 taxes online Involuntary conversions, Involuntary Conversions, Property acquired in a like-kind exchange or involuntary conversion. Filing 2012 taxes online , Introduction Irrigation Illegal subsidy, Illegal federal irrigation subsidy. Filing 2012 taxes online Project, Irrigation Project L Labor hired, Labor Hired Landlord participation, Landlord Participation in Farming Lease or purchase, Lease or Purchase Life tenant (see Term interests) Like-kind exchanges, Like-Kind Exchanges, Like-Kind Exchanges Lime, Fertilizer and Lime Limits At-risk, At-Risk Limits Business use of home, Deduction limit. Filing 2012 taxes online Capital losses, Treatment of Capital Losses Conservation expenses, Assessment for Depreciable Property, 25% Limit on Deduction Depreciation Business-use, What Is the Business-Use Requirement? Excluded farm debt, Exclusion limit. Filing 2012 taxes online Farm losses, Losses From Operating a Farm Loss of personal-use property, Deduction Limits on Losses of Personal-Use Property Not-for-profit farming, Not-for-Profit Farming Passive activity, Passive Activity Limits Percentage depletion, Taxable income limit. Filing 2012 taxes online Prepaid farm supplies, Deduction limit. Filing 2012 taxes online Reforestation costs, Reforestation Costs Section 179 expense deduction Automobile, Limits for passenger automobiles. Filing 2012 taxes online Business income, Business Income Limit Dollar, Dollar Limits Time to keep records, How Long To Keep Records Listed property Defined, What Is Listed Property? Passenger automobile, Passenger automobiles. Filing 2012 taxes online Rules, Additional Rules for Listed Property Livestock, Section 1231 transactions. Filing 2012 taxes online Casualty and theft losses, Livestock or produce bought for resale. Filing 2012 taxes online Crop shares, Crop shares you use to feed livestock. Filing 2012 taxes online Depreciation, Livestock. Filing 2012 taxes online Diseased, Diseased livestock. Filing 2012 taxes online Feed assistance, Feed Assistance and Payments Immature, Immature livestock. Filing 2012 taxes online Losses, Loss of livestock. Filing 2012 taxes online , Livestock Purchased, Purchased livestock. Filing 2012 taxes online Raised, Raised livestock. Filing 2012 taxes online Sale of, Sales of Farm Products, Livestock Unit-livestock-price, inventory valuation, Unit-livestock-price method. Filing 2012 taxes online Used in a farm business, Livestock used in farm business. Filing 2012 taxes online Weather-related sales, Sales Caused by Weather-Related Conditions, Weather-related sales of livestock. Filing 2012 taxes online Loans, Commodity Credit Corporation (CCC) Loans, Loan expenses. Filing 2012 taxes online Losses At-risk limits, At-Risk Limits Casualty, Casualties, Thefts, and Condemnations Disaster areas, Disaster Area Losses Farming, Farming Losses Growing crops, Loss of growing plants, produce, and crops. Filing 2012 taxes online Hobby farming, Not-for-Profit Farming Livestock, Livestock, Diseased livestock. Filing 2012 taxes online Nondeductible, Other Nondeductible Items Theft, Casualties, Thefts, and Condemnations Lost income payments, Lost income payments. Filing 2012 taxes online Lost property, Mislaid or lost property. Filing 2012 taxes online M MACRS property Involuntary conversion, Property acquired in a like-kind exchange or involuntary conversion. Filing 2012 taxes online Like-kind exchange, Property acquired in a like-kind exchange or involuntary conversion. Filing 2012 taxes online Nontaxable transfer, Property acquired in a nontaxable transfer. Filing 2012 taxes online Market gain, reporting, Market Gain Marketing quota penalties, Marketing Quota Penalties Material participation, Landlord Participation in Farming Meals, Meals. Filing 2012 taxes online Membership fees, Club dues and membership fees. Filing 2012 taxes online Methods of accounting, Accounting Methods Modified ACRS (MACRS) ADS election, ADS election. Filing 2012 taxes online Conventions, Which Convention Applies? Depreciation methods, Which Depreciation Method Applies? Exchange, Property acquired in a like-kind exchange or involuntary conversion. Filing 2012 taxes online Figuring the deduction, How Is the Depreciation Deduction Figured? Involuntary conversion, Property acquired in a like-kind exchange or involuntary conversion. Filing 2012 taxes online Nontaxable transfer, Property acquired in a nontaxable transfer. Filing 2012 taxes online Percentage tables, Rules for using the tables. Filing 2012 taxes online Property classes, Which Property Class Applies Under GDS? Recovery periods, Which Recovery Period Applies? N New hire reporting, New hire reporting. Filing 2012 taxes online Noncapital asset, Noncapital Assets Nontaxable exchanges, Like-Kind Exchanges Nontaxable transfer of MACRS property, Property acquired in a nontaxable transfer. Filing 2012 taxes online Not-for-profit farming, Not-for-Profit Farming O Organizational costs, Business start-up and organizational costs. Filing 2012 taxes online P Partners, limited, Limited partner. Filing 2012 taxes online Partners, retired, Retired partner. Filing 2012 taxes online Partners, Spouse, Business Owned and Operated by Spouses. Filing 2012 taxes online Partnership, Partnership income or loss. Filing 2012 taxes online Passenger automobile, Passenger automobiles. Filing 2012 taxes online Pasture income, Pasture income and rental. Filing 2012 taxes online Patronage dividends, Patronage Dividends Payments considered received, Payments Received or Considered Received Payments received, Payments Received or Considered Received Penalties Estimated tax, Estimated Tax Penalty for 2013 Returns, Estimated Tax Penalty for 2013 Trust fund recovery, Trust fund recovery penalty. Filing 2012 taxes online Per-unit retain certificates, Per-Unit Retain Certificates Personal expenses, Personal, Living, and Family Expenses Placed in service, Placed in Service, What Is the Placed-in-Service Date? Postponing casualty gain, Postponing Gain Prepaid expense Advance premiums, Advance premiums. Filing 2012 taxes online Extends useful life, Prepayment. Filing 2012 taxes online Farm supplies, Prepaid Farm Supplies Livestock feed, Prepaid Livestock Feed Prizes, Prizes. 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Filing 2012 taxes online , Timber Depletion, Timber Tobacco quota buyout payments, Tobacco Quota Buyout Program Payments Tobacco settlement payments, National Tobacco Growers' Settlement Trust Fund Payments Trade-in, Sale and Purchase Travel expenses, Travel Expenses Truck expenses, Truck and Car Expenses Trust fund recovery penalty, Trust fund recovery penalty. Filing 2012 taxes online TTY/TDD information, How To Get Tax Help U Uniform capitalization rules Basis of assets, Uniform Capitalization Rules Inventory, Uniform capitalization rules. Filing 2012 taxes online Unstated interest, Unstated interest. Filing 2012 taxes online W Wages and salaries, Wages and salaries. Filing 2012 taxes online Water conservation, Conservation Expenses Water well, Water well. Filing 2012 taxes online , Water wells. Filing 2012 taxes online Weather-related sales, livestock, Sales Caused by Weather-Related Conditions, Weather-related sales of livestock. Filing 2012 taxes online Withholding Income tax, Federal Income Tax Withholding Social security and Medicare tax, Social Security and Medicare Taxes Prev  Up     Home   More Online Publications