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Free Federal Tax Filing 2011

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Free Federal Tax Filing 2011

Free federal tax filing 2011 Publication 503 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Free federal tax filing 2011 Tax questions. Free federal tax filing 2011 Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 503, such as legislation enacted after it was published, go to www. Free federal tax filing 2011 irs. Free federal tax filing 2011 gov/pub503. Free federal tax filing 2011 Reminders Taxpayer identification number needed for each qualifying person. Free federal tax filing 2011  You must include on line 2 of Form 2441, Child and Dependent Care Expenses, the name and taxpayer identification number (generally the social security number) of each qualifying person. Free federal tax filing 2011 See Taxpayer identification number under Qualifying Person Test, later. Free federal tax filing 2011 You may have to pay employment taxes. Free federal tax filing 2011  If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Free federal tax filing 2011 Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business. Free federal tax filing 2011 See Employment Taxes for Household Employers, later. Free federal tax filing 2011 Photographs of missing children. Free federal tax filing 2011  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free federal tax filing 2011 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free federal tax filing 2011 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free federal tax filing 2011 Introduction This publication explains the tests you must meet to claim the credit for child and dependent care expenses. Free federal tax filing 2011 It explains how to figure and claim the credit. Free federal tax filing 2011 You may be able to claim the credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. Free federal tax filing 2011 The credit can be up to 35% of your expenses. Free federal tax filing 2011 To qualify, you must pay these expenses so you can work or look for work. Free federal tax filing 2011 This publication also discusses some of the employment tax rules for household employers. Free federal tax filing 2011 Dependent care benefits. Free federal tax filing 2011   If you received any dependent care benefits from your employer during the year, you may be able to exclude from your income all or part of them. Free federal tax filing 2011 You must complete Form 2441, Part III, before you can figure the amount of your credit. Free federal tax filing 2011 See Dependent Care Benefits under How To Figure the Credit, later. Free federal tax filing 2011 Comments and suggestions. Free federal tax filing 2011   We welcome your comments about this publication and your suggestions for future editions. Free federal tax filing 2011   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free federal tax filing 2011 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free federal tax filing 2011 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free federal tax filing 2011   You can send your comments from www. Free federal tax filing 2011 irs. Free federal tax filing 2011 gov/formspubs/. Free federal tax filing 2011 Click on “More Information” and then on “Comment on Tax Forms and Publications. Free federal tax filing 2011 ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free federal tax filing 2011 Ordering forms and publications. Free federal tax filing 2011   Visit www. Free federal tax filing 2011 irs. Free federal tax filing 2011 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free federal tax filing 2011 Internal Revenue Service 1201 N. Free federal tax filing 2011 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free federal tax filing 2011   If you have a tax question, check the information available on IRS. Free federal tax filing 2011 gov or call 1-800-829-1040. Free federal tax filing 2011 We cannot answer tax questions sent to either of the above addresses. Free federal tax filing 2011 Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information 926 Household Employer's Tax Guide Form (and Instructions) 2441 Child and Dependent Care Expenses Schedule H (Form 1040) Household Employment Taxes W-10 Dependent Care Provider's Identification and Certification See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. Free federal tax filing 2011 Prev  Up  Next   Home   More Online Publications
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Business Filer Notices

One of the ways we classify our notices is by the type of tax form they're about. We call notices we send about business-related tax forms such as Forms 941, 1065, and 1120, business filer notices.  Notices we send about Form 1040, 1040A, 1040EZ, or any related schedules, forms, or other attachments are called individual filer notices and are listed elsewhere.  If the business filer notice you have isn't listed below, check back often. We'll be adding more on a regular basis.

The Notices in Numerical Order

Here's a list of notices with detailed information available.


CP 101 - Math Error, Balance Due on Form 940
Informs the recipient of one or more changes made to their Form 940 or 940-EZ return during processing. The changes resulted in a balance due on the account.
CP 111 - Math Error, Overpayment on Form 940
Informs the recipient of one or more changes made to their Form 940 or 940-EZ tax return during processing. The changes resulted in an overpayment.
CP 165 - Penalty for Dishonored Check (Federal Tax Deposit)
Informs the recipient that a check they sent as payment for their federal tax deposit was returned unpaid by their bank.
CP 207 - Proposed FTD Penalty - Request for Correct Information
Asks the recipient to send us a completed Record of Federal Tax Liability (ROFTL).
CP 209 - EIN Assigned in Error
Informs the recipient that we erroneously assigned them more than one EIN.
CP 235 - Federal Tax Deposit Penalty Waived Due to Change in Deposit Requirements
Informs the recipient that we're waiving their FTD penalty because they meet the criteria for penalty relief.
CP 236 - Reminder of Your Semi-Weekly Deposit Requirements
Reminds the recipient that they're subject to semi-weekly deposits.
CP 238 - You Made One or More Late Federal Tax Deposits But We Didn't Charge You a Penalty
Informs the recipient that they made one or more late federal tax deposits and provides guidance on these deposits and how to make them.
CP 260 - Credit Adjustment
Informs the recipient that we removed one or more credits that had been erroneously applied to their account and that the account now has a balance due.
CP 267 - Account Overpaid - Possibly Misapplied Payments
Informs the recipient that they have more credit available on their account than they claimed on their tax return.
CP 298 - Final Notice Before Levy on Social Security Benefits
Informs the recipient of our intent to levy on their social security benefits.
Page Last Reviewed or Updated: 25-Feb-2014

The Free Federal Tax Filing 2011

Free federal tax filing 2011 5. Free federal tax filing 2011   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Free federal tax filing 2011 Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Free federal tax filing 2011 When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Free federal tax filing 2011 Otherwise, these are capital expenses that must be added to the basis of the land. Free federal tax filing 2011 (See chapter 6 for information on determining basis. Free federal tax filing 2011 ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Free federal tax filing 2011 The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Free federal tax filing 2011 See 25% Limit on Deduction , later. Free federal tax filing 2011 Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Free federal tax filing 2011 These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Free federal tax filing 2011 You must include in income most government payments for approved conservation practices. Free federal tax filing 2011 However, you can exclude some payments you receive under certain cost-sharing conservation programs. Free federal tax filing 2011 For more information, see Agricultural Program Payments in chapter 3. Free federal tax filing 2011 To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Free federal tax filing 2011 Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Free federal tax filing 2011 You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Free federal tax filing 2011 You are not farming if you are engaged only in forestry or the growing of timber. Free federal tax filing 2011 Farm defined. Free federal tax filing 2011   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Free federal tax filing 2011 It also includes plantations, ranches, ranges, and orchards. Free federal tax filing 2011 A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Free federal tax filing 2011 It does not include an area where they are merely caught or harvested. Free federal tax filing 2011 A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Free federal tax filing 2011 Farm rental. Free federal tax filing 2011   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Free federal tax filing 2011 If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Free federal tax filing 2011   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Free federal tax filing 2011 Example. Free federal tax filing 2011 You own a farm in Iowa and live in California. Free federal tax filing 2011 You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Free federal tax filing 2011 You cannot deduct your soil conservation expenses for this farm. Free federal tax filing 2011 You must capitalize the expenses and add them to the basis of the land. Free federal tax filing 2011     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Free federal tax filing 2011 Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Free federal tax filing 2011 If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Free federal tax filing 2011 Keep a copy of the plan with your books and records to support your deductions. Free federal tax filing 2011 Conservation plan. Free federal tax filing 2011   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Free federal tax filing 2011 There are three types of approved plans. Free federal tax filing 2011 NRCS individual site plans. Free federal tax filing 2011 These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Free federal tax filing 2011 NRCS county plans. Free federal tax filing 2011 These plans include a listing of farm conservation practices approved for the county where the farmland is located. Free federal tax filing 2011 You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Free federal tax filing 2011 Comparable state agency plans. Free federal tax filing 2011 These plans are approved by state agencies and can be approved individual site plans or county plans. Free federal tax filing 2011   A list of NRCS conservation programs is available at www. Free federal tax filing 2011 nrcs. Free federal tax filing 2011 usda. Free federal tax filing 2011 gov/programs. Free federal tax filing 2011 Individual site plans can be obtained from NRCS offices and the comparable state agencies. Free federal tax filing 2011 Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Free federal tax filing 2011 These expenses include, but are not limited to, the following. Free federal tax filing 2011 The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Free federal tax filing 2011 The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Free federal tax filing 2011 The eradication of brush. Free federal tax filing 2011 The planting of windbreaks. Free federal tax filing 2011 You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Free federal tax filing 2011 These expenses are added to the basis of the land. Free federal tax filing 2011 If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Free federal tax filing 2011 See chapter 3 for information about payments eligible for the cost-sharing exclusion. Free federal tax filing 2011 New farm or farmland. Free federal tax filing 2011   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Free federal tax filing 2011 You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Free federal tax filing 2011 The new farming activity does not have to be the same as the old farming activity. Free federal tax filing 2011 For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Free federal tax filing 2011 Land not used for farming. Free federal tax filing 2011   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Free federal tax filing 2011 For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Free federal tax filing 2011 You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Free federal tax filing 2011 Depreciable conservation assets. Free federal tax filing 2011   You generally cannot deduct your expenses for depreciable conservation assets. Free federal tax filing 2011 However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Free federal tax filing 2011 See Assessment for Depreciable Property , later. Free federal tax filing 2011   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Free federal tax filing 2011 These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Free federal tax filing 2011 You recover your capital investment through annual allowances for depreciation. Free federal tax filing 2011   You can deduct soil and water conservation expenses for nondepreciable earthen items. Free federal tax filing 2011 Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Free federal tax filing 2011 Water well. Free federal tax filing 2011   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Free federal tax filing 2011 It is a capital expense. Free federal tax filing 2011 You recover your cost through depreciation. Free federal tax filing 2011 You also must capitalize your cost for drilling a test hole. Free federal tax filing 2011 If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Free federal tax filing 2011 You can recover the total cost through depreciation deductions. Free federal tax filing 2011   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Free federal tax filing 2011 Abandonment means that all economic benefits from the well are terminated. Free federal tax filing 2011 For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Free federal tax filing 2011 Endangered species recovery expenses. Free federal tax filing 2011   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Free federal tax filing 2011 Otherwise, these are capital expenses that must be added to the basis of the land. Free federal tax filing 2011   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Free federal tax filing 2011 See Internal Revenue Code section 175 for more information. Free federal tax filing 2011 Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Free federal tax filing 2011 You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Free federal tax filing 2011 Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Free federal tax filing 2011 This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Free federal tax filing 2011 The depreciable property must be used in the district's soil and water conservation activities. Free federal tax filing 2011 However, the following limits apply to these assessments. Free federal tax filing 2011 The total assessment limit. Free federal tax filing 2011 The yearly assessment limit. Free federal tax filing 2011 After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Free federal tax filing 2011 The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Free federal tax filing 2011 See Table 5-1 for a brief summary of these limits. Free federal tax filing 2011 Table 5-1. Free federal tax filing 2011 Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Free federal tax filing 2011 Your deductible share of the cost to the district for the property. Free federal tax filing 2011 Your gross income from farming. Free federal tax filing 2011 No one taxpayer can deduct more than 10% of the total assessment. Free federal tax filing 2011 Any amount over 10% is a capital expense and is added to the basis of your land. Free federal tax filing 2011 If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Free federal tax filing 2011 If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Free federal tax filing 2011 You can deduct the remainder in equal amounts over the next 9 tax years. Free federal tax filing 2011 Limit for all conservation expenses, including assessments for depreciable property. Free federal tax filing 2011 Amounts greater than 25% can be carried to the following year and added to that year's expenses. Free federal tax filing 2011 The total is then subject to the 25% of gross income from farming limit in that year. Free federal tax filing 2011 To ensure your deduction is within the deduction limits, keep records to show the following. Free federal tax filing 2011 The total assessment against all members of the district for the depreciable property. Free federal tax filing 2011 Your deductible share of the cost to the district for the depreciable property. Free federal tax filing 2011 Your gross income from farming. Free federal tax filing 2011 Total assessment limit. Free federal tax filing 2011   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Free federal tax filing 2011 This applies whether you pay the assessment in one payment or in installments. Free federal tax filing 2011 If your assessment is more than 10% of the total amount assessed, both the following rules apply. Free federal tax filing 2011 The amount over 10% is a capital expense and is added to the basis of your land. Free federal tax filing 2011 If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Free federal tax filing 2011 Yearly assessment limit. Free federal tax filing 2011   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Free federal tax filing 2011 If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Free federal tax filing 2011 If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Free federal tax filing 2011 You can deduct the remainder in equal amounts over the next 9 tax years. Free federal tax filing 2011 Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Free federal tax filing 2011 Example 1. Free federal tax filing 2011 This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Free federal tax filing 2011 Of the assessment, $1,500 is for digging drainage ditches. Free federal tax filing 2011 You can deduct this part as a soil or conservation expense as if you had paid it directly. Free federal tax filing 2011 The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Free federal tax filing 2011 The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Free federal tax filing 2011 The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Free federal tax filing 2011 The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Free federal tax filing 2011 To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Free federal tax filing 2011 Add $500 to the result for a total of $570. Free federal tax filing 2011 Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Free federal tax filing 2011 You can deduct the balance at the rate of $70 a year over the next 9 years. Free federal tax filing 2011 You add $70 to the $1,500 portion of the assessment for drainage ditches. Free federal tax filing 2011 You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Free federal tax filing 2011 Example 2. Free federal tax filing 2011 Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Free federal tax filing 2011 The total amount assessed by the district against all its members for depreciable equipment is $5,500. Free federal tax filing 2011 The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Free federal tax filing 2011 The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Free federal tax filing 2011 Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Free federal tax filing 2011 You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Free federal tax filing 2011 Sale or other disposal of land during 9-year period. Free federal tax filing 2011   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Free federal tax filing 2011 Death of farmer during 9-year period. Free federal tax filing 2011   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Free federal tax filing 2011 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Free federal tax filing 2011 Gross income from farming. Free federal tax filing 2011   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Free federal tax filing 2011 Gains from sales of draft, breeding, or dairy livestock are included. Free federal tax filing 2011 Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Free federal tax filing 2011 Carryover of deduction. Free federal tax filing 2011   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Free federal tax filing 2011 However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Free federal tax filing 2011 Example. Free federal tax filing 2011 In 2012, you have gross income of $32,000 from two farms. Free federal tax filing 2011 During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Free federal tax filing 2011 However, your deduction is limited to 25% of $32,000, or $8,000. Free federal tax filing 2011 The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Free federal tax filing 2011 The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Free federal tax filing 2011 Any expenses over the limit in that year are carried to 2014 and later years. Free federal tax filing 2011 Net operating loss. Free federal tax filing 2011   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Free federal tax filing 2011 If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Free federal tax filing 2011 When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Free federal tax filing 2011 If you do not choose to deduct the expenses, you must capitalize them. Free federal tax filing 2011 Change of method. Free federal tax filing 2011   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Free federal tax filing 2011 To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Free federal tax filing 2011 You or your authorized representative must sign the request. Free federal tax filing 2011   The request must include the following information. Free federal tax filing 2011 Your name and address. Free federal tax filing 2011 The first tax year the method or change of method is to apply. Free federal tax filing 2011 Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Free federal tax filing 2011 If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Free federal tax filing 2011 The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Free federal tax filing 2011 A statement that you will account separately in your books for the expenses to which this method or change of method relates. Free federal tax filing 2011 Send your request to the following  address. Free federal tax filing 2011  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Free federal tax filing 2011 Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Free federal tax filing 2011 However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Free federal tax filing 2011 Gain on sale of farmland. Free federal tax filing 2011   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Free federal tax filing 2011 If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Free federal tax filing 2011 See Section 1252 property under Other Gains in chapter 9. Free federal tax filing 2011 Prev  Up  Next   Home   More Online Publications