File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Happens If I Didn't File Taxes Last Year

Amend Tax Return 20131040ez Form For 2013Pa Ez FormTax Credit For Military1040nrezHow To File 2008 Taxes Free OnlineFile 2007 Taxes OnlineArmy H&r BlockIncome Tax Form 1040ezFree Federal Tax Filing 2012E File Tax PreparationWww Irs Gov ComVita Tax Locations 2012Form 1040nrFiling TaxesHow Can I File State Taxes For FreeWww H&r BlockFree State Tax ExtensionFiling An Extension For TaxesHow To Amend Taxes With TurbotaxIrs Tax Forms1040 Tax FormTurbo Tax Ez 1040 FreeFile Late2009 Tax FormFree H And R Block OnlineMilitary Pay ScaleWhere To File Federal Tax Return 20112012 940 Tax FormIrs Form 1040 EzFederal 1040xFree Online Federal And State Tax Filing 2013How Can I File 2010 Taxes1090ezFile An Extension For 2011 Taxes OnlineHow To Do An Amended Tax ReturnH&r Block 1040ez FreeFree 1040 State Tax FormsEz Tax Form 2013Taxes 2011 Forms

Happens If I Didn't File Taxes Last Year

Happens if i didn't file taxes last year 4. Happens if i didn't file taxes last year   Transportation Table of Contents Parking fees. Happens if i didn't file taxes last year Advertising display on car. Happens if i didn't file taxes last year Car pools. Happens if i didn't file taxes last year Hauling tools or instruments. Happens if i didn't file taxes last year Union members' trips from a union hall. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year These expenses include the cost of transportation by air, rail, bus, taxi, etc. Happens if i didn't file taxes last year , and the cost of driving and maintaining your car. Happens if i didn't file taxes last year Transportation expenses include the ordinary and necessary costs of all of the following. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Tax home is defined in chapter 1. Happens if i didn't file taxes last year Visiting clients or customers. Happens if i didn't file taxes last year Going to a business meeting away from your regular workplace. Happens if i didn't file taxes last year Getting from your home to a temporary workplace when you have one or more regular places of work. Happens if i didn't file taxes last year These temporary workplaces can be either within the area of your tax home or outside that area. Happens if i didn't file taxes last year Transportation expenses do not include expenses you have while traveling away from home overnight. Happens if i didn't file taxes last year Those expenses are travel expenses discussed in chapter 1 . Happens if i didn't file taxes last year However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. Happens if i didn't file taxes last year See Car Expenses , later. Happens if i didn't file taxes last year Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. Happens if i didn't file taxes last year However, there may be exceptions to this general rule. Happens if i didn't file taxes last year You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Illustration of transportation expenses. Happens if i didn't file taxes last year    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. Happens if i didn't file taxes last year You may want to refer to it when deciding whether you can deduct your transportation expenses. Happens if i didn't file taxes last year Temporary work location. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year It will not be treated as temporary after the date you determine it will last more than 1 year. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year You may have deductible travel expenses as discussed in chapter 1 . Happens if i didn't file taxes last year No regular place of work. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. Happens if i didn't file taxes last year   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. Happens if i didn't file taxes last year These are nondeductible commuting expenses. Happens if i didn't file taxes last year Two places of work. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. Happens if i didn't file taxes last year You cannot deduct them. Happens if i didn't file taxes last year Armed Forces reservists. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year In this case, your transportation generally is a nondeductible commuting expense. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. Happens if i didn't file taxes last year These expenses are discussed in chapter 1 . Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. Happens if i didn't file taxes last year Commuting expenses. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year These costs are personal commuting expenses. Happens if i didn't file taxes last year You cannot deduct commuting expenses no matter how far your home is from your regular place of work. Happens if i didn't file taxes last year You cannot deduct commuting expenses even if you work during the commuting trip. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year You sometimes use your cell phone to make business calls while commuting to and from work. Happens if i didn't file taxes last year Sometimes business associates ride with you to and from work, and you have a business discussion in the car. Happens if i didn't file taxes last year These activities do not change the trip from personal to business. Happens if i didn't file taxes last year You cannot deduct your commuting expenses. Happens if i didn't file taxes last year Parking fees. Happens if i didn't file taxes last year    Fees you pay to park your car at your place of business are nondeductible commuting expenses. Happens if i didn't file taxes last year You can, however, deduct business-related parking fees when visiting a customer or client. Happens if i didn't file taxes last year Advertising display on car. Happens if i didn't file taxes last year   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. Happens if i didn't file taxes last year If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. Happens if i didn't file taxes last year Car pools. Happens if i didn't file taxes last year   You cannot deduct the cost of using your car in a nonprofit car pool. Happens if i didn't file taxes last year Do not include payments you receive from the passengers in your income. Happens if i didn't file taxes last year These payments are considered reimbursements of your expenses. Happens if i didn't file taxes last year However, if you operate a car pool for a profit, you must include payments from passengers in your income. Happens if i didn't file taxes last year You can then deduct your car expenses (using the rules in this publication). Happens if i didn't file taxes last year Hauling tools or instruments. Happens if i didn't file taxes last year   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year Union members' trips from a union hall. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. Happens if i didn't file taxes last year Office in the home. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Happens if i didn't file taxes last year ) Examples of deductible transportation. Happens if i didn't file taxes last year   The following examples show when you can deduct transportation expenses based on the location of your work and your home. Happens if i didn't file taxes last year Example 1. Happens if i didn't file taxes last year You regularly work in an office in the city where you live. Happens if i didn't file taxes last year Your employer sends you to a 1-week training session at a different office in the same city. Happens if i didn't file taxes last year You travel directly from your home to the training location and return each day. Happens if i didn't file taxes last year You can deduct the cost of your daily round-trip transportation between your home and the training location. Happens if i didn't file taxes last year Example 2. Happens if i didn't file taxes last year Your principal place of business is in your home. Happens if i didn't file taxes last year You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. Happens if i didn't file taxes last year Example 3. Happens if i didn't file taxes last year You have no regular office, and you do not have an office in your home. Happens if i didn't file taxes last year In this case, the location of your first business contact inside the metropolitan area is considered your office. Happens if i didn't file taxes last year Transportation expenses between your home and this first contact are nondeductible commuting expenses. Happens if i didn't file taxes last year Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. Happens if i didn't file taxes last year While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. Happens if i didn't file taxes last year Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. Happens if i didn't file taxes last year You generally can use one of the two following methods to figure your deductible expenses. Happens if i didn't file taxes last year Standard mileage rate. Happens if i didn't file taxes last year Actual car expenses. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year See Leasing a Car , later. Happens if i didn't file taxes last year In this publication, “car” includes a van, pickup, or panel truck. Happens if i didn't file taxes last year For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. Happens if i didn't file taxes last year Rural mail carriers. Happens if i didn't file taxes last year   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. Happens if i didn't file taxes last year Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. Happens if i didn't file taxes last year   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). Happens if i didn't file taxes last year You must complete Form 2106 and attach it to your Form 1040, U. Happens if i didn't file taxes last year S. Happens if i didn't file taxes last year Individual Income Tax Return. Happens if i didn't file taxes last year   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. Happens if i didn't file taxes last year It is given as an equipment maintenance allowance (EMA) to employees of the U. Happens if i didn't file taxes last year S. Happens if i didn't file taxes last year Postal Service. Happens if i didn't file taxes last year It is at the rate contained in the 1991 collective bargaining agreement. Happens if i didn't file taxes last year Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. Happens if i didn't file taxes last year See your employer for information on your reimbursement. Happens if i didn't file taxes last year    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. Happens if i didn't file taxes last year If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. Happens if i didn't file taxes last year You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. Happens if i didn't file taxes last year See Choosing the standard mileage rate and Standard mileage rate not allowed, later. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year See chapter 6 for more information on reimbursements . Happens if i didn't file taxes last year Choosing the standard mileage rate. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Then, in later years, you can choose to use either the standard mileage rate or actual expenses. Happens if i didn't file taxes last year   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. Happens if i didn't file taxes last year You cannot revoke the choice. Happens if i didn't file taxes last year However, in later years, you can switch from the standard mileage rate to the actual expenses method. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year Larry is an employee who occasionally uses his own car for business purposes. Happens if i didn't file taxes last year He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. Happens if i didn't file taxes last year Standard mileage rate not allowed. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year (See Rural mail carriers , earlier. Happens if i didn't file taxes last year ) Note. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Five or more cars. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year However, you may be able to deduct your actual expenses for operating each of the cars in your business. Happens if i didn't file taxes last year See Actual Car Expenses , later, for information on how to figure your deduction. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. Happens if i didn't file taxes last year Example 1. Happens if i didn't file taxes last year Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Example 2. Happens if i didn't file taxes last year Tony and his employees use his four pickup trucks in his landscaping business. Happens if i didn't file taxes last year During the year, he traded in two of his old trucks for two newer ones. Happens if i didn't file taxes last year Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. Happens if i didn't file taxes last year Example 3. Happens if i didn't file taxes last year Chris owns a repair shop and an insurance business. Happens if i didn't file taxes last year He and his employees use his two pickup trucks and van for the repair shop. Happens if i didn't file taxes last year Chris alternates using his two cars for the insurance business. Happens if i didn't file taxes last year No one else uses the cars for business purposes. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Example 4. Happens if i didn't file taxes last year Maureen owns a car and four vans that are used in her housecleaning business. Happens if i didn't file taxes last year Her employees use the vans, and she uses the car to travel to various customers. Happens if i didn't file taxes last year Maureen cannot use the standard mileage rate for the car or the vans. Happens if i didn't file taxes last year This is because all five vehicles are used in Maureen's business at the same time. Happens if i didn't file taxes last year She must use actual expenses for all vehicles. Happens if i didn't file taxes last year Interest. Happens if i didn't file taxes last year   If you are an employee, you cannot deduct any interest paid on a car loan. Happens if i didn't file taxes last year This applies even if you use the car 100% for business as an employee. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). Happens if i didn't file taxes last year You cannot deduct the part of the interest expense that represents your personal use of the car. Happens if i didn't file taxes last year    If you use a home equity loan to purchase your car, you may be able to deduct the interest. Happens if i didn't file taxes last year See Publication 936, Home Mortgage Interest Deduction, for more information. Happens if i didn't file taxes last year Personal property taxes. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. Happens if i didn't file taxes last year   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). Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year Parking fees and tolls. Happens if i didn't file taxes last year   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. Happens if i didn't file taxes last year (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. Happens if i didn't file taxes last year ) Sale, trade-in, or other disposition. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year See Disposition of a Car , later. Happens if i didn't file taxes last year Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. Happens if i didn't file taxes last year If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Continue to keep records, as explained later in chapter 5 . Happens if i didn't file taxes last year Business and personal use. Happens if i didn't file taxes last year   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. Happens if i didn't file taxes last year You can divide your expense based on the miles driven for each purpose. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. Happens if i didn't file taxes last year Employer-provided vehicle. Happens if i didn't file taxes last year   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. Happens if i didn't file taxes last year You cannot use the standard mileage rate. Happens if i didn't file taxes last year See Vehicle Provided by Your Employer in chapter 6. Happens if i didn't file taxes last year Interest on car loans. Happens if i didn't file taxes last year   If you are an employee, you cannot deduct any interest paid on a car loan. Happens if i didn't file taxes last year This interest is treated as personal interest and is not deductible. Happens if i didn't file taxes last year If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. Happens if i didn't file taxes last year Taxes paid on your car. Happens if i didn't file taxes last year   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. Happens if i didn't file taxes last year Enter the amount paid on line 7 of Schedule A (Form 1040). Happens if i didn't file taxes last year Sales taxes. Happens if i didn't file taxes last year   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. Happens if i didn't file taxes last year Fines and collateral. Happens if i didn't file taxes last year   You cannot deduct fines you pay or collateral you forfeit for traffic violations. Happens if i didn't file taxes last year Casualty and theft losses. Happens if i didn't file taxes last year   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. Happens if i didn't file taxes last year See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. Happens if i didn't file taxes last year Depreciation and section 179 deductions. Happens if i didn't file taxes last year   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Happens if i didn't file taxes last year Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. Happens if i didn't file taxes last year The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. Happens if i didn't file taxes last year   Generally, there are limits on these deductions. Happens if i didn't file taxes last year Special rules apply if you use your car 50% or less in your work or business. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Car defined. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Its unloaded gross vehicle weight must not be more than 6,000 pounds. Happens if i didn't file taxes last year A car includes any part, component, or other item physically attached to it or usually included in the purchase price. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Qualified nonpersonal use vehicles. Happens if i didn't file taxes last year   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. Happens if i didn't file taxes last year More information. Happens if i didn't file taxes last year   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year See Depreciation Limits, later. Happens if i didn't file taxes last year You can claim the section 179 deduction only in the year you place the car in service. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. Happens if i didn't file taxes last year A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year In 2012, you bought a new car and used it for personal purposes. Happens if i didn't file taxes last year In 2013, you began to use it for business. Happens if i didn't file taxes last year Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. Happens if i didn't file taxes last year However, you can claim a depreciation deduction for the business use of the car starting in 2013. Happens if i didn't file taxes last year See Depreciation Deduction , later. Happens if i didn't file taxes last year More than 50% business use requirement. Happens if i didn't file taxes last year   You must use the property more than 50% for business to claim any section 179 deduction. Happens if i didn't file taxes last year If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Happens if i didn't file taxes last year The result is the cost of the property that can qualify for the section 179 deduction. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year Peter purchased a car in April 2013 for $24,500 and used it 60% for business. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. Happens if i didn't file taxes last year Limits. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Limit on the amount of the section 179 deduction. Happens if i didn't file taxes last year   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. Happens if i didn't file taxes last year You must allocate the dollar limit (after any reduction) between you. Happens if i didn't file taxes last year   For more information on the above section 179 deduction limits, see Publication 946. Happens if i didn't file taxes last year Limit for sport utility and certain other vehicles. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year    Limit on total section 179, special depreciation allowance, and depreciation deduction. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year The limit is reduced if your business use of the car is less than 100%. Happens if i didn't file taxes last year See Depreciation Limits , later, for more information. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year Cost of car. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Your cost includes only the cash you paid. Happens if i didn't file taxes last year Basis of car for depreciation. Happens if i didn't file taxes last year   The amount of the section 179 deduction reduces your basis in your car. Happens if i didn't file taxes last year If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. Happens if i didn't file taxes last year The resulting amount is the basis in your car you use to figure your depreciation deduction. Happens if i didn't file taxes last year When to choose. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year How to choose. Happens if i didn't file taxes last year    Employees use Form 2106 to make this choice and report the section 179 deduction. Happens if i didn't file taxes last year All others use Form 4562. Happens if i didn't file taxes last year   File the appropriate form with either of the following. Happens if i didn't file taxes last year Your original tax return filed for the year the property was placed in service (whether or not you file it timely). Happens if i didn't file taxes last year An amended return filed within the time prescribed by law. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year The amended return must also include any resulting adjustments to taxable income. Happens if i didn't file taxes last year    You must keep records that show the specific identification of each piece of qualifying section 179 property. Happens if i didn't file taxes last year These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Happens if i didn't file taxes last year Revoking an election. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Recapture of section 179 deduction. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Any section 179 deduction claimed on the car is included in calculating the excess depreciation. Happens if i didn't file taxes last year For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. Happens if i didn't file taxes last year Dispositions. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year For information on the disposition of a car, see Disposition of a Car , later. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year The special depreciation allowance applies only for the first year the car is placed in service. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year Combined depreciation. Happens if i didn't file taxes last year   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). Happens if i didn't file taxes last year For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). Happens if i didn't file taxes last year See Depreciation Limits , later in this chapter. Happens if i didn't file taxes last year Qualified car. Happens if i didn't file taxes last year   To be a qualified car (including trucks and vans), the car must meet all of the following tests. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Election not to claim the special depreciation allowance. Happens if i didn't file taxes last year   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. Happens if i didn't file taxes last year If you make this election, it applies to all 5-year property placed in service during the year. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year    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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. Happens if i didn't file taxes last year You generally need to know the following things about the car you intend to depreciate. Happens if i didn't file taxes last year Your basis in the car. Happens if i didn't file taxes last year The date you place the car in service. Happens if i didn't file taxes last year The method of depreciation and recovery period you will use. Happens if i didn't file taxes last year Basis. Happens if i didn't file taxes last year   Your basis in a car for figuring depreciation is generally its cost. Happens if i didn't file taxes last year This includes any amount you borrow or pay in cash, other property, or services. Happens if i didn't file taxes last year   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). Happens if i didn't file taxes last year However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). Happens if i didn't file taxes last year For one of these situations see Exception under Methods of depreciation, later. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . Happens if i didn't file taxes last year Placed in service. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Depreciation begins when the car is placed in service for use in your work or business or for the production of income. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Car placed in service and disposed of in the same year. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Methods of depreciation. Happens if i didn't file taxes last year   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). Happens if i didn't file taxes last year MACRS is discussed later in this chapter. Happens if i didn't file taxes last year Exception. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year You must use straight line depreciation over the estimated remaining useful life of the car. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year The rate per mile varies depending on the year(s) you used the standard mileage rate. Happens if i didn't file taxes last year For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. Happens if i didn't file taxes last year   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . Happens if i didn't file taxes last year You must use your adjusted basis in your car to figure your depreciation deduction. Happens if i didn't file taxes last year For additional information on the straight line method of depreciation, see Publication 946. Happens if i didn't file taxes last year More-than-50%-use test. Happens if i didn't file taxes last year   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. Happens if i didn't file taxes last year You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. Happens if i didn't file taxes last year   If your business use is 50% or less, you must use the straight line method to depreciate your car. Happens if i didn't file taxes last year This is explained later under Car Used 50% or Less for Business . Happens if i didn't file taxes last year Qualified business use. Happens if i didn't file taxes last year   A qualified business use is any use in your trade or business. Happens if i didn't file taxes last year It does not include use for the production of income (investment use). Happens if i didn't file taxes last year However, you do combine your business and investment use to compute your depreciation deduction for the tax year. Happens if i didn't file taxes last year Use of your car by another person. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year It is directly connected with your business. Happens if i didn't file taxes last year It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). Happens if i didn't file taxes last year It results in a payment of fair market rent. Happens if i didn't file taxes last year This includes any payment to you for the use of your car. Happens if i didn't file taxes last year Business use changes. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. Happens if i didn't file taxes last year    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. Happens if i didn't file taxes last year Use for more than one purpose. Happens if i didn't file taxes last year   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. Happens if i didn't file taxes last year You do this on the basis of mileage. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Change from personal to business use. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year In this case, you figure the percentage of business use for the year as follows. Happens if i didn't file taxes last year Determine the percentage of business use for the period following the change. Happens if i didn't file taxes last year Do this by dividing business miles by total miles driven during that period. Happens if i didn't file taxes last year Multiply the percentage in (1) by a fraction. Happens if i didn't file taxes last year The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year You use a car only for personal purposes during the first 6 months of the year. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. Happens if i didn't file taxes last year Your business use for the year is 40% (80% × 6/12). Happens if i didn't file taxes last year Limits. Happens if i didn't file taxes last year   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. Happens if i didn't file taxes last year The maximum amount you can claim depends on the year in which you placed your car in service. Happens if i didn't file taxes last year You have to reduce the maximum amount if you did not use the car exclusively for business. Happens if i didn't file taxes last year See Depreciation Limits , later. Happens if i didn't file taxes last year Unadjusted basis. Happens if i didn't file taxes last year   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) . Happens if i didn't file taxes last year Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. Happens if i didn't file taxes last year   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. Happens if i didn't file taxes last year Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. Happens if i didn't file taxes last year Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 1, 2006), and alternative motor vehicle credit. Happens if i didn't file taxes last year   See Form 8910 for information on the alternative motor vehicle credit. Happens if i didn't file taxes last year If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. Happens if i didn't file taxes last year See Car Used 50% or Less for Business, later, for more information. Happens if i didn't file taxes last year If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. Happens if i didn't file taxes last year Improvements. Happens if i didn't file taxes last year   A major improvement to a car is treated as a new item of 5-year recovery property. Happens if i didn't file taxes last year It is treated as placed in service in the year the improvement is made. Happens if i didn't file taxes last year It does not matter how old the car is when the improvement is added. Happens if i didn't file taxes last year Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. Happens if i didn't file taxes last year However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year See Depreciation Limits , later. Happens if i didn't file taxes last year Car trade-in. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. Happens if i didn't file taxes last year If you make this election, you treat the old car as disposed of at the time of the trade-in. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year You then figure your depreciation deduction for the new car beginning with the date you placed it in service. Happens if i didn't file taxes last year You make this election by completing Form 2106, Part II, Section D. Happens if i didn't file taxes last year This method is explained later, beginning at Effect of trade-in on basis . Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year You must apply two depreciation limits (see Depreciation Limits , later). Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year You must use Form 4562 to compute your depreciation deduction. Happens if i didn't file taxes last year You cannot use Form 2106, Part II, Section D. Happens if i didn't file taxes last year This method is explained in Publication 946. Happens if i didn't file taxes last year   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). Happens if i didn't file taxes last year Otherwise, you must use the method described in (2). Happens if i didn't file taxes last year Effect of trade-in on basis. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 168(i)-6(d)(3). Happens if i didn't file taxes last year Traded car used only for business. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year Paul trades in a car that has an adjusted basis of $5,000 for a new car. Happens if i didn't file taxes last year In addition, he pays cash of $20,000 for the new car. Happens if i didn't file taxes last year 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). Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Traded car used partly in business. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. Happens if i didn't file taxes last year See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. Happens if i didn't file taxes last year )   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. Happens if i didn't file taxes last year Modified Accelerated Cost Recovery System (MACRS). Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year   The maximum amount you can deduct is limited, depending on the year you placed your car in service. Happens if i didn't file taxes last year See Depreciation Limits , later. Happens if i didn't file taxes last year Recovery period. Happens if i didn't file taxes last year   Under MACRS, cars are classified as 5-year property. Happens if i didn't file taxes last year You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Depreciation deduction for certain Indian reservation property. Happens if i didn't file taxes last year   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. Happens if i didn't file taxes last year The recovery that applies for a business-use car is 3 years instead of 5 years. Happens if i didn't file taxes last year However, the depreciation limits, discussed later, will still apply. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Depreciation methods. Happens if i didn't file taxes last year   You can use one of the following methods to depreciate your car. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year The straight line method (SL) over a 5-year recovery period. Happens if i didn't file taxes last year    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. Happens if i didn't file taxes last year This is because the chart has the switch to the straight line method built into its rates. Happens if i didn't file taxes last year   Before choosing a method, you may wish to consider the following facts. Happens if i didn't file taxes last year Using the straight line method provides equal yearly deductions throughout the recovery period. Happens if i didn't file taxes last year Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. Happens if i didn't file taxes last year MACRS depreciation chart. Happens if i didn't file taxes last year   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . Happens if i didn't file taxes last year Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. Happens if i didn't file taxes last year A similar chart appears in the Instructions for Form 2106. Happens if i didn't file taxes last year    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year You file your return on a fiscal year basis. Happens if i didn't file taxes last year You file your return for a short tax year (less than 12 months). Happens if i didn't file taxes last year During the year, all of the following conditions apply. Happens if i didn't file taxes last year You placed some property in service from January through September. Happens if i didn't file taxes last year You placed some property in service from October through December. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   You placed qualified property in service on an Indian reservation. Happens if i didn't file taxes last year Depreciation in future years. Happens if i didn't file taxes last year   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. Happens if i didn't file taxes last year However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Happens if i didn't file taxes last year    In future years, do not use the chart in this edition of the publication. Happens if i didn't file taxes last year Instead, use the chart in the publication or the form instructions for those future years. Happens if i didn't file taxes last year Disposition of car during recovery period. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year How to use the 2013 chart. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. Happens if i didn't file taxes last year If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. Happens if i didn't file taxes last year    Your deduction cannot be more than the maximum depreciation limit for cars. Happens if i didn't file taxes last year See Depreciation Limits, later. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year Phil bought a used truck in February 2012 to use exclusively in his landscape business. Happens if i didn't file taxes last year He paid $9,200 for the truck with no trade-in. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Phil used the MACRS depreciation chart in 2012 to find his percentage. Happens if i didn't file taxes last year The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. Happens if i didn't file taxes last year His records show that the business use of his truck was 90% in 2013. Happens if i didn't file taxes last year Phil used Table 4-1 to find his percentage. Happens if i didn't file taxes last year Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. Happens if i didn't file taxes last year The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. Happens if i didn't file taxes last year The maximum amount you can deduct each year depends on the year you place the car in service. Happens if i didn't file taxes last year These limits are shown in the following tables. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Happens if i didn't file taxes last year 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. Happens if i didn't file taxes last year 4$7,660 if you acquired the car before 5/6/2003. Happens if i didn't file taxes last year $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Trucks and vans. Happens if i didn't file taxes last year   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Car used less than full year. Happens if i didn't file taxes last year   The depreciation limits are not reduced if you use a car for less than a full year. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. Happens if i didn't file taxes last year See Reduction for personal use , next. Happens if i didn't file taxes last year Reduction for personal use. Happens if i didn't file taxes last year   The depreciation limits are reduced based on your percentage of personal use. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Section 179 deduction. Happens if i didn't file taxes last year   The section 179 deduction is treated as a depreciation deduction. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. Happens if i didn't file taxes last year He used it 80% for his business, and he chooses to take a section 179 deduction for the car. Happens if i didn't file taxes last year The car is not qualified property for purposes of the special depreciation allowance. Happens if i didn't file taxes last year Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. Happens if i didn't file taxes last year This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). Happens if i didn't file taxes last year Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). Happens if i didn't file taxes last year He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. Happens if i didn't file taxes last year Jack has reached his maximum depreciation deduction for 2013. Happens if i didn't file taxes last year For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. Happens if i didn't file taxes last year Deductions in years after the recovery period. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. Happens if i didn't file taxes last year Unrecovered basis. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year The recovery period. Happens if i didn't file taxes last year   For 5-year property, your recovery period is 6 calendar years. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. Happens if i didn't file taxes last year You determine your unrecovered basis in the 7th year after you placed the car in service. Happens if i didn't file taxes last year How to treat unrecovered basis. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. Happens if i didn't file taxes last year For example, no deduction is allowed for a year you use your car 100% for personal purposes. Happens if i didn't file taxes last year Example. Happens if i didn't file taxes last year In April 2007, Bob bought and placed in service a car he used exclusively in his business. Happens if i didn't file taxes last year The car cost $31,500. Happens if i didn't file taxes last year Bob did not claim a section 179 deduction or the special depreciation allowance for the car. Happens if i didn't file taxes last year He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year      MACRS     Deprec. Happens if i didn't file taxes last year Year % Amount Limit Allowed 2007 20. Happens if i didn't file taxes last year 00 $6,300 $3,060 $ 3,060 2008 32. Happens if i didn't file taxes last year 00 10,080 4,900 4,900 2009 19. Happens if i didn't file taxes last year 20 6,048 2,850 2,850 2010 11. Happens if i didn't file taxes last year 52 3,629 1,775 1,775 2011 11. Happens if i didn't file taxes last year 52 3,629 1,775 1,775 2012 5. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year   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. Happens if i didn't file taxes last year 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%. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Table 4-1. Happens if i didn't file taxes last year 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. Happens if i didn't file taxes last year ) 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. Happens if i didn't file taxes last year   First, using the left column, find the date you first placed the car in service in 2013. Happens if i didn't file taxes last year Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year Refer back to the MACRS Depreciation Chart for the year you placed the car in service. Happens if i didn't file taxes last year (See Car Used 50% or Less for Business . Happens if i didn't file taxes last year )  Multiply the unadjusted basis of your car by your business use percentage. Happens if i didn't file taxes last year Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. Happens if i didn't file taxes last year (Also see Depreciation Limits . Happens if i didn't file taxes last year )   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. Happens if i didn't file taxes last year 1—Sept. Happens if i didn't file taxes last year 30 percentage instead of the Oct. Happens if i didn't file taxes last year 1—Dec. Happens if i didn't file taxes last year 31 percentage for your car. Happens if i didn't file taxes last year               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. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year 1—Sept. Happens if i didn't file taxes last year 30 for figuring depreciation for your car. Happens if i didn't file taxes last year See Which Convention Applies? in chapter 4 of Publication 946 for more details. Happens if i didn't file taxes last year               Example. Happens if i didn't file taxes last year 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. Happens if i didn't file taxes last year You
Español

National Nuclear Security Administration

The National Nuclear Security Administration works to ensure that the nation's stockpile of nuclear weapons is safe and secure. It also works to ensure the safety of naval nuclear reactors, is the first responder in case of nuclear emergency, and works on worldwide nuclear nonproliferation issues.

Contact the Agency or Department

Website: National Nuclear Security Administration

Address: 1000 Independence Ave SW
Washington, DC 20585

Phone Number: (202) 586-5000 (Energy Switchboard)

Toll-free: (800) 342-5363

The Happens If I Didn't File Taxes Last Year

Happens if i didn't file taxes last year 3. Happens if i didn't file taxes last year   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. Happens if i didn't file taxes last year Traditional IRA mistakenly moved to SIMPLE IRA. Happens if i didn't file taxes last year When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). Happens if i didn't file taxes last year It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. Happens if i didn't file taxes last year Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). Happens if i didn't file taxes last year This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. Happens if i didn't file taxes last year See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. Happens if i didn't file taxes last year If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. Happens if i didn't file taxes last year See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. Happens if i didn't file taxes last year What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Happens if i didn't file taxes last year See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. Happens if i didn't file taxes last year A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. Happens if i didn't file taxes last year These contributions are called salary reduction contributions. Happens if i didn't file taxes last year All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. Happens if i didn't file taxes last year The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Happens if i didn't file taxes last year Contributions are made on behalf of eligible employees. Happens if i didn't file taxes last year (See Eligible Employees below. Happens if i didn't file taxes last year ) Contributions are also subject to various limits. Happens if i didn't file taxes last year (See How Much Can Be Contributed on Your Behalf , later. Happens if i didn't file taxes last year ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. Happens if i didn't file taxes last year See How Are Contributions Made , later. Happens if i didn't file taxes last year You may be able to claim a credit for contributions to your SIMPLE plan. Happens if i didn't file taxes last year For more information, see chapter 4. Happens if i didn't file taxes last year Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. Happens if i didn't file taxes last year Self-employed individual. Happens if i didn't file taxes last year   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. Happens if i didn't file taxes last year Excludable employees. Happens if i didn't file taxes last year   Your employer can exclude the following employees from participating in the SIMPLE plan. Happens if i didn't file taxes last year Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). Happens if i didn't file taxes last year Employees who are nonresident aliens and received no earned income from sources within the United States. Happens if i didn't file taxes last year Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. Happens if i didn't file taxes last year Compensation. Happens if i didn't file taxes last year   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. Happens if i didn't file taxes last year Wages, tips, and other pay from your employer that is subject to income tax withholding. Happens if i didn't file taxes last year Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. Happens if i didn't file taxes last year Self-employed individual compensation. Happens if i didn't file taxes last year   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. Happens if i didn't file taxes last year   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. Happens if i didn't file taxes last year How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. Happens if i didn't file taxes last year They are made on your behalf by your employer. Happens if i didn't file taxes last year Your employer must also make either matching contributions or nonelective contributions. Happens if i didn't file taxes last year Salary reduction contributions. Happens if i didn't file taxes last year   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). Happens if i didn't file taxes last year You can choose to cancel the election at any time during the year. Happens if i didn't file taxes last year   Salary reduction contributions are also referred to as “elective deferrals. Happens if i didn't file taxes last year ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. Happens if i didn't file taxes last year Matching contributions. Happens if i didn't file taxes last year   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. Happens if i didn't file taxes last year See How Much Can Be Contributed on Your Behalf below. Happens if i didn't file taxes last year These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. Happens if i didn't file taxes last year These contributions are referred to as matching contributions. Happens if i didn't file taxes last year   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. Happens if i didn't file taxes last year Nonelective contributions. Happens if i didn't file taxes last year   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. Happens if i didn't file taxes last year These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. Happens if i didn't file taxes last year   One of the requirements your employer must satisfy is notifying the employees that the election was made. Happens if i didn't file taxes last year For other requirements that your employer must satisfy, see chapter 3 of Publication 560. Happens if i didn't file taxes last year How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. Happens if i didn't file taxes last year Salary reduction contributions limit. Happens if i didn't file taxes last year   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. Happens if i didn't file taxes last year The limitation remains at $12,000 for 2014. Happens if i didn't file taxes last year If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. Happens if i didn't file taxes last year You, not your employer, are responsible for monitoring compliance with these limits. Happens if i didn't file taxes last year Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. Happens if i didn't file taxes last year The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. Happens if i didn't file taxes last year $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. Happens if i didn't file taxes last year The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. Happens if i didn't file taxes last year The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. Happens if i didn't file taxes last year Matching employer contributions limit. Happens if i didn't file taxes last year   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. Happens if i didn't file taxes last year These matching contributions cannot be more than 3% of your compensation for the calendar year. Happens if i didn't file taxes last year See Matching contributions less than 3% below. Happens if i didn't file taxes last year Example 1. Happens if i didn't file taxes last year In 2013, Joshua was a participant in his employer's SIMPLE plan. Happens if i didn't file taxes last year His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). Happens if i didn't file taxes last year Instead of taking it all in cash, Joshua elected to have 12. Happens if i didn't file taxes last year 5% of his weekly pay ($100) contributed to his SIMPLE IRA. Happens if i didn't file taxes last year For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. Happens if i didn't file taxes last year Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. Happens if i didn't file taxes last year Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). Happens if i didn't file taxes last year Example 2. Happens if i didn't file taxes last year Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. Happens if i didn't file taxes last year 94% of his weekly pay contributed to his SIMPLE IRA. Happens if i didn't file taxes last year In this example, Joshua's salary reduction contributions for the year (2. Happens if i didn't file taxes last year 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). Happens if i didn't file taxes last year Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. Happens if i didn't file taxes last year In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. Happens if i didn't file taxes last year Matching contributions less than 3%. Happens if i didn't file taxes last year   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. Happens if i didn't file taxes last year   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. Happens if i didn't file taxes last year If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. Happens if i didn't file taxes last year Nonelective employer contributions limit. Happens if i didn't file taxes last year   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. Happens if i didn't file taxes last year For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. Happens if i didn't file taxes last year   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. Happens if i didn't file taxes last year Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. Happens if i didn't file taxes last year This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. Happens if i didn't file taxes last year Example 3. Happens if i didn't file taxes last year Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. Happens if i didn't file taxes last year Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. Happens if i didn't file taxes last year In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). Happens if i didn't file taxes last year Traditional IRA mistakenly moved to SIMPLE IRA. Happens if i didn't file taxes last year   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Happens if i didn't file taxes last year For more information, see Recharacterizations in chapter 1. Happens if i didn't file taxes last year Recharacterizing employer contributions. Happens if i didn't file taxes last year   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. Happens if i didn't file taxes last year SEPs are discussed in chapter 2 of Publication 560. Happens if i didn't file taxes last year SIMPLE plans are discussed in this chapter. Happens if i didn't file taxes last year Converting from a SIMPLE IRA. Happens if i didn't file taxes last year   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . Happens if i didn't file taxes last year    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. Happens if i didn't file taxes last year When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. Happens if i didn't file taxes last year These rules are discussed in chapter 1. Happens if i didn't file taxes last year Your employer cannot restrict you from taking distributions from a SIMPLE IRA. Happens if i didn't file taxes last year Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. Happens if i didn't file taxes last year If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. Happens if i didn't file taxes last year See Additional Tax on Early Distributions, later. Happens if i didn't file taxes last year Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. Happens if i didn't file taxes last year Two-year rule. Happens if i didn't file taxes last year   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. Happens if i didn't file taxes last year The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. Happens if i didn't file taxes last year   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). Happens if i didn't file taxes last year Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. Happens if i didn't file taxes last year If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. Happens if i didn't file taxes last year If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. Happens if i didn't file taxes last year Prev  Up  Next   Home   More Online Publications