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How Can I Amend My Taxes

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How Can I Amend My Taxes

How can i amend my taxes 37. How can i amend my taxes   Other Credits Table of Contents What's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld What's New Adoption credit. How can i amend my taxes  The maximum adoption credit is $12,970 for 2013. How can i amend my taxes See Adoption Credit . How can i amend my taxes Plug-in electric vehicle credit. How can i amend my taxes  This credit has expired. How can i amend my taxes Credit for prior year minimum tax. How can i amend my taxes  The refundable portion of the credit for prior year minimum tax has expired. How can i amend my taxes Excess withholding of social security and railroad retirement tax. How can i amend my taxes  Social security tax and tier 1 railroad retirement (RRTA) tax were both withheld during 2013 at a rate of 6. How can i amend my taxes 2% of wages up to $113,700. How can i amend my taxes If you worked for more than one employer and had too much social security or RRTA tax withheld during 2013, you may be entitled to a credit for the excess withholding. How can i amend my taxes See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld . How can i amend my taxes Introduction This chapter discusses the following nonrefundable credits. How can i amend my taxes Adoption credit. How can i amend my taxes Alternative motor vehicle credit. How can i amend my taxes Alternative fuel vehicle refueling property credit. How can i amend my taxes Credit to holders of tax credit bonds. How can i amend my taxes Foreign tax credit. How can i amend my taxes Mortgage interest credit. How can i amend my taxes Nonrefundable credit for prior year minimum tax. How can i amend my taxes Plug-in electric drive motor vehicle credit. How can i amend my taxes Residential energy credits. How can i amend my taxes Retirement savings contributions credit. How can i amend my taxes This chapter also discusses the following refundable credits. How can i amend my taxes Credit for tax on undistributed capital gain. How can i amend my taxes Health coverage tax credit. How can i amend my taxes Credit for excess social security tax or railroad retirement tax withheld. How can i amend my taxes Several other credits are discussed in other chapters in this publication. How can i amend my taxes Child and dependent care credit (chapter 32). How can i amend my taxes Credit for the elderly or the disabled (chapter 33). How can i amend my taxes Child tax credit (chapter 34). How can i amend my taxes Education credits (chapter 35). How can i amend my taxes Earned income credit (chapter 36). How can i amend my taxes Nonrefundable credits. How can i amend my taxes   The first part of this chapter, Nonrefundable Credits , covers ten credits that you subtract from your tax. How can i amend my taxes These credits may reduce your tax to zero. How can i amend my taxes If these credits are more than your tax, the excess is not refunded to you. How can i amend my taxes Refundable credits. How can i amend my taxes   The second part of this chapter, Refundable Credits , covers three credits that are treated as payments and are refundable to you. How can i amend my taxes These credits are added to the federal income tax withheld and any estimated tax payments you made. How can i amend my taxes If this total is more than your total tax, the excess will be refunded to you. How can i amend my taxes Useful Items - You may want to see: Publication 502 Medical and Dental Expenses 514 Foreign Tax Credit for  Individuals 530 Tax Information for Homeowners 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1116 Foreign Tax Credit 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 5695 Residential Energy Credits 8396 Mortgage Interest Credit 8801 Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts 8828 Recapture of Federal Mortgage Subsidy 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions 8885 Health Coverage Tax Credit 8910 Alternative Motor Vehicle Credit 8911 Alternative Fuel Vehicle Refueling Property Credit 8912 Credit to Holders of Tax Credit Bonds 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit Nonrefundable Credits The credits discussed in this part of the chapter can reduce your tax. How can i amend my taxes However, if the total of these credits is more than your tax, the excess is not refunded to you. How can i amend my taxes Adoption Credit You may be able to take a tax credit of up to $12,970 for qualified expenses paid to adopt an eligible child. How can i amend my taxes The credit may be allowed for the adoption of a child with special needs even if you do not have any qualified expenses. How can i amend my taxes If your modified adjusted gross income (AGI) is more than $194,580, your credit is reduced. How can i amend my taxes If your modified AGI is $234,580 or more, you cannot take the credit. How can i amend my taxes Qualified adoption expenses. How can i amend my taxes   Qualified adoption expenses are reasonable and necessary expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. How can i amend my taxes These expenses include: Adoption fees, Court costs, Attorney fees, Travel expenses (including amounts spent for meals and lodging) while away from home, and Re-adoption expenses to adopt a foreign child. How can i amend my taxes Nonqualified expenses. How can i amend my taxes   Qualified adoption expenses do not include expenses: That violate state or federal law, For carrying out any surrogate parenting arrangement, For the adoption of your spouse's child, For which you received funds under any federal, state, or local program, Allowed as a credit or deduction under any other federal income tax rule, or Paid or reimbursed by your employer or any other person or organization. How can i amend my taxes Eligible child. How can i amend my taxes   The term “eligible child” means any individual: Under 18 years old, or Physically or mentally incapable of caring for himself or herself. How can i amend my taxes Child with special needs. How can i amend my taxes   An eligible child is a child with special needs if all three of the following apply. How can i amend my taxes The child was a citizen or resident of the United States (including U. How can i amend my taxes S. How can i amend my taxes possessions) at the time the adoption process began. How can i amend my taxes A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home. How can i amend my taxes The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. How can i amend my taxes Factors used by states to make this determination include: The child's ethnic background, The child's age, Whether the child is a member of a minority or sibling group, and Whether the child has a medical condition or a physical, mental, or emotional handicap. How can i amend my taxes When to take the credit. How can i amend my taxes   Generally, until the adoption becomes final, you take the credit in the year after your qualified expenses were paid or incurred. How can i amend my taxes If the adoption becomes final, you take the credit in the year your expenses were paid or incurred. How can i amend my taxes See the Instructions for Form 8839 for more specific information on when to take the credit. How can i amend my taxes Foreign child. How can i amend my taxes   If the child is not a U. How can i amend my taxes S. How can i amend my taxes citizen or resident at the time the adoption process began, you cannot take the credit unless the adoption becomes final. How can i amend my taxes You treat all adoption expenses paid or incurred in years before the adoption becomes final as paid or incurred in the year it becomes final. How can i amend my taxes How to take the credit. How can i amend my taxes   Figure your 2013 nonrefundable credit and any carryforward to 2014 on Form 8839 and attach it to your Form 1040. How can i amend my taxes Include the credit in your total for Form 1040, line 53. How can i amend my taxes Check box c and enter “8839” on the line next to that box. How can i amend my taxes More information. How can i amend my taxes   For more information, see the Instructions for Form 8839. How can i amend my taxes Alternative Motor Vehicle Credit You may be able to take this credit if you place a qualified fuel cell vehicle in service in 2013. How can i amend my taxes Amount of credit. How can i amend my taxes   Generally, you can rely on the manufacturer's certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies. How can i amend my taxes In the case of a foreign manufacturer, you generally can rely on its domestic distributor's certification to the IRS. How can i amend my taxes   Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification to the IRS of the maximum credit allowable. How can i amend my taxes How to take the credit. How can i amend my taxes   To take the credit, you must complete Form 8910 and attach it to your Form 1040. How can i amend my taxes Include the credit in your total for Form 1040, line 53. How can i amend my taxes Check box c and enter “8910” on the line next to that box. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see the Instructions for Form 8910. How can i amend my taxes Alternative Fuel Vehicle Refueling Property Credit You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2013. How can i amend my taxes Qualified alternative fuel vehicle refueling property. How can i amend my taxes   Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used for either of the following. How can i amend my taxes To store or dispense alternative fuel into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into that tank. How can i amend my taxes To recharge an electric vehicle, but only if the recharging property is located at the point where the vehicle is recharged. How can i amend my taxes   The following are alternative fuels. How can i amend my taxes Any fuel at least 85% of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. How can i amend my taxes Any mixture which consists of two or more of the following: biodiesel, diesel fuel, or kerosene, and at least 20% of the volume of which consists of biodiesel determined without regard to any kerosene. How can i amend my taxes Electricity. How can i amend my taxes Amount of the credit. How can i amend my taxes   For personal use property, the credit is generally the smaller of 30% of the property's cost or $1,000. How can i amend my taxes For business use property, the credit is generally the smaller of 30% of the property's cost or $30,000. How can i amend my taxes How to take the credit. How can i amend my taxes   To take the credit, you must complete Form 8911 and attach it to your Form 1040. How can i amend my taxes Include the credit in your total for Form 1040, line 53. How can i amend my taxes Check box c and enter “8911” on the line next to that box. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see the Form 8911 instructions. How can i amend my taxes Credit to Holders of Tax Credit Bonds Tax credit bonds are bonds in which the holder receives a tax credit in lieu of some or all of the interest on the bond. How can i amend my taxes You may be able to take a credit if you are a holder of one of the following bonds. How can i amend my taxes Clean renewable energy bonds (issued before 2010). How can i amend my taxes New clean renewable energy bonds. How can i amend my taxes Qualified energy conservation bonds. How can i amend my taxes Qualified school construction bonds. How can i amend my taxes Qualified zone academy bonds. How can i amend my taxes Build America bonds. How can i amend my taxes In some instances, an issuer may elect to receive a credit for interest paid on the bond. How can i amend my taxes If the issuer makes this election, you cannot also claim a credit. How can i amend my taxes Interest income. How can i amend my taxes   The amount of any tax credit allowed (figured before applying tax liability limits) must be included as interest income on your tax return. How can i amend my taxes How to take the credit. How can i amend my taxes   Complete Form 8912 and attach it to your Form 1040. How can i amend my taxes Include the credit in your total for Form 1040, line 53. How can i amend my taxes Check box c and enter “8912” on the line next to that box. How can i amend my taxes More information. How can i amend my taxes   For more information, see the Instructions for Form 8912. How can i amend my taxes Foreign Tax Credit You generally can choose to take income taxes you paid or accrued during the year to a foreign country or U. How can i amend my taxes S. How can i amend my taxes possession as a credit against your U. How can i amend my taxes S. How can i amend my taxes income tax. How can i amend my taxes Or, you can deduct them as an itemized deduction (see chapter 22). How can i amend my taxes You cannot take a credit (or deduction) for foreign income taxes paid on income that you exclude from U. How can i amend my taxes S. How can i amend my taxes tax under any of the following. How can i amend my taxes Foreign earned income exclusion. How can i amend my taxes Foreign housing exclusion. How can i amend my taxes Income from Puerto Rico exempt from U. How can i amend my taxes S. How can i amend my taxes tax. How can i amend my taxes Possession exclusion. How can i amend my taxes Limit on the credit. How can i amend my taxes   Unless you can elect not to file Form 1116 (see Exception , later), your foreign tax credit cannot be more than your U. How can i amend my taxes S. How can i amend my taxes tax liability (Form 1040, line 44), multiplied by a fraction. How can i amend my taxes The numerator of the fraction is your taxable income from sources outside the United States. How can i amend my taxes The denominator is your total taxable income from U. How can i amend my taxes S. How can i amend my taxes and foreign sources. How can i amend my taxes See Publication 514 for more information. How can i amend my taxes How to take the credit. How can i amend my taxes   Complete Form 1116 and attach it to your Form 1040. How can i amend my taxes Enter the credit on Form 1040, line 47. How can i amend my taxes Exception. How can i amend my taxes   You do not have to complete Form 1116 to take the credit if all of the following apply. How can i amend my taxes All of your gross foreign source income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). How can i amend my taxes If you had dividend income from shares of stock, you held those shares for at least 16 days. How can i amend my taxes You are not filing Form 4563 or excluding income from sources within Puerto Rico. How can i amend my taxes The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). How can i amend my taxes All of your foreign taxes were: Legally owed and not eligible for a refund, and Paid to countries that are recognized by the United States and do not support terrorism. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit and these requirements, see the Instructions for Form 1116. How can i amend my taxes Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals own a home. How can i amend my taxes If you qualify, you can take the credit each year for part of the home mortgage interest you pay. How can i amend my taxes Who qualifies. How can i amend my taxes   You may be eligible for the credit if you were issued a qualified mortgage credit certificate (MCC) from your state or local government. How can i amend my taxes Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. How can i amend my taxes Amount of credit. How can i amend my taxes   Figure your credit on Form 8396. How can i amend my taxes If your mortgage loan amount is equal to (or smaller than) the certified indebtedness (loan) amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. How can i amend my taxes   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. How can i amend my taxes To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. How can i amend my taxes      Certified indebtedness amount on your MCC     Original amount of your mortgage   Limit based on credit rate. How can i amend my taxes   If the certificate credit rate is more than 20%, the credit you are allowed cannot be more than $2,000. How can i amend my taxes If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, this $2,000 limit must be divided based on the interest held by each person. How can i amend my taxes See Publication 530 for more information. How can i amend my taxes Carryforward. How can i amend my taxes   Your credit (after applying the limit based on the credit rate) is also subject to a limit based on your tax that is figured using Form 8396. How can i amend my taxes If your allowable credit is reduced because of this tax liability limit, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. How can i amend my taxes   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). How can i amend my taxes How to take the credit. How can i amend my taxes    Figure your 2013 credit and any carryforward to 2014 on Form 8396, and attach it to your Form 1040. How can i amend my taxes Be sure to include any credit carryforward from 2010, 2011, and 2012. How can i amend my taxes   Include the credit in your total for Form 1040, line 53. How can i amend my taxes Check box c and enter “8396” on the line next to that box. How can i amend my taxes Reduced home mortgage interest deduction. How can i amend my taxes   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. How can i amend my taxes You must do this even if part of that amount is to be carried forward to 2014. How can i amend my taxes For more information about the home mortgage interest deduction, see chapter 23. How can i amend my taxes Recapture of federal mortgage subsidy. How can i amend my taxes   If you received an MCC with your mortgage loan, you may have to recapture (pay back) all or part of the benefit you received from that program. How can i amend my taxes The recapture may be required if you sell or dispose of your home at a gain during the first 9 years after the date you closed your mortgage loan. How can i amend my taxes See the Instructions for Form 8828 and chapter 15 for more information. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see the Form 8396 instructions. How can i amend my taxes Nonrefundable Credit for Prior Year Minimum Tax The tax laws give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. How can i amend my taxes If you benefit from these laws, you may have to pay at least a minimum amount of tax in addition to any other tax on these items. How can i amend my taxes This is called the alternative minimum tax. How can i amend my taxes The special treatment of some items of income and expenses only allows you to postpone paying tax until a later year. How can i amend my taxes If in prior years you paid alternative minimum tax because of these tax postponement items, you may be able to take a credit for prior year minimum tax against your current year's regular tax. How can i amend my taxes You may be able to take a credit against your regular tax if for 2012 you had: An alternative minimum tax liability and adjustments or preferences other than exclusion items, A minimum tax credit that you are carrying forward to 2013, or An unallowed qualified electric vehicle credit. How can i amend my taxes How to take the credit. How can i amend my taxes    Figure your 2013 nonrefundable credit (if any), and any carryforward to 2014 on Form 8801, and attach it to your Form 1040. How can i amend my taxes Include the credit in your total for Form 1040, line 53, and check box b. How can i amend my taxes You can carry forward any unused credit for prior year minimum tax to later years until it is completely used. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see the Instructions for Form 8801. How can i amend my taxes Plug-in Electric Drive Motor Vehicle Credit You may be able to take this credit if you placed in service for business or personal use a qualified plug-in electric drive motor vehicle or a qualified two- or three-wheeled plug-in electric vehicle in 2013 and you meet some other requirements. How can i amend my taxes Qualified plug-in electric drive motor vehicle. How can i amend my taxes   This is a new vehicle with at least four wheels that: Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. How can i amend my taxes Qualified two- or three-wheeled plug-in electric vehicle. How can i amend my taxes   This is a new vehicle with two or three wheels that: Is capable of achieving a speed of 45 miles per hour or greater, Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2. How can i amend my taxes 5 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. How can i amend my taxes Certification and other requirements. How can i amend my taxes   Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and, if applicable, the amount of the credit for which it qualifies. How can i amend my taxes However, if the IRS publishes an announcement that the certification for any specific make, model, and model year vehicle has been withdrawn, you cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement. How can i amend my taxes   The following requirements must also be met to qualify for the credit. How can i amend my taxes You are the owner of the vehicle. How can i amend my taxes If the vehicle is leased, only the lessor, and not the lessee, is entitled to the credit. How can i amend my taxes You placed the vehicle in service during 2013. How can i amend my taxes The vehicle is manufactured primarily for use on public streets, roads, and highways. How can i amend my taxes The original use of the vehicle began with you. How can i amend my taxes You acquired the vehicle for your use or to lease to others, and not for resale. How can i amend my taxes In the case of the qualified two- or three-wheeled plug-in electric vehicle, the vehicle is acquired after 2011 and before 2014. How can i amend my taxes You use the vehicle primarily in the United States. How can i amend my taxes How to take the credit. How can i amend my taxes   To take the credit, you must complete Form 8936 and attach it to your Form 1040. How can i amend my taxes Include the credit in your total for Form 1040, line 53. How can i amend my taxes Check box c and enter “8936” on the line next to that box. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see the Form 8936 instructions. How can i amend my taxes Residential Energy Credits You may be able to take one or both of the following credits if you made energy saving improvements to your home located in the United States in 2013. How can i amend my taxes Nonbusiness energy property credit. How can i amend my taxes Residential energy efficient property credit. How can i amend my taxes If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of the association or corporation for purposes of these credits. How can i amend my taxes Nonbusiness energy property credit. How can i amend my taxes   You may be able to take a credit equal to the sum of: 10% of the amount paid or incurred for qualified energy efficiency improvements installed during 2013, and Any residential energy property costs paid or incurred in 2013. How can i amend my taxes   There is a lifetime limit of $500 for all years after 2005, of which only $200 can be for windows; $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property. How can i amend my taxes    If the total of nonbusiness energy property credits you have taken in previous years (after 2005) is more than $500, you cannot take this credit in 2013. How can i amend my taxes   Qualified energy efficiency improvements are the following improvements that are new, can be expected to remain in use at least 5 years, and meet certain requirements for energy efficiency. How can i amend my taxes Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home. How can i amend my taxes Exterior window (including skylights). How can i amend my taxes Exterior doors. How can i amend my taxes Any metal or asphalt roof that has appropriate pigmented coatings or cooling granules specifically and primarily designed to reduce heat gain of the home. How can i amend my taxes   Residential energy property is any of the following. How can i amend my taxes Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heater; and stoves that use biomass fuel. How can i amend my taxes Qualified natural gas, propane, or oil furnaces; and qualified natural gas, propane, or oil hot water boilers. How can i amend my taxes Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces. How can i amend my taxes Residential energy efficient property credit. How can i amend my taxes   You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. How can i amend my taxes The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property. How can i amend my taxes Basis reduction. How can i amend my taxes   You must reduce the basis of your home by the amount of any credit allowed. How can i amend my taxes How to take the credit. How can i amend my taxes   Complete Form 5695 and attach it to your Form 1040. How can i amend my taxes Enter the credit on Form 1040, line 52. How can i amend my taxes More information. How can i amend my taxes   For more information on these credits, see the Form 5695 instructions. How can i amend my taxes Retirement Savings Contributions Credit (Saver's Credit) You may be able to take this credit if you, or your spouse if filing jointly, made: Contributions (other than rollover contributions) to a traditional or Roth IRA, Elective deferrals to a 401(k) or 403(b) plan (including designated Roth contributions) or to a governmental 457, SEP, or SIMPLE plan, Voluntary employee contributions to a qualified retirement plan (including the federal Thrift Savings Plan), or Contributions to a 501(c)(18)(D) plan. How can i amend my taxes However, you cannot take the credit if either of the following applies. How can i amend my taxes The amount on Form 1040, line 38, or Form 1040A, line 22, is more than $29,500 ($44,250 if head of household; $59,000 if married filing jointly). How can i amend my taxes The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1996, (b) is claimed as a dependent on someone else's 2013 tax return, or (c) was a student (defined next). How can i amend my taxes Student. How can i amend my taxes   You were a student if during any part of 5 calendar months of 2013 you: Were enrolled as a full-time student at a school, or Took a full-time, on-farm training course given by a school or a state, county, or local government agency. How can i amend my taxes School. How can i amend my taxes   A school includes a technical, trade, or mechanical school. How can i amend my taxes It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. How can i amend my taxes How to take the credit. How can i amend my taxes   Figure the credit on Form 8880. How can i amend my taxes Enter the credit on your Form 1040, line 50, or your Form 1040A, line 32, and attach Form 8880 to your return. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see the Form 8880 instructions. How can i amend my taxes Refundable Credits The credits discussed in this part of the chapter are treated as payments of tax. How can i amend my taxes If the total of these credits, withheld federal income tax, and estimated tax payments is more than your total tax, the excess can be refunded to you. How can i amend my taxes Credit for Tax on Undistributed Capital Gain You must include in your income any amounts that regulated investment companies (commonly called mutual funds) or real estate investment trusts (REITs) allocated to you as capital gain distributions, even if you did not actually receive them. How can i amend my taxes If the mutual fund or REIT paid a tax on the capital gain, you are allowed a credit for the tax since it is considered paid by you. How can i amend my taxes The mutual fund or REIT will send you Form 2439 showing your share of the undistributed capital gains and the tax paid, if any. How can i amend my taxes How to take the credit. How can i amend my taxes   To take the credit, attach Copy B of Form 2439 to your Form 1040. How can i amend my taxes Include the amount from box 2 of your Form 2439 in the total for Form 1040, line 71, and check box a. How can i amend my taxes More information. How can i amend my taxes   See Capital Gain Distributions in chapter 8 for more information on undistributed capital gains. How can i amend my taxes Health Coverage Tax Credit You may be able to take this credit for any month in which all the following statements were true on the first day of the month. How can i amend my taxes You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient (defined later); or you were a qualified family member of one of these individuals when the individual died or you finalized a divorce with one of these individuals. How can i amend my taxes You and/or your family members were covered by a qualified health insurance plan for which you paid the entire premiums, or your portion of the premiums, directly to your health plan or to “U. How can i amend my taxes S. How can i amend my taxes Treasury–HCTC. How can i amend my taxes ” You were not enrolled in Medicare Part A, B, or C, or you were enrolled in Medicare but your family member(s) qualified for the HCTC. How can i amend my taxes You were not enrolled in Medicaid or the Children's Health Insurance Program (CHIP). How can i amend my taxes You were not enrolled in the Federal Employees Health Benefits program (FEHBP) or eligible to receive benefits under the U. How can i amend my taxes S. How can i amend my taxes military health system (TRICARE). How can i amend my taxes You were not imprisoned under federal, state, or local authority. How can i amend my taxes Your employer did not pay 50% or more of the cost of coverage. How can i amend my taxes You did not receive a 65% COBRA premium reduction from your former employer or COBRA administrator. How can i amend my taxes But, you cannot take the credit if you can be claimed as a dependent on someone else's 2013 tax return. How can i amend my taxes If you meet all of these conditions, you may be able to take a credit of up to 72. How can i amend my taxes 5% of the amount you paid directly to a qualified health plan for you and any qualifying family members. How can i amend my taxes You cannot take the credit for insurance premiums on coverage that was actually paid for with a National Emergency Grant. How can i amend my taxes The amount you paid for qualified health insurance coverage must be reduced by any Archer MSA and health savings account distributions used to pay for the coverage. How can i amend my taxes You can take this credit on your tax return or have it paid on your behalf in advance to your insurance company. How can i amend my taxes If the credit is paid on your behalf in advance, that amount will reduce the amount of the credit you can take on your tax return. How can i amend my taxes TAA recipient. How can i amend my taxes   You were an eligible TAA recipient on the first day of the month if, for any day in that month or the prior month, you: Received a trade readjustment allowance, or Would have been entitled to receive such an allowance except that you had not exhausted all rights to any unemployment insurance (except additional compensation that is funded by a state and is not reimbursed from any federal funds) to which you were entitled (or would be entitled if you applied). How can i amend my taxes Example. How can i amend my taxes You received a trade adjustment allowance for January 2013. How can i amend my taxes You were an eligible TAA recipient on the first day of January and February. How can i amend my taxes Alternative TAA recipient. How can i amend my taxes   You were an eligible alternative TAA recipient on the first day of the month if, for that month or the prior month, you received benefits under an alternative trade adjustment assistance program for older workers established by the Department of Labor. How can i amend my taxes Example. How can i amend my taxes You received benefits under an alternative trade adjustment assistance program for older workers for October 2013. How can i amend my taxes The program was established by the Department of Labor. How can i amend my taxes You were an eligible alternative TAA recipient on the first day of October and November. How can i amend my taxes RTAA recipient. How can i amend my taxes   You were an eligible RTAA recipient on the first day of the month if, for that month or the prior month, you received benefits under a reemployment trade adjustment assistance program for older workers established by the Department of Labor. How can i amend my taxes PBGC pension recipient. How can i amend my taxes   You were an eligible PBGC pension recipient on the first day of the month, if both of the following apply. How can i amend my taxes You were age 55 or older on the first day of the month. How can i amend my taxes You received a benefit for that month paid by the PBGC under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). How can i amend my taxes If you received a lump-sum payment from the PBGC after August 5, 2002, you meet item (2) above for any month that you would have received a PBGC benefit if you had not received the lump-sum payment. How can i amend my taxes How to take the credit. How can i amend my taxes   To take the credit, complete Form 8885 and attach it to your Form 1040. How can i amend my taxes Include your credit in the total for Form 1040, line 71, and check box c. How can i amend my taxes   You must attach health insurance bills (or COBRA payment coupons) and proof of payment for any amounts you include on Form 8885, line 2. How can i amend my taxes For details, see Publication 502 or Form 8885. How can i amend my taxes More information. How can i amend my taxes   For definitions and special rules, including those relating to qualified health insurance plans, qualifying family members, the effect of certain life events, and employer-sponsored health insurance plans, see Publication 502 and the Form 8885 instructions. How can i amend my taxes Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Most employers must withhold social security tax from your wages. How can i amend my taxes If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. How can i amend my taxes If you worked for two or more employers in 2013, you may have had too much social security tax withheld from your pay. How can i amend my taxes If one or more of those employers was a railroad employer, too much tier 1 RRTA tax may also have been withheld at the 6. How can i amend my taxes 2% rate. How can i amend my taxes You can claim the excess social security or tier 1 RRTA tax as a credit against your income tax when you file your return. How can i amend my taxes For the tier 1 RRTA tax, only use the portion of the tier 1 RRTA tax that was taxed at the 6. How can i amend my taxes 2% rate when figuring if excess tier 1 RRTA tax was withheld; do not include any portion of the tier 1 RRTA tax that was withheld at the Medicare tax rate (1. How can i amend my taxes 45%) or the Additional Medicare Tax rate (. How can i amend my taxes 9%). How can i amend my taxes The following table shows the maximum amount of wages subject to tax and the maximum amount of tax that should have been withheld for 2013. How can i amend my taxes Type of tax Maximum  wages subject to tax Maximum tax that should have been withheld Social security or RRTA tier 1 $113,700 $7,049. How can i amend my taxes 40 RRTA tier 2 $84,300 $3,709. How can i amend my taxes 20 All wages are subject to Medicare tax withholding. How can i amend my taxes   Use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess tier 2 RRTA tax. How can i amend my taxes Be sure to attach a copy of all of your W-2 forms. How can i amend my taxes Use Worksheet 3-3 in Publication 505, Tax Withholding and Estimated Tax, to help you figure the excess amount. How can i amend my taxes Employer's error. How can i amend my taxes   If any one employer withheld too much social security or tier 1 RRTA tax, you cannot take the excess as a credit against your income tax. How can i amend my taxes The employer should adjust the tax for you. How can i amend my taxes If the employer does not adjust the overcollection, you can file a claim for refund using Form 843. How can i amend my taxes Joint return. How can i amend my taxes   If you are filing a joint return, you cannot add the social security or tier 1 RRTA tax withheld from your spouse's wages to the amount withheld from your wages. How can i amend my taxes Figure the withholding separately for you and your spouse to determine if either of you has excess withholding. How can i amend my taxes How to figure the credit if you did not work for a railroad. How can i amend my taxes   If you did not work for a railroad during 2013, figure the credit as follows: 1. How can i amend my taxes Add all social security tax withheld (but not more than $7,049. How can i amend my taxes 40 for each employer). How can i amend my taxes Enter the total here   2. How can i amend my taxes Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. How can i amend my taxes Add lines 1 and 2. How can i amend my taxes If $7,049. How can i amend my taxes 40 or less, stop here. How can i amend my taxes You cannot take  the credit   4. How can i amend my taxes Social security tax limit 7,049. How can i amend my taxes 40 5. How can i amend my taxes Credit. How can i amend my taxes Subtract line 4 from line 3. How can i amend my taxes Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ Example. How can i amend my taxes You are married and file a joint return with your spouse who had no gross income in 2013. How can i amend my taxes During 2013, you worked for the Brown Technology Company and earned $60,000 in wages. How can i amend my taxes Social security tax of $3,720 was withheld. How can i amend my taxes You also worked for another employer in 2013 and earned $55,000 in wages. How can i amend my taxes $3,410 of social security tax was withheld from these wages. How can i amend my taxes Because you worked for more than one employer and your total wages were more than $113,700, you can take a credit of $80. How can i amend my taxes 60 for the excess social security tax withheld. How can i amend my taxes 1. How can i amend my taxes Add all social security tax withheld (but not more than $7,049. How can i amend my taxes 40 for each employer). How can i amend my taxes Enter the total here $7,130. How can i amend my taxes 00 2. How can i amend my taxes Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT” -0- 3. How can i amend my taxes Add lines 1 and 2. How can i amend my taxes If $7,049. How can i amend my taxes 40 or less, stop here. How can i amend my taxes You cannot take the credit 7,130. How can i amend my taxes 00 4. How can i amend my taxes Social security tax limit 7,049. How can i amend my taxes 40 5. How can i amend my taxes Credit. How can i amend my taxes Subtract line 4 from line 3. How can i amend my taxes Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $80. How can i amend my taxes 60 How to figure the credit if you worked for a railroad. How can i amend my taxes   If you were a railroad employee at any time during 2013, figure the credit as follows: 1. How can i amend my taxes Add all social security and tier 1 RRTA tax withheld at the 6. How can i amend my taxes 2% rate (but not more than $7,049. How can i amend my taxes 40 for each employer). How can i amend my taxes Enter the total here   2. How can i amend my taxes Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. How can i amend my taxes Add lines 1 and 2. How can i amend my taxes If $7,049. How can i amend my taxes 40 or less, stop here. How can i amend my taxes You cannot take  the credit   4. How can i amend my taxes Social security and tier 1 RRTA  tax limit 7,049. How can i amend my taxes 40 5. How can i amend my taxes Credit. How can i amend my taxes Subtract line 4 from line 3. How can i amend my taxes Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ How to take the credit. How can i amend my taxes   Enter the credit on Form 1040, line 69, or include it in the total for Form 1040A, line 41. How can i amend my taxes More information. How can i amend my taxes   For more information on the credit, see Publication 505. How can i amend my taxes Prev  Up  Next   Home   More Online Publications
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IRS Releases the Dirty Dozen Tax Scams for 2012

IR-2012-23, Feb. 16, 2012

WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman. “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

The following is the Dirty Dozen tax scams for 2012:

Identity Theft

Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.
 
An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. 

The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.  Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states.

Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit.  For more information, visit the special identity theft page at www.IRS.gov/identitytheft

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.  The IRS has information that can help you protect yourself from email scams.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

  • Do not sign the return or place a Preparer Tax identification Number on it.
  • Do not give you a copy of your tax return.
  • Promise larger than normal tax refunds.
  • Charge a percentage of the refund amount as preparation fee.
  • Require you to split the refund to pay the preparation fee.
  • Add forms to the return you have never filed before.
  • Encourage you to place false information on your return, such as false income, expenses and/or credits.

For advice on how to find a competent tax professional, see  Tips for Choosing a Tax Preparer.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.
 
Since 2009, 30,000 individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to bring their money back into the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore will become increasingly more difficult.

At the beginning of this year, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.  This program will be open for an indefinite period until otherwise announced.

The IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program.  That number will grow as the IRS processes the 2011 cases.

“Free Money” from the IRS & Tax Scams Involving Social Security

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

Scammers prey on low income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

There are a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return. 

Beware. Intentional mistakes of this kind can result in a $5,000 penalty.

False/Inflated Income and Expenses

Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions.  This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution. 

Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit when their occupations or income levels make the claims unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

False Form 1099 Refund Claims

In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.

Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Falsely Claiming Zero Wages

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

Abuse of Charitable Organizations and Deductions

IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property. The IRS is investigating schemes that involve the donation of non-cash assets –– including situations in which several organizations claim the full value of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new standards for qualified appraisals.

Disguised Corporate Ownership

Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.

These entities can be used to underreport income, claim fictitious deductions, avoid filing tax returns, participate in listed transactions and facilitate money laundering, and financial crimes. The IRS is working with state authorities to identify these entities and bring the owners into compliance with the law.

Misuse of Trusts

For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are legitimate uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.

IRS personnel have seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.
 

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Page Last Reviewed or Updated: 11-Feb-2014

The How Can I Amend My Taxes

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