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How Do I File An Amended Tax Return For 2011

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How Do I File An Amended Tax Return For 2011

How do i file an amended tax return for 2011 Publication 971 - Main Content Table of Contents How To Request ReliefException for agreements relating to TEFRA partnership proceedings. How do i file an amended tax return for 2011 The IRS Must Contact Your Spouse or Former Spouse Tax Court Review of Request Community Property LawsRelief for Married Persons Who Did Not File Joint Returns Innocent Spouse ReliefUnderstated Tax Erroneous Items Actual Knowledge or Reason To Know Indications of Unfairness for Innocent Spouse Relief Separation of Liability ReliefLimitations on Relief Equitable ReliefConditions for Getting Equitable Relief Factors for Determining Whether To Grant Equitable Relief RefundsProof Required Refunds Under Equitable Relief Limit on Amount of Refund Filled-in Form 8857 Flowcharts How To Request Relief File Form 8857 to ask the IRS for the types of relief discussed in this publication. How do i file an amended tax return for 2011 If you are requesting relief for more than three tax years, you must file an additional Form 8857. How do i file an amended tax return for 2011 The IRS will review your Form 8857 and let you know if you qualify. How do i file an amended tax return for 2011 A completed Form 8857 is shown later. How do i file an amended tax return for 2011 When to file Form 8857. How do i file an amended tax return for 2011   You should file Form 8857 as soon as you become aware of a tax liability for which you believe only your spouse or former spouse should be held responsible. How do i file an amended tax return for 2011 The following are some of the ways you may become aware of such a liability. How do i file an amended tax return for 2011 The IRS is examining your tax return and proposing to increase your tax liability. How do i file an amended tax return for 2011 The IRS sends you a notice. How do i file an amended tax return for 2011   You must file Form 8857 no later than two years after the date on which the IRS first attempted to collect the tax from you that occurs after July 22, 1998. How do i file an amended tax return for 2011 (But see the exceptions below for different filing deadlines that apply. How do i file an amended tax return for 2011 ) For this reason, do not delay filing because you do not have all the documentation. How do i file an amended tax return for 2011   Collection activities that may start the 2-year period are: The IRS offset your income tax refund against an amount you owed on a joint return for another year and the IRS informed you about your right to file Form 8857. How do i file an amended tax return for 2011 The filing of a claim by the IRS in a court proceeding in which you were a party or the filing of a claim in a proceeding that involves your property. How do i file an amended tax return for 2011 This includes the filing of a proof of claim in a bankruptcy proceeding. How do i file an amended tax return for 2011 The filing of a suit by the United States against you to collect the joint liability. How do i file an amended tax return for 2011 The issuance of a section 6330 notice, which notifies you of the IRS' intent to levy and your right to a collection due process (CDP) hearing. How do i file an amended tax return for 2011 The collection-related notices include, but are not limited to, Letter 11 and Letter 1058. How do i file an amended tax return for 2011 Exception for equitable relief. How do i file an amended tax return for 2011   On July 25, 2011, the IRS issued Notice 2011-70 (available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/irb/2011-32_IRB/ar11. How do i file an amended tax return for 2011 html) expanding the amount of time to request equitable relief. How do i file an amended tax return for 2011 The amount of time to request equitable relief depends on whether you are seeking relief from a balance due, seeking a credit or refund, or both: Balance Due – Generally, you must file your request within the time period the IRS has to collect the tax. How do i file an amended tax return for 2011 Generally, the IRS has 10 years from the date the tax liability was assessed to collect the tax. How do i file an amended tax return for 2011 In certain cases, the 10-year period is suspended. How do i file an amended tax return for 2011 The amount of time the suspension is in effect will extend the time the IRS has to collect the tax. How do i file an amended tax return for 2011 See Pub. How do i file an amended tax return for 2011 594, The IRS Collection Process, for details. How do i file an amended tax return for 2011 Credit or Refund – Generally, you must file your request within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. How do i file an amended tax return for 2011 But you may have more time to file if you live in a federally declared disaster area or you are physically or mentally unable to manage your financial affairs. How do i file an amended tax return for 2011 See Pub. How do i file an amended tax return for 2011 556, Examination of Returns, Appeal Rights, and Claims for Refund, for details. How do i file an amended tax return for 2011 Both a Balance Due and a Credit or Refund – If you are seeking a refund of amounts you paid and relief from a balance due over and above what you have paid, the time period for credit or refund will apply to any payments you have made, and the time period for collection of a balance due amount will apply to any unpaid liability. How do i file an amended tax return for 2011 Exception for relief based on community property laws. How do i file an amended tax return for 2011   If you are requesting relief based on community property laws, a different filing deadline applies. How do i file an amended tax return for 2011 See Relief from liability arising from community property law discussed later under Community Property Laws . How do i file an amended tax return for 2011 Form 8857 filed by or on behalf of a decedent. How do i file an amended tax return for 2011   An executor (including any other duly appointed representative) may pursue a Form 8857 filed during the decedent's lifetime. How do i file an amended tax return for 2011 An executor (including any other duly appointed representative) may also file Form 8857 as long as the decedent satisfied the eligibility requirements while alive. How do i file an amended tax return for 2011 For purposes of separation of liability relief (discussed later), the decedent's marital status is determined on the earlier of the date relief was requested or the date of death. How do i file an amended tax return for 2011 Situations in which you are not entitled to relief. How do i file an amended tax return for 2011   You are not entitled to innocent spouse relief for any tax year to which the following situations apply. How do i file an amended tax return for 2011 In a final decision dated after July 22, 1998, a court considered whether to grant you relief from joint liability and decided not to do so. How do i file an amended tax return for 2011 In a final decision dated after July 22, 1998, a court did not consider whether to grant you relief from joint liability, but you meaningfully participated in the proceeding and could have asked for relief. How do i file an amended tax return for 2011 You entered into an offer in compromise with the IRS. How do i file an amended tax return for 2011 You entered into a closing agreement with the IRS that disposed of the same liability for which you want to seek relief. How do i file an amended tax return for 2011 Exception for agreements relating to TEFRA partnership proceedings. How do i file an amended tax return for 2011   You may be entitled to relief, discussed in (4) earlier, if you entered into a closing agreement for both partnership items and nonpartnership items, while you were a party to a pending TEFRA partnership proceeding. How do i file an amended tax return for 2011 (TEFRA is an acronym that refers to the “Tax Equity and Fiscal Responsibility Act of 1982” that prescribed the tax treatment of partnership items. How do i file an amended tax return for 2011 ) You are not entitled to relief for the nonpartnership items, but you will be entitled to relief for the partnership items (if you otherwise qualify). How do i file an amended tax return for 2011 Transferee liability not affected by innocent spouse relief provisions. How do i file an amended tax return for 2011   The innocent spouse relief provisions do not affect tax liabilities that arise under federal or state transferee liability or property laws. How do i file an amended tax return for 2011 Therefore, even if you are relieved of the tax liability under the innocent spouse relief provisions, you may remain liable for the unpaid tax, interest, and penalties to the extent provided by these laws. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 Herb and Wanda timely filed their 2008 joint income tax return on April 15, 2009. How do i file an amended tax return for 2011 Herb died in March 2010, and the executor of Herb's will transferred all of the estate's assets to Wanda. How do i file an amended tax return for 2011 In August 2010, the IRS assessed a deficiency for the 2008 return. How do i file an amended tax return for 2011 The items causing the deficiency belong to Herb. How do i file an amended tax return for 2011 Wanda is relieved of the deficiency under the innocent spouse relief provisions, and Herb's estate remains solely liable for it. How do i file an amended tax return for 2011 However, the IRS may collect the deficiency from Wanda to the extent permitted under federal or state transferee liability or property laws. How do i file an amended tax return for 2011 The IRS Must Contact Your Spouse or Former Spouse By law, the IRS must contact your spouse or former spouse. How do i file an amended tax return for 2011 There are no exceptions, even for victims of spousal abuse or domestic violence. How do i file an amended tax return for 2011 We will inform your spouse or former spouse that you filed Form 8857 and will allow him or her to participate in the process. How do i file an amended tax return for 2011 If you are requesting relief from joint and several liability on a joint return, the IRS must also inform him or her of its preliminary and final determinations regarding your request for relief. How do i file an amended tax return for 2011 However, to protect your privacy, the IRS will not disclose your personal information (for example, your current name, address, phone number(s), information about your employer, your income or assets) or any other information that does not relate to making a determination about your request for relief from liability. How do i file an amended tax return for 2011 If you petition the Tax Court (explained below), your spouse or former spouse may see your personal information. How do i file an amended tax return for 2011 Tax Court Review of Request After you file Form 8857, you may be able to petition (ask) the United States Tax Court to review your request for relief in the following two situations. How do i file an amended tax return for 2011 The IRS sends you a final determination letter regarding your request for relief. How do i file an amended tax return for 2011 You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857. How do i file an amended tax return for 2011 If you seek equitable relief for an underpaid tax, you will be able to get a Tax Court review of your request only if the tax arose or remained unpaid on or after December 20, 2006. How do i file an amended tax return for 2011 The United States Tax Court is an independent judicial body and is not part of the IRS. How do i file an amended tax return for 2011 You must file a petition with the United States Tax Court in order for it to review your request for relief. How do i file an amended tax return for 2011 You must file the petition no later than the 90th day after the date the IRS mails its final determination notice to you. How do i file an amended tax return for 2011 If you do not file a petition, or you file it late, the Tax Court cannot review your request for relief. How do i file an amended tax return for 2011 You can get a copy of the rules for filing a petition by writing to the Tax Court at the following address:    United States Tax Court 400 Second Street, NW Washington, DC 20217 Or you can visit the Tax Court's website at www. How do i file an amended tax return for 2011 ustaxcourt. How do i file an amended tax return for 2011 gov Community Property Laws You must generally follow community property laws when filing a tax return if you are married and live in a community property state. How do i file an amended tax return for 2011 Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. How do i file an amended tax return for 2011 Generally, community property laws require you to allocate community income and expenses equally between both spouses. How do i file an amended tax return for 2011 However, community property laws are not taken into account in determining whether an item belongs to you or to your spouse (or former spouse) for purposes of requesting any relief from liability. How do i file an amended tax return for 2011 Relief for Married Persons Who Did Not File Joint Returns Married persons who live in community property states, but who did not file joint returns, have two ways to get relief. How do i file an amended tax return for 2011 Relief From Liability Arising From Community Property Law You are not responsible for the tax relating to an item of community income if all the following conditions exist. How do i file an amended tax return for 2011 You did not file a joint return for the tax year. How do i file an amended tax return for 2011 You did not include the item of community income in gross income. How do i file an amended tax return for 2011 The item of community income you did not include is one of the following: Wages, salaries, and other compensation your spouse (or former spouse) received for services he or she performed as an employee. How do i file an amended tax return for 2011 Income your spouse (or former spouse) derived from a trade or business he or she operated as a sole proprietor. How do i file an amended tax return for 2011 Your spouse's (or former spouse's) distributive share of partnership income. How do i file an amended tax return for 2011 Income from your spouse's (or former spouse's) separate property (other than income described in (a), (b), or (c)). How do i file an amended tax return for 2011 Use the appropriate community property law to determine what is separate property. How do i file an amended tax return for 2011 Any other income that belongs to your spouse (or former spouse) under community property law. How do i file an amended tax return for 2011 You establish that you did not know of, and had no reason to know of, that community income. How do i file an amended tax return for 2011 See  Actual Knowledge or Reason To Know , below. How do i file an amended tax return for 2011 Under all facts and circumstances, it would not be fair to include the item of community income in your gross income. How do i file an amended tax return for 2011 See Indications of unfairness for liability arising from community property law, later. How do i file an amended tax return for 2011 Actual knowledge or reason to know. How do i file an amended tax return for 2011   You knew or had reason to know of an item of community income if: You actually knew of the item of community income, or A reasonable person in similar circumstances would have known of the item of community income. How do i file an amended tax return for 2011 Amount of community income unknown. How do i file an amended tax return for 2011   If you are aware of the source of the item of community income or the income-producing activity, but are unaware of the specific amount, you are considered to know or have reason to know of the item of community income. How do i file an amended tax return for 2011 Not knowing the specific amount is not a basis for relief. How do i file an amended tax return for 2011 Reason to know. How do i file an amended tax return for 2011   The IRS will consider all facts and circumstances in determining whether you had reason to know of an item of community income. How do i file an amended tax return for 2011 The facts and circumstances include: The nature of the item of community income and the amount of the item relative to other income items. How do i file an amended tax return for 2011 The financial situation of you and your spouse (or former spouse). How do i file an amended tax return for 2011 Your educational background and business experience. How do i file an amended tax return for 2011 Whether the item of community income represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns). How do i file an amended tax return for 2011 Indications of unfairness for liability arising from community property law. How do i file an amended tax return for 2011   The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax due to the item of community income. How do i file an amended tax return for 2011   The following are examples of factors the IRS will consider. How do i file an amended tax return for 2011 Whether you received a benefit, either directly or indirectly, from the omitted item of community income (defined below). How do i file an amended tax return for 2011 Whether your spouse (or former spouse) deserted you. How do i file an amended tax return for 2011 Whether you and your spouse have been divorced or separated. How do i file an amended tax return for 2011  For other factors see Factors for Determining Whether To Grant Equitable Relief later. How do i file an amended tax return for 2011 Benefit from omitted item of community income. How do i file an amended tax return for 2011   A benefit includes normal support, but does not include de minimis (small) amounts. How do i file an amended tax return for 2011 Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers received several years after the filing of the return. How do i file an amended tax return for 2011   For example, if you receive property, including life insurance proceeds, from your spouse (or former spouse) and the property is traceable to omitted items of community income attributable to your spouse (or former spouse), you are considered to have benefitted from those omitted items of community income. How do i file an amended tax return for 2011 Equitable Relief If you do not qualify for the relief described above and are now liable for an underpaid or understated tax you believe should be paid only by your spouse (or former spouse), you may request equitable relief (discussed later). How do i file an amended tax return for 2011 How and When To Request Relief You request relief by filing Form 8857, as discussed earlier. How do i file an amended tax return for 2011 Fill in Form 8857 according to the instructions. How do i file an amended tax return for 2011 For relief from liability arising from community property law, you must file Form 8857 no later than 6 months before the expiration of the period of limitations on assessment (including extensions) against your spouse for the tax year for which you are requesting relief. How do i file an amended tax return for 2011 However, if the IRS begins an examination of your return during that 6-month period, the latest time for requesting relief is 30 days after the date the IRS' initial contact letter to you. How do i file an amended tax return for 2011 The period of limitation on assessment is the amount of time, generally three years, that the IRS has from the date you filed the return to assess taxes that you owe. How do i file an amended tax return for 2011 Innocent Spouse Relief By requesting innocent spouse relief, you can be relieved of responsibility for paying tax, interest, and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return. How do i file an amended tax return for 2011 Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse (or former spouse). How do i file an amended tax return for 2011 However, you are jointly and individually responsible for any tax, interest, and penalties that do not qualify for relief. How do i file an amended tax return for 2011 The IRS can collect these amounts from either you or your spouse (or former spouse). How do i file an amended tax return for 2011 You must meet all of the following conditions to qualify for innocent spouse relief. How do i file an amended tax return for 2011 You filed a joint return. How do i file an amended tax return for 2011 There is an understated tax on the return that is due to erroneous items (defined later) of your spouse (or former spouse). How do i file an amended tax return for 2011 You can show that when you signed the joint return you did not know, and had no reason to know, that the understated tax existed (or the extent to which the understated tax existed). How do i file an amended tax return for 2011 See Actual Knowledge or Reason To Know, later. How do i file an amended tax return for 2011 Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated tax. How do i file an amended tax return for 2011 See Indications of Unfairness for Innocent Spouse Relief , later. How do i file an amended tax return for 2011 Innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme. How do i file an amended tax return for 2011 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. How do i file an amended tax return for 2011 Understated Tax You have an understated tax if the IRS determined that your total tax should be more than the amount that was actually shown on your return. How do i file an amended tax return for 2011 Erroneous Items Erroneous items are either of the following. How do i file an amended tax return for 2011 Unreported income. How do i file an amended tax return for 2011 This is any gross income item received by your spouse (or former spouse) that is not reported. How do i file an amended tax return for 2011 Incorrect deduction, credit, or basis. How do i file an amended tax return for 2011 This is any improper deduction, credit, or property basis claimed by your spouse (or former spouse). How do i file an amended tax return for 2011 The following are examples of erroneous items. How do i file an amended tax return for 2011 The expense for which the deduction is taken was never paid or incurred. How do i file an amended tax return for 2011 For example, your spouse, a cash-basis taxpayer, deducted $10,000 of advertising expenses on Schedule C of your joint Form 1040, but never paid for any advertising. How do i file an amended tax return for 2011 The expense does not qualify as a deductible expense. How do i file an amended tax return for 2011 For example, your spouse claimed a business fee deduction of $10,000 that was for the payment of state fines. How do i file an amended tax return for 2011 Fines are not deductible. How do i file an amended tax return for 2011 No factual argument can be made to support the deductibility of the expense. How do i file an amended tax return for 2011 For example, your spouse claimed $4,000 for security costs related to a home office, which were actually veterinary and food costs for your family's two dogs. How do i file an amended tax return for 2011 Actual Knowledge or Reason To Know You knew or had reason to know of an understated tax if: You actually knew of the understated tax, or A reasonable person in similar circumstances would have known of the understated tax. How do i file an amended tax return for 2011 Actual knowledge. How do i file an amended tax return for 2011   If you actually knew about an erroneous item that belongs to your spouse (or former spouse), the relief discussed here does not apply to any part of the understated tax due to that item. How do i file an amended tax return for 2011 You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. How do i file an amended tax return for 2011 For information about the criteria for determining whether you actually knew about an erroneous item, see Actual Knowledge later under Separation of Liability Relief. How do i file an amended tax return for 2011 Reason to know. How do i file an amended tax return for 2011   If you had reason to know about an erroneous item that belongs to your spouse (or former spouse), the relief discussed here does not apply to any part of the understated tax due to that item. How do i file an amended tax return for 2011 You and your spouse (or former spouse) remain jointly liable for that part of the understated tax. How do i file an amended tax return for 2011   The IRS will consider all facts and circumstances in determining whether you had reason to know of an understated tax due to an erroneous item. How do i file an amended tax return for 2011 The facts and circumstances include: The nature of the erroneous item and the amount of the erroneous item relative to other items. How do i file an amended tax return for 2011 The financial situation of you and your spouse (or former spouse). How do i file an amended tax return for 2011 Your educational background and business experience. How do i file an amended tax return for 2011 The extent of your participation in the activity that resulted in the erroneous item. How do i file an amended tax return for 2011 Whether you failed to ask, at or before the time the return was signed, about items on the return or omitted from the return that a reasonable person would question. How do i file an amended tax return for 2011 Whether the erroneous item represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns). How do i file an amended tax return for 2011 Partial relief when a portion of erroneous item is unknown. How do i file an amended tax return for 2011   You may qualify for partial relief if, at the time you filed your return, you had no knowledge or reason to know of only a portion of an erroneous item. How do i file an amended tax return for 2011 You will be relieved of the understated tax due to that portion of the item if all other requirements are met for that portion. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 At the time you signed your joint return, you knew that your spouse did not report $5,000 of gambling winnings. How do i file an amended tax return for 2011 The IRS examined your tax return several months after you filed it and determined that your spouse's unreported gambling winnings were actually $25,000. How do i file an amended tax return for 2011 You established that you did not know about, and had no reason to know about, the additional $20,000 because of the way your spouse handled gambling winnings. How do i file an amended tax return for 2011 The understated tax due to the $20,000 will qualify for innocent spouse relief if you meet the other requirements. How do i file an amended tax return for 2011 The understated tax due to the $5,000 of gambling winnings you knew about will not qualify for relief. How do i file an amended tax return for 2011 Indications of Unfairness for Innocent Spouse Relief The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax. How do i file an amended tax return for 2011 The following are examples of factors the IRS will consider. How do i file an amended tax return for 2011 Whether you received a significant benefit (defined below), either directly or indirectly, from the understated tax. How do i file an amended tax return for 2011 Whether your spouse (or former spouse) deserted you. How do i file an amended tax return for 2011 Whether you and your spouse have been divorced or separated. How do i file an amended tax return for 2011 Whether you received a benefit on the return from the understated tax. How do i file an amended tax return for 2011 For other factors, see Factors for Determining Whether To Grant Equitable Relief later under Equitable Relief. How do i file an amended tax return for 2011 Significant benefit. How do i file an amended tax return for 2011   A significant benefit is any benefit in excess of normal support. How do i file an amended tax return for 2011 Normal support depends on your particular circumstances. How do i file an amended tax return for 2011 Evidence of a direct or indirect benefit may consist of transfers of property or rights to property, including transfers that may be received several years after the year of the understated tax. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You receive money from your spouse that is beyond normal support. How do i file an amended tax return for 2011 The money can be traced to your spouse's lottery winnings that were not reported on your joint return. How do i file an amended tax return for 2011 You will be considered to have received a significant benefit from that income. How do i file an amended tax return for 2011 This is true even if your spouse gives you the money several years after he or she received it. How do i file an amended tax return for 2011 Separation of Liability Relief Under this type of relief, the understated tax (plus interest and penalties) on your joint return is allocated between you and your spouse (or former spouse). How do i file an amended tax return for 2011 The understated tax allocated to you is generally the amount you are responsible for. How do i file an amended tax return for 2011 This type of relief is available only for unpaid liabilities resulting from the understated tax. How do i file an amended tax return for 2011 Refunds are not allowed. How do i file an amended tax return for 2011 To request separation of liability relief, you must have filed a joint return and meet either of the following requirements at the time you file Form 8857. How do i file an amended tax return for 2011 You are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief. How do i file an amended tax return for 2011 (Under this rule, you are no longer married if you are widowed. How do i file an amended tax return for 2011 ) You were not a member of the same household (explained below) as the spouse with whom you filed the joint return at any time during the 12-month per- iod ending on the date you file Form 8857. How do i file an amended tax return for 2011 Members of the same household. How do i file an amended tax return for 2011   You and your spouse are not members of the same household if you are living apart and are estranged. How do i file an amended tax return for 2011 However, you and your spouse are considered members of the same household if any of the following conditions are met. How do i file an amended tax return for 2011 You and your spouse reside in the same dwelling. How do i file an amended tax return for 2011 You and your spouse reside in separate dwellings but are not estranged, and one of you is temporarily absent from the other's household as explained in (3) below. How do i file an amended tax return for 2011 Either spouse is temporarily absent from the household and it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. How do i file an amended tax return for 2011 Examples of temporary absences include absence due to imprisonment, illness, business, vacation, military service, or education. How do i file an amended tax return for 2011 Burden of proof. How do i file an amended tax return for 2011   You must be able to prove that you meet all of the requirements for separation of liability relief (except actual knowledge) and that you did not transfer property to avoid tax (discussed later). How do i file an amended tax return for 2011 You must also establish the basis for allocating the erroneous items. How do i file an amended tax return for 2011 Limitations on Relief Even if you meet the requirements discussed previously, separation of liability relief will not be granted in the following situations. How do i file an amended tax return for 2011 The IRS proves that you and your spouse (or former spouse) transferred assets to one another as part of a fraudulent scheme. How do i file an amended tax return for 2011 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. How do i file an amended tax return for 2011 The IRS proves that at the time you signed your joint return, you had actual knowledge (explained below) of any erroneous items giving rise to the deficiency that were allocable to your spouse (or former spouse). How do i file an amended tax return for 2011 For the definition of erroneous items, see Erroneous Items earlier under Innocent Spouse Relief. How do i file an amended tax return for 2011 Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. How do i file an amended tax return for 2011 See Transfers of Property To Avoid Tax , later. How do i file an amended tax return for 2011 Actual Knowledge The relief discussed here does not apply to any part of the understated tax due to your spouse's (or former spouse's) erroneous items of which you had actual knowledge. How do i file an amended tax return for 2011 You and your spouse (or former spouse) remain jointly and severally liable for this part of the understated tax. How do i file an amended tax return for 2011 If you had actual knowledge of only a portion of an erroneous item, the IRS will not grant relief for that portion of the item. How do i file an amended tax return for 2011 You had actual knowledge of an erroneous item if: You knew that an item of unreported income was received. How do i file an amended tax return for 2011 (This rule applies whether or not there was a receipt of cash. How do i file an amended tax return for 2011 ) You knew of the facts that made an incorrect deduction or credit unallowable. How do i file an amended tax return for 2011 For a false or inflated deduction, you knew that the expense was not incurred, or not incurred to the extent shown on the tax return. How do i file an amended tax return for 2011 Knowledge of the source of an erroneous item is not sufficient to establish actual knowledge. How do i file an amended tax return for 2011 Also, your actual knowledge may not be inferred when you merely had a reason to know of the erroneous item. How do i file an amended tax return for 2011 Similarly, the IRS does not have to establish that you knew of the source of an erroneous item in order to establish that you had actual knowledge of the item itself. How do i file an amended tax return for 2011 Your actual knowledge of the proper tax treatment of an erroneous item is not relevant for purposes of demonstrating that you had actual knowledge of that item. How do i file an amended tax return for 2011 Neither is your actual knowledge of how the erroneous item was treated on the tax return. How do i file an amended tax return for 2011 For example, if you knew that your spouse received dividend income, relief is not available for that income even if you did not know it was taxable. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 Bill and Karen Green filed a joint return showing Karen's wages of $50,000 and Bill's self-employment income of $10,000. How do i file an amended tax return for 2011 The IRS audited their return and found that Bill did not report $20,000 of self-employment income. How do i file an amended tax return for 2011 The additional income resulted in a $6,000 understated tax, plus interest and penalties. How do i file an amended tax return for 2011 After obtaining a legal separation from Bill, Karen filed Form 8857 to request separation of liability relief. How do i file an amended tax return for 2011 The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. How do i file an amended tax return for 2011 Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. How do i file an amended tax return for 2011 Karen is also liable for the understated tax, interest, and penalties due to the $20,000 of unreported income because she actually knew of the item. How do i file an amended tax return for 2011 The IRS can collect the entire $6,000 plus interest and penalties from either Karen or Bill because they are jointly and individually liable for it. How do i file an amended tax return for 2011 Factors supporting actual knowledge. How do i file an amended tax return for 2011   The IRS may rely on all facts and circumstances in determining whether you actually knew of an erroneous item at the time you signed the return. How do i file an amended tax return for 2011 The following are examples of factors the IRS may use. How do i file an amended tax return for 2011 Whether you made a deliberate effort to avoid learning about the item in order to be shielded from liability. How do i file an amended tax return for 2011 Whether you and your spouse (or former spouse) jointly owned the property that resulted in the erroneous item. How do i file an amended tax return for 2011 Exception for spousal abuse or domestic violence. How do i file an amended tax return for 2011   Even if you had actual knowledge, you may still qualify for relief if you establish that: You were the victim of spousal abuse or domestic violence before signing the return, and Because of that abuse, you did not challenge the treatment of any items on the return because you were afraid your spouse (or former spouse) would retaliate against you. How do i file an amended tax return for 2011   If you establish that you signed your joint return under duress (threat of harm or other form of coercion), then it is not a joint return, and you are not liable for any tax shown on that return or any tax deficiency for that return. How do i file an amended tax return for 2011 However, you may be required to file a separate return for that tax year. How do i file an amended tax return for 2011 For more information about duress, see the instructions for Form 8857. How do i file an amended tax return for 2011 Transfers of Property To Avoid Tax If your spouse (or former spouse) transfers property (or the right to property) to you for the main purpose of avoiding tax or payment of tax, the tax liability allocated to you will be increased by the fair market value of the property on the date of the transfer. How do i file an amended tax return for 2011 The increase may not be more than the entire amount of the liability. How do i file an amended tax return for 2011 A transfer will be presumed to have as its main purpose the avoidance of tax or payment of tax if the transfer is made after the date that is 1 year before the date on which the IRS sent its first letter of proposed deficiency. How do i file an amended tax return for 2011 This presumption will not apply if: The transfer was made under a divorce decree, separate maintenance agreement, or a written instrument incident to such an agreement, or You establish that the transfer did not have as its main purpose the avoidance of tax or payment of tax. How do i file an amended tax return for 2011 If the presumption does not apply, but the IRS can establish that the purpose of the transfer was the avoidance of tax or payment of tax, the tax liability allocated to you will be increased as explained above. How do i file an amended tax return for 2011 Equitable Relief If you do not qualify for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law, you may still be relieved of responsibility for tax, interest, and penalties through equitable relief. How do i file an amended tax return for 2011 Unlike innocent spouse relief or separation of liability relief, you can get equitable relief from an understated tax (defined earlier under Innocent Spouse Relief ) or an underpaid tax. How do i file an amended tax return for 2011 An underpaid tax is an amount of tax you properly reported on your return but you have not paid. How do i file an amended tax return for 2011 For example, your joint 2009 return shows that you and your spouse owed $5,000. How do i file an amended tax return for 2011 You paid $2,000 with the return. How do i file an amended tax return for 2011 You have an underpaid tax of $3,000. How do i file an amended tax return for 2011 Conditions for Getting Equitable Relief You may qualify for equitable relief if you meet all of the following conditions. How do i file an amended tax return for 2011 You are not eligible for innocent spouse relief, separation of liability relief, or relief from liability arising from community property law. How do i file an amended tax return for 2011 You have an understated tax or an underpaid tax. How do i file an amended tax return for 2011 You did not pay the tax. How do i file an amended tax return for 2011 However, see Refunds , later, for situations in which you are entitled to a refund of payments you made. How do i file an amended tax return for 2011 You establish that, taking into account all the facts and circumstances, it would be unfair to hold you liable for the understated or underpaid tax. How do i file an amended tax return for 2011 See Factors for Determining Whether To Grant Equitable Relief, later. How do i file an amended tax return for 2011 You and your spouse (or former spouse) did not transfer assets to one another as a part of a fraudulent scheme. How do i file an amended tax return for 2011 A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, former spouse, or business partner. How do i file an amended tax return for 2011 Your spouse (or former spouse) did not transfer property to you for the main purpose of avoiding tax or the payment of tax. How do i file an amended tax return for 2011 See Transfers of Property To Avoid Tax, earlier, under Separation of Liability Relief. How do i file an amended tax return for 2011 You did not file or fail to file your return with the intent to commit fraud. How do i file an amended tax return for 2011 The income tax liability from which you seek relief must be attributable to an item of the spouse (or former spouse) with whom you filed the joint return, unless one of the following exceptions applies: The item is attributable or partially attributable to you solely due to the operation of community property law. How do i file an amended tax return for 2011 If you meet this exception, that item will be considered attributable to your spouse (or former spouse) for purposes of equitable relief. How do i file an amended tax return for 2011 If the item is titled in your name, the item is presumed to be attributable to you. How do i file an amended tax return for 2011 However, you can rebut this presumption based on the facts and circumstances. How do i file an amended tax return for 2011 You did not know, and had no reason to know, that funds intended for the payment of tax were misappropriated by your spouse (or former spouse) for his or her benefit. How do i file an amended tax return for 2011 If you meet this exception, the IRS will consider granting equitable relief although the underpaid tax may be attributable in part or in full to your item, and only to the extent the funds intended for payment were taken by your spouse (or former spouse). How do i file an amended tax return for 2011 You establish that you were the victim of spousal abuse or domestic violence before signing the return, and that, as a result of the prior abuse, you did not challenge the treatment of any items on the return for fear of your spouse's (or former spouse's) retaliation. How do i file an amended tax return for 2011 If you meet this exception, relief will be considered although the understated tax or underpaid tax may be attributable in part or in full to your item. How do i file an amended tax return for 2011 Factors for Determining Whether To Grant Equitable Relief The IRS will consider all of the facts and circumstances in order to determine whether it is unfair to hold you responsible for the understated or underpaid tax. How do i file an amended tax return for 2011 The following are examples of factors that the IRS will consider to determine whether to grant equitable relief. How do i file an amended tax return for 2011 The IRS will consider all factors and weigh them appropriately. How do i file an amended tax return for 2011 Relevant Factors The following are examples of factors that may be relevant to whether the IRS will grant equitable relief. How do i file an amended tax return for 2011 Whether you are separated (whether legally or not) or divorced from your spouse. How do i file an amended tax return for 2011 A temporary absence, such as an absence due to imprisonment, illness, business, vacation, military service, or education, is not considered separation for this purpose. How do i file an amended tax return for 2011 A temporary absence is one where it is reasonable to assume that the absent spouse will return to the household, and the household or a substantially equivalent household is maintained in anticipation of the absent spouse's return. How do i file an amended tax return for 2011 Whether you would suffer a significant economic hardship if relief is not granted. How do i file an amended tax return for 2011 (In other words, you would not be able to pay your reasonable basic living expenses. How do i file an amended tax return for 2011 ) Whether you have a legal obligation under a divorce decree or agreement to pay the tax. How do i file an amended tax return for 2011 This factor will not weigh in favor of relief if you knew or had reason to know, when entering into the divorce decree or agreement, that your former spouse would not pay the income tax liability. How do i file an amended tax return for 2011 Whether you received a significant benefit (beyond normal support) from the underpaid tax or item causing the understated tax. How do i file an amended tax return for 2011 (For a definition of significant benefit, see Indications of Unfairness for Innocent Spouse Relief earlier. How do i file an amended tax return for 2011 ) Whether you have made a good faith effort to comply with federal income tax laws for the tax year for which you are requesting relief or the following years. How do i file an amended tax return for 2011 Whether you knew or had reason to know about the items causing the understated tax or that the tax would not be paid, as explained next. How do i file an amended tax return for 2011 Knowledge or reason to know. How do i file an amended tax return for 2011   In the case of an underpaid tax, the IRS will consider whether you did not know and had no reason to know that your spouse (or former spouse) would not pay the income tax liability. How do i file an amended tax return for 2011   In the case of an income tax liability that arose from an understated tax, the IRS will consider whether you did not know and had no reason to know of the item causing the understated tax. How do i file an amended tax return for 2011 Reason to know of the item giving rise to the understated tax will not be weighed more heavily than other factors. How do i file an amended tax return for 2011 Actual knowledge of the item giving rise to the understated tax, however, is a strong factor weighing against relief. How do i file an amended tax return for 2011 This strong factor may be overcome if the factors in favor of equitable relief are particularly compelling. How do i file an amended tax return for 2011 Reason to know. How do i file an amended tax return for 2011   In determining whether you had reason to know, the IRS will consider your level of education, any deceit or evasiveness of your spouse (or former spouse), your degree of involvement in the activity generating the income tax liability, your involvement in business and household financial matters, your business or financial expertise, and any lavish or unusual expenditures compared with past spending levels. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You and your spouse filed a joint 2009 return. How do i file an amended tax return for 2011 That return showed you owed $10,000. How do i file an amended tax return for 2011 You had $5,000 of your own money and you took out a loan to pay the other $5,000. How do i file an amended tax return for 2011 You gave 2 checks for $5,000 each to your spouse to pay the $10,000 liability. How do i file an amended tax return for 2011 Without telling you, your spouse took the $5,000 loan and spent it on himself. How do i file an amended tax return for 2011 You and your spouse were divorced in 2010. How do i file an amended tax return for 2011 In addition, you had no knowledge or reason to know at the time you signed the return that the tax would not be paid. How do i file an amended tax return for 2011 These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 underpaid tax. How do i file an amended tax return for 2011 The IRS will consider these facts, together with all of the other facts and circumstances, to determine whether to grant you equitable relief from the $5,000 underpaid tax. How do i file an amended tax return for 2011 Factors Weighing in Favor of Equitable Relief The following are examples of factors that will weigh in favor of equitable relief, but will not weigh against equitable relief. How do i file an amended tax return for 2011 Whether your spouse (or former spouse) abused you. How do i file an amended tax return for 2011 Whether you were in poor mental or physical health on the date you signed the return or at the time you requested relief. How do i file an amended tax return for 2011 Refunds If you are granted relief, refunds are: Permitted under innocent spouse relief as explained later under Limit on Amount of Refund . How do i file an amended tax return for 2011 Not permitted under separation of liability relief. How do i file an amended tax return for 2011 Permitted in limited circumstances under equitable relief, as explained under Refunds Under Equitable Relief. How do i file an amended tax return for 2011 Proof Required The IRS will only refund payments you made with your own money. How do i file an amended tax return for 2011 However, you must provide proof that you made the payments with your own money. How do i file an amended tax return for 2011 Examples of proof are a copy of your bank statement or a canceled check. How do i file an amended tax return for 2011 No proof is required if your individual refund was used by the IRS to pay a tax you owed on a joint tax return for another year. How do i file an amended tax return for 2011 Refunds Under Equitable Relief In the following situations, you are eligible to receive a refund of certain payments you made. How do i file an amended tax return for 2011 Underpaid tax. How do i file an amended tax return for 2011   If you are granted relief for an underpaid tax, you are eligible for a refund of separate payments that you made after July 22, 1998. How do i file an amended tax return for 2011 However, you are not eligible for refunds of payments made with the joint return, joint payments, or payments that your spouse (or former spouse) made. How do i file an amended tax return for 2011 For example, withholding tax and estimated tax payments cannot be refunded because they are considered made with the joint return. How do i file an amended tax return for 2011   The amount of the refund is subject to the limit discussed later under Limit on Amount of Refund. How do i file an amended tax return for 2011 Understated tax. How do i file an amended tax return for 2011   If you are granted relief for an understated tax, you are eligible for a refund of certain payments made under an installment agreement that you entered into with the IRS, if you have not defaulted on the installment agreement. How do i file an amended tax return for 2011 You are not in default if the IRS did not issue you a notice of default or take any action to end the installment agreement. How do i file an amended tax return for 2011 Only installment payments made after the date you filed Form 8857 are eligible for a refund. How do i file an amended tax return for 2011   The amount of the refund is subject to the limit discussed next. How do i file an amended tax return for 2011 Limit on Amount of Refund The amount of your refund is limited. How do i file an amended tax return for 2011 Read the following chart to find out the limit. How do i file an amended tax return for 2011 IF you file Form 8857. How do i file an amended tax return for 2011 . How do i file an amended tax return for 2011 . How do i file an amended tax return for 2011 THEN the refund cannot be more than. How do i file an amended tax return for 2011 . How do i file an amended tax return for 2011 . How do i file an amended tax return for 2011 Within 3 years after filing your return The part of the tax paid within 3 years (plus any extension of time for filing your return) before you filed Form 8857. How do i file an amended tax return for 2011 After the 3-year period, but within 2 years from the time you paid the tax The tax you paid within 2 years immediately before you filed Form 8857. How do i file an amended tax return for 2011 Filled-in Form 8857 This part explains how Janie Boulder fills out Form 8857 to request innocent spouse relief. How do i file an amended tax return for 2011 Janie and Joe Boulder filed a joint tax return for 2007. How do i file an amended tax return for 2011 They claimed one dependency exemption for their son Michael. How do i file an amended tax return for 2011 Their return was adjusted by the IRS because Joe did not report a $5,000 award he won that year. How do i file an amended tax return for 2011 Janie did not know about the award when the return was filed. How do i file an amended tax return for 2011 They agreed to the adjustment but could not pay the additional amount due of $815 ($650 tax + $165 penalty and interest). How do i file an amended tax return for 2011 Janie and Joe were divorced on May 13, 2009. How do i file an amended tax return for 2011 In February 2010, Janie filed her 2009 federal income tax return as head of household. How do i file an amended tax return for 2011 She expected a refund of $1,203. How do i file an amended tax return for 2011 In May 2010, she received a notice informing her that the IRS had offset her refund against the $815 owed on her joint 2007 income tax return and that she had a right to file Form 8857. How do i file an amended tax return for 2011 Janie applies the conditions listed earlier under Innocent Spouse Relief to see if she qualifies for relief. How do i file an amended tax return for 2011 Janie meets the first and second conditions because the joint tax return they filed has an understated tax due to Joe's erroneous item. How do i file an amended tax return for 2011 Janie believes she meets the third condition. How do i file an amended tax return for 2011 She did not know about the award and had no reason to know about it because of the secretive way Joe conducted his financial affairs. How do i file an amended tax return for 2011 Janie believes she meets the fourth condition. How do i file an amended tax return for 2011 She believes it would be unfair to be held liable for the tax because she did not benefit from the award. How do i file an amended tax return for 2011 Joe spent it on personal items for his use only. How do i file an amended tax return for 2011 Because Janie believes she qualifies for innocent spouse relief, she first completes Part I of Form 8857 to determine if she should file the form. How do i file an amended tax return for 2011 In Part I, she makes all entries under the Tax Year 1 column because she is requesting relief for only one year. How do i file an amended tax return for 2011 Part I Line 1. How do i file an amended tax return for 2011   She enters “2007” on line 1 because this is the tax year for which she is requesting relief. How do i file an amended tax return for 2011 Line 2. How do i file an amended tax return for 2011   She checks the box because she wants a refund. How do i file an amended tax return for 2011 Note. How do i file an amended tax return for 2011 Because the IRS used her individual refund to pay the tax owed on the joint tax return, she does not need to provide proof of payment. How do i file an amended tax return for 2011 Line 3. How do i file an amended tax return for 2011   She checks the “No” box because the IRS did not use her share of a joint refund to pay Joe's past-due debts. How do i file an amended tax return for 2011 Line 4. How do i file an amended tax return for 2011   She checks the “Yes” box because she filed a joint tax return for tax year 2007. How do i file an amended tax return for 2011 Line 5. How do i file an amended tax return for 2011   She skips this line because she checked the “Yes” box on line 4. How do i file an amended tax return for 2011 Part II Line 6. How do i file an amended tax return for 2011   She enters her name, address, social security number, county, and best daytime phone number. How do i file an amended tax return for 2011 Part III Line 7. How do i file an amended tax return for 2011   She enters Joe's name, address, social security number, and best daytime phone number. How do i file an amended tax return for 2011 Line 8. How do i file an amended tax return for 2011   She checks the “divorced since” box and enters the date she was divorced as “05/13/2009. How do i file an amended tax return for 2011 ” She attaches a copy of her entire divorce decree (not Illustrated) to the form. How do i file an amended tax return for 2011 Line 9. How do i file an amended tax return for 2011   She checks the box for “High school diploma, equivalent, or less,” because she had completed high school when her 2007 joint tax return was filed. How do i file an amended tax return for 2011 Line 10. How do i file an amended tax return for 2011   She checks the “No” box because she was not a victim of spousal abuse or domestic violence. How do i file an amended tax return for 2011 Line 11. How do i file an amended tax return for 2011   She checks the “No” box because neither she nor Joe incurred any large expenses during the year for which she wants relief. How do i file an amended tax return for 2011 Line 12. How do i file an amended tax return for 2011   She checks the “Yes” box because she signed the 2007 joint tax return. How do i file an amended tax return for 2011 Line 13. How do i file an amended tax return for 2011   She checks the “No” box because she did not have a mental or physical condition when the return was filed and does not have one now. How do i file an amended tax return for 2011 Part IV Line 14. How do i file an amended tax return for 2011   Because she was not involved in preparing the return, she checks the box, “You were not involved in preparing the returns. How do i file an amended tax return for 2011 ” Line 15. How do i file an amended tax return for 2011   She checks the box, “You did not know anything was incorrect or missing” because she did not know that Joe had received a $5,000 award. How do i file an amended tax return for 2011 She explains this in the space provided. How do i file an amended tax return for 2011 Line 16. How do i file an amended tax return for 2011   She checks the box, “You knew that person had income” because she knew Joe had income from wages. How do i file an amended tax return for 2011 She also lists Joe's income. How do i file an amended tax return for 2011 Under “Type of Income” she enters “wages. How do i file an amended tax return for 2011 ” Under “Who paid it to that person,” she enters the name of Joe's employer, “Allied. How do i file an amended tax return for 2011 ” Under “Tax Year 1” she enters the amount of Joe's wages, “$40,000. How do i file an amended tax return for 2011 ” Because she is only requesting relief for one tax year, she leaves the entry spaces for “Tax Year 2” and “Tax Year 3” blank. How do i file an amended tax return for 2011 Line 17. How do i file an amended tax return for 2011   She checks the “No” box because she did not know any amount was owed to the IRS when the 2007 return was signed. How do i file an amended tax return for 2011 Line 18. How do i file an amended tax return for 2011   She checks the “No” box because, when the return was signed, she was not having financial problems. How do i file an amended tax return for 2011 Line 19. How do i file an amended tax return for 2011   She checks the box, “You were not involved in handling money for the household” because Joe handled all the money for the household. How do i file an amended tax return for 2011 She provides additional information in the space provided. How do i file an amended tax return for 2011 Line 20. How do i file an amended tax return for 2011   She checks the “No” box because Joe has never transferred money or property to her. How do i file an amended tax return for 2011 Part V Line 21. How do i file an amended tax return for 2011   She enters the number “1” on both the line for “Adults” and the line for “Children” because her current household consists of herself and her son. How do i file an amended tax return for 2011 Line 22. How do i file an amended tax return for 2011   She enters her average monthly income for her entire household. How do i file an amended tax return for 2011 Line 23. How do i file an amended tax return for 2011   She lists her assets, which are $500 for the fair market value of a car, $450 in her checking account, and $100 in her savings account. How do i file an amended tax return for 2011 Signing and mailing Form 8857. How do i file an amended tax return for 2011    Janie signs and dates the form. How do i file an amended tax return for 2011 She attaches the copy of her divorce decree (not illustrated) required by line 8. How do i file an amended tax return for 2011 Finally, she sends the form to the IRS address or fax number shown in the instructions for Form 8857. How do i file an amended tax return for 2011 This image is too large to be displayed in the current screen. How do i file an amended tax return for 2011 Please click the link to view the image. How do i file an amended tax return for 2011 Boulder's filled-in Form 8857 page 1 This image is too large to be displayed in the current screen. How do i file an amended tax return for 2011 Please click the link to view the image. How do i file an amended tax return for 2011 Boulder's filled-in Form 8857 page 2 This image is too large to be displayed in the current screen. How do i file an amended tax return for 2011 Please click the link to view the image. How do i file an amended tax return for 2011 Boulder's filled-in Form 8857 page 3 This image is too large to be displayed in the current screen. How do i file an amended tax return for 2011 Please click the link to view the image. How do i file an amended tax return for 2011 Boulder's filled-in Form 8857 page 4 Flowcharts The following flowcharts provide a quick way for determining whether you may qualify for relief. How do i file an amended tax return for 2011 But do not rely on these flowcharts alone. How do i file an amended tax return for 2011 Also read the earlier discussions. How do i file an amended tax return for 2011 Figure A. How do i file an amended tax return for 2011 Do You Qualify for Innocent Spouse Relief? Please click here for the text description of the image. How do i file an amended tax return for 2011 "Do You Qualify for Innocent Spouse Relief?" Figure B. How do i file an amended tax return for 2011 Do You Qualify for Separation of Liability Relief? Please click here for the text description of the image. How do i file an amended tax return for 2011 "Do You Qualify for Separation of Liability Relief?" Figure C. How do i file an amended tax return for 2011 Do You Qualify for Equitable Relief? This image is too large to be displayed in the current screen. How do i file an amended tax return for 2011 Please click the link to view the image. How do i file an amended tax return for 2011 "Do You Qualify for Equitable Relief?" Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Severe Storms, Tornadoes and Flooding in Mississippi

Updated 3/5/2013 to include Greene and Perry counties.

Updated 3/4/2013 to include Jefferson Davis county.

Updated 2/19/2013 to include Marion and Wayne counties.

LA-MS-2013-01, Feb. 14, 2013

NEW ORLEANS — Victims of the severe storms, tornadoes and flooding that took place on Feb. 10, 2013 in parts of Mississippi may qualify for tax relief from the Internal Revenue Service.

The President has declared Forrest, Greene, Jefferson Davis, Lamar, Marion, Perry and Wayne counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Feb. 10, and on or before April 30, have been postponed to April 30, 2013. This includes the April 15 deadline for filing 2012 individual income tax returns, making income tax payments and making 2012 contributions to an individual retirement account (IRA).  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Feb. 10, and on or before Feb. 27, as long as the deposits are made by Feb. 27, 2013.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until April 30 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Feb. 10 and on or before April 30.

The IRS also gives affected taxpayers until April 30 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Feb. 10 and on or before April 30.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Feb. 10 and on or before Feb. 27 provided the taxpayer makes these deposits by Feb. 27.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Mississippi/Severe Storms, Tornadoes, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Page Last Reviewed or Updated: 04-Feb-2014

The How Do I File An Amended Tax Return For 2011

How do i file an amended tax return for 2011 1. How do i file an amended tax return for 2011   Overview of Depreciation Table of Contents Introduction Useful Items - You may want to see: What Property Can Be Depreciated?Property You Own Property Used in Your Business or Income-Producing Activity Property Having a Determinable Useful Life Property Lasting More Than One Year What Property Cannot Be Depreciated?Land Excepted Property When Does Depreciation Begin and End?Placed in Service Idle Property Cost or Other Basis Fully Recovered Retired From Service What Method Can You Use To Depreciate Your Property?Property You Placed in Service Before 1987 Property Owned or Used in 1986 Intangible Property Corporate or Partnership Property Acquired in a Nontaxable Transfer Election To Exclude Property From MACRS What Is the Basis of Your Depreciable Property?Cost as Basis Other Basis Adjusted Basis How Do You Treat Repairs and Improvements? Do You Have To File Form 4562? How Do You Correct Depreciation Deductions?Filing an Amended Return Changing Your Accounting Method Introduction Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. How do i file an amended tax return for 2011 It is an allowance for the wear and tear, deterioration, or obsolescence of the property. How do i file an amended tax return for 2011 This chapter discusses the general rules for depreciating property and answers the following questions. How do i file an amended tax return for 2011 What property can be depreciated? What property cannot be depreciated? When does depreciation begin and end? What method can you use to depreciate your property? What is the basis of your depreciable property? How do you treat repairs and improvements? Do you have to file Form 4562? How do you correct depreciation deductions? Useful Items - You may want to see: Publication 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 538 Accounting Periods and Methods 551 Basis of Assets Form (and Instructions) Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. How do i file an amended tax return for 2011 What Property Can Be Depreciated? You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment. How do i file an amended tax return for 2011 You also can depreciate certain intangible property, such as patents, copyrights, and computer software. How do i file an amended tax return for 2011 To be depreciable, the property must meet all the following requirements. How do i file an amended tax return for 2011 It must be property you own. How do i file an amended tax return for 2011 It must be used in your business or income-producing activity. How do i file an amended tax return for 2011 It must have a determinable useful life. How do i file an amended tax return for 2011 It must be expected to last more than one year. How do i file an amended tax return for 2011 The following discussions provide information about these requirements. How do i file an amended tax return for 2011 Property You Own To claim depreciation, you usually must be the owner of the property. How do i file an amended tax return for 2011 You are considered as owning property even if it is subject to a debt. How do i file an amended tax return for 2011 Example 1. How do i file an amended tax return for 2011 You made a down payment to purchase rental property and assumed the previous owner's mortgage. How do i file an amended tax return for 2011 You own the property and you can depreciate it. How do i file an amended tax return for 2011 Example 2. How do i file an amended tax return for 2011 You bought a new van that you will use only for your courier business. How do i file an amended tax return for 2011 You will be making payments on the van over the next 5 years. How do i file an amended tax return for 2011 You own the van and you can depreciate it. How do i file an amended tax return for 2011 Leased property. How do i file an amended tax return for 2011   You can depreciate leased property only if you retain the incidents of ownership in the property (explained below). How do i file an amended tax return for 2011 This means you bear the burden of exhaustion of the capital investment in the property. How do i file an amended tax return for 2011 Therefore, if you lease property from someone to use in your trade or business or for the production of income, you generally cannot depreciate its cost because you do not retain the incidents of ownership. How do i file an amended tax return for 2011 You can, however, depreciate any capital improvements you make to the property. How do i file an amended tax return for 2011 See How Do You Treat Repairs and Improvements later in this chapter and Additions and Improvements under Which Recovery Period Applies in chapter 4. How do i file an amended tax return for 2011   If you lease property to someone, you generally can depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. How do i file an amended tax return for 2011 However, if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased, you cannot depreciate the cost of the property. How do i file an amended tax return for 2011 Incidents of ownership. How do i file an amended tax return for 2011   Incidents of ownership in property include the following. How do i file an amended tax return for 2011 The legal title to the property. How do i file an amended tax return for 2011 The legal obligation to pay for the property. How do i file an amended tax return for 2011 The responsibility to pay maintenance and operating expenses. How do i file an amended tax return for 2011 The duty to pay any taxes on the property. How do i file an amended tax return for 2011 The risk of loss if the property is destroyed, condemned, or diminished in value through obsolescence or exhaustion. How do i file an amended tax return for 2011 Life tenant. How do i file an amended tax return for 2011   Generally, if you hold business or investment property as a life tenant, you can depreciate it as if you were the absolute owner of the property. How do i file an amended tax return for 2011 However, see Certain term interests in property under Excepted Property, later. How do i file an amended tax return for 2011 Cooperative apartments. How do i file an amended tax return for 2011   If you are a tenant-stockholder in a cooperative housing corporation and use your cooperative apartment in your business or for the production of income, you can depreciate your stock in the corporation, even though the corporation owns the apartment. How do i file an amended tax return for 2011   Figure your depreciation deduction as follows. How do i file an amended tax return for 2011 Figure the depreciation for all the depreciable real property owned by the corporation in which you have a proprietary lease or right of tenancy. How do i file an amended tax return for 2011 If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. How do i file an amended tax return for 2011 Multiply your cost per share by the total number of outstanding shares, including any shares held by the corporation. How do i file an amended tax return for 2011 Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. How do i file an amended tax return for 2011 Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. How do i file an amended tax return for 2011 Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. How do i file an amended tax return for 2011 Divide the number of your shares of stock by the total number of outstanding shares, including any shares held by the corporation. How do i file an amended tax return for 2011 Multiply the result of (2) by the percentage you figured in (3). How do i file an amended tax return for 2011 This is your depreciation on the stock. How do i file an amended tax return for 2011   Your depreciation deduction for the year cannot be more than the part of your adjusted basis in the stock of the corporation that is allocable to your business or income-producing property. How do i file an amended tax return for 2011 You must also reduce your depreciation deduction if only a portion of the property is used in a business or for the production of income. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You figure your share of the cooperative housing corporation's depreciation to be $30,000. How do i file an amended tax return for 2011 Your adjusted basis in the stock of the corporation is $50,000. How do i file an amended tax return for 2011 You use one half of your apartment solely for business purposes. How do i file an amended tax return for 2011 Your depreciation deduction for the stock for the year cannot be more than $25,000 (½ of $50,000). How do i file an amended tax return for 2011 Change to business use. How do i file an amended tax return for 2011   If you change your cooperative apartment to business use, figure your allowable depreciation as explained earlier. How do i file an amended tax return for 2011 The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. How do i file an amended tax return for 2011 The fair market value of the property on the date you change your apartment to business use. How do i file an amended tax return for 2011 This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. How do i file an amended tax return for 2011 The corporation's adjusted basis in the property on that date. How do i file an amended tax return for 2011 Do not subtract depreciation when figuring the corporation's adjusted basis. How do i file an amended tax return for 2011   If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1), above. How do i file an amended tax return for 2011 The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. How do i file an amended tax return for 2011   For a discussion of fair market value and adjusted basis, see Publication 551. How do i file an amended tax return for 2011 Property Used in Your Business or Income-Producing Activity To claim depreciation on property, you must use it in your business or income-producing activity. How do i file an amended tax return for 2011 If you use property to produce income (investment use), the income must be taxable. How do i file an amended tax return for 2011 You cannot depreciate property that you use solely for personal activities. How do i file an amended tax return for 2011 Partial business or investment use. How do i file an amended tax return for 2011   If you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the business or investment use. How do i file an amended tax return for 2011 For example, you cannot deduct depreciation on a car used only for commuting, personal shopping trips, family vacations, driving children to and from school, or similar activities. How do i file an amended tax return for 2011    You must keep records showing the business, investment, and personal use of your property. How do i file an amended tax return for 2011 For more information on the records you must keep for listed property, such as a car, see What Records Must Be Kept in chapter 5. How do i file an amended tax return for 2011    Although you can combine business and investment use of property when figuring depreciation deductions, do not treat investment use as qualified business use when determining whether the business-use requirement for listed property is met. How do i file an amended tax return for 2011 For information about qualified business use of listed property, see What Is the Business-Use Requirement in chapter 5. How do i file an amended tax return for 2011 Office in the home. How do i file an amended tax return for 2011   If you use part of your home as an office, you may be able to deduct depreciation on that part based on its business use. How do i file an amended tax return for 2011 For information about depreciating your home office, see Publication 587. How do i file an amended tax return for 2011 Inventory. How do i file an amended tax return for 2011   You cannot depreciate inventory because it is not held for use in your business. How do i file an amended tax return for 2011 Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. How do i file an amended tax return for 2011   If you are a rent-to-own dealer, you may be able to treat certain property held in your business as depreciable property rather than as inventory. How do i file an amended tax return for 2011 See Rent-to-own dealer under Which Property Class Applies Under GDS in chapter 4. How do i file an amended tax return for 2011   In some cases, it is not clear whether property is held for sale (inventory) or for use in your business. How do i file an amended tax return for 2011 If it is unclear, examine carefully all the facts in the operation of the particular business. How do i file an amended tax return for 2011 The following example shows how a careful examination of the facts in two similar situations results in different conclusions. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 Maple Corporation is in the business of leasing cars. How do i file an amended tax return for 2011 At the end of their useful lives, when the cars are no longer profitable to lease, Maple sells them. How do i file an amended tax return for 2011 Maple does not have a showroom, used car lot, or individuals to sell the cars. How do i file an amended tax return for 2011 Instead, it sells them through wholesalers or by similar arrangements in which a dealer's profit is not intended or considered. How do i file an amended tax return for 2011 Maple can depreciate the leased cars because the cars are not held primarily for sale to customers in the ordinary course of business, but are leased. How do i file an amended tax return for 2011 If Maple buys cars at wholesale prices, leases them for a short time, and then sells them at retail prices or in sales in which a dealer's profit is intended, the cars are treated as inventory and are not depreciable property. How do i file an amended tax return for 2011 In this situation, the cars are held primarily for sale to customers in the ordinary course of business. How do i file an amended tax return for 2011 Containers. How do i file an amended tax return for 2011   Generally, containers for the products you sell are part of inventory and you cannot depreciate them. How do i file an amended tax return for 2011 However, you can depreciate containers used to ship your products if they have a life longer than one year and meet the following requirements. How do i file an amended tax return for 2011 They qualify as property used in your business. How do i file an amended tax return for 2011 Title to the containers does not pass to the buyer. How do i file an amended tax return for 2011   To determine if these requirements are met, consider the following questions. How do i file an amended tax return for 2011 Does your sales contract, sales invoice, or other type of order acknowledgment indicate whether you have retained title? Does your invoice treat the containers as separate items? Do any of your records state your basis in the containers? Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. How do i file an amended tax return for 2011 This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. How do i file an amended tax return for 2011 Property Lasting More Than One Year To be depreciable, property must have a useful life that extends substantially beyond the year you place it in service. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You maintain a library for use in your profession. How do i file an amended tax return for 2011 You can depreciate it. How do i file an amended tax return for 2011 However, if you buy technical books, journals, or information services for use in your business that have a useful life of one year or less, you cannot depreciate them. How do i file an amended tax return for 2011 Instead, you deduct their cost as a business expense. How do i file an amended tax return for 2011 What Property Cannot Be Depreciated? Certain property cannot be depreciated. How do i file an amended tax return for 2011 This includes land and certain excepted property. How do i file an amended tax return for 2011 Land You cannot depreciate the cost of land because land does not wear out, become obsolete, or get used up. How do i file an amended tax return for 2011 The cost of land generally includes the cost of clearing, grading, planting, and landscaping. How do i file an amended tax return for 2011 Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. How do i file an amended tax return for 2011 These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You constructed a new building for use in your business and paid for grading, clearing, seeding, and planting bushes and trees. How do i file an amended tax return for 2011 Some of the bushes and trees were planted right next to the building, while others were planted around the outer border of the lot. How do i file an amended tax return for 2011 If you replace the building, you would have to destroy the bushes and trees right next to it. How do i file an amended tax return for 2011 These bushes and trees are closely associated with the building, so they have a determinable useful life. How do i file an amended tax return for 2011 Therefore, you can depreciate them. How do i file an amended tax return for 2011 Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. How do i file an amended tax return for 2011 Excepted Property Even if the requirements explained in the preceding discussions are met, you cannot depreciate the following property. How do i file an amended tax return for 2011 Property placed in service and disposed of in the same year. How do i file an amended tax return for 2011 Determining when property is placed in service is explained later. How do i file an amended tax return for 2011 Equipment used to build capital improvements. How do i file an amended tax return for 2011 You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. How do i file an amended tax return for 2011 See Uniform Capitalization Rules in Publication 551. How do i file an amended tax return for 2011 Section 197 intangibles. How do i file an amended tax return for 2011 You must amortize these costs. How do i file an amended tax return for 2011 Section 197 intangibles are discussed in detail in Chapter 8 of Publication 535. How do i file an amended tax return for 2011 Intangible property, such as certain computer software, that is not section 197 intangible property, can be depreciated if it meets certain requirements. How do i file an amended tax return for 2011 See Intangible Property , later. How do i file an amended tax return for 2011 Certain term interests. How do i file an amended tax return for 2011 Certain term interests in property. How do i file an amended tax return for 2011   You cannot depreciate a term interest in property created or acquired after July 27, 1989, for any period during which the remainder interest is held, directly or indirectly, by a person related to you. How do i file an amended tax return for 2011 A term interest in property means a life interest in property, an interest in property for a term of years, or an income interest in a trust. How do i file an amended tax return for 2011 Related persons. How do i file an amended tax return for 2011   For a description of related persons, see Related Persons, later. How do i file an amended tax return for 2011 For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. How do i file an amended tax return for 2011 Basis adjustments. How do i file an amended tax return for 2011   If you would be allowed a depreciation deduction for a term interest in property except that the holder of the remainder interest is related to you, you generally must reduce your basis in the term interest by any depreciation or amortization not allowed. How do i file an amended tax return for 2011   If you hold the remainder interest, you generally must increase your basis in that interest by the depreciation not allowed to the term interest holder. How do i file an amended tax return for 2011 However, do not increase your basis for depreciation not allowed for periods during which either of the following situations applies. How do i file an amended tax return for 2011 The term interest is held by an organization exempt from tax. How do i file an amended tax return for 2011 The term interest is held by a nonresident alien individual or foreign corporation, and the income from the term interest is not effectively connected with the conduct of a trade or business in the United States. How do i file an amended tax return for 2011 Exceptions. How do i file an amended tax return for 2011   The above rules do not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. How do i file an amended tax return for 2011 They also do not apply to the holder of dividend rights that were separated from any stripped preferred stock if the rights were purchased after April 30, 1993, or to a person whose basis in the stock is determined by reference to the basis in the hands of the purchaser. How do i file an amended tax return for 2011 When Does Depreciation Begin and End? You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. How do i file an amended tax return for 2011 You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first. How do i file an amended tax return for 2011 Placed in Service You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. How do i file an amended tax return for 2011 Even if you are not using the property, it is in service when it is ready and available for its specific use. How do i file an amended tax return for 2011 Example 1. How do i file an amended tax return for 2011 Donald Steep bought a machine for his business. How do i file an amended tax return for 2011 The machine was delivered last year. How do i file an amended tax return for 2011 However, it was not installed and operational until this year. How do i file an amended tax return for 2011 It is considered placed in service this year. How do i file an amended tax return for 2011 If the machine had been ready and available for use when it was delivered, it would be considered placed in service last year even if it was not actually used until this year. How do i file an amended tax return for 2011 Example 2. How do i file an amended tax return for 2011 On April 6, Sue Thorn bought a house to use as residential rental property. How do i file an amended tax return for 2011 She made several repairs and had it ready for rent on July 5. How do i file an amended tax return for 2011 At that time, she began to advertise it for rent in the local newspaper. How do i file an amended tax return for 2011 The house is considered placed in service in July when it was ready and available for rent. How do i file an amended tax return for 2011 She can begin to depreciate it in July. How do i file an amended tax return for 2011 Example 3. How do i file an amended tax return for 2011 James Elm is a building contractor who specializes in constructing office buildings. How do i file an amended tax return for 2011 He bought a truck last year that had to be modified to lift materials to second-story levels. How do i file an amended tax return for 2011 The installation of the lifting equipment was completed and James accepted delivery of the modified truck on January 10 of this year. How do i file an amended tax return for 2011 The truck was placed in service on January 10, the date it was ready and available to perform the function for which it was bought. How do i file an amended tax return for 2011 Conversion to business use. How do i file an amended tax return for 2011   If you place property in service in a personal activity, you cannot claim depreciation. How do i file an amended tax return for 2011 However, if you change the property's use to use in a business or income-producing activity, then you can begin to depreciate it at the time of the change. How do i file an amended tax return for 2011 You place the property in service in the business or income-producing activity on the date of the change. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You bought a home and used it as your personal home several years before you converted it to rental property. How do i file an amended tax return for 2011 Although its specific use was personal and no depreciation was allowable, you placed the home in service when you began using it as your home. How do i file an amended tax return for 2011 You can begin to claim depreciation in the year you converted it to rental property because its use changed to an income-producing use at that time. How do i file an amended tax return for 2011 Idle Property Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle (not in use). How do i file an amended tax return for 2011 For example, if you stop using a machine because there is a temporary lack of a market for a product made with that machine, continue to deduct depreciation on the machine. How do i file an amended tax return for 2011 Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. How do i file an amended tax return for 2011 You recover your basis when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. How do i file an amended tax return for 2011 See What Is the Basis of Your Depreciable Property , later. How do i file an amended tax return for 2011 Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. How do i file an amended tax return for 2011 You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. How do i file an amended tax return for 2011 You sell or exchange the property. How do i file an amended tax return for 2011 You convert the property to personal use. How do i file an amended tax return for 2011 You abandon the property. How do i file an amended tax return for 2011 You transfer the property to a supplies or scrap account. How do i file an amended tax return for 2011 The property is destroyed. How do i file an amended tax return for 2011 If you included the property in a general asset account, see How Do You Use General Asset Accounts in chapter 4 for the rules that apply when you dispose of that property. How do i file an amended tax return for 2011 What Method Can You Use To Depreciate Your Property? You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most property. How do i file an amended tax return for 2011 MACRS is discussed in chapter 4. How do i file an amended tax return for 2011 You cannot use MACRS to depreciate the following property. How do i file an amended tax return for 2011 Property you placed in service before 1987. How do i file an amended tax return for 2011 Certain property owned or used in 1986. How do i file an amended tax return for 2011 Intangible property. How do i file an amended tax return for 2011 Films, video tapes, and recordings. How do i file an amended tax return for 2011 Certain corporate or partnership property acquired in a nontaxable transfer. How do i file an amended tax return for 2011 Property you elected to exclude from MACRS. How do i file an amended tax return for 2011 The following discussions describe the property listed above and explain what depreciation method should be used. How do i file an amended tax return for 2011 Property You Placed in Service Before 1987 You cannot use MACRS for property you placed in service before 1987 (except property you placed in service after July 31, 1986, if MACRS was elected). How do i file an amended tax return for 2011 Property placed in service before 1987 must be depreciated under the methods discussed in Publication 534. How do i file an amended tax return for 2011 For a discussion of when property is placed in service, see When Does Depreciation Begin and End , earlier. How do i file an amended tax return for 2011 Use of real property changed. How do i file an amended tax return for 2011   You generally must use MACRS to depreciate real property that you acquired for personal use before 1987 and changed to business or income-producing use after 1986. How do i file an amended tax return for 2011 Improvements made after 1986. How do i file an amended tax return for 2011   You must treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. How do i file an amended tax return for 2011 Therefore, you can depreciate that improvement as separate property under MACRS if it is the type of property that otherwise qualifies for MACRS depreciation. How do i file an amended tax return for 2011 For more information about improvements, see How Do You Treat Repairs and Improvements , later and Additions and Improvements under Which Recovery Period Applies in chapter 4. How do i file an amended tax return for 2011 Property Owned or Used in 1986 You may not be able to use MACRS for property you acquired and placed in service after 1986 if any of the situations described below apply. How do i file an amended tax return for 2011 If you cannot use MACRS, the property must be depreciated under the methods discussed in Publication 534. How do i file an amended tax return for 2011 For the following discussions, do not treat property as owned before you placed it in service. How do i file an amended tax return for 2011 If you owned property in 1986 but did not place it in service until 1987, you do not treat it as owned in 1986. How do i file an amended tax return for 2011 Personal property. How do i file an amended tax return for 2011   You cannot use MACRS for personal property (section 1245 property) in any of the following situations. How do i file an amended tax return for 2011 You or someone related to you owned or used the property in 1986. How do i file an amended tax return for 2011 You acquired the property from a person who owned it in 1986 and as part of the transaction the user of the property did not change. How do i file an amended tax return for 2011 You lease the property to a person (or someone related to this person) who owned or used the property in 1986. How do i file an amended tax return for 2011 You acquired the property in a transaction in which: The user of the property did not change, and The property was not MACRS property in the hands of the person from whom you acquired it because of (2) or (3) above. How do i file an amended tax return for 2011 Real property. How do i file an amended tax return for 2011   You generally cannot use MACRS for real property (section 1250 property) in any of the following situations. How do i file an amended tax return for 2011 You or someone related to you owned the property in 1986. How do i file an amended tax return for 2011 You lease the property to a person who owned the property in 1986 (or someone related to that person). How do i file an amended tax return for 2011 You acquired the property in a like-kind exchange, involuntary conversion, or repossession of property you or someone related to you owned in 1986. How do i file an amended tax return for 2011 MACRS applies only to that part of your basis in the acquired property that represents cash paid or unlike property given up. How do i file an amended tax return for 2011 It does not apply to the carried-over part of the basis. How do i file an amended tax return for 2011 Exceptions. How do i file an amended tax return for 2011   The rules above do not apply to the following. How do i file an amended tax return for 2011 Residential rental property or nonresidential real property. How do i file an amended tax return for 2011 Any property if, in the first tax year it is placed in service, the deduction under the Accelerated Cost Recovery System (ACRS) is more than the deduction under MACRS using the half-year convention. How do i file an amended tax return for 2011 For information on how to figure depreciation under ACRS, see Publication 534. How do i file an amended tax return for 2011 Property that was MACRS property in the hands of the person from whom you acquired it because of (2) above. How do i file an amended tax return for 2011 Related persons. How do i file an amended tax return for 2011   For this purpose, the following are related persons. How do i file an amended tax return for 2011 An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. How do i file an amended tax return for 2011 A corporation and an individual who directly or indirectly owns more than 10% of the value of the outstanding stock of that corporation. How do i file an amended tax return for 2011 Two corporations that are members of the same controlled group. How do i file an amended tax return for 2011 A trust fiduciary and a corporation if more than 10% of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. How do i file an amended tax return for 2011 The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. How do i file an amended tax return for 2011 The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. How do i file an amended tax return for 2011 A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. How do i file an amended tax return for 2011 Two S corporations, and an S corporation and a regular corporation, if the same persons own more than 10% of the value of the outstanding stock of each corporation. How do i file an amended tax return for 2011 A corporation and a partnership if the same persons own both of the following. How do i file an amended tax return for 2011 More than 10% of the value of the outstanding stock of the corporation. How do i file an amended tax return for 2011 More than 10% of the capital or profits interest in the partnership. How do i file an amended tax return for 2011 The executor and beneficiary of any estate. How do i file an amended tax return for 2011 A partnership and a person who directly or indirectly owns more than 10% of the capital or profits interest in the partnership. How do i file an amended tax return for 2011 Two partnerships, if the same persons directly or indirectly own more than 10% of the capital or profits interest in each. How do i file an amended tax return for 2011 The related person and a person who is engaged in trades or businesses under common control. How do i file an amended tax return for 2011 See section 52(a) and 52(b) of the Internal Revenue Code. How do i file an amended tax return for 2011 When to determine relationship. How do i file an amended tax return for 2011   You must determine whether you are related to another person at the time you acquire the property. How do i file an amended tax return for 2011   A partnership acquiring property from a terminating partnership must determine whether it is related to the terminating partnership immediately before the event causing the termination. How do i file an amended tax return for 2011 For this rule, a terminating partnership is one that sells or exchanges, within 12 months, 50% or more of its total interest in partnership capital or profits. How do i file an amended tax return for 2011 Constructive ownership of stock or partnership interest. How do i file an amended tax return for 2011   To determine whether a person directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership, apply the following rules. How do i file an amended tax return for 2011 Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. How do i file an amended tax return for 2011 However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more of the value of the stock of the corporation. How do i file an amended tax return for 2011 An individual is considered to own the stock or partnership interest directly or indirectly owned by or for the individual's family. How do i file an amended tax return for 2011 An individual who owns, except by applying rule (2), any stock in a corporation is considered to own the stock directly or indirectly owned by or for the individual's partner. How do i file an amended tax return for 2011 For purposes of rules (1), (2), or (3), stock or a partnership interest considered to be owned by a person under rule (1) is treated as actually owned by that person. How do i file an amended tax return for 2011 However, stock or a partnership interest considered to be owned by an individual under rule (2) or (3) is not treated as owned by that individual for reapplying either rule (2) or (3) to make another person considered to be the owner of the same stock or partnership interest. How do i file an amended tax return for 2011 Intangible Property Generally, if you can depreciate intangible property, you usually use the straight line method of depreciation. How do i file an amended tax return for 2011 However, you can choose to depreciate certain intangible property under the income forecast method (discussed later). How do i file an amended tax return for 2011 You cannot depreciate intangible property that is a section 197 intangible or that otherwise does not meet all the requirements discussed earlier under What Property Can Be Depreciated. How do i file an amended tax return for 2011 Straight Line Method This method lets you deduct the same amount of depreciation each year over the useful life of the property. How do i file an amended tax return for 2011 To figure your deduction, first determine the adjusted basis, salvage value, and estimated useful life of your property. How do i file an amended tax return for 2011 Subtract the salvage value, if any, from the adjusted basis. How do i file an amended tax return for 2011 The balance is the total depreciation you can take over the useful life of the property. How do i file an amended tax return for 2011 Divide the balance by the number of years in the useful life. How do i file an amended tax return for 2011 This gives you your yearly depreciation deduction. How do i file an amended tax return for 2011 Unless there is a big change in adjusted basis or useful life, this amount will stay the same throughout the time you depreciate the property. How do i file an amended tax return for 2011 If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 In April, Frank bought a patent for $5,100 that is not a section 197 intangible. How do i file an amended tax return for 2011 He depreciates the patent under the straight line method, using a 17-year useful life and no salvage value. How do i file an amended tax return for 2011 He divides the $5,100 basis by 17 years to get his $300 yearly depreciation deduction. How do i file an amended tax return for 2011 He only used the patent for 9 months during the first year, so he multiplies $300 by 9/12 to get his deduction of $225 for the first year. How do i file an amended tax return for 2011 Next year, Frank can deduct $300 for the full year. How do i file an amended tax return for 2011 Patents and copyrights. How do i file an amended tax return for 2011   If you can depreciate the cost of a patent or copyright, use the straight line method over the useful life. How do i file an amended tax return for 2011 The useful life of a patent or copyright is the lesser of the life granted to it by the government or the remaining life when you acquire it. How do i file an amended tax return for 2011 However, if the patent or copyright becomes valueless before the end of its useful life, you can deduct in that year any of its remaining cost or other basis. How do i file an amended tax return for 2011 Computer software. How do i file an amended tax return for 2011   Computer software is generally a section 197 intangible and cannot be depreciated if you acquired it in connection with the acquisition of assets constituting a business or a substantial part of a business. How do i file an amended tax return for 2011   However, computer software is not a section 197 intangible and can be depreciated, even if acquired in connection with the acquisition of a business, if it meets all of the following tests. How do i file an amended tax return for 2011 It is readily available for purchase by the general public. How do i file an amended tax return for 2011 It is subject to a nonexclusive license. How do i file an amended tax return for 2011 It has not been substantially modified. How do i file an amended tax return for 2011   If the software meets the tests above, it may also qualify for the section 179 deduction and the special depreciation allowance, discussed later. How do i file an amended tax return for 2011 If you can depreciate the cost of computer software, use the straight line method over a useful life of 36 months. How do i file an amended tax return for 2011    Tax-exempt use property subject to a lease. How do i file an amended tax return for 2011   The useful life of computer software leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership), cannot be less than 125% of the lease term. How do i file an amended tax return for 2011 Certain created intangibles. How do i file an amended tax return for 2011   You can amortize certain intangibles created on or after December 31, 2003, over a 15-year period using the straight line method and no salvage value, even though they have a useful life that cannot be estimated with reasonable accuracy. How do i file an amended tax return for 2011 For example, amounts paid to acquire memberships or privileges of indefinite duration, such as a trade association membership, are eligible costs. How do i file an amended tax return for 2011   The following are not eligible. How do i file an amended tax return for 2011 Any intangible asset acquired from another person. How do i file an amended tax return for 2011 Created financial interests. How do i file an amended tax return for 2011 Any intangible asset that has a useful life that can be estimated with reasonable accuracy. How do i file an amended tax return for 2011 Any intangible asset that has an amortization period or limited useful life that is specifically prescribed or prohibited by the Code, regulations, or other published IRS guidance. How do i file an amended tax return for 2011 Any amount paid to facilitate an acquisition of a trade or business, a change in the capital structure of a business entity, and certain other transactions. How do i file an amended tax return for 2011   You must also increase the 15-year safe harbor amortization period to a 25-year period for certain intangibles related to benefits arising from the provision, production, or improvement of real property. How do i file an amended tax return for 2011 For this purpose, real property includes property that will remain attached to the real property for an indefinite period of time, such as roads, bridges, tunnels, pavements, and pollution control facilities. How do i file an amended tax return for 2011 Income Forecast Method You can choose to use the income forecast method instead of the straight line method to depreciate the following depreciable intangibles. How do i file an amended tax return for 2011 Motion picture films or video tapes. How do i file an amended tax return for 2011 Sound recordings. How do i file an amended tax return for 2011 Copyrights. How do i file an amended tax return for 2011 Books. How do i file an amended tax return for 2011 Patents. How do i file an amended tax return for 2011 Under the income forecast method, each year's depreciation deduction is equal to the cost of the property, multiplied by a fraction. How do i file an amended tax return for 2011 The numerator of the fraction is the current year's net income from the property, and the denominator is the total income anticipated from the property through the end of the 10th taxable year following the taxable year the property is placed in service. How do i file an amended tax return for 2011 For more information, see section 167(g) of the Internal Revenue Code. How do i file an amended tax return for 2011 Films, video tapes, and recordings. How do i file an amended tax return for 2011   You cannot use MACRS for motion picture films, video tapes, and sound recordings. How do i file an amended tax return for 2011 For this purpose, sound recordings are discs, tapes, or other phonorecordings resulting from the fixation of a series of sounds. How do i file an amended tax return for 2011 You can depreciate this property using either the straight line method or the income forecast method. How do i file an amended tax return for 2011 Participations and residuals. How do i file an amended tax return for 2011   You can include participations and residuals in the adjusted basis of the property for purposes of computing your depreciation deduction under the income forecast method. How do i file an amended tax return for 2011 The participations and residuals must relate to income to be derived from the property before the end of the 10th taxable year after the property is placed in service. How do i file an amended tax return for 2011 For this purpose, participations and residuals are defined as costs which by contract vary with the amount of income earned in connection with the property. How do i file an amended tax return for 2011   Instead of including these amounts in the adjusted basis of the property, you can deduct the costs in the taxable year that they are paid. How do i file an amended tax return for 2011 Videocassettes. How do i file an amended tax return for 2011   If you are in the business of renting videocassettes, you can depreciate only those videocassettes bought for rental. How do i file an amended tax return for 2011 If the videocassette has a useful life of one year or less, you can currently deduct the cost as a business expense. How do i file an amended tax return for 2011 Corporate or Partnership Property Acquired in a Nontaxable Transfer MACRS does not apply to property used before 1987 and transferred after 1986 to a corporation or partnership (except property the transferor placed in service after July 31, 1986, if MACRS was elected) to the extent its basis is carried over from the property's adjusted basis in the transferor's hands. How do i file an amended tax return for 2011 You must continue to use the same depreciation method as the transferor and figure depreciation as if the transfer had not occurred. How do i file an amended tax return for 2011 However, if MACRS would otherwise apply, you can use it to depreciate the part of the property's basis that exceeds the carried-over basis. How do i file an amended tax return for 2011 The nontaxable transfers covered by this rule include the following. How do i file an amended tax return for 2011 A distribution in complete liquidation of a subsidiary. How do i file an amended tax return for 2011 A transfer to a corporation controlled by the transferor. How do i file an amended tax return for 2011 An exchange of property solely for corporate stock or securities in a reorganization. How do i file an amended tax return for 2011 A contribution of property to a partnership in exchange for a partnership interest. How do i file an amended tax return for 2011 A partnership distribution of property to a partner. How do i file an amended tax return for 2011 Election To Exclude Property From MACRS If you can properly depreciate any property under a method not based on a term of years, such as the unit-of-production method, you can elect to exclude that property from MACRS. How do i file an amended tax return for 2011 You make the election by reporting your depreciation for the property on line 15 in Part II of Form 4562 and attaching a statement as described in the instructions for Form 4562. How do i file an amended tax return for 2011 You must make this election by the return due date (including extensions) for the tax year you place your property in service. How do i file an amended tax return for 2011 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within six months of the due date of the return (excluding extensions). How do i file an amended tax return for 2011 Attach the election to the amended return and write “Filed pursuant to section 301. How do i file an amended tax return for 2011 9100-2” on the election statement. How do i file an amended tax return for 2011 File the amended return at the same address you filed the original return. How do i file an amended tax return for 2011 Use of standard mileage rate. How do i file an amended tax return for 2011   If you use the standard mileage rate to figure your tax deduction for your business automobile, you are treated as having made an election to exclude the automobile from MACRS. How do i file an amended tax return for 2011 See Publication 463 for a discussion of the standard mileage rate. How do i file an amended tax return for 2011 What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. How do i file an amended tax return for 2011 To determine basis, you need to know the cost or other basis of your property. How do i file an amended tax return for 2011 Cost as Basis The basis of property you buy is its cost plus amounts you paid for items such as sales tax (see Exception , below), freight charges, and installation and testing fees. How do i file an amended tax return for 2011 The cost includes the amount you pay in cash, debt obligations, other property, or services. How do i file an amended tax return for 2011 Exception. How do i file an amended tax return for 2011   You can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). How do i file an amended tax return for 2011 If you make that choice, you cannot include those sales taxes as part of your cost basis. How do i file an amended tax return for 2011 Assumed debt. How do i file an amended tax return for 2011   If you buy property and assume (or buy subject to) an existing mortgage or other debt on the property, your basis includes the amount you pay for the property plus the amount of the assumed debt. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You make a $20,000 down payment on property and assume the seller's mortgage of $120,000. How do i file an amended tax return for 2011 Your total cost is $140,000, the cash you paid plus the mortgage you assumed. How do i file an amended tax return for 2011 Settlement costs. How do i file an amended tax return for 2011   The basis of real property also includes certain fees and charges you pay in addition to the purchase price. How do i file an amended tax return for 2011 These generally are shown on your settlement statement and include the following. How do i file an amended tax return for 2011 Legal and recording fees. How do i file an amended tax return for 2011 Abstract fees. How do i file an amended tax return for 2011 Survey charges. How do i file an amended tax return for 2011 Owner's title insurance. How do i file an amended tax return for 2011 Amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. How do i file an amended tax return for 2011   For fees and charges you cannot include in the basis of property, see Real Property in Publication 551. How do i file an amended tax return for 2011 Property you construct or build. How do i file an amended tax return for 2011   If you construct, build, or otherwise produce property for use in your business, you may have to use the uniform capitalization rules to determine the basis of your property. How do i file an amended tax return for 2011 For information about the uniform capitalization rules, see Publication 551 and the regulations under section 263A of the Internal Revenue Code. How do i file an amended tax return for 2011 Other Basis Other basis usually refers to basis that is determined by the way you received the property. How do i file an amended tax return for 2011 For example, your basis is other than cost if you acquired the property in exchange for other property, as payment for services you performed, as a gift, or as an inheritance. How do i file an amended tax return for 2011 If you acquired property in this or some other way, see Publication 551 to determine your basis. How do i file an amended tax return for 2011 Property changed from personal use. How do i file an amended tax return for 2011   If you held property for personal use and later use it in your business or income-producing activity, your depreciable basis is the lesser of the following. How do i file an amended tax return for 2011 The fair market value (FMV) of the property on the date of the change in use. How do i file an amended tax return for 2011 Your original cost or other basis adjusted as follows. How do i file an amended tax return for 2011 Increased by the cost of any permanent improvements or additions and other costs that must be added to basis. How do i file an amended tax return for 2011 Decreased by any deductions you claimed for casualty and theft losses and other items that reduced your basis. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 Several years ago, Nia paid $160,000 to have her home built on a lot that cost her $25,000. How do i file an amended tax return for 2011 Before changing the property to rental use last year, she paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house. How do i file an amended tax return for 2011 Land is not depreciable, so she includes only the cost of the house when figuring the basis for depreciation. How do i file an amended tax return for 2011 Nia's adjusted basis in the house when she changed its use was $178,000 ($160,000 + $20,000 − $2,000). How do i file an amended tax return for 2011 On the same date, her property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. How do i file an amended tax return for 2011 The basis for depreciation on the house is the FMV on the date of change ($165,000), because it is less than her adjusted basis ($178,000). How do i file an amended tax return for 2011 Property acquired in a nontaxable transaction. How do i file an amended tax return for 2011   Generally, if you receive property in a nontaxable exchange, the basis of the property you receive is the same as the adjusted basis of the property you gave up. How do i file an amended tax return for 2011 Special rules apply in determining the basis and figuring the MACRS depreciation deduction and special depreciation allowance for property acquired in a like-kind exchange or involuntary conversion. How do i file an amended tax return for 2011 See Like-kind exchanges and involuntary conversions. How do i file an amended tax return for 2011 under How Much Can You Deduct? in chapter 3 and Figuring the Deduction for Property Acquired in a Nontaxable Exchange in chapter 4. How do i file an amended tax return for 2011   There are also special rules for determining the basis of MACRS property involved in a like-kind exchange or involuntary conversion when the property is contained in a general asset account. How do i file an amended tax return for 2011 See How Do You Use General Asset Accounts in chapter 4. How do i file an amended tax return for 2011 Adjusted Basis To find your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service. How do i file an amended tax return for 2011 These events could include the following. How do i file an amended tax return for 2011 Installing utility lines. How do i file an amended tax return for 2011 Paying legal fees for perfecting the title. How do i file an amended tax return for 2011 Settling zoning issues. How do i file an amended tax return for 2011 Receiving rebates. How do i file an amended tax return for 2011 Incurring a casualty or theft loss. How do i file an amended tax return for 2011 For a discussion of adjustments to the basis of your property, see Adjusted Basis in Publication 551. How do i file an amended tax return for 2011 If you depreciate your property under MACRS, you also may have to reduce your basis by certain deductions and credits with respect to the property. How do i file an amended tax return for 2011 For more information, see What Is the Basis for Depreciation in chapter 4. How do i file an amended tax return for 2011 . How do i file an amended tax return for 2011 Basis adjustment for depreciation allowed or allowable. How do i file an amended tax return for 2011   You must reduce the basis of property by the depreciation allowed or allowable, whichever is greater. How do i file an amended tax return for 2011 Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). How do i file an amended tax return for 2011 Depreciation allowable is depreciation you are entitled to deduct. How do i file an amended tax return for 2011   If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable. How do i file an amended tax return for 2011   If you deduct more depreciation than you should, you must reduce your basis by any amount deducted from which you received a tax benefit (the depreciation allowed). How do i file an amended tax return for 2011 How Do You Treat Repairs and Improvements? If you improve depreciable property, you must treat the improvement as separate depreciable property. How do i file an amended tax return for 2011 Improvement means an addition to or partial replacement of property that adds to its value, appreciably lengthens the time you can use it, or adapts it to a different use. How do i file an amended tax return for 2011 You generally deduct the cost of repairing business property in the same way as any other business expense. How do i file an amended tax return for 2011 However, if a repair or replacement increases the value of your property, makes it more useful, or lengthens its life, you must treat it as an improvement and depreciate it. How do i file an amended tax return for 2011 Example. How do i file an amended tax return for 2011 You repair a small section on one corner of the roof of a rental house. How do i file an amended tax return for 2011 You deduct the cost of the repair as a rental expense. How do i file an amended tax return for 2011 However, if you completely replace the roof, the new roof is an improvement because it increases the value and lengthens the life of the property. How do i file an amended tax return for 2011 You depreciate the cost of the new roof. How do i file an amended tax return for 2011 Improvements to rented property. How do i file an amended tax return for 2011   You can depreciate permanent improvements you make to business property you rent from someone else. How do i file an amended tax return for 2011 Do You Have To File Form 4562? Use Form 4562 to figure your deduction for depreciation and amortization. How do i file an amended tax return for 2011 Attach Form 4562 to your tax return for the current tax year if you are claiming any of the following items. How do i file an amended tax return for 2011 A section 179 deduction for the current year or a section 179 carryover from a prior year. How do i file an amended tax return for 2011 See chapter 2 for information on the section 179 deduction. How do i file an amended tax return for 2011 Depreciation for property placed in service during the current year. How do i file an amended tax return for 2011 Depreciation on any vehicle or other listed property, regardless of when it was placed in service. How do i file an amended tax return for 2011 See chapter 5 for information on listed property. How do i file an amended tax return for 2011 A deduction for any vehicle if the deduction is reported on a form other than Schedule C (Form 1040) or Schedule C-EZ (Form 1040). How do i file an amended tax return for 2011 Amortization of costs if the current year is the first year of the amortization period. How do i file an amended tax return for 2011 Depreciation or amortization on any asset on a corporate income tax return (other than Form 1120S, U. How do i file an amended tax return for 2011 S. How do i file an amended tax return for 2011 Income Tax Return for an S Corporation) regardless of when it was placed in service. How do i file an amended tax return for 2011 You must submit a separate Form 4562 for each business or activity on your return for which a Form 4562 is required. How do i file an amended tax return for 2011 Table 1-1 presents an overview of the purpose of the various parts of Form 4562. How do i file an amended tax return for 2011 Employee. How do i file an amended tax return for 2011   Do not use Form 4562 if you are an employee and you deduct job-related vehicle expenses using either actual expenses (including depreciation) or the standard mileage rate. How do i file an amended tax return for 2011 Instead, use either Form 2106 or Form 2106-EZ. How do i file an amended tax return for 2011 Use Form 2106-EZ if you are claiming the standard mileage rate and you are not reimbursed by your employer for any expenses. How do i file an amended tax return for 2011 How Do You Correct Depreciation Deductions? If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. How do i file an amended tax return for 2011 See Filing an Amended Return , next. How do i file an amended tax return for 2011 If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. How do i file an amended tax return for 2011 See Changing Your Accounting Method , later. How do i file an amended tax return for 2011 Filing an Amended Return You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. How do i file an amended tax return for 2011 You claimed the incorrect amount because of a mathematical error made in any year. How do i file an amended tax return for 2011 You claimed the incorrect amount because of a posting error made in any year. How do i file an amended tax return for 2011 You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. How do i file an amended tax return for 2011 You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. How do i file an amended tax return for 2011 Adoption of accounting method defined. How do i file an amended tax return for 2011   Generally, you adopt a method of accounting for depreciation by using a permissible method of determining depreciation when you file your first tax return, or by using the same impermissible method of determining depreciation in two or more consecutively filed tax returns. How do i file an amended tax return for 2011   For an exception to this 2-year rule, see Revenue Procedure 2011-14 on page 330 of the Internal Revenue Bulletin 2011-4, available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/pub/irs-irbs/irb11-04. How do i file an amended tax return for 2011 pdf. How do i file an amended tax return for 2011 (Note. How do i file an amended tax return for 2011 Revenue Procedure 2011-14 is clarified and modified by Revenue Procedure 2012-20. How do i file an amended tax return for 2011 For more information, see Revenue Procedure 2012-20 on page 700 of the Internal Revenue Bulletin 2012-14, available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/pub/irs-irbs/irb12-14. How do i file an amended tax return for 2011 pdf. How do i file an amended tax return for 2011 )   For a safe harbor method of accounting to treat rotable spare parts as depreciable assets and procedures to obtain automatic consent to change to the safe harbor method of accounting, see Revenue Procedure 2007-48 on page 110 of Internal Revenue Bulletin 2007-29, available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/pub/irs-irbs/irb07-29. How do i file an amended tax return for 2011 pdf. How do i file an amended tax return for 2011 When to file. How do i file an amended tax return for 2011   If an amended return is allowed, you must file it by the later of the following. How do i file an amended tax return for 2011 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. How do i file an amended tax return for 2011 A return filed before an unextended due date is considered filed on that due date. How do i file an amended tax return for 2011 2 years from the time you paid your tax for that year. How do i file an amended tax return for 2011 Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. How do i file an amended tax return for 2011 You generally must file Form 3115, Application for Change in Accounting Method, to request a change in your method of accounting for depreciation. How do i file an amended tax return for 2011 The following are examples of a change in method of accounting for depreciation. How do i file an amended tax return for 2011 A change from an impermissible method of determining depreciation for depreciable property, if the impermissible method was used in two or more consecutively filed tax returns. How do i file an amended tax return for 2011 A change in the treatment of an asset from nondepreciable to depreciable or vice versa. How do i file an amended tax return for 2011 A change in the depreciation method, period of recovery, or convention of a depreciable asset. How do i file an amended tax return for 2011 A change from not claiming to claiming the special depreciation allowance if you did not make the election to not claim any special allowance. How do i file an amended tax return for 2011 A change from claiming a 50% special depreciation allowance to claiming a 30% special depreciation allowance for qualified property (including property that is included in a class of property for which you elected a 30% special allowance instead of a 50% special allowance). How do i file an amended tax return for 2011 Changes in depreciation that are not a change in method of accounting (and may only be made on an amended return) include the following. How do i file an amended tax return for 2011 An adjustment in the useful life of a depreciable asset for which depreciation is determined under section 167. How do i file an amended tax return for 2011 A change in use of an asset in the hands of the same taxpayer. How do i file an amended tax return for 2011 Making a late depreciation election or revoking a timely valid depreciation election (including the election not to deduct the special depreciation allowance). How do i file an amended tax return for 2011 If you elected not to claim any special allowance, a change from not claiming to claiming the special allowance is a revocation of the election and is not an accounting method change. How do i file an amended tax return for 2011 Generally, you must get IRS approval to make a late depreciation election or revoke a depreciation election. How do i file an amended tax return for 2011 You must submit a request for a letter ruling to make a late election or revoke an election. How do i file an amended tax return for 2011 Any change in the placed in service date of a depreciable asset. How do i file an amended tax return for 2011 See section 1. How do i file an amended tax return for 2011 446-1(e)(2)(ii)(d) of the regulations for more information and examples. How do i file an amended tax return for 2011 IRS approval. How do i file an amended tax return for 2011   In some instances, you may be able to get approval from the IRS to change your method of accounting for depreciation under the automatic change request procedures generally covered in Revenue Procedure 2011-14. How do i file an amended tax return for 2011 If you do not qualify to use the automatic procedures to get approval, you must use the advance consent request procedures generally covered in Revenue Procedure 97-27, 1997-1 C. How do i file an amended tax return for 2011 B. How do i file an amended tax return for 2011 680. How do i file an amended tax return for 2011 Also see the Instructions for Form 3115 for more information on getting approval, including lists of scope limitations and automatic accounting method changes. How do i file an amended tax return for 2011 Additional guidance. How do i file an amended tax return for 2011    For additional guidance and special procedures for changing your accounting method, automatic change procedures, amending your return, and filing Form 3115, see Revenue Procedure 2011-14 on page 330 of the Internal Revenue Bulletin 2011-4, available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/pub/irs-irbs/irb11-04. How do i file an amended tax return for 2011 pdf. How do i file an amended tax return for 2011 (Note. How do i file an amended tax return for 2011 Revenue Procedure 2011-14 is clarified and modified by Revenue Procedure 2012-20. How do i file an amended tax return for 2011 For more information, see Revenue Procedure 2012-20 on page 700 of the Internal Revenue Bulletin 2012-14, available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/pub/irs-irbs/irb12-14. How do i file an amended tax return for 2011 pdf. How do i file an amended tax return for 2011 )   For a safe harbor method of accounting to treat rotable spare parts as depreciable assets, see Revenue Procedure 2007-48 on page 110 of Internal Revenue Bulletin 2007-29, available at www. How do i file an amended tax return for 2011 irs. How do i file an amended tax return for 2011 gov/pub/irs-irbs/irb07-29. How do i file an amended tax return for 2011 pdf. How do i file an amended tax return for 2011 Table 1-1. How do i file an amended tax return for 2011 Purpose of Form 4562 This table describes the purpose of the various parts of Form 4562. How do i file an amended tax return for 2011 For more information, see Form 4562 and its instructions. How do i file an amended tax return for 2011 Part Purpose I • Electing the section 179 deduction • Figuring the maximum section 179 deduction for the current year • Figuring any section 179 deduction carryover to the next year II • Reporting the special depreciation allowance for property (other than listed property) placed in service during the tax year • Reporting depreciation deductions on property being depreciated under any method other than Modified Accelerated Cost Recovery System (MACRS) III • Reporting MACRS depreciation deductions for property placed in service before this year • Reporting MACRS depreciation deductions for property (other than listed property) placed in service during the current year IV • Summarizing other parts V • Reporting the special depreciation allowance for automobiles and other listed property • Reporting MACRS depreciation on automobiles and other listed property • Reporting the section 179 cost elected for automobiles and other listed property • Reporting information on the use of automobiles and other transportation vehicles VI • Reporting amortization deductions Section 481(a) adjustment. How do i file an amended tax return for 2011   If you file Form 3115 and change from an impermissible method to a permissible method of accounting for depreciation, you can make a section 481(a) adjustment for any unclaimed or excess amount of allowable depreciation. How do i file an amended tax return for 2011 The adjustment is the difference between the total depreciation actually deducted for the property and the total amount allowable prior to the year of change. How do i file an amended tax return for 2011 If no depreciation was deducted, the adjustment is the total depreciation allowable prior to the year of change. How do i file an amended tax return for 2011 A negative section 481(a) adjustment results in a decrease in taxable income. How do i file an amended tax return for 2011 It is taken into account in the year of change and is reported on your business tax returns as “other expenses. How do i file an amended tax return for 2011 ” A positive section 481(a) adjustment results in an increase in taxable income. How do i file an amended tax return for 2011 It is generally taken into account over 4 tax years and is reported on your business tax returns as “other income. How do i file an amended tax return for 2011 ” However, you can elect to use a one-year adjustment period and report the adjustment in the year of change if the total adjustment is less than $25,000. How do i file an amended tax return for 2011 Make the election by completing the appropriate line on Form 3115. How do i file an amended tax return for 2011   If you file a Form 3115 and change from one permissible method to another permissible method, the section 481(a) adjustment is zero. How do i file an amended tax return for 2011 Prev  Up  Next   Home   More Online Publications